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Relationship Between Csr And Competitive Advantages Commerce Essay

For the past two decennaries, corporate societal duty ( CSR ) has been the topic of academic examination due to an addition force per unit area placed on corporations to be more accountable for the well being of society. There are many researches done on CSR and its impact on transnational corporations ( MNCs ) ( Gande, Fortanier & A ; Van Tulder 2009 ; Kytle & A ; Ruggie 2005 ; Subrahmanyan 2004 ) but research on an industry broad degree, particularly within the Information Technology sector are underrepresented ( Cetindamar & A ; Husoy 2007 ) . Furthermore, CSR impact on MNCs competitory advantage within a Singapore context seem to be limited and those researches done are chiefly confined within the boundaries of CSR consciousness ( Ramasamy & A ; Ting 2004 ) and corporate societal coverage ( Newson & A ; Deegan 2002 ; Tsang 1998 ; Andrew et al. 1989 ; Foo & A ; Tan 1988 ) . The standard definition of a MNC is a house that “ controls and manages production constitutions – workss – in at least two states ” ( Caves 1996, p. 1 ) , hence MNCs have a broad extension of corporate ownership and corporate decision-making power across national boundary lines therefore doing them more antiphonal to international obligatory regulations and ordinances ( Jones 1996 ) . For illustration, the European Union and the North America have codified many policies to regulate the activities of MNCs therefore making a certain degree of “ societal duties ” for MNCs to follow ( Harris 1999 ; Vyakarnam 1992 ) . With more rigorous policies in topographic point and greater force per unit area by civil society, CSR is progressively being accepted as a beginning of competitory advantage ( Branco & A ; Rodrigues 2007 ) . CSR has evolved from being damaging to a company ‘s profitableness to being good to a company in the long tally ( Porter & A ; Kramer 2002 ) . The proposed research undertaking is an effort to analyze how Hewlett-Packard ( HP ) could break follow CSR to beef up its competitory advantage in countries such as human resources, strategic stigmatization, operations efficiency and profitableness.

Literature Review

This chapter examines past CSR surveies that are relevant to the proposed research and foreground some spreads in bing literature. It begins with a reappraisal of CSR development for the past 60 old ages and a treatment of a scope of competitory advantages derived from effectual deployment of CSR enterprises. Some illustrations of CSR enterprises include just employment patterns, philanthropic activities such as instruction bursaries every bit good as incorporating heath, safety and environment criterions into operations ( Semcorp 2008 ) . The relationship among these constructs will besides be explored through the buildings of a theoretical account.

Development of CSR

In 1999, at the universe Economic Forum in Davos, Mr Kofi Annan, so United Nations Secretary General had told concern leaders, “ we have to take between planetary market driven merely by computations of short-run net income, and one which has a human face. ” ( Mares 2004, p. 99 ) . A decennary subsequently, the universe faces a battalion of challenges such as economic, nutrient security, fiscal, clime alteration and terrorist act. On top of these challenges, there is besides the challenge of accomplishing sustainable development, “ development that meets the demands of the present without compromising the ability of future coevalss to run into their ain demands ” ( United Nations General Assembly 1987, p. para 1 ) . Therefore, concerns do non hold a pick between short term net income and operating with a human face. Administrations have to move in the involvements of stakeholders so as to accomplish long-run sustainability ( van Marrewijk 2003 ) .

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CSR is accepted by many concerns, civil society administrations, labour administrations and authoritiess as the manner of giving concerns a “ human face ” ( ICC World Business Organization 2002 ) . Furthermore, true CSR helps to extenuate the negative effects of globalisation and to maximise its benefits for the improvement of both society and concerns ( Uddin, Hassan & A ; Tarique 2008 ) . CSR goes beyond heightening stockholder value to heightening value for stakeholders. The humane constituent imbedded within CSR allows concerns to do commercial determinations that take into history people, society and environmental factors ( Elkington 1998 ) . The term “ sustainability ” is normally used alternatively of CSR, with dedicated studies on CSR activities and outcomes published as “ sustainability studies ” and “ citizenship studies ” ( Weber 2008 ) .

“ CSR is a doctrine of behavior and a construct of making concern applied by the concern community, companies and single business communities for sustainable development and saving of resources for future coevalss, based on the undermentioned rules: supplying quality merchandises and services to consumers ; making decent occupations, puting in development of production and human resources ; rigorous conformity with Torahs, whether revenue enhancement, labor, environmental or otherwise ; unity and reciprocality in relationships with all stakeholders ; making concern expeditiously to make economic value added and better national fight for the benefit of stockholders and the society ; incorporating public outlooks and by and large accepted moralss into concern pattern ; and lending to the development of civil society through partnerships and societal development undertakings ” ( Russian Managers Association 2006, p. 4 ) .

Neoclassic View of Firm ‘s Behaviour

With greater examination on sustainability in the twenty-first century, the neoclassical position of making concern can no longer be an effectual manner in at the same time balance or better fiscal and corporate societal public presentation ( Griffin & A ; Mahon 1997 ) . In the neo classical theoretical account, modern directors are position as professional directors that do non hold ownerships in the concern they run. These directors are obligated merely to shareholders, the receivers of net income ( Friedman 1970 ) . There is an inexistent of external influences or duties nor internal relationship or ethical considerations in this theoretical account. However, the house ‘s behaviors can be regulated by governmental entities through the infliction of “ expressed regulative inducements to counter the debatable market inducements ” ( Tomer 1999, p. 5 ) and directors simply “ obey the jurisprudence merely if the hazard of punishments makes it financially prudent to make so ” ( Paine 2003, p. 32 ) . Therefore, under neoclassical theoretical account, market and regulative inducements will find the house ‘s behaviour ( Tomer 1999 ) . Figure 1 depicts the neoclassical theoretical account of house ‘s behavior.

