Ahen 2013

International Business, Sustainability and Corporate
Social Responsibility
Institutional and Market Forces: The Dominant Logic of Strategic Corporate
Responsibility and Innovative Value Co-Creation
Frederick Ahen, Peter Zettinig
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INSTITUTIONAL AND MARKET
FORCES: THE DOMINANT
LOGIC OF STRATEGIC
CORPORATE RESPONSIBILITY
AND INNOVATIVE VALUE

CO-CREATION
Frederick Ahen and Peter Zettinig
ABSTRACT
Purpose – This chapter seeks to theoretically demonstrate that authentic
corporate strategy is entrenched in an ethical responsibility, and ethical
responsibility requires a strategic framework to qualify as a sustainable
value co-creation process that determines the long-term success of the
firm.
Design/methodology/approach – Through economic philosophical ana-
lysis and content analysis, we critically reviewed literature which argues
for the integration of corporate responsibility (CR) and corporate
strategy both in theory and practice by putting the concept into a proper
context of institutional and time-based dynamics.

Advances in Sustainability and Environmental Justice, Volume 11, 97–131
Copyright r 2013 by Emerald Group Publishing Limited
All rights of reproduction in any form reserved
ISSN: 2051-5030/doi:10.1108/S2051-5030(2013)0000011009
97
98 FREDERICK AHEN AND PETER ZETTINIG
Findings – The chapter delineates the salient dimensions of the dominant

logic (D-L) of strategic corporate responsibility (SCR). The traditional
notion of CSR is explained, compared and contrasted with the
transitioning process of strategic CSR and the D-L of SCR which is at
the civic level. We also identified four global forces that serve as enablers
of strategic CR logic.
Practical implications – The D-L of SCR explains how a firm defines and
redefines itself and not what a firm does. We underscore what firms are in
the ‘process of becoming’ through a co-evolutionary process with markets
and institutions. Firms which want to go beyond mere survival in the 21st
century must see the D-L of SCR not as a choice but as an imperative
constrained by these global forces.
Originality/value of chapter – The novelty of this chapter is that it
challenges traditional CSR and provides a shift in thinking about the
concept of CR where sustainability and innovative strategies become the
source of institutional and market legitimacy and hence a competitive
advantage.
Keywords: Corporate strategy; corporate responsibility; global

sustainability; institutional legitimacy; sustained competitive
advantage
INTRODUCTION
The purpose of the present chapter is to theoretically demonstrate that

authentic corporate strategy (CS) is by nature ethically responsible, and
ethical responsibility requires a strategic framework to qualify as a
sustainable value creation process. Thus, true CS is not values-free
(Donaldson, 2012a, 2012b; Frederick, 1995). Nevertheless, such an analysis
is valid only when the institutional context and historical point or temporal
dimensions are taken into consideration (Rivoli & Waddock, 2011).
Employing economic philosophical analysis, we achieve this through the
deconstruction (by questioning traditional assumptions about CR truths)
and critique of 22 theoretically sampled articles. These articles propose
the integration of the concepts of strategy and corporate responsibility
(CR) towards sustainability. We analyse these postulations in the light of
the premise that market and non-market forces shape, enable and constrain
The Dominant Logic of Strategic Corporate Responsibility 99
CR and CS (Laszlo & Zhexembayeva, 2011; Orlitzky, Siegel, & Waldman,

2011; Porter & Kramer, 2006). The emphasis is not on the social per se but on
the sustained social benefits of responsible strategy making. In the past three
decades, scholars of ethical responsibility and CS in the instrumental sense
have traditionally walked parallel paths as if to suggest that the two
disciplines had nothing in common to share or at least that they are only
tangentially related. At best, a fragment of ethical content was added to some
curricula but that was still not mostly seen as a major issue until the normal
order of things was punctuated by an economic crisis. Such an impasse has
started fading dramatically and is giving way to the generally acceptable

notion of sustainability. This was the case in the 1970s with Friedman (1970)
and Drucker (1974) until Freeman (1984) reawakened the consciousness
of both academics and practitioners albeit having some operational
ambiguities as to who stakeholders were. Prior to this period, pioneers such
as Bowen (1953), Frederick (1960), Davis (1960) and Rhenman (1964) had
an uphill battle defending their position about what the responsibility of the
firm was. In that epoch, however, what they meant (at least, in part) by
corporate social responsibility (CSR) was what the firm ought to give back to
society and not how the firm could proactively and cooperatively create value
with and for the society in which it is embedded. They did not manage to
explain how giving back would help to create a competitive advantage and
determine the success of the firm in the long term through innovations
that earn premium. This is what we mean by the temporal dimension of CR
when the concept takes a different meaning in each historical context under
different varieties of capitalism. It can therefore not be naı̈vely assumed
away that the responsibility of the firm in society takes the same meaning in
each institutional and historical context even though the profit-making
motive is easily pointed out. It follows that what is deemed ethically
responsible has mostly been defined by the era, prevailing global forces and
the institutional matrix within which firms’ operations take place. It is now
the era of global sustainability.
The question then is do we embark on integration or continual frag-
mentation of concepts when analysing CS and CR? From the above
description, there is ample theoretical and empirical evidence to substantiate
the fact that the extant literature on the subject of the firm’s responsibility is
at best fragmented, but the magnitude of emerging global forces warrants
their integration in answering a simple question: what is the responsibility
of the firm? This chapter therefore contributes to the debate on CR (in a
broader sense; not CSR per se) towards sustainability with a focus on
institutional theory as the main theoretical lens. It is emphasized here that
there is a finely nuanced difference between CSR and strategic corporate

responsibility (SCR). The former is a subset of the latter. We begin our
analysis with a call for pluralism and pragmatism, a warning to avoid
ideological polarization and dogmatism, and a recommendation to pursue
interdisciplinary scholarship on the intertwined issues of CR and strategy in
the era of systemic global crisis. In this way, we shall be adding substance
and relevance (without sacrificing rigour) to our scientific endeavours. Some
scholars’ ideological stances and unwillingness to change their weary
premises to suit the contemporary market and institutional forces shaping
the world’s economies and societies need to be questioned. We refer to the

