Strategic Corporate Social Responsibility: Effects on Business Performance

7 CHAPTER 1: INTRODUCTION 1.1 BACKGROUND Corporate Social Responsibility (CSR) has gained legitimacy only in the last few years, despite being a long-lasting concept. Just few years ago, in 2005, The Economist criticised CSR, which was labelled as “based on a faulty… analysis of the capitalist system”; the article cited Adam Smith’s Wealth of Nations, according to which the capitalist system is pivoted on the search for profit (The Economist, 2005). Moreover, an article in The Guardian stated that the concept had not been reaching companies’ staff, who regarded CSR as a mere PR exercise (Pandya, 2004). However, The Economist’s opinion on CSR changed in few years. In 2008, CSR was described as mainstream and unavoidable for large companies; this because of public pressures and because of concerns about the environment caused by the model of development brought by globalisation (The Economist, 2008). Moreover, in a Financial Times article, Moore (2012) strongly sustained the necessity to include social projects as parts of MBA required curricula, in order to educate students in the subject. Despite the upsurge in the importance of CSR, which is nowadays believed to create shareholder value, it is difficult to assess this value in univocal terms, and this is why many CFOs still do not consider CSR investments when evaluating the attractiveness of business projects (McKinsey & Company, 2009). This does not change the fact that considering CSR has become by now essential; however, what many companies have not yet understood is that CSR should not be viewed only in terms of compliance, but also in terms of an opportunity to improve business performance. Indeed, many researchers have been trying to demonstrate how CSR can be advantageous for companies as well as for society. Moreover, the fast growth of emerging economies, like the BRIC countries, since the beginning of the globalisation process brings a problem of resource scarcity and, hence, of sustainability of the current economic model of development. Not only does this cause concerns about power sources and climate change, but it also