Therefore, the classical position can besides be seen as a signifier of stockholder theoretical account, where stockholders are the exclusive legal claimant on the intent of the house ( Emiliani 2001 ) . Harmonizing to Friedman ( 1970 ) , directors will castrate free market mechanism if they spend their administration ‘s resources for the improvement of society and person must pay for this redistribution of assets. Friedman argues that all administration ‘s constituencies will lose out because of the undermentioned grounds:

Net incomes and dividends for stockholders will be reduced to pay for socially responsible actions.

Employees will necessitate to hold their rewards and benefits reduced to pay for societal actions.

Consumers lose out because monetary values of merchandises will necessitate to be raised in order to pay for societal actions.

If the higher merchandise monetary values are rejected by consumers, there will be a diminution in gross revenues and concern support will be affected.

Figure 1: Neoclassic theoretical account of the house ‘s behavior ( Tomer 1999, p. 5 )

The classical position besides contends that there are force per unit areas in a competitory market for investing financess to travel where they will accomplish higher returns. If socially responsible houses can non go through on its higher cost to consumers, they will necessitate to absorb the higher societal cost, and it will bring forth a lower rate of return. Over clip, investing financess will gravitate off from socially responsible houses to those that are non burdened by higher

Social cost, because the subsequently will supply a higher rate of returns ( Friedman & A ; Miles 2002 ; Friedman 1978 ; Friedman 1962 ; Friedman 1970 ; Friedman & A ; Friedman 1980 ) . Stated below is HP ‘s mission statement:

Socio-economic View of Firm ‘s Behaviour

The skip of societal duties and ethical considerations in the neoclassical theory has given rise to the development of socioeconomic position that could assist both society and concerns achieved long term sustainability. Unlike the classical economic position where directors focus on short term returns, the socioeconomic position contends that directors should be concerned with maximising fiscal returns over the long tally ( Porter & A ; Kramer 2006 ; Porter & A ; Kramer 2002 ) . Harmonizing to one writer, “ maximising net incomes is a company ‘s 2nd precedence, non its first. The first is guaranting its endurance ” ( Gellerman 1986, p. 89 ) . To carry through that, corporations must accept some societal duties and the costs that go with them ( Galen 1990 ) .

When concerns address the economic, societal and environmental impact of their concern, it provides an chance for concerns to prosecute with stakeholders and earn their trust and support. Companies that set up a repute for their committedness to strong corporate administration, the wellbeing of people, the environment, and a sustainable hereafter, distinguish themselves in the market as a company of pick for consumers, employees, investors and communities. The theory of ‘stakeholders in concern ‘ can be traced back to Dr R. Edward Freeman ‘s Strategic Management: A Stakeholder Approach in ( 1984 ) . “ The stakeholders in a corporation are the persons and constituencies that contribute, either voluntarily or involuntarily, to its wealth-creating capacity and activities, and that are, hence, its possible donees and/or risk-bearers ” ( Post, Preston & A ; Sachs 2002, p. 19 ) .


Stakeholders can be divided into primary and secondary stakeholders. Primary stakeholders include stockholders, employees, clients, concern spouses, communities, future coevalss and the natural environment ( Carroll & A ; Buchholtz 2008 ) . Secondary stakeholders include local, province and federal authoritiess ; regulative organic structures, civic instructions and groups, particular involvement groups, media, rivals, trade and industry groups ( Carroll & A ; Buchholtz 2008 ) . Although primary stakeholders have a direct interest in the house ‘s operations and success and hence are influential. An administration ‘s duties are non limited towards its primary stakeholders. Secondary stakeholders can be “ highly influential every bit good, particularly in impacting repute and public standing, but their interest in the administration is more representational of public or particular involvement than direct ” ( Sims 2003, p. 74 ) . In add-on, secondary stakeholders besides act as active gatekeepers in guaranting administrations fulfill their duties towards their primary stakeholders ( Sims 2003 ; Phillips 2003 ) . Therefore, strong relationships will necessitate to be established with all of its cardinal stakeholders before a resilient competitory advantage can be build.

CSR tendencies in the twenty-first Century

Last, in the twenty-first century, the tendency of CSR tends to skew towards eco-economy or natural capitalist economy ( Brown 2006 ; Hawken, Lovins & A ; Lovins 2000 ) . Natural capitalist economy is a “ model designed to demo concerns how the new century ‘s net incomes would be drawn from prosecuting in society and environmentally responsible behaviours. Natural Capitalism outlines how commercialism can transform itself by heightening value through capitalising on green chances ” ( Swallow 2009, p. 42 ) . The sustainability model of eco-economy can be traced back to the 1999 publication of the Natural Capitalism by Paul Hawken, Amory and Hunter Lovins ( Reinhardt 2000 ) . The writers demonstrated that by redesigning systems of productions and ingestion can assist organisation achieve high resource productiveness capable plenty to bring forth a new economic system. Higher resource productiveness efficiency can be achieved through the use of new engineering, switching to biologically divine production theoretical accounts, traveling to a solution based concern theoretical account, and reinvesting in natural capital ( Swallow 2009 ; Orsato 2009 ) .

