corporate social reposbility in building brands (1)

7/31/2019 Corporate Social Reposbility in Building Brands (1)

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CORPORATE SOCIAL RESPONSIBILITY IN

BUILDING BRANDS, HOW TESCO HAS

EXPERIENCED IT



One precise definition of corporate social responsibility that describes all the factors of

this aspect of business is still not been described after many efforts from the

researchers (Dahlsrud, 2006). There are many definitions available for CSR and of

them the one presented by European Union describes corporate social responsibility as

a program ran by the companies to decide their volunteer contribution for the betterment

of the society and providing a clearer and better environment to the population. Another

definition that was described by Hopkins in a discussion paper for an international labor

organisation describe the concerns of corporate social responsibility are to treat the

stakeholders of the firm, regardless of the business type in a responsible way that is

definitely in the favor of the firm. The organization for economic co-operation and

development (OECD) provides multinational firms with guidelines on corporate social

responsibility. The aim of OECD is to encourage the firms to contribute to the society in

which they are operating to make the positive influence on the economies, environment

and society. Further they encourage the firms to attempt to reduce the difficulties that

might be caused in the environment and society as a result of the various operations of

the firm.

The term Corporate Social Responsibility was first coined in 1953 with the publication of

Bowen‟s Social Responsibility of Businessmen (Corporate watch report, 2006). Though,

the idea is old but the implementation and especially the realization of its impotence is

relatively new and academia addressed this important aspect of business sector

aggressively in 80s and 90s (Caroll, 1999). The first firm that implemented the corporate

social responsibility initiatives was Shell and that was in 1998.



The benefits that a firm could experience when it is regarding its orle in the society well

could be both internal and external. Internal benefits bring strength to the internal

organizational structure by enhancing the loyalty and trust of the employees. This

enhancement would ultimately affect the organizational performance by increasing the

motivation resulting in increased quality product or service delivery to the user. On the

other hand the external benefits would create a positive image among the people in the

society leading to higher appreciation and respect for the organisation. This would

enhance the sales of the business thus generate profit as the people feel more trusting

for the organisations that are socially responsible, that consider the societal values

before their business interest.

Now the question arise why all this social responsibility is important and exactly where it

influence the business process. An important aspect of successful business is the

recognized brands. Brands are essentially the way to success in any type of business

and customers are actually purchasing brands not the name of the firm when in the

purchase decision making process. The attributes of any brand that could make them

successful among the customers are the Brand Building or in other words the positive

marketing and brand insurance. The reputation of brands is important for the successful

business and corporations around the world understand this fact well enough to get

indulge in the corporate social responsibility initiatives. Organisations develop different

models for integrating brands and corporate social responsibility. The informative era of

today has increased the requirement of being socially aware and responsible to many

folds as has the knowledge of the general public. Now the socially and ethically strong



organisations are successful in attracting customers, attaining and retaining excellent

workforce and being respected by the peers.



INTRODUCTION TO TESCO

Tesco, headquartering in United Kingdom (Cheshunt), is a well known global

merchandiser and is operating successfully in almost fourteen countries across Europe,

Asia and North America. Based on the operations, the store has been divided into six

types which could be found around the United Kingdom and these are: (1) Tesco Extra,

(2) Tesco Superstore, (3) Tesco Express, (4) Tesco Metro, (5) Home Plus and (6) One

Stop. Operating in such a huge scale, this retail store is only second largest in terms of

its profit generation and is third largest in terms of revenue generation, making it

undoubtedly a very famous product provider in fast moving consumer goods retail.

The store was founded in 1919 by Sir Jack Cohen and the name of the store first time

appeared in 1924. Till 1939, the store got around 100 branches all over the country and

now the operations are extended to major markets of the world. In the United Kingdom

alone, the market shear of Tesco is around 30%, showing the fame and trust it got

among the public. The business 0of the store increased form a grocery store and this

was an exponential growth. The store started to offer, along with its original grocery

items, clothing, books, petrol, software, electronics, telecom, internet services and

furniture. Further services include the DVD rental, music downloads and also financial

services. These are just some of the long list of products and services offered by Tesco.