typical ‘holier than thou’ attribute that is neither a necessary nor a useful
condition for the advancement of scientific knowledge. There are excep-
tions, however, for example, Devinney (2009), Donaldson (2012a, 2012b),
Frederick (1998), Freeman, (1984), Galbreath (2008), Lee (2008), Orlitzky
et al. (2011), Peng and Pleggenkuhle-Miles (2009), Porter (1985), Prahalad
and Hamel (1990) and Sen (2010). In fact, at present much of the discourse
in strategic management is dedicated to understanding how corporate
actions can improve economic performance while earning institutional
legitimacy (Suchman, 1995). At the same time non-economic motives and
socially co-operative behaviour towards sustainability are increasingly
becoming part of the strategic management research agenda.
We argue that CR and CS are either constrained or enabled by the same
dominant factors, that is, formal and informal institutions and the threat of
the future of the planet. Implied here is that the study of these concepts,
whether in ethical philosophy, law, economics, sociology or management
science, is the study of social institutions (DiMaggio & Powell, 1983; Meyer &
Rowan, 1977; Williamson, 2000). On a higher level of abstraction, this
supposition about the central role of institutions can be meant to be informed
by various disciplines (theoretical lenses) which in essence are inputs towards
the same outcome. The locus of ethical responsibility and strategy is found in
the managers’ cognition and emotions, economic aspirations and actions
which are institutionalized by routinization into the organizational culture.
The focus is on the socio-economic impact of the firm’s interface with society
and its environment. To be sure, there is an intricate link between CR and CS
that needs to be unpacked to serve as an interdisciplinary dialogue which not
only advances theory but also offers novel empirical and practical insights.
Such new perspectives should not force practitioners and scholars into an
‘either-or’ position (Donaldson, 2012a). This much is long deferred but
performing the task of integrating CS and CR is emphatically not a problem
or a cost. Rather, it is merely another way of dealing with the unnecessary

ideological bias that separates the two concepts. We are not suggesting that
the operational traditions of these research streams and their practical
application should follow the same set of standards and procedures. To
ethical philosophers belongs the normative emphasis and to the strategic
management science the portion of strategy, instrumentation and risk
management towards value creation. While the focal point of the normative is
on strategy implementation that is ethically appropriate or congruent with
the norms of the context (Donaldson & Preston, 1995), the strategy on the
other hand aims at the firm’s survival in the long term by reaching the basic
objectives (meeting consumer needs, beating competitors in order to make
profits) via successful operations with the core competence which creates a
sustainable competitive advantage (Porter, 1985).
In the post-millennium era, global institutions and questions of sustain-
ability serve as the point of convergence in what we now refer to as the
dominant logic (D-L) of SCR. Here, socio-political, economic and environ-
mental issues are integrated into every facet of the strategic processes
rather than being compartmentalized. For researchers, the methodological
approaches in cultures of strategy and ethics may appear different yet
the moral myth (Entine, 2003) of their difference can be made obvious.
Half-baked theories, myopic ideas and uni-dimensional suppositions
undermine managerial integrity and good practices leading to a crisis
irrespective of the strength of the prevailing institutions. Thus, when the
process of strategizing is divorced from ethical principles, it probably means
that such strategies have been fed by a non-deliberative choice, one of a
misleading theoretical kind or what Ferraro, Pfeffer, and Sutton (2005) call
self-fulfilling prophecies. Ethical concepts are mostly espoused as philan-
thropic and emotional (do good rhetoric) but beyond that scope, they can
become operational only via their full integration into strategy. Strategy is
an agenda, interrelated set of complex plans for the reconfiguration and
allocation of resources towards a purposeful creation of a competitive
advantage (Drucker, 1974; Hayek, 1945; Porter, 1985) which serves
stakeholders (Freeman, 1984) and creates value for shareholders (Friedman,
1970) while reaching its long-term goals of profitability (Porter, 1990).
Nevertheless, this is achieved by offering optimal value propositions to
consumers who are the ultimate value creators as well as to the society that
sustains the firm. SCR is operationalized here as the process whereby
the firm is seen as part of society and its institutions; hence, all the firm’s
day-to-day actions are fully integrated into its strategy and not treated
as ad-hoc programs. On the basis of these analyses, we offer policy

recommendations and highlight the practically useful nature of the D-L of
SCR for managerial application.
METHODOLOGICAL APPROACH: ECONOMIC

PHILOSOPHICAL ANALYSIS
This economic philosophical analysis employs the content analysis

(a detailed and systematic examination of the contents of a particular
body of material; Leedy & Ormrod, 2005) for the purpose of identifying the
definition of concepts of CR and CS where suggestions are made for their
integration both in theory and practice. Following Hassard and Parker’s
(1993) post-modernism and post-structuralism view, Carter and Jackson
(2007) present a distinct philosophical style that problematizes traditional
assumptions undergirding what constitutes the responsibility of the firm.
The post-millennial forces actually follow a pattern of analysis in terms of
epoch, a historical era or the temporal dimension of the substantive domain
of strategy and what responsibility means at different points in time. Thus,
relationships between concepts (such as CR), organizations and identities
are not fixed. They are ‘differed and becoming’. This way of philosophizing
also takes an epistemological stance in terms of novel critical view of
knowledge on CSR and (social) scientific truth: objectivity and subjectivity
claims Kuhn (1996), without rendering them unscientific but out-of-date
for contemporary use. By way of deconstruction, which is the decomposi-
tion of established paradigms or the existing knowledge claims about the
responsibility of the firm towards society, we resuscitate the silenced
opposition of the CSR concept in ways that weaken its implicit hierarchy
(Kilduff, 1993). The silent opposition is the corporate irresponsibility that
pervades practices because theories and their assumptions no longer fit the
realities of the post-millennial era. It is against this backdrop that this
approach aims at making a nuanced interpretation of what authors mean
by traditional CSR or strategic CSR (SCSR) in the context of post-millen-
nium global forces. Our preference for in-depth understanding of context-
specific knowledge and local circumstances rather than a quest for generali-
zability are motivated by the need to broaden the base of this research
domain.
Subsequently, our analyses are delineated as follows. We first conducted a
search through various journals with the help of search engines such as
Google Scholar and Scopus on the topic of CR. In Google Scholar, we used
specific keywords such as ‘corporate strategy’, ‘corporate responsibility’ and
‘strategic CSR’. Articles which tend to suggest the unification of CR and
strategy were selected. Initially we obtained 208 articles which then led us to
other articles based on the references. By applying purposive sampling via
the criteria that are detailed below we (selected) only 22 of these, including
book chapters from Louche, Idowu, and Filho (2010). The selected articles
were then reviewed on the basis of their contents and conclusions in terms of
findings, contributions and the main argument or motivation for conjoining
the two concepts. Second, we analysed and made sense of the lines of
arguments which serve as the embodiment of the authors’ main assumptions
in the light of market and institutional forces. The wider socio-political,
legal, environmental and health issues and the potential effects of all the
above on sustainability and competitive advantage for the firm were also
considered. The objective here was to put the discussion into focus as to how
the micro level (governance structures and managerial decision making) is
integrated into the macro level of analysis.
There must certainly be new ways of looking at old issues such as CR
since the subject cannot be sealed within the borders of over-simplification.
Such an approach pleases the conventional wisdom which attempts to
ignore the stark differences within various institutional contexts. This is
an equally rigorous attempt to enrich existing debate and to redirect efforts
and resources towards institutionally relevant questions. Hopefully this
will create ample space for research that reflects the voices and view-
points linking CR and socially responsible managerial practice. This is to
emphasize the contemporary trends that are elevating the importance of
organizational ethics that can no longer be ignored (Kilduff & Mehra,
1997).
Criteria for Selecting (Theoretical Sampling of) the 22 Articles
1) Novelty in the discourse of CR – mainly articles written in the 21st

