From Corporate Social Innovation to Corporate Social Responsibility

From Corporate Social Innovation to Corporate Social Responsibility

The readings this week cover various big companies’ social innovation (CSI) initiatives area, which is pretty inspiring: Ratan Tata motors tries to develop the “cheapest cars” in the world with a mission to create value at very low cost. French food giant Danone produces cheap bottled-water and yogurt to Senegalese consumers. Adidas experimented with its one-euro sneaker for Bangladeshis. L’Oreal seals shampoo and other hygiene items in India. Unilever also plans on a series of products in the developing markets… they are benefiting from all these initiatives, generating revenues and expanding market shares, also they are bringing more decency and better life quality to the poor.

I used to do research on Corporate Social Responsibility (CSR), especially the relationship between CSR and a company’s financial performance (no consensus on this. Can be negative or positive). I figured that a corporate social innovation (CSI) initiates and CSR share many similarities. Intuitively, they both do “good things” to community. It appears to me that CSI has more advantages compared with CSR: CSI is clearly more sustainable, more needs-targeted (of course, companies have to satisfy a certain need to sell the product. Then considering sometimes how nonsense can a company’s CSR initiative be! ). Besides, let’s examine the relationship between CSR/CSI and company’s financial performance. CSR can decrease financial performance if you takes a RBV perspective, CSR initiatives take up a company’s limited resources (e.g: cash), increase cost but may generate “goodwill” (reputation), hard to quantify. This will decrease financial performance observed from a company’s financial statements. CSI generate revenue! So I am wondering “Why even bother CSR”. Companies should do more exploration in CSI.

I researched deeper in this topic and found out an inspiring article “Corporate Social Responsibility is Dead: Long Live Corporate Social Innovation” posted by Tim Drainin discussing this question in depth. Some main point here:

“Corporate Social Responsibility (CSR) is dead. Giving money to charity, staff volunteering, painting the community centre – all good things but peripheral to the business. They don’t lead to the creation of new products and services, differentiate your brand, engage your people or achieve lasting social or environmental impact.

“The answers to the world’s biggest social challenges will not be found by governments, charities or NGO’s alone. Increasingly big companies are creating new business models, new products and services that deliver lasting, financially viable solutions to the big problems we face.

Personally, I am quite excited about CSI and sort of pessimistic on CSR. As Milton Friedman once said ”the business of business is business” . when I was studying CSR, I kept asking myself: is it valid to advocate companies to give away, simply because they are “rich”. I am with Friedman this time. but if CSI can combine the company’s profit nature, more importantly expertise (R&D, distribution, advanced management skills, etc.) with the goal to bring a better society. Why not?

More questions can be: can major companies all rush to explore CSI? Definitely not I guess, then are there any specific type of company can be considered in a better position to do this? When exploring the “developing market” reducing price is definitely a major concern, but that is far from enough, then what else?  

 

Source: http://sigeneration.ca/blog/?p=38 Social Innovation Generation

P.S: I find this website a great one. It contains many thought-provoking articles in social innovation area.