CSR can be an integral element of a firm’s business and corporate-level differentiation strategies. Therefore, it should be considered as a form of strategic investment. Even when it is not directly tied to a product feature or production process, CSR can be viewed as a form of reputation building or maintenance. Baron (2001) pointed out that CSR is what a firm does when its business and marketing strategy is concerned with the public good. And Husted and Salazar (2006: 83) commented that: ‘There are additional benefits that the firm extracts from a given level of social output… precisely because the firm has designed a strategy so as to appropriate such benefits’.
Strategic CSR is about deciding initially whether or not the firm should be involved in social issues and then creating a corporate social agenda – deciding what social issues to focus on and to what extent. Porter and Kramer (2006: 85) believe that: ‘It is through strategic CSR that the company will make the greatest social impact and reap the greatest business benefits’. They also stress that: ‘Strategy is always about making choices, and success in corporate social responsibility is no different. It is about choosing which social issues to focus on… organizations that make the right choices and build focused, proactive and integrated social initiatives in concert with their core strategies will increasingly distance themselves from the pack’ (ibid: 91). McWilliams and Siegel (2000) suggest that CSR activities should be included in strategy formulation and that the level of resources devoted to CSR should be determined through cost/benefit analysis.
CSR strategy needs to be integrated with the business strategy but it is also closely associated with HR strategy. This is because it is concerned with ethical behaviour both outside and within the firm – with society generally and with the internal community. In the latter case this means creating a working environment where personal and employment rights are upheld and HR policies and practices provide for the fair and ethical treatment of employees.