century building on 20th century arguments and vacuums about the role
of the firm.
2) How authors’ arguments linked to market and institutional forces and
the wider socio-political, legal, environmental or health issues.
3) The potential effects of all the above on sustainability and a competitive
advantage for the firm and value for society. Hence, the managerial and
social usefulness were also fundamental to this choice.
4) The strengths of the authors’ philosophical arguments or motivations for

conjoining the two concepts were appraised in equal measure. Articles
which did not emphasize the following essential premises were not deemed
philosophically strong enough to be considered for inclusion in our
analysis: the ethical philosophical nature of the arguments, the convincing
empirical illustrations and conceptualizations, and the extent to which
they encompass the three fundamental questions of (i) innovative
value creation, (ii) the importance of varieties of institutional contexts
emphasizing regulatory and market forces, and (iii) strategy implementa-
tion towards creating a sustained competitive advantage. Without these

premises, the conclusions would hardly fit with what we refer to as the
D-L of SCR. The D-L of SCR is not about social responsibility in the
traditional sense. Rather, it is about the sustained social benefits of
responsible strategy making that affects the socio-economic, political,
ethical and environmental outcomes of the firm and its stakeholders.
The table of conceptualizations (see Table 1) serves as the initial frame of
theoretical reference upon which the analyses are performed using Parson’s
(1960, cited in Levinthal, 1994) characterization of the three fundamental
levels of an organizational structure. Parson refers to the technical level as
the core competencies and capabilities linked to the firm’s operations. The
managerial level refers to the functions of resource allocation and
coordination, and the institutional level embodies the broader notions of
organizational objectives and values (ethical posture) and the legitimacy of
the firm in the social context of its operations. After this, we present a
conceptual framework of four post-millennium market and non-market
forces in the light of which SCR towards sustainability finds basis. The main
questions for furthering analysis are articulated as follows:
(i) Which market and non-market forces (institutions) with systemic effects
constrain, enable or shape the ethically responsible strategy making in
chemical and pharmaceutical firms to determine success?
(ii) How do these forces influence managers in their quest to offer adequate
and proactive responses in the science and innovation context for coopera-
tive investment towards mutual value creation?
RESULTS
The results of the analysis of the selected articles are summarized in Table 1.
The Dominant Logic of Strategic Corporate Responsibility
Table 1. Conceptualizations of Strategic Corporate ‘Social’ Responsibility (SCSR) and Sustainability – A
Step Towards the D-L of SCR.
Article Conceptualization of Strategic Corporate Social Characterization of CR Integration into Strategy
Responsibility
Davis, 1973, p. 312 ‘The firm’s considerations of, and response to issues Response to stakeholders by matching internal
beyond the narrow economic, technical, and legal resources with environmental demands.
requirements of the firm to accomplish social benefits
along with traditional economic gains’
Stead & Stead, 2000 Eco-enterprise strategy as a sound theoretical framework ‘Enterprise strategy proposed as a meaningful
whereby the core value system serves as the basis for framework for integrating ecological concerns
sound ethically developed ecologically sensitive arch- into the strategic processes of organizations’
strategy which permits the firm to meet its social and (p. 313).
environmental responsibilities.
Lantos, 2001 Strategic CSR is good for business and society; however, Places ethical responsibility at the heart of
altruism is not a legitimate role of firms but ethical strategy in marketing.
obligations are.
Zadek, 2004 The strategic stage refers to the point where the company From denial, compliance, managerial, and
learns how realigning its strategy to address responsible strategic to the civic stages; embodies the five
business practices can give it a leg up on the competition steps to SCR.
and contribute to the organization’s long-term success.
Werther & Chandler, Conceptualizes CSR as a constantly evolving field with Recognizes the cross-cultural trends and
2006 direct impact on organizational strategies and success. convergence of thoughts about impact of CSR
on the strategic viability of modern
organizations.
Boiral, 2006 Emphasizes the anticipation of the possible impacts of CR and climate change policies as proactive
global warming on organizations and the need to strategies to put the Kyoto Protocol into their
105
strategies.
106
Table 1. (Continued )
Responsibility
explore policies and measures that managers can

implement.
Porter & Kramer, 2006 Identification of a set of social issues and investing in Corporate social integration for creating shared
disruptive innovations as solutions in order to create a value
competitive advantage. SCSR – beyond best practices,
choosing a unique position, differentiation, lowering
costs and offering superior value propositions to
customers (stakeholders), p. 11.
FREDERICK AHEN AND PETER ZETTINIG

Bonini, Mendonca, & Short-term financial pressures and non-familiarity with Socio-economic and political issues must be
Oppenheim, 2006 CR issues lead to negligence of environmental issues, integrated into firms’ governance systems due
data protection and other sensitive matters as potential to their strategic nature.
threats to value creation.
Husted & Allen, 2007 When a firm positions itself by focusing on a portfolio of Treating CSR as a strategic value creator.
resources and assets (centrality, p. 596); anticipate
competitors in acquiring strategic factors (proactively);
build reputation advantage through customer
knowledge (visibility); ensure that the added value
created goes to the firm (appropriability); engage in
social practices beyond that required by law
(voluntarism).
Katsoulakos & CSR and CR have been isolated from mainstream Integrating CSR and sustainability into
Katsoulacos, 2007 strategy. CSR can be integrated into strategy and linked mainstream strategy.
to deliver advantages that create knowledge and
stakeholder relations as part of the company’s core
competencies and dynamic capabilities.
Arnold, 2010 Group of activities that comprises CSR activities that go Cost reduction and increase in value to customers
beyond best practice or simply responding to anticipated extends protection of proprietary nature from
future social and environmental concerns and issues. It competitive pressures. Sometimes aligned with
is a process of positioning and differentiation. responsive CSR (p. 106).
Davis, 2010 CR defined as the result of the way in which a corporation Compared with the inherent limits of corporate
locates its strategic goals for responsible business as initiatives based on the alignment of business
either managing risk, creating value and how it with social demands, CSR based on the
conceives of the organizational resources that it commits integration of social awareness into strategic
in order to achieve this goal as either a cost or an business process promises huge potential
investment. (p. 375).
Del Bosco, 2010 CSR and strategy: the possibility and importance for Focuses on how integration of CSR and strategy
companies to engage in strategic or ‘profit maximizing’ can be executed.
type of CSR.
Galbreath & Benjamin, Action designed to improve social conditions. (1) Social issues, (2) strategic issues, (3) industry
2010 context, (4) issues of prioritization, and
(5) strategic actions
Guzmán & Becker-Olsen, The objective of strategic CSR is to identify ways in which Four key components: clear motivation,
2010 companies can align business goals with consumer appropriate initiative, right timing, and right
expectations to increase brand loyalty while communication.
simultaneously meeting larger societal demands.
Maas & Boons, 2010 Strategic activity that adds value to the firm, ecosystem CSR (economic and social values) integrated into
and society under two conditions. the firm’s strategy for creating or improving
existing products. It must be a measurable
process that allows monitoring new or
additional values (p. 155).
Williamson et al., 2010 Competitive advantage gained only through regulatory CSR viewed from compliance, on compliance,
compliance or exceeding regulatory requirements. and beyond compliance; institutional change
and firm resource alignment.
107
108
Responsibility
Milton De Sousa Filho, CSR strategies are linked to the creation of competitive CSR strategies affect and are affected by
Wanderley, Gómez, & advantage, attraction and retention of highly skilled opportunities, resources, skills, corporation’s
Farache, 2010 employees, image enhancement and reputation building. merits, industry structure and stakeholders.
McWilliams & Siegel, SCSR as a mechanism for creating and capturing social SCSR is defined as any responsible activity that
2011. value sustainably. allows a firm to achieve a sustainable
competitive advantage, regardless of motive.
Laszlo & Zhexembayeva, Embedded sustainability: it is a response to a radically A proactive integrated concept of business

2011 different market reality, one that unifies the profit, practices as social solutions to create a
ecological and social spheres into a single integrated competitive advantage. It represents the
value creation space (p. 2). assimilation of environmental, health and
social value into core business activities or
instrumental strategy without any trade-off in
price or quality for all stakeholders.
Orlitzky, Siegel, & Argue that SCSR enhances both competitiveness and The authors see SCSR arguments from the
Waldman, 2011 image. Thus, such an approach to business boosts economic perspective as most promising for
economic and financial performances. the advancement of this field of research.
Donaldson, 2012a A conceptual contribution argues that it is Calls for the integration of normative concepts
epistemologically faulty when the normative into governance models.
considerations are removed from the instrumental or the
positive process of theorizing in corporate governance.
DISCUSSION
From Traditional CSR and SCSR to SCR at the Civic Level
In the discussions that follow, we offer a synthesis and critique of the key
differences in the CR-related concepts. First, it is clear from the above
conceptualizations of pro-strategic CSR scholars that there are no real
disagreements on the normative level. However, there are different lenses of
looking at the same substantive domain given the authors’ epistemological
positions (Orlitzky et al., 2011). Hence, the semantic distortions and

sometimes meaningless search for a single framework to answer one big
question: ‘what is the responsibility of the firm?’ makes no sense when one
attempts to find a universal definition without considering the varieties of
institutions and the era within which firms operate. The perceived centrality
of CSR in CS lacks grounds in most of the works cited above in Table 1. If it
were not so, there would not be so much corporate irresponsibility and
green washing in the economic system in the name of ‘social’ while
neglecting the environmental, or in the name of environmental sustainability
while leaving the political power of MNCs – a clear deviation from the
expected optimal, proactive and innovative value creation which embeds
corporate activities in the civic needs (Zadek, 2004). While traditional CSR
is about what firms ought to give, SCSR is an intermediate level or
transitioning stage of conforming to changes in the institutional environ-
ment. This intermediate level is where the traditional notions of
philanthropy as suggested by Carroll (1979) among three other responsi-
bilities and public relations (PR) are mixed with some lines of innovation
without being fully integrated and institutionalized in the implementation
process as long as they offer the firm some form of visibility.
In essence, traditional CSR, SCSR and the D-L of SCR are closely related
concepts but vastly dissimilar in practice. However, there is a curious
measure of theoretical alignment between the notions when viewed
superficially. This is the source of ambiguity that creates a strange
acceptance that traditional CSR and medium-term SCSR are the same as
the D-L of SCR. Historically, however, CSR has assumed a variety of
meanings at different times and in different contexts. The concept has
succeeded as a communication tool, but its substantive integration into
strategy implementation is less convincing. To this end, the case that can be
made is the convergence of market and non-market forces that are pushing
the general responsibility (financial, socio-political, environmental, health)
of firms into a fully integrated strategy implementation process. SCR then
connotes a proactive attempt to induce change in the practical approach to

responsible day-to-day management at the core of the firm’s existence – to
succeed based on competitive advantage which derives from sustainable
value propositions expressed in both incremental and destructive innova-
tions. These in turn must create visibility that leads to institutional
legitimacy. Examples of such practices include the collaboration of
pharmaceutical firms with non-business actors to co-create value for
consumers in developing economies.
Proponents of traditional CSR have zealously defended its moral
philosophical standing. While the need for CR in the implementation of

firms’ strategies is unquestionable, some authors have done little to explain
precisely how, why and what really transpires in the operational milieus of
firms where institutions are weak, where transaction costs are higher and
where stakeholders have neither voice nor the right to demand account-
ability (Banerjee, 2007). The theoretical fairy tale of traditional CSR
demonstrates empirically robust attributes of weakness, given its clear
deviation from observed strategies especially when the same firm’s CSR
practices are taken into consideration both at home and abroad where
institutions are fundamentally vulnerable. For some multinationals in the
extractive industries and even in the pharmaceutical industries, CSR is
treated as an ad-hoc program used to compensate any unethical activity;
from the dumping of waste products to the use of child labour, drug testing
on the poor, extremely high prices of essential medicines down to bribery
and environmental negligence. What becomes SCR is not the kindergarten
built by an MNC or a donation after much exploitation but the holistic
day-to-day management of the relationship with the firm’s environment and
the actors therein. While the above theoretically sampled conceptualizations
purport to broaden our understanding, what is evident in this analysis is
that the institutional logics (values, norms, belief systems and cultural and
disciplinary backgrounds) which inform the ontological leanings of each
author (Orlitzky et al., 2011), appears diametrically opposed to what one
would expect if they had come from a homogeneous background. This
rather is a source of enrichment that promotes academic debate from
varieties of perspectives rather than a condemning rift. That notwithstand-
ing, there are areas of potential generalizability and clear gaps to fill in this
substantive domain. To this end, traditional CSR can best be described as
a mixture of deviance, green washing and sporadic acts of philanthropy
aimed at PR purposes. For this reason, only when the responsible inno-
vations, including smart business models will make socio-economic, political
and environmental difference by creating a competitive advantage, can they
qualify as the D-L of SCR. Drucker (1974) and Friedman (1970) are
partially correct in their analyses of what ought to be the responsibility
of the firm; to make profits but not to destroy the environment nor
exploit workers but create value for other stakeholders on whom the firm
depends (Freeman, 1984). To structure our argumentation and to offer
a fair critique of the conceptualizations above, we identify the evolutionary
paths to SCR by contrasting these paths with the conventional notions.
They are the (a) disruptive-entrepreneurial level, (b) strategic business
entrepreneurial level, and (c) the D-L of SCR level or civic sensitivity level
(Fig. 1).
Disruptive-Entrepreneurial SCR
Disruptive innovations precede incremental innovation and a certain degree

of incrementalism clearly creates the scenario and the need for disruptive
innovations. To argue which of them is more useful is not only unfruitful
but also a misplaced conceptualization. Both are required under different
contextual realities to create competitive advantage (The Economist, 2011).
Disruptive innovations and business models are very typical of start-up
SMEs (but less so with pharmaceutical SMEs which mostly make generics)
with novel entrepreneurial mindset and behaviour. They turn social
problems into opportunities embedded in innovation by taking advantage
of favourable regulatory novelties with sophisticated and radical but socially
desirable technologies and value propositions. Such social solutions are for
creating novel brand identity in substance and not as mere PR through
sophisticated rhetoric. They include cutting-edge innovation replacing
Organizational core-values SCR, organizational change, R&D, innovation-

transfer Legitimacy
Ethically
Strategic business The D-L of SCR –
Disruptive entrepreneurial cooperative
entrepreneurial institutionalised in
SCR (short term = investment
level (medium daily routines (long
traditional CSR) for mutual
term/transitioning) term sustainability)
Mainly start-ups & SMEs and
Both SMEs & MNCs Both SMEs & MNCs
Figure 2 sustainable
value
Regulatory (coercive) + congruent normative ideals Financial and social creation
capital (via networks) to buffer internal and external shocks for strategic
reorientation
Fig. 1. The Co-Evolutionary Process of SCR.

existing firms which do not meet the criteria and higher standards set by
environmental regulators and emerging consumer demands. This is what
Schumpeter (1975, cited in Maas & Boons, 2010) referred to as ‘creative
destruction’. By implication, firms do not only innovate to meet existing
needs but also proactively innovate to provide new value propositions and
teach consumers to want new things. These considerations are in sharp
contrast with the conflation of philanthropy with innovation and
competitive advantage in strategic analysis.
Despite the strengths of the above conceptualizations in Table 1, there are
some assertions which clearly qualify as limitations. How do our arguments

differ in this regard? Philanthropy has played a major role in building
societies and creating wealth besides directing the course of distributive
justice and charity. It still does today (Musafer, 2012). The raison d’etre of
non-business organizations and foundations is unambiguous because they
are indespensable sources of resources for the promotion of science and
technology or some other form of advancement in society. That is what they
are established for, unlike firms that are established to produce goods and
services with the aim of meeting the needs of several stakeholders. In some
cases there can also be partnerships between private business and private
non-business entities or even governments in pursuit of a socially
responsible goal. This is all good. Nonethless, charitable acts (altruistic
behaviour) per se do not qualify as SCR, ethical behaviour does. First,
philanthropic actions are good and commendable humanitarian works but
do not enhance operational effieciency (Porter, 1990) nor any form of
innovation of a business firm. This must not be confused with philanthropic
organizations whose overarching objective is to promote peace, freedom,
justice, culture (arts, history, music, etc.), scientific enquiry and technolo-
gical advancement. Second, philanthropic actions by firms are morally
praiseworthy; that notwithstanding, they only represent a value transfer
from one party to the other with instantaneous or very short-term returns of
PR. Third, unlike the arguments raised by authors such as Bhattacharya,
Smith, and Vogel (2004), Carroll (2001) and McAlister and Ferrell (2002)
in what they refer to as strategic philanthropy, we argue that such actions
are tactical and sporadic and do not include the input of other strategic
actors to create long term value. Fourth and most importantly, philan-
thropy does not determine the long-term success of the firm because its
short-term nature does not include any collaborative efforts towards
optimal resource combination or allocation that would lead to a sustained
competitive advantage. Essentially it creates visibility in enhancing PR, but
how sustainable is this?
Strategic CSR – Medium Term or Transitional Level
SCSR involves the MNC or SME’s identification of new lines of business

which are then gradually aligned with the existing business models. This
however as intended in the conceptualizations of SCSR in Table 1 is nothing
more than corporate diversification with a social or environmental focus
(depending on the firm’s CR orientation) that will be integrated into the
mainstream business over time or a gradual development of technologies or
cheaper medicines for the bottom of the pyramid consumers.This is what
Brooks (2009) and Fowler (2000) refer to as social entrepreneurship or

civic innovation. The process may lack coherent coordination unless it has
a promising scope, scalability and prolonged existence to qualify as
strategic. Further, such a process, although desirable, does not serve the
sustainability purpose if it does not involve heavy resource allocation in
R&D towards innovation. It may also have resources that are usually
time dependent given the external competition. This is what makes this
strategic CSR level cumbersome, transitional at best, and unfocused in its
implementation and predictability. Further, SCSR does not evoke the
regulatory institutional contraints which make this process a failure or
success in a competitive market where differentation, cost reduction, and
positioning count in order to offer a competitive advantage to firms that
meet regulatory requirements or structural reforms. Little else is said about
the value co-creation by way of relational embeddedness (Grönroos, 2008)
and organizational learning via feedback loop of knowledge acquired
through interaction(Prahalad & Ramaswamy, 2004).
Simply pinpoiting a range of activities that are socially responsible in the
short term, or in response to effects of isomorphism (DiMaggio & Powell,
1983) does not lead to sustainability. That is, such a view does not
completely qualify asthe D-L of SCR because of the lack of commensur-
ability in firms’ scope and levels of integration across functional levels and
from head quarters to subsidiaries in MNCs.
Vogel (2005) postulates that companies draw a fine line between ‘offen-
sive’ or ‘defensive’ approaches to CR. Thus, some firms may either use CSR
in the traditional sense as a means towards achieving a competitive
advantage or as a modus operandi to escape from a competitive disadvan-
tage as in the case of philanthropic acts. For Vogel, the level of corporate
commitment is proportionate to the expected payoff. Any defensive
approach to CR is about protecting corporate image and therefore the
level of resource allocation is negligible just as the resultant benefits to the
stakeholders in question. On the other hand, any substantial resource
allocation towards CSR with its inherent risks brings about better payoffs.
This stems from the fact that aligned business models are experimental by
nature but do not always translate into fully-integrated core businesses and
this presents quasi-insurmountable operational challenges. If an operation is
not deemed core, then neither are the managerial nor the employ-
ees’commitment to such a business and social cause. It will turn out to be
a cost due to operational lapses and the lack of key resource allocation. By
contrast, whenever practices are fully integrated at both process (cultural-
cognitive level) and procedural level (at the operational and strategy
implementation level), then all core competencies and dynamic capabilities

(Eisenhardt & Martin, 2000) are involved in achieving the objective through
structural changes and new product and service architecture that meet
emerging needs. In this way, there is no ambiguity in the direction, scale and
scope of the organization at its functional levels and within subsidiaries
towards allocating the best resources innovatively to adapt to market and
institutional trends which shape, constrain or enable ethical managerial
decisions. Are we therefore to argue that despite the fact that these
definitions in large part do not lack cogency, actions which deviate from the
established new sustainability and CR programs are usually socially
irresponsible? We do not know. Primary stakeholders (employees, customers
and investors) (Clarkson, 1995) are the first to know the impact of SCR
before the external stakeholders.
The Post-Millennium Forces Shaping the D-L of SCR Towards

Sustainability
The academic, industrial and political consensus about the urgency for a
consolidated action towards sustainability is an evidence of the need to
aggregate emerging issues and ethical responsibility into strategy. Heigh-
tened ecological awareness and global preoccupation with socio-economic
and political turbulence have ignited a tremendous response towards
sustainability. Prominently, governments, financial institutions and venture
capitalists are increasingly unsupportive of R&D projects or investments
that do not have a clear substantive vision to be ecological and socially
responsible. This widespread attitude is not meant to be a pun but it is
rather a strategic posture towards a revolutionary change in values. In
developing economies, questions pertaining to whether any form of foreign
direct investment will help or derail the national development agenda may
be posed (Louche et al., 2010); is it sustainable in a nutshell? The following
four forces are the determinant factors of a globally converging call for
ethical responsibility embedded in strategy as potential solutions to the
global quest for sustainable value co-creation with a major focus on the
areas of education, the environment, economy and healthcare: (i) institu-
tional dynamics, (ii) sustainable capitalism, (iii) global networking and
innovation, (iv) re-regulation and institutional eco-protectionism (Fig. 2).
Global climate change, desertification, diseases and the lack of drugs for
neglected diseases affect the sustainability of modern capitalism. This in
turn leads to institutional reactions and significant involvement across the
board with non-traditional players such as NGOs, governments and private

individuals. The current state of affairs aided by technology in a digital
era has led to a geopolitical shift. The agenda has now moved from
de-regulation to re-regulation and institutional eco-protectionism in global
governance with firms as active players and agents of change in different
Global market and non-market turbulence

as forces shaping SCR of firms
Institutional Sustainable
Dynamics Systemic links Capitalism
Consolidated
efforts to
protect CPR
Reregulation &
Global Networking
institutional eco-
& Innovation
protectionism
SCR = Sustainable
value co-creation
Fig. 2. The Structure of Strategic Corporate Responsibility (SCR) and Its

Institutional Embeddedness Towards Sustainability. CPR – Common Pool Resource.
institutional contexts. Global networking between socio-economic actors,

owners of resources and their varieties of activities in different sectors result
in the interconnectedness and interdependence to save the planet as a
common pool resource (CPR; Ostrom, 1990).Therefore, the need to manage
the CPR via cooperative value creation is a plausible explanation for the
high interest in sustainability.
Institutional dynamics
Four global pressures and one critical functional pressure of the organi-
zation are moderated by powerful entropic and inertial pressures which lead
age-old practices and status quo to give way to deinstitutionalization

(Oliver, 1992).There is now a global follow-the-leader trend (in the form of
institutional isomorphism; DiMaggio & Powell, 1983) in all industries where
institutional forces via mimetic and coercive regulatory pressures or
normative means compel firms to act responsibly along the value chains
albeit with a degree of resistance. Across industries, small firms are forced
to follow the trend of sustainability, while for some it is even the only
means of survival. SCR is corporate entrepreneurship that employs dynamic
capabilities constrained by institutional developments and managerial
values to address emerging market and non-market issues. Grayson and
Hodges (2004, p. 11) refer to these types of corporate social opportunities as
‘commercially viable activities which also advance environmental and social
sustainability’. The elimination of the negative impact of firms’ externality
increases costs and constitutes a competitive disadvantage if rivals in the
industry do not do the same (Drucker, 1974; Williamson, Lynch-Wood, &
Dragneva-Lewers, 2010).
Where elimination of an impact requires a restriction, regulation is in the interest of
business and especially in the interest of responsible business. Otherwise it will be
penalized as irresponsible while the unscrupulous, the greedy, the stupid, and the
chiseller cash in (Drucker, 1974, p. 335).
The regulatory changes across the board offer firms the incentives to
outpace public choices on environmental and public issues in order to create
a competitive advantage and to avoid the cost of non-compliance. This
means regulations in some cases help to avoid scandals, highly punitive laws
in future and creates the opportunity for social innovators who see social
ills as opportunities (Drucker, 1974). SCR is not about trade-offs as to
whether these considerations are of ethical interest to the firm. Rather, it
is about what the response of consumers and stakeholders will be under such
dynamic market with increasing socio-economic, political and environ-
mental pressures.
Sustainable capitalism
Sustainability must be construed as an urgent response to the global
threat to all spheres of human existence. The imperative to protect and
renew our common pool ecological resources (CPR) with direct effects on
socio-economic lives requires systemic efforts consolidated across the
board. Shrinking resources, radical transparency, increasing expectations
of societies (Downes & Mui, 1998) and governments matched by an
exponential rise in public private and non-market involvements have now
fed the global interests in questions of sustainability. For example,
corporate actions in the Niger Delta destroy the aquatic habitat of fish
upon which the population depends (Ibeanu, 2000), or river fish suffer
from accumulation of compounds from human drug waste (Gilbert, 2011;
Mason, 2003); such activities also spread skin diseases and spoil the
streams while leaving livelihoods shuttered. Disgruntled villagers in Niger
Delta who disrupt oil production can affect global prices in a matter of
days. What happens on Wall Street has systemic effects across the global
financial markets. Carroll (1979) describes three types of ecological
behaviours of firms: (a) eco-defensive behaviour which seeks instantaneous
economic gains while viewing any environmental action as costs, (b) eco-
conformist behaviour refers to firms which stay within the regulatory
confines even when they are capable of raising the standards and (c) the
eco-sensitive behaviour which goes beyond prescribed legal requirement as
a way of survival in the long term. We subscribe to the third category as
the only strategic action that leads to sustainable value creation for the
firm and society. Although all companies are legally and legitimately
accepted, their operational procedures may have negative externalities
being the results of unethical decisions and actions of managers and by
extension the firm. A negative externality is present when a third party
(neither the producer nor the consumer) is harmfully affected by an
economic activity, thus from production to consumption of a product or a
service (Chernomas & Hudson, 2010). Environmental and air pollution
are the most infamous of all the externalities because the severe and
sometimes irreversible harm they cause affects those who are neither
producers nor consumers of the product in question. Increasing negative
externalities, such as cancer resulting from pollution, represent an
extremely high cost to societies and their environment. This, in essence,
is beyond the private costs to the company that caused it. The protection/
preservation of the ecosystem or biodiversity (flora and fauna) is the basic
premise underpinning the concept of sustainability of which firms have a
major role to play.
From de-regulation to re-regulation and institutional eco-protectionism

That global and national institutions are overwhelmingly rallying behind
issues of sustainability with new regulations is well received. The attention
has been turned from the buzz about de-regulation to global ‘eco-
protectionism’. This concerns the internationalization of questions pertain-
ing to food, health and safety in what Hollingsworth and Boyer (1998) call
‘international regulatory agenda’ aimed at harmonizing global policy
measures via the cross-national alignment. Runge (1990, p. 187) refers to
the phenomenon of global attention to re-regulate given the global forces
and pressures as eco-protectionism. In fact such arguments are too obvious

to be worth pursuing any further. The discourse only needs to be theorized
by its authentic name; the D-L of SCR based on sustainable innovations.
This view is generally seen as an imperative because it cannot be fittingly
called anything else given the rate at which economic activities and
organizational practices affect the full gamut of eco-systems and threaten
human livelihood. The eternal tension between economics of self-interest
and altruism and institutional changes (namely, the private and public
regulatory regimes, increasing organized dialogues (Campbell, 2007), indus-
trial influences, socio-cultural foundations of institutional structures (Scott,
2001) have enormously changed the global mindset now and perhaps for
good. This represents the dawn of a new socio-economic order that places
sustainability at the centre of all institutional frameworks which in turn
affects firms’ strategy. Pursuing such objectives and not only engaging in
rhetoric has become the way to demonstrate commitment and seriousness in
search of legitimacy from financiers, consumers, and society in general on
whom the firm depends for its existence (Davis, 1960; Pfeffer & Salancik,
1978). This is also due in part to the increasing role of big firms as political
actors given the socio-economic power they wield (Mitchell, 1989; Scherer &
Palazzo, 2007) and the evolution of global forces which naturally select
innovative firms that fit with the changing environment. Examples of global
initiatives include: the International Organization for Standardization (ISO)
26000; a non-binding, voluntary standard. Since 2005, ISO has been
developing CSR international standard guidelines. The first of its kind was
published in 2006. The 2010 ISO 26000 publication was made possible by
contributions from industry, government, worker’s unions, consumers,
NGOs and other specialists (Moratis & Cochius, 2011). Other examples are
the UN Millennium Development Goals (MDGs), the Global Compact,
and the Global Reporting Initiative (GRI). The latter is a globally accepted
framework for voluntary reporting on socio-economic and environmental
activities of firms. A critical concern regards their non-binding nature which
again brings in the question of regulatory regimes as the preconditions for

translating these codes of conduct into real enforceable and meaningful
measures. This however depends on the prevailing institutional context
if it is to create any competitive advantage for firms that adhere (Williamson
et al., 2010).
Global networking in innovation and technological change

The responses to post-millennium forces by business and non-business
organizations represent a unique source of both incentives and opportu-
nities on one hand and a set of complex problems requiring sophisticated

tacit knowledge forms as well as cooperative initiatives for creating solu-
tions. Hollingsworth and Boyer (1998) imply that there are three important
dimensions of the coordination of organizational partnerships for knowl-
edge use and innovation which are either in the form of joint ventures,
alliances or other discrete structural alternatives to governance via vertical
integration such as franchising and spot contracts. For our purpose, how-
ever, non-traditional partners, that is, governments and NGOs play a
critical role where solving questions of legitimacy is a prerequisite for a
firm’s long term success. Moreover, new advancements in technology, for
example, new product architecture and innovations have caused structural
changes, mergers and acquisitions, and strategy retooling especially in the
pharmaceutical industry, all in the face of global competition, environ-
mental changes and high societal expectations (Hollingsworth & Boyer,
1998; Prahalad & Hamel, 1990). Institutional changes accompanied by
opportunities or what North (1991) refers to as ‘incentive structures’ spur
innovations. Such incentives according to Hage and Jing (1995, cited in
Hollingsworth & Boyer, 1998) are pushed by two competitive forces which
drive firms into networking and other forms of collaborations: (1) inno-
vation which in the post-millennium era represents a more prominent and a
fundamental competitive factor compared to cost reduction and high
productivity; (2) the critical nature of adaptive costs incurred on monitoring
both technological and product change, R&D and other competitive
responses. Such operations must always be expedited given the short
product life cycles so as to gain (i) market share and (ii) first mover advan-
tages with novelty that comes with premium prices. Analysis from this
perspective has now made transaction costs obsolete for our purpose. Three
other points add to the definition of adaptive costs especially in the science
and innovation firms, for example, the pharmaceutical industry: (iii) the
need to implement competitive solutions; (iv) the threat of the loss of market
share which is a consequence of slow response to competitive challenges
(Hollingsworth & Boyer, 1998); (v) the opportunity costs associated with
‘non-innovativeness’ by firms in the face of the global forces and the speed
of technological advancement towards sustainable global health.
Testable theoretical propositions of the dimensions of the D-L of SCR are
delineated in Table 2. These dimensions also serve as the preconditions for
the existence of the D-L of SCR within the internal structures of the firm
and its interface with the environment.
MANAGERIAL IMPLICATIONS: 21ST CENTURY

RESPONSIBLE STRATEGY MAKING FOR
INNOVATIVE VALUE CO-CREATION
There is no recipe for actualizing SCR. The D-L of SCR is not what a firm
does; we are rather referring to what firms are in the ‘process of becoming’
(firms’ position and identity within this historical juncture) as a co-
evolutionary process with the markets and institutions within which they are
embedded. Firms which want to go beyond mere survival in the 21st century
and become successful in the long term must see SCR not as a choice but as
an imperative. Principally, the process of strategic value co-creation entails
the following points listed below for managers in MNCs which must be
idiosyncratically adapted to each individual firm within the industrial
composition that it finds itself. The foregoing is neither a description of
some activities nor a to-do list, but rather, contents and processes and
philosophical underpinnings explaining the possible outcomes of the D-L of
SCR for the firm. How does the firm define and redefine itself given the
dynamism of institutional reforms and market changes?
(i) Determinants of the success of the firm. The first point is in the form of a
philosophical question: what is the responsibility of the firm that will
generate long-term success (and a competitive advantage) on one hand
and what the implications of such success on the environment, society
and ultimately the consumers are? This means the concept of SCR is a
cooperative investment based on innovation and the moral posture of
the firm. Then again why should any manager care? The central role of
managers is also emphasized here.
(ii) Integrity and transparency in all day-to-day decisions and actions. The
firm must see the D-L of SCR as its day-to-day ethically responsible
cooperative investment for mutual and sustainable value creation. This
Table 2. The Dimensions of the D-L of SCR.

Construct Theoretical Proposition Sources
Cognitive and This basic cognitive frame and shared values (ethical principles Orlitzky, Siegel, & Waldman, 2011; Herbert,
values-based about what is appropriate behaviour) produce congenial 2000
(ethical) leadership working environment and space for culture of innovation that is
institutionalized throughout the firm and its subsidiaries in the
case of an MNC. The productive use of political power of
decision makers rests on the upper echelon. Put together,
conditions will determine constant increase in the social,
psychological and intellectual capitals that spur innovation.
Structural dimension The strength of the leadership network ties within industry, Granovetter, 1985; DiMaggio & Powell, 1983
academia and even in the political arena creates social capital
based on trust that leads to social legitimacy. The greater the
informal alliances and cooperation with organizations and
other stakeholders, the better the dialogue and learning
(knowledge exchange) is made possible to meet national or
global sustainability agenda.
Dynamic capability The proactive innovation ‘durchKompetenz’ by sensing emerging North, 1991; Eisenhardt & Martin, 2000
dimension opportunities and challenges of context-specific needs occurs
when existing resources are configured into new capabilities to
meet the context-specific needs via managerial entrepreneurship.
SCR exists only within the scope of the core competence or the
synergy produced from collaborations. These strategic decisions
are based on available incentive structures and prevailing
institutions.
Opportunity seeking The identification and advancement of the latent needs of Freeman, 1984; Clarkson, 1995; Kohli &
and stakeholder stakeholders for which a premium price is paid. This proactive Jaworski, 1990
orientation process comprises innovation, learning, authentic branding,
dialogue and engagement with stakeholders (whether or not
121
they have power and urgency) while keeping an eye on the
actions of competitors and regulatory changes.
122
Construct Theoretical Proposition Sources
Institutional legitimacy Knowledge about the cultural, regulatory and normative Suchman, 1995; Scott, 2001
circumstances creates the added momentum to explore what
contributes to the developmental agenda of the home
government and local people as well as other social
establishments. Institutions also refer to the internal governance
structures of the firm. Transparency and accountability both
create visibility and trust since they become the unintended
communication tools which link the firm with stakeholders
about its symbolic position as a responsible organization. This

is what leads to good reputation.
Strategic dimension Available resources that are well defined and allocated and are Hage & Jing, 1995 (in Hollingsworth &
contingent to the successful achievement of the firm’s long-term Boyer, 1998); Werther & Chandler, 2006;
goals. Positioning the firm in industry is not only through Zadek, 2004
differentiation, focus or cost leadership but also through a
response to (i) the post-millennial forces, (ii) adaptive costs and
(iii) innovation via collaboration.
Value co-creation Value for the consumer translates into value for the firm. The Grönroos, 2008; Prahalad & Ramaswamy,
dimension ultimate goal of the combination of all the above in this table is 2004; Hollingsworth & Boyer, 1998;
to offer consumers the best possible service via constant control Maas & Boons, 2010
of routines to ameliorate existing quality standards. That is
made possible via the protection of the value chain. Cooperative
innovation also leads to sustained competitive advantage. In
essence, the D-L of SCR is inherently proactive, reactively
relational, and it is the result of interlinked resources, activities
and strategic stake-actors with reciprocity of interests for a
mutual investment in sustainable value co-creation.
is because such a process is not tactical but for the long-term gain. It is a
win-win approach for all stakeholders rather than a zero sum game.
(iii) Innovation and differentiation are not to be perceived as costs. The D-L
of SCR must also not be construed as a cost since it involves a constant
amelioration of the raison d’être of the firm to keep abreast of market
and institutional dynamics or what we refer to as the global forces. It is
clearly a process of differentiation and adaptation to the ever changing
business environment that allows the firm to gain premium from sales
and outpace competitors.
(iv) Eco-sensitivity and cooperation lead to great social capital. The content
of the D-L of SCR entails alliances with the consumers, cooperation
with other stakeholders and a foresight that allows the firm not only to
comply with current regulatory requirements but also to exceed the
expectation of employees, stockholders, consumers and governments.
This clearly creates visibility (good image) and legitimacy in different
institutional contexts.
(v) Moral task (ethical responsibility) and appropriate use of corporate
political power. When the firm operates in a developing economy,
the weak institutional environment may offer the firm a leeway to
manoeuvre without the responsible use of its political power (Banerjee,
2007; Davis & Yugay, 2012). This means that individuals in managerial
positions have the moral task to operate with integrity and respect for
the environment and workers in ways that avoids any form of exploi-
tation (Mària & Devuyst, 2011). What does the firm gain in return?
Investors put their money in responsible firms; such firms avoid anta-
gonism from workers and thereby increase productivity, creativity and
knowledge sharing on sustainable practices (Nicolopoulou, 2011). Host
governments will then move from an adversarial role to business friendly
policies that will accommodate and allow firