Corporate Social Responsibility: A Case Study

Is Corporate Social Responsibility (CSR) beneficial to a company’s performance? What stance should companies therefore take towards CSR initiatives?

The past decades have witnessed the surge in importance of corporate pro-social practices, which has aroused widespread controversy about the attitude companies are supposed to take towards the executions of Corporate Social Responsibility (CSR). While CSR campaigns have been launched by a large number of corporations, their effectiveness in benefiting company performance is still under challenge. CSR is defined as the concept whereby social and environmental concerns are voluntarily synthesized by companies in their business operations and in their relationship with stakeholders (Commission of

Two reasons contribute to this advantage. For one thing, most consumers show preferences for socially reputed brands when evaluating similar products; for another, a firm could sharpen its competitive edge by focusing on non-economic factors. CSR could therefore be conducive for firms to establish a better brand image and promote consumers’ positive attitudes, making it an essential source of competitive advantages (Porter & Kramer, 2006, as cited in He & Lai, 2014). These advantages tend to be more important for companies in the highly-saturated cosmetic industry, where features among competing brands may not be significantly different and non-functional associations are likely to become a vital consideration when consumers make decisions (He & Lai, 2014). A series of empirical studies on cosmetic corporation provide evidence for this perspective. According to a research conducted by Organization for Economic Co-operation and Development (2007), CSR programmes have equipped The Body Shop, a British cosmetic company, with high social reputation, allowing it to gain the competitive edge in the cosmetic industry. In the past decade, The Body Shop has been actively engaged in a variety of CSR campaigns that protest animal testing, activate self-esteem, promote community fair trade, defend human rights and protect the environment (The Body Shop,

It is believed that socially responsible initiatives, involving in particular non-discriminatory practices, could facilitate the recruitment of people from older workers, women, ethnic minorities and other people at disadvantage (COM, 2001). Moreover, CSR activities such as environmentally responsible commitments, extensive employee benefit programmes and equal employment opportunity (EEO) policies are considered capable to improve the morale and loyalty of workers (Lee & Logsdon, 1996; Smith, 2005, as cited in Carroll & Shabana, 2010). This effectively raises labour productivity and reduces employee turnover, which further enhances long-term shareholder value of the company (Smith, 2005, as cited in Carroll & Shabana, 2010). The significance of the interaction with employees cannot be overemphasized in the cosmetic industry as well. The Body Shop, for example, has shaped its organizational identity through the campaign against animal testing, which could enhance the employees’ identification with the company (Scott & Lane, 2000, as cited in H. Kim, M. Lee, H. Lee, & N. Kim, 2010). CSR practices are applied by Natura Cosméticos, one of Latin America’s largest cosmetics firms, for a similar purpose as well. Natura has been tracking indicators on health, knowledge and standard of living condition of its sales consultants (Natura, 2016), and has