AIM OF STUDY

Societal representation of the organizations and how well they communicate and secure

the social values of the population they are dealing with in terms of product delivery and

working are vital to determine the stakeholder interest in the business end product,

whether it is a service or product. This interest is developed when the organisations are

sensibly acting towards their social responsibilities and their initiatives towards

corporate social reasonability determine the boiling of brand image. The aim of this

study is to understand the role of organisations within the society they are operating in

and how this role when executed effectively affects the brand image. A retail industry is

intended to study for this research project as the interaction of a retail store like Tesco is

higher than any other business and further, the brand image is crucial for the consumer

selection of the retailer as their provider of choice.



RESEARCH QUESTIONS

What is the role of corporate social responsibility in brand building?

What are effective initiatives that organisations take to be socially more close to

its shareholders?

How consumers perceive the socially responsible organisations in selecting their

providers?

What are the effects of ethically irresponsible behaviours of the organisations on

the consumers?



RESEARCH OBJECTIVES

1. To understand the significance of socially responsible organisations in building

brands

2. To find out the different initiatives that retailers execute to be perceived as

socially responsible

3. To describe the value of strong brands in the business success



RESEARCH STRATEGY

The research strategy intended to be adopted for this particular study is based on

deductive approach that is based on the idea of discussing broader theories to deduce

specific statements or facts about the under discussion topic. The broader theory of

corporate social responsibility is studied and the discussion is concluded to produce

specific facts about the role of being ethically and socially sound for the society to

produce stronger brand image. A case study methodology is opted for this study and a

retail industry is selected for this purpose. The data collection is intended to be of

secondary nature. The secondary data would be collected from the organisational

policies, websites, reports and news about the initiatives of CSR and their results

observed at the organisational level etc. All the information collected from these sources

would then be analysed critically to drive the final conclusion.



LITERATURE REVIEW

The concept of corporate social responsibility is almost as old as is the concept of

business. In the United Kingdom, the compassionate capitalism has been a ritual for

over 150 years (Arndt, 2003). Caroll (1999) traced the evolution of this business aspect

back to the beginning of 1950s which is the precursor of what we see of corporate

social responsibility now days. The definitions of CSR started to develop and propagate

in 1960s and 1970s and the idea begins to get mature in its nature and execution

(Caroll, 1999). In the recent years, corporate social responsibility is perceived more as a

function that encourages and guides the organizations to work in accordance to the

social and environmental requirements of the society.

A definition from McWilliams and Seigel (2001) states corporate social responsibility as

situations and attributes that takes the organization‟s focus from compliance to getting

involved in the socially appreciated actions of betterment. These steps taken by the

firms are far from their interests and also from legislations (McWilliams and Seigel,

2001). The philosophy of being socially responsible corporation drives the decision

making process of the strategic manager towards the ethical and social strengths rather

the mere profit making and business growth. They also moves the shareholder selection

and availability, employee availability, selections and hiring practices, which would

ultimately effect the brand image positively (2002). The corporate social responsibility

includes how the society perceives the functions of firm‟s legal, ethical, economical and

discretionary aspects (Carroll, 1979). This deals with the firm‟s dealing with not o nly its



society and environment, but also the employees, suppliers, and shareholders as well

(Carroll, 1979).

A very interesting finding in the favor of a firm‟s corporate responsibility initiatives was

that the lower pollution was strongly associated to the higher financial performance of

the firm (King and Lennox, 2001). Though this finding was not that conclusive but there

was surely enough of the evidence that when firms decide to work for the betterment of

society, in any way, whether it is about being environmentally more responsible or by

providing more opportunities for the social elements to develop, it pays back in terms of

profit to the firm through higher stakeholders interest and trust. The corporate social

responsibility enhances a firm‟s position in the capital markets thus making it more

attractive for the investments (Dowell, Hart and Yeung, 2000). This increases the long

term profit earnings of the corporate.

There are certain benefits that a firm could achieve through its corporate social

responsibility function and critics have positively linked certain aspects which could be

used to develop business and enhance market share. These include the waste

reduction, risk management, relationship improvement with the regulatory authorities

and human relations, creation of brand equity, and also the capital cost reduction. The

decisions of the regulatory authorities are influenced by the conduct of the corporate

and the decisions in the favor of the socially and ethically responsible firms are

positively perceived then the one in the favor of anti-social behavioral firms (Heal,

2008). The consumers are sensitive and they promptly react to a firm‟s behavior

towards the social issues and the responsibility they show towards them (Heal, 2008).



