Focusing on Being more socially Responsible Companies can Get Competitive Advantage and is Very Beneficial to the Business.
Businesses, big or small, global or local, need a way to stand out. One way of doing it is adopting CSR or Corporate Social Responsibility. CSR is an applied business practice which concerns more on the well being of others (society and the environment) while at the same time bringing economic benefits (profit) for all the relevant stakeholders. Today we live in a technological era, where things are changing fast, information are spreading with ease, and the wider community expectation has changed. As claimed by James Epstein-Reeves, a Chicago-based CSR expert, CSR is in a great demand between consumers and employees alike. This is proven from the survey done on the public opinions on the companies’ sustainability. The result is, more than 88% of the consumers think that companies should attempt to reach their business goals while paying close attention to issues related to society and environment. From the percentage, we can see that there’s a raise in awareness in the community, and it’s a call for businesses to start adapting and focusing on Corporate Social Responsibility to attain competitive advantages. This comprises other profitable facets such as contribution to company’s image on the public perspective, employee’s productivity and cutting back operational cost, and sustainability affect on business growth.
First and foremost, businesses who adopted CSR on their work receive a good feedback from the public. People based their decision to purchase something on rational belief, but emotions take an important part of their choice of who to buy it from. People prefer to purchase and associate themselves with sustainable businesses. Provided that people’s perceptions of value are not just limited to the price and the quality of the offer, but it extend to whether the business is “doing good” or not. Nielsen Company conducted a research in October 2015 on this matter. The survey stated that the number of sales percentage of the companies who are sustainable increased by more than 4% and those who aren’t applying the practice loses their sales growth by 1%. In addition to that, looking over more than 53,000 U.S. customers, the Natural Marketing Institute found that 58% of the buyers consider an organization’s effect on the environment in selecting the brands they intend to purchase from and there’s a high probability they’ll choose sustainable companies. This implied that sustainable companies gained more favor than those who aren’t, substantially good public image.
Secondly, development of the companies’ sustainable approach aid the business in streamlining effort and conserving resources that led to minimization of operational cost and waste reduction. GE lighting redesigned their headquarters in the Merrimak building, Madrid by replacing all of their fluorescent lamp with their GE Lighting’s Lumination™ LED luminaire. They saved more than 57% of energy usage while also improving the lighting quality inside the building. 405 GE lighting’s 600mm x 600mm Lumination™ LED luminaires replaced the 735 TL 3 x 18W luminaires in their main office. Operational cost is calculated based on lux and daily operational hours in 5 years time after the application, the result shows that the company could save up to €115,000 in electricity and €20,000 on maintenance, while receiving their venture capital after 3 years of application. It can be costly to renovate offices but the long-term profits justify this form of investment. Another advantage from green office is the improvement of employee’s productivity. Employees took pride in the place they’re working with. Knowing that the company they work for implement CSR and is active in charity and philanthropy works, enhance their moral value and engagement. A research in May 2014 on American Marketing Association’s Journal of Marketing done by Daniel Korschun of Drexel University, C.B. Bhattacharya of the European School of Management and Technology, and Scott D. Swain of Clemson University, reviewing more than 200 front offices employees across 500 global financial companies shared their view on working with sustainable businesses. The survey stated that the employees feel the real impact firsthand because it makes them easier to communicate to both company and the customers. The authors claimed that the customer and the employee most of the time shared similar interest on CSR. Consequently, it lightens the tension between them, which will then improve the quality of the communication and delivery of information. This can be motivating for the employee since they think that their job gets easier, therefore improving their work productivity.
As CSR improves the organizations’ reputation and employees productivity, it is also complementary to business growth. For instance, we can refer this to Nike’s undeniable success on being one of the top companies who adopted CSR. Nike’s Hannah Jones, vice-president of sustainable business and innovation believes that the more the company can introduce their idea of sustainability into the market, the more they can show Nike’s good vision and contribution to the current state of affairs. Nike sparks the idea of The Low Carbon Growth. The Low Carbon Growth concept itself is derived from the brand’s awareness on the environmental issues around them. Nike uses carbon as their benchmark for sustainability, but they believe it goes way beyond that. Nike addresses their impacts on the surrounding environment and the communities, while also delivering goods and services to their customers. This balanced amount of shared attention on both aspects is certainly what gives Nike economic moat as they keep on reducing Carbon Dioxide emission while gaining an increase revenues.
CSR contributes on giving the businesses their competitive advantage by firstly providing a good public reputation. There is a rise in awareness among the community about business processes influence on the surrounding environment and society. Customers think highly of the business that dives into the CSR practice and it leads to receiving a positive feedback as the business is more sustainable and responsible than competitors. Once the customers trust the product and admire the company’s vision on delivering and serving the customers as they pay close attention to their surroundings, the customers will soon make a purchase again and most likely to recommend the product to their friends and family. In which will leads to the increase in revenues and business growth, as more people favor sustainable brands and it is a campaign worth investing in. Corresponding to CSR improving reputations and business growth, CSR also reduce operational cost by applying eco-efficiencies in their business’ practices while boosting employees’ productivity simultaneously. The improvement of the workplace quality gives a motivational effect on the employee, furthermore enhancing employee engagement. All things considered, applications of CSR as the company’s operational vision is fundamental in granting it with competitive advantage and beneficial in the long run.