Why CSR/Sustainability is Important to Business

There are four chief grounds why CSR/sustainability is of import to concern. The four chief grounds include ordinances ; community dealingss ; cost and gross jussive moods ; social and moral duties.


Differences in authorities ordinances and industry behaviors varies across states are legion and complex. The magnitude of authorities engagement in economic and environmental ordinances could act upon the manner MNCs conduct their concern. Failure to follow with ordinances can be dearly-won. Regulative disobedience costs can take the signifier of punishments and mulcts ; possible closing of operations, legal costs, lost productiveness due to extra reviews and tarnish corporate reputes. For illustration, Shell was all right US $ 300,000 for a January 2006 oil spillage at Martinez refinery ( Taugher 2008 ) . It is of import to observe that Shell was besides all right US $ 19.75 million on 1st December 1989 for sloping more than 400,000 gallons of rough oil at the Martinez refinery in April 1988 ( AP 1989 ) .

Community Relations

With greater entree to modern engineering, the populace and nongovernmental administrations ( NGOs ) have become more witting of sustainability and the impacts MNCs ‘ concern activities have on the environment and the society. Additionally, corporate citizenship “ demands that houses should non bury the duty to the society such as public wellness, public safety, and the environment ” ( Husain et al. 2001, p. 926 ) . Ability to further good community dealingss with these cardinal stakeholders can further trueness and trust, giving them a legitimate licence to carry on concern on an on-going footing. Failure to run into these stakeholders concerns can be damaging to the concern in the long tally and make a negative impact to corporate reputes, trueness to the merchandise and the bottom line ( Hess, Rogovsky & A ; Dunfee 2002 ; Griffin & A ; Mahon 1997 ) .

Cost and Revenues Imperatives

Third, sustainability can bring forth positive returns for the corporation through cost decrease and higher grosss ( Auld, Bernstein & A ; Cashore 2009 ) , doing a win-win state of affairs for both society and concern. Grosss increases because of bigger market portion and higher gross revenues, derived indirectly through an “ improved trade name image or straight e.g. , by CSR-driven merchandise or market development ” ( Weber 2008, p. 249 ) . Additionally, procedure betterments can besides assist companies cut down operation costs ( Epstein & A ; Roy 2001 ) . Furthermore, if companies patterns good corporate citizenships, exposure to regulative mulcts will besides be cut down, therefore cut downing cost and farther enhanced the bottom-line ( Schaltegger & A ; Wagner 2006 ) .

Social and Moral Duties

Last, there are turning public outlooks that houses have contractual duties to be socially responsible towards society because concern as a whole is a subset of society ( Donaldson & A ; Werhane 1983 ) . It is the society that permitted houses to execute their productive maps and attained their power position through the use of both human and natural resources. As a consequence, there is an inexplicit societal contract between house and society. This societal contract has given the houses legitimate rights to work resources in the production procedure and in return houses need to assist keep and better the overall public assistance of the society ( Moir 2001 ; Carroll 1999 ) . Similarly, Wilson ( 2000, p. 13 ) has noted that “ to gain and retain societal legitimacy, the corporation must specify its basic mission in footings of the societal intent it is designed to served instead than as the maximization of net income ” .

These social and moral duties have led to a rise for corporate leaders to include sustainability in the house ‘s corporate scheme. For illustration, Anita and Gordon Roddick ‘s company, The Body Shop, recognizes the relationships between society and concern and has established a concern theoretical account based on the construct of sustainability ( Roddick 1991 ) . The organic structure shop “ sells merchandises and redresss that are made with natural ingredients and that are proven to be good for people and the environment ” without “ working adult females or acting amorally as the conventional beauty concern has ” ( Tomer 1999, p. 112 ) .

Associating Competitive Advantage with CSR

Figure 2 provides an illustration on how house ‘s internal guiding mechanisms, external context, concern context, human and fiscal resources can assist drives CSR enterprises, which can take to assorted competitory advantages and eventual touchable benefits ( Tan & A ; Chong 2009 ) . The competitory advantage can be split into external intangible benefits and internal intangible benefits. Overtime these competitve advantages will go touchable as they become mensurable and straight impact the house ‘s income statement, such as decrease in operating and human resources cost, which leades to gross growing and an addition in portion monetary values ( Filbeck & A ; Gorman 2004 ; Fussler, Cramer & A ; Van der Vegt 2004 ; Bowie 1991 ; Griffin & A ; Mahon 1997 ; Teece 1998 ; Turban & A ; Greening 1997 ; Preffer 1994 ; Fombrun & A ; Shanley 1990 ; Tan & A ; Chong 2009 ) . However, the benefits and competitory adavantages dereived from CSR will non be come-at-able if houses ‘ leaders failed to implant CSR in the administration through its vision and mission statement. Corporate leaders must besides recommend the the importance of compliancing with industry norms, regulative demands and just employment patterns that promote societal duty ( Chhabara 2009 ; Choy 2007 ; Epstein 2008 ) .

2.5.1 Input signals

Internal Guiding Mechanism

As mentioned earlier, the guiding mechanism within the house ‘s will hold a direct impact on its CSR enterprises. These steering mechanisms incude the company ‘s vision, mission, nucleus values and CSR vision ( Tan & A ; Chong 2009 ) .