Another important effect of being socially responsible on the corporate is by influencing

the productivity of its employees and attracting and retaining the good workforce from

the market. The people look for employers that are well trusted and have good

reputation in the society so they could proudly tell their peers about their workplace.

This makes the companies with good corporate social responsibly profile to be an

employer of choice for the most workers and having the most productive and effective

team on board (Conroy, 2001). In a research on MBA students, it was found that they

were ready to work on low pays but with companies that have good societal reputation

(Montgomery and May, 2003). A case study on Merck showed that the river blindness

campaign of the firm, though cost the firm considerable but helped them recruit many

excellent scientists on board that were otherwise not possible for them to reach. This

was helpful in the long run company future profit targets and goals (Vagelos and

Galambos, 2004).

The resource based view of the firm (RBV) theory (Wernerfelt, 1984) describes the

resources of the firm as bundles that have potentials which are transportable throughout

the firm imperfectly (Barney, 1991). This theory was based on the research of Penrose

(1959) and it is beloved that these resources could be sued well to achieve the

competitive edge for the firm. This RVB theory was applied on the environmental

responsibilities of the firm by Hart (1995) and this application to corporate social

responsibility was found to bring a competitive edge to the firms. This was subsequently

found that firm with good environmental performance were better in their financial

performance then the ones with lower concern (Russo and Fouts, 1997).



The corporate social responsibility is an integral part of a firm‟s strategies so it must be

handled and considered as a type of tactical investment. It is rather a reputation building

process then a product attribute or development cycle. The RBV implication on the

corporate social responsibility could make it possible for the firms to predict the

investment patterns as a result of the companies‟ initiatives for the society (McWilliams

and Seigel, 2000). The other aspect is the product differentiation where the corporate

responsibility act where the customers would be influenced in the vertical product

differentiation by selecting a product with CSR attributes over the one that has no such

features to offer (Fombrun and Shanley, 1990). This further adds to the firm reputation

and value given by the customers.

Brand is a concept that enhance the image of a product by the standards that are

followed to not only get the brand registered at the first place but also to maintain the

product buzz or brand image ensuring the successful brand registration in consumer

minds. The brand image is important and plays a key role in the consumer purchase

decision making process. The brand image is positively associated with the corporate

social responsibility initiatives of a firm. A good example is of Nike. The market of the

brand falls significantly when the issue of the low wedges of the developing country‟s

employees was known to public (23). The brand of a company is valued more by its

stakeholders when they know the strong social and ethical grounds of the corporate. A

company which is already well known in the society, its socially responsible acts would

make it more famous among the society then it will for the companies that are less

known. Thus the relationship of this function in brand imaging is far stronger for

awareness then for favorability (Agerwal and Sudhir, 2011).



The corporate social responsibility has been debated well by Theodore Levitt. According

to his description the job of any business is different from the government and vice

versa (Levitt, 1958). Another fact discussed in the debate of corporate social

responsibility was that the CSR is commonly used in different firms to gain some career

and personal plans by the managers rather the betterment society. In such situations,

this aspect of the business structure is just a waste of the corporate resources that

could be positively used in other ways to benefit the business (Friedman, 1970).

The firms indulged in CSR activities needs to be on an edge in the competitive market

place to get the exceptional results out of the business which is rather challenging

(Reinhardt, 1998). As the policies for the CSR are transparent and this makes it unlikely

for offering a different thing giving edge to the firm in the aggressive market competition.

If the early mover lead is considered, it again is worn in scenarios where the policies are

not restricted (Hope and Lehmann-Grube, 2001).

In a study where top ten United Kingdom based retailers were studied for their

corporate social responsibility issues, it was found that the social responsibility

initiatives in all these firms had common justifications. Those were reported to be based

on the commitment towards the customers, environmental issues, and also the

employees. The corporate social responsibility was without question is an essential

aspect of the business structure (Jones, Comfort and Hillier, 2005).

As could be observed form the brief discussion on the previous literature available on

the corporate social responsibility and its influence on brands image, the corporate

social reasonability initiatives are highly appreciated by the stakeholders of the business



and the firms involved in social betterment are found to get an additional benefit in the

market. But there are still some which found the difference between the profit and

business returns as a result of brand image recognition through CSR and the other

firms without these attributes to be negligible. This particular study under consideration

would attempt to develop an understanding about how these imitative works for the

retail industry and what benefits are actually received by the corporate implementing

them.



RESEARCH DESIGN

RESEARCH METHODOLOGY

For a research to be successful, the vital step is the selection of methodology that is

appropriate for the topic intended to study and the extent of research. Broadly

categorizing, there are two approaches for any research namely deductive research

approach and inductive research approach. The deductive approach deals with the

discussion of general ideas to deduce specific results and facts while the inductive

approach is opposite, using specific facts to generate theories that are broader in nature

with respect to the initial facts. For this study under consideration the approach intended

to be adopted is deductive where the general theory of corporate social responsibility is

discussed to generate facts about its role in brand building. Of the choices available for

the research to carry out, action research, experiments, observational studies etc, the

case study methodology is intended to be opted based on the scope of the topic

intended to study, the time availability and also to the data planned to collect. There are

advantages for each methodology and so are particular limitations involved with every

methodology and efficient research design tends to get maximum benefit while carefully

dealing with the limitations.



REASON FOR SELECTION OF METHODOLOGY

When the attitudes from a particular aspect from within an organisation or group of

organisations are intended to study, the case studies are of best choice as they present

with the very specific details. Further the data that is collected through this methodology

is more accurate as is coming from the most relievable sources, the organisations itself.

Also the time consumption is low and also the time is saved as more precise information

is collected and the time in refining the data is saved to great extent.



DATA COLLECTION

The data that is collected during the course of a research is the determinant of the

validity and reliability of the research as the source of information, the approaches for its

collection, analysis and presentation defines the research acceptable. Broadly, there

are two types of data that could be collected in any research type.

Primary data is collected directly from the source and is of more crude in nature and

needs to be refined to use in the research. The sources for this type of data could be

the entrepreneurs, customers, organisational heads etc. The time consumption for

primary data collection is high but the value given to research is worthwhile. The other

type of data is secondary data which is obtained from secondary data sources i.e.,

organisational archives, policies, manuals, news, annual reports etc. This information is

collected by others for some different reason and the research uses this data in

coherence to his particular research and is more refined type of data and needs lesser

time to collect. For this particular study under consideration, secondary sources would

be used for collection of required data.



TOOLS FOR DATA COLLECTION

Based on the data type to be collected, there are different available tools of data

collection. The type of data is that is planned to be collected for this study is of

secondary nature and that would be collected directly from the intended to study

organisation. The approachable policies of the firm, the corporate websites, annual CSR

reports and other information that is posted on the world wide web by the under study

organisation and other sources in this regard would be studied to obtain relevant

information that would then be evaluated in terms of the research objectives of the

under consideration study.



SAMPLE SIZE AND DATA PRESENTATION

Only one organisation that is intended to study as a case is Tesco. Tables, charts and

other descriptive presentation tools would be used to describe all the data that is

collected during the course of this research in a way that is more legible to the reader.



RELIABILITY AND VALIDITY OF RESEARCH

The validity of this under consideration study would be attempted to achieve by

consulting the most valid sources of information for data collection. The corporate

websites, news and annual reports issued from the organization intended to study

would be referred. The external factor of research validity would be a certain limitation

as the data would be collected for only one organization and the results would not be

transferable to other businesses. Further the reliability of secondary data could be

assured as the data is more reproducible in contrast to the primary data coming from

surveys.

LIMITATIONS OF THE RESEARCH

Regardless of the excellent research design and efforts for its execution there are

always certain limitations that a researcher has to face during the course of his

particular research that needs to be identified and attempted to plan to tackle effectively.

For this study under consideration, so far identified limitations are discussed briefly

below.

Generalisability: As the intended research is planned to be a case study dealing

with only one organisation, application of the findings on general business industries

would not be possible. The results would project the practices and their effect on only

the studies organisations. This could be helpful in estimating how this affect could be

translated in other firms but the results could not be essentially same. Generalisability

would certainly be a limitation of this under consideration study.



Data access: Another limitation that in anticipated during the course of this

research is the data access. As the organisational policies are generally restricted

documents and their access is usually discouraged at all organisations, so the access to

the more relevant data would certainly be a limitation but attempts would be made to

overcome it as much as possible.



REFERENCES

Agrawal, Sudhir, 2011, “Corporate social responsibility – a tool to create a positive

brand image”, International University, Noida, India, Vol 8, No 1

Arndt, M, 2003, „An Ode to „The Money-Spinner,‟‟ BusinessWeek, , pp22-23

Barney, J, 1991, “Firm resources and sustained competitive advantage”, Journal of

Management, 17, 99 –120

Beltratti, A, 2004, “The complementarity between corporate governance and corporate

social responsibility,” Bocconi University

Carroll, A, B, 1979, “A Three-Dimensional Conceptual Model of Corporate

Performance”, Academy of Management Review, 1979, Vol. 4, No. 4, p. 500

Carroll, A, B, 1999, “Corporate Social Responsibility, Evolution of a Definitional

Construct”, Business Society vol. 38 no. 3 268-295

Conroy, M, E, 2001, “Program on Development, Peace building, and the Environment”,

Political Economy Research Institute (PERI) University of Massachusetts, Amherst

Dahlsrud, A, 2006, “How corporate social responsibility is defined: an analysis of 37

definitions”,

Dowell, G., Hart, S, Yeung, B, 2000, "Do corporate global environmental standards create or destroy

market value?" Management Science, 46, 8, 1059-1074



Friedman, M, 1970, “The social responsibility of business is to increase its profits”, New

York Times Magazine, 13

Hart, S, 1995, “ A natural resource-based view of the firm”, Academy of Management

Review, 20, 986 –1014

Heal, G, M, 2008, “When Principle Pay; Corporate social Responsibility and the Bottom

Line”, New York, Columbia University Press

Hopkins M, 2004, “Corporate social responsibility: an issues paper.” Working Paper No. 27, ILO,

Hoppe, H, Lehmann-Grube, U, 2001, “Second-mover advantages in dynamic quality

competition”, Journal of Economics and Management Strategy, 10, 419 –33

Jones, P, Comfort, D, Hillier, D, 2005, "Corporate social responsibility and the UK's top

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pp.882 – 892

King, A, A, Lenox, M, J, 2001, “Does It Really Pay to Be Green? An Empirical Study of Firm

Environmental and Financial Performance”Journal of Industrial Ecology Volume 5 No. 1

Levitt, T, 1958, “The dangers of social responsibility”, Harvard Business Review, 41 –50

McWilliams, A, Siegel, D, 2000, “Corporate social responsibility and financial

performance: correlation or misspecification?”, Strategic Management Journal, 21, 603 –

9

McWilliams, A, Siegel, D, 2001, “Corporate social responsibility: a theory of the firm

perspective”, Academy of Management Review, 26, 117 –27



Micklethwait, J, Wooldrige, A, 2003, “The Company: A Short History of a Revolutionary

Idea”, Modern Library,

Montgomery, D, B, Ramus, C, A, 2003, “Corporate Social Responsibility Reputation

Effects on MBA Job Choice”, Stanford Graduate School of Business

OECD, 2003, “Guidelines for Multinational Enterprises.” Available at www.oecd.org/

daf/investment/guidelines,

Reinhardt, F, 1998, “Environmental product differentiation”, California Management

Review, 40, 43 –73

Russo, M, Fouts, P, 1997, “ A resource-based perspective on corporate environmental

performance and profitability”, Academy of Management Journal, 40, 534 –59

South China Morning Post, 2002

Vagelos, R, Galambos, L, 2004, “Medicine Science and Merck”, Cambridge University Press

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Volume 15, Issue 1, pages 1 –13

Wernerfelt, B, 1984, “ A resource based view of the firm”, Strategic Management

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corporate social reposbility in building brands (1)

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