Figure 2: Linkage Between CSR, Competitive Advantage and Benefits

Beginning: Model modified from Tan and Chong 2009 ; Epstein 2008

Vision and mission statements non merely show a house ‘s individuality and depict its work but besides inform both directors and employees of the house ‘s way. Although vision and mission statement are non schemes, but they convey organisational individuality and aim to critical stakeholders both inside and outside the house ( Palazzi & A ; Starcher 1997 ) . The house can utilize its mission statement to place certain nucleus constructs, such as raison d’etre ; values and beliefs ; criterion of behavior ; or corporate degree purposes ( Bart & A ; Baetz 1998 ; Campbell & A ; Yeung 1991 ; Ireland & A ; Hitt 1992 ) . All employees are supposed to internalise nucleus ideals and name upon them to steer their determinations and actions, this signifier of behavior must be advocated by leaders of the corporation ( Ireland & A ; Hitt 1992 ) . HP ‘s mission statement was foremost written by carbon monoxide laminitiss Bill Hewlett and Dave Packard in 1957, of all time since, it has become an built-in portion of HP ‘s criterion of concern behavior Stated below is HP ‘s mission statement:

Beginning: ( hp.com )

External Context

The preparation and execution of CSR enterprises will be affected by the planetary and local external context. Corporations will necessitate to follow a minimal criterion of sustainability stipulated by governmental regulative bureaus. Some illustrations of regulative ordinances include non favoritism Torahs, ordinances refering to working conditions, risky and waste disposal ordinances, labour Torahs, and pollution criterions ( Kytle & A ; Ruggie 2005 ; Burke & A ; Logsdon 1996 ) . Regulative demands vary across different parts, with a higher signifier of conformance demands felt within the European Union ( Mercado, Welford & A ; Prescott 2001 ) . Firms can run into these regulative demands through the development of a comprehensive sustainability program.

Additionally, child employment and minimal pay criterions are issues that have tainted the repute of many internationally well-known companies. For illustration, Nike ‘s 1990s child labour dirts that involved child labour in Pakistan, low rewards in Indonesia every bit good as hapless working conditions in Vietnam and China has tarnished Nike ‘s world-wide repute ( Locke 2003 ; Locke, Qin & A ; Brause 2007 ) . Because of these peculiar incidents, Nike had become the mark of anti-sweatshop and anti globalisation motions. To antagonize societal discontent, Nike has implemented a societal audit procedure to implement an international codification of behavior for its providers to follow, necessitating them to stay to basic labor and health/environmental criterions ( Locke 2003 ) .

The market place for the house ‘s merchandises and services will besides act upon the house ‘s sustainability scheme. Surveies conducted in China and Mexico has indicated that corporations that sell its merchandises and services in states with strong civilization of sustainability public presentation outperformed their challengers in footings of environmental public presentation ( Christmann & A ; Taylor 2001 ; Wisner & A ; Epstein 2005 ) . Therefore, with divergences among market place and governmental ordinances, houses need to make up one’s mind whether it wants to keep a customized or standardised sustainability scheme across parts.

Business Context

The features of merchandises and clients every bit good as the industry sector of the concern can besides act upon the house ‘s sustainability schemes. Although HP operates within the Information Technology sector, it is a extremely diversified company that besides operates within the fabrication, consumer merchandises, electronics and service sectors. HP is the biggest personal computing machines maker in the universe, an industry that has immense impact on the environment in footings of “ ingestion of natural resources, emanations, and wellness hazard of their merchandises or services compared to companies runing in other industries ” ( Epstein 2008, p. 49 ) . Therefore, companies that operate within the fabrication and electronics sector will concentrate more on environmental and wellness issues in its CSR programmes because electronic merchandises contain several 100s or 1000s of heavy metals and risky chemicals ( Schipper & A ; de Hann 2005 ) . Workers ‘ wellness is at interest because they are exposed to these unsafe chemicals at the production stage. Furthermore, a survey conducted in 1994 has indicated that workers in the electronic fabrication industry are exposed to higher toxic constituents than workers working in the chemical industry ( LaDou 1994 ) .

On the environmental forepart, environmental evaluation bureau Greenpeace has highly divergent sentiments about HP despite being ranked highest on the Silicon Valley Toxics Campaign index on environmental sustainability ( Schipper & A ; de Hann 2005 ) . This is because Greenpeace “ claimed that trial carried out in late 2003 showed that the sum of brominated fire retardents ( BFRs ) contained in HP computing machines is much higher than in other computing machines tested. TBBPA, a sort of BFR, made up 20 per centum of all fictile weight in the HP Pavilion A250 desktop theoretical account, a stuff that is used worldwide in HP computing machine ” ( Schipper & A ; de Hann 2005, p. 88 ) . However, a recent ranking conducted by Greenpeace International ( 2010 ) has indicated that HP has made little betterment in its ranking, mounting 3 topographic points from the 14 place to the 11 place due to its clear support for planetary emanations decrease and improved coverage conformity with the latest Energy Star criterion for energy efficiency of merchandises. However the recent study has besides indicated that HP should besides put high accent on cut downing the sum of risky constituents in its merchandise ( Greenpeace International 2010 ) . Table 1 shows the overall mark of HP based on Greenpeace International evaluation criterions. Table 2 shows the elaborate marking of HP based on Greenpeace International evaluation criterion.

As HP besides deals in services every bit good as consumer lasting merchandises, therefore HP will be exposed to high trade name exposure every bit good as a competitory market for endowment ( Epstein 2008 ) . Consumer lasting merchandises refers to mass market goods intended to last for 3 or more old ages ( businessdictionary.com ) . Therefore HP ‘s sustainability scheme should besides integrate constituents that could heighten effectual trade name distinctions every bit good as endowment enlisting and direction. The assorted CSR enterprises will be discussed in the subdivision on CSR enterprises.

Table 1: HP Overall Score by Greenpeace International

Table 2: HP Detailed Scoring by Greenpeace International

Table 2: Continue from page 18

Human and Financial Resources

Human and fiscal resources restraint will besides act upon the types of sustainability programmes adopted by an administration. Adequate fiscal resources are needed for the execution of assorted sustainability programmes every bit good as to pay and supply preparation for sustainability staffs. Additionally, “ administrations need educated and trained persons throughout the administration who can be sensitized to sustainability issues along with staff who can be specifically dedicated to sustainability programmes ” ( Epstein 2008, p. 49 ) . Therefore, it can be seen that the allotment of fiscal and human resources will hold a direct impact on the ability to implement sustainability programmes.

In 2009, HP had put in considerable fiscal and human resources in the formation of a planetary Centre of Social Innovation because it believes that “ As one of the largest planetary communities, HP can do cardinal differences to how people live their lives. Innovative engineering, a host of movable accomplishments in direction and coaction, and our astonishing HP voluntaries represent a potent force for alteration. At HP, invention in instruction, entrepreneurship instruction and employee volunteerism were our primary focal point countries in 2009 ” ( HP Centre of Social Innovation 2009, p. Para 1 ) . In 2009 entirely, HP has contributed a sum of US $ 52.2 million to societal causes ( HP Centre of Social Innovation 2009 ) .



Corporate leaders need to see inputs such as external context, internal guiding mechanism every bit good as the homo and fiscal resources before effectual sustainability schemes can be implemented. A research has indicated that the best manner to deploy effectual sustainability is through a top-down committedness attack ( Wisner et al. 2006 ) . The board and CEO can put the committedness at the top through the articulation of a mission statement or the development of a corporate sustainability scheme so as to promote employees to act in ways that are aligned with company scheme. If leaders fail to actuate their subsidiaries or set up proper CSR enterprises, so sustainability will hold higher leaning for failure. “ Effective and consistent leading provides an alliance between environmentally and socially antiphonal activities and corporate ends and provides internal credibleness to advance advancement toward improved societal and environmental direction within concern units and organisational maps ” ( Epstein 2008, p. 58 ) .

CSR Enterprises

In HP corporate societal duty programmes are oversee by the Executive Vice President of Office of Corporate Strategy and Technology who reports straight to the CEO. He is supported by a Corporate Selling concern unit every bit good as an Office of Social Innovations. Corporate Selling was described as the cardinal co-coordinating section, with every other departments/division in charge of the CSR patterns within its range of duty. The CSR programmes are aligned with HP ‘s Standard of Business Conduct ( SBC ) , a policy that all employees need to be familiar with and all employees are require to finish a compulsory SBC class on a annual footing. The chief activities under the Office of Corporate Innovations include CSR programmes that focus on Innovation in Education ( IE ) , Entrepreneurship Education ( EE ) , Employee Volunteerism and Giving ( EVG ) .

CSR Initiatives – Corporate Administration

Corporate administration can be defined as the mechanisms used within an administration to find its strategic way and guarantee this way is consistent with the desires of stakeholders ( Aguilera et al. 2006 ) . As mentioned earlier in this chapter, stakeholders are persons or groups that have an involvement, claim or interest in an administration as a consequence of either their ability to impact, or their possible to be affected by, the administration ( Freeman & A ; Evan 1990 ) . Corporate administration is related to CSR preparation and execution in several ways. The most seeable functions are in set uping controls and inducements. Boardss should guarantee that the house ‘s vision and mission are reflected in its CSR enterprises, monitor the manner the programmes are executed, and see the top executives ‘ reap appropriate calling and fiscal effects in instances of failure or success.

The hazard that directors will divert from organisation ‘s stated intent and its guiding mechanisms additions when directors are non the proprietors of the house ( Fama & A ; Jensen 1983 ; Walsh & A ; Seward 1990 ) . An bureau relationship exists when one party, the agent, acts on behalf of another party the principal. In corporations like HP, stockholders are viewed as principals, and cardinal executives like CEO, Mark Hurd are viewed as agents ( Milgrom & A ; Roberts 1992 ) . Generally, a few premises can be made about principals and agents that highlight the possible jobs in an bureau relationship.

Most theoretical interventions of the bureau relationship in a modern corporation assume that both stockholders and executives are self interested determination shapers. This does non intend that they have no involvement in the wellbeing of the other party ; it merely means that they will by and large do determinations that are in their ain best involvement. When the involvement of stockholders and executives are virtually indistinguishable, so the bureau job is little. In this state of affairs, executives will make what stockholders want them to make because it serves their ain involvements every bit good as those of the house ‘s stockholders ( Sanders 2001 ) .

However, in most state of affairss, the involvements of principals and agents do non of course overlap wholly ; some things that would be in stockholders ‘ best involvement may be damaging to those of executives and frailty versa. Therefore, the key for stockholders is either to happen a manner to aline the involvement of executives with their ain or to closely supervise and command what executives do so that stockholders ‘ involvements are protected. The involvement of stockholders and affected stakeholders can be protected through the formulated codifications of administration ( Beltratti 2005 ) .

The chief codification of behavior in HP is the Standard of Business Conduct ( SBC ) that guides the behavior of the whole administration in countries such as Ethical motives and Compliance ( e.g. human rights, provider relationship, environmental sustainability, privateness protection, work force diverseness and trade conformities ) ( HP Ethics and Compliance Office 2009 ) . The SBC is aimed at for chief issues: stockholder equality – upholding stockholder rights ; answerability by the board and direction ; revelation and transparence through accurate and timely fiscal and non-financial coverage ; and independency ( audits and inadvertence ; managers ) . Under the stakeholder battle class, HP seeks to be crystalline and accountable to its stakeholders, including its clients, investors, employees, contractors, providers and the community at big. The chief enterprises under the environmental sustainability will be the Design for Environment programme, Social and Environmental Responsibility Supplier Code of Conduct, Electronic Industry Code of Conduct, General Specification for the Environment, redemption programme, Policy on Export of Electronic Waste to Developing States, environment, wellness and safety ( EHS ) direction system. The chief activities under the labour policies/human rights class include the acceptance of just employment patterns like non-discrimination, cultivating endowment and edifice a pro-family work-health and work-life harmoniousness. Those under community class include employee volunteerism and educational programmes such as IE and EE.

Other than internal codification of behaviors, HP is required to register periodic studies in conformity with the Sarbanes-Oxley Act of 2002. Disobedience comes with important punishments. The indispensable constituents of Sarbanes-Oxley trade with accounting inadvertence, hearer independency, revelation, analysts ‘ struggles of involvements, and answerability for fraud, and lawyer ‘s duties ( Security and Exchange Commission 2010 ) .

CSR Initiatives – Environmental Sustainability

To advance environmental sustainability, concern should “ back up a precautional attack to environmental challenges, undertake enterprises to advance greater environmental duty every bit good as promote the development and diffusion of environmental-friendly engineering ” ( Agawal 2008, p. 73 ; Cetindamar & A ; Husoy 2007 ; Fussler, Cramer & A ; Van der Vegt 2004 ) .

HP has continually worked to salvage energy in its operations by supervising the fabrication procedure, logistics demands and use of its merchandises. Although the IT industry merely constitute 2 per centum of the universe ‘s nursery gas ( CHG ) emanations, there are abundant chance to play a portion in cut downing the other 98 per centum ( EIA 2009 ) . The development of HP aura and HP SkyRoom has helped cut down energy ingestion through the decrease in concern travel. For illustration, the HP aura solutions is a practical meeting platform embedded with end-to-end managed services that helps make a existent clip graphic meeting experience that can assist cut down energy ingestion through the riddance of concern travel ( HP Global Citizenship: Tech Gallery 2010 ) .

Second, HP has besides collaborated with preservation World Wildlife Fund ( WWF ) on clime alteration research every bit good as easing thought leading that encourages the importance of a low C economic system ( HP Global Citizenship: Environmental sustainability 2010 ) .

Third, HP besides promotes sustainable design so as to understate the sum of risky constituents discharged into environment. For illustration HP Compaq 8000f Elite Business Personal computer is the universe ‘s first desktop Personal computer in the industry that does non incorporate any BFRs and polyvinyl chloride ( PVC ) ( HP Global Citizenship: Environmental sustainability 2010 ) . However as mentioned earlier, the research conducted by Greenpeace International has indicated that HP should put a stronger accent on extinguishing both BFR and PVC in all of its merchandises, this invention will supply chance for HP to turn to Greenpeace concern. The recycle undertaking conducted by HP, encourages the re-usage of recycled plastic has been overpowering and a new end was set to utilize a cumulative one hundred million lbs of recycled plastic in HP ‘s printing merchandises such as the Deskjets and the ink cartridges by 2011 ( HP Global Citizenship: Environmental sustainability 2010 ) .

CSR Initiatives – Stakeholder Engagement ( Consumers )

With promotion in engineering and immediate entree to information via the cyberspace, consumers ‘ has become more informed on planetary citizenship issues such as labour patterns, human rights misdemeanors, privateness, environment and philanthropic gift ( Werther Jr & A ; Chandler 2005 ) . A study conducted by Carbon Trust ( 2009 ) has indicated that the bulk of consumers in the UK has a strong penchant to purchase from environmentally responsible corporations. Yet research has besides indicated that there is a deficiency of consensus among consumer penchant with respects to socially responsible trade names ( Bronn & A ; Vrioni 2001 ; Pomering & A ; Dolnicar 2009 ) .

Therefore HP feels that there is a demand to educate consumers on ways they can be more sustainable every bit good as high spot to them the advancement and part make by HP in countries such as community public assistance and environmental sustainability. Research has indicated that consumers will merely exchange to a socially responsible trade name merely when they are cognizant of the enterprises made by the corporations ( Pomering & A ; Dolnicar 2009 ) . For illustration, the debut of HP Eco Highlights label in 2008 will ease consumers ‘ consciousness and apprehension of the environmental properties of more than 215 HP merchandises ( HP Eco Solutions 2010 ) .

CSR Initiatives – Stakeholder Engagement ( Corporate Customers )

There is a turning tendency for corporate clients to include standards of planetary citizenship in their buying policies ( Macleod & A ; Lewis 2004 ) . IT providers like HP, will necessitate to show its efficiency in assisting these corporate clients cut down their C footmarks ( Cramer 2008 ) . HP must besides guarantee these corporate clients that ethical labor policy is emplaced within its supply concatenation. Based on the recent ranking by CR ( 2010 ) , HP was ranked 3rd in environmental sustainability and 12 in human rights, with a amalgamate 1st place in the CR ranking. Such acknowledgment will supply HP an border in winning concern.

Large corporate clients have a inclination to present concern to providers that can assist them better their really ain planetary citizenship position. From a HP position, it can assist corporate clients achieve better planetary citizenship standings by assisting them cut down the energy ingestion in their informations Centres, promote the recycle of old IT equipments and supply informations security services to protect the privateness of spouses, clients and employees. To run into the turning demands of these corporate clients, HP had launched a web-based portal, HP Global Innovation Network, where spouses, industry experts and leaders every bit good as HP can portion thoughts, merchandises, solutions, capablenesss and innovations that are both good to concern and the society ( HP Enterprise Services 2010 ) . These corporate societal duty enterprises will let HP to be more antiphonal to the demands of its clients.

CSR Initiatives – Stakeholder Engagement ( Governmental Agencies )

Governmental Torahs and ordinances related to societal duties have direct impact on concern operations efficiency in legion markets. There is an increasing tendency indicating that pubic sector purchasing behaviors can be affected by factors such as environmental reactivity, privateness and informations security ( Drumwright 1994 ; Bradley 1977 ) . For illustration, the European Commission strongly back up green public procurance and encourages each member provinces to put concrete stairss for run intoing them ( Mercado, Welford & A ; Prescott 2001 ) .

In Singapore, “ the Singapore Constitution does non incorporate any commissariats on the environment. Neither does Singapore hold a model jurisprudence on environmental protection and direction. There is no compulsory environmental impact appraisal ( EIA ) system laid out in statute law. The present strategy of environmental direction in Singapore is scattered throughout legion Acts and Regulations. EIAs are required on an ad hoc footing at the discretion of the ENV ” ( Tan 1998, p. 2.2 ) and corporate environmental duty is based on a voluntary footing ( Perry & A ; Singh 2001 ) . In the United States, procurance buying behavior in the populace sector is influence by the Federal Acquisition Regulation ( FAR ) . FAR specify that they have stronger penchants towards providers that promote the use of reclamation merchandises, energy and H2O efficiency ( US Environmental Protection Agency 2010 ) . To run into these demands criterions set by EPA, HP has achieved a Gold-rated criterion for the Electronic Product Environmental Assignment set by EPA, a buying policy pertains to personal computing machine merchandises.

CSR Initiatives – Stakeholder Engagement ( Investor )

There is a turning tendency bespeaking that investors are size uping non-financial facets such as CSR in their appraisals of companies ( Epstein 2008 ) . An interviews with investor dealingss professionals in 2004, has indicated that chief watercourse investors and socially responsible investors are more willing to put in companies that achieve positive fiscal, societal and environmental impact ( Hockerts & A ; Moir 2004 ) . These socially responsible investors used either the negative showing or positive showing methods in their investing determination procedure. In negative showing, these socially responsible investors will extinguish companies that have hapless corporate citizenship criterions or merchandises that are socially harmful ( Woll 2010 ) . They will besides utilize the positive showing method to put in companies that performed good in CSR.

The Dow Jones Sustainability Group Indexes ( DJSGI ) was created in 1999 to assist societal investors identify and rank companies harmonizing to five elements. Table 3 provides a sum-up of the sustainability appraisal used in DJSGI:

Table 3: Sustainability Assessment of Down Jones Sustainability Group Indexes

Beginning: ( Knoepfel 2001 )

HP is cut downing its C footmark, developing inventions to back up a low-carbon planetary economic system every bit good as set uping a socially responsible supply concatenation, so as to pull a wider group of investors that could help HP entree to a wider pool of capital. HP continues to execute good in many Social Responsibility Index ranking. HP public presentations in these indexes are outlined below:

CSR Initiatives – Stakeholder Engagement ( Suppliers )

HP took the lead in act uponing its providers to follow safe and environmentally-friendly designs, programs and programmes to cut down the negative constituents in its merchandises and services. HP achieved its nonsubjective by co-leading the development of the Electronic Industry Code of Conduct ( EICC ) . The EICC has been applied across the industry ( HP Global Citizenship: Supply Chain 2010 ) . By recommending these concerns throughout the supply concatenation, HP can understate costs every bit good as societal and environmental impact. Therefore, giving HP an chance to excite market with its socially and environmentally sensitive merchandises and services ( Hammond et al. 2007 ) . Since 2000, HP has engaged 600 over providers and conducted 500 provider audits, this action aid raise the providers ‘ public presentation every bit good as eliminate socially non-ethical providers from its supply concatenation ( HP Global Citizenship: Supply Chain 2010 ) .

Furthermore, HP made it clear that providers ‘ ethical behaviors in labour dealingss, environmental wellness and safety path records were cardinal make up one’s minding factors in the determination procedure to re-engage the providers for future undertakings. Additionally, HP has besides collaborated with non-governmental administrations ( NGOs ) and industry spouses to supply the providers the necessary preparation needed to conform with the EICC criterions ( HP Global Citizenship: Supply Chain 2010 ) .

CSR Initiatives – Labor Practices

HP is committed to making a positive workplace where employees are reasonably rewarded. In a mark of committedness to this cause HP has offer wage bundles which are public presentation driven. HP besides patterns non-discriminatory policy when it comes to age, gender, ethnicity, and nationality. For case, there is an addition in the figure of adult females employee in HP from the period of 2008 to 2009. Table 4 reflects HP ‘s worldwide work force demographics from 2005 to 2009. Additionally, adult females top executives ( frailty president degree and above ) was 17 % in 2009, of which 17.3 % are minorities, a 4.4 % addition from 2008 ( HP Global Citizenship: Employee Diversity 2010 ) .

Table 4:

Beginning: ( HP Global Citizenship: Employee Diversity 2010 ) .

HP is besides committed to the work-life harmoniousness and wellness of its employees. HP work-life flexibleness programme is really popular among employees. The sort of work-life flexibleness is elaborated in Table 5.

Table 5: HP Work-life Flexibility Programmes

CSR Initiatives – Community Programmes

HP has a strong tradition of giving back to the community. Its community attempts have evolved to widen beyond philanthropic gift to include three specific societal invention programmes. These programmes include Innovation in Education ( IE ) , Entrepreneurship Education ( EE ) and Employee Voluntarism and Giving ( EVG ) . These programmes were established carefully to complement HP ‘s concern theoretical account.

The IE programme was implemented to convey engineering into schoolrooms. Technology is apply in a originative manner to heighten the instruction and larning procedure that helps equips future leaders, workers and pioneers with the necessary accomplishment sets and cognition needed to win in a extremely globalised economic system. HP had contributed more than US $ 30 million to this programme in 2009, profiting more than 1,100 educational establishments over 40 states. The EE programme was established to supply immature people with the necessary concern and engineering accomplishments developing necessary to leap get down their calling or put up their ain concern. A sum of US $ 6.7 million was contributed to the EE programmes. The programmes under EVG were established to supply HP ‘s employees the chances to lend back to the society where they live and work in countries such as catastrophe alleviation and Pandemic grippe ( H1N1 ) response.

End products and Results

Competitive Advantages

Competitive advantage can be defined as a house ‘s ability to make value in a manner that is challengers can non ( Barney 1991 ; Peteraf 1993 ) . Performance itself, nevertheless, is non a competitory advantage. A house may accomplish comparatively high short-run public presentation degrees without deriving any significant advantage over its challengers because it might be attributed to a good twelvemonth or because of a cost film editing step. A house can bask a important competitory advantage in some concern lines but still see a worse public presentation than its challengers because of other underperforming concern. For illustration Toyota is able to surpass its rivals for a long period of clip provides an indicant that Toyota has some signifier of competitory advantage over their challengers ( Iyer, Seshadri & A ; Vasher 2009 ; Liker 2004 ; Liker & A ; Meier 2006 ; Wiggins & A ; Ruefli 2002 ) . Harmonizing to figure 2, competitory advantages can be attributed to external intangible benefits and internal intangible benefits.

External Intangible ( Inputs ) and Tangible Benefits ( Outcomes )

For illustration, environmental sustainability enterprises such the decrease of risky constituents in HP fabrication procedure and debut of advanced merchandises that helps in the decrease of C emanation have helped HP win infinite awards and acknowledgments every bit good as generate much good promotion. This in bend has enhanced HP ‘s repute which acts as a signifier of trade name support ( Werther Jr & A ; Chandler 2005 ; Strahilevitz 1998 ) . Furthermore, this positive repute has helped HP addition credibleness amongst the international investor community and good will with the authorities. These external intangible benefits finally lead to touchable benefits such as increased gross growing, and increase portion monetary value as demand for its portions increases amongst the international investor community ( Werther Jr & A ; Chandler 2005 ; Hockerts & A ; Moir 2004 ; Woll 2010 ; Filbeck & A ; Gorman 2004 ; Gande, Fortanier & A ; Van Tulder 2009 ) .

Internal Intangible ( Inputs ) and Tangible Benefits ( Outcomes )

HP ‘s Work-life and Flexibility Programmes have led to a more contributing work environment. This in bend led to touchable benefit such as decreased operating costs as employees ‘ absenteeism are minimized ( Leonard & A ; McAdam 2003 ) . Furthermore, HP ‘s model labor and community patterns such as just employment patterns and employee volunteerism have led to internal intangible benefits such as attractive force of higher quality occupation appliers and increased employee committedness and morale, and therefore reduced turnover rates ( Shelton 1999 ; Leonard & A ; McAdam 2003 ; Morgan & A ; Hunt 1994 ) . These in bend have led to the touchable benefit of decreased human resources costs that comes with enlisting cost, developing and development cost.


The present chapter looked at the linkage between CSR and house ‘s competitory advantage. It besides provide an illustration on how a house ‘s internal guiding mechanisms, external context, concern context, human and fiscal resources can assist drives CSR enterprises, which can take to assorted competitory advantages and eventual touchable benefits. The research discussed in the present chapter was used to develop the theoretical account that is the major focal point of the present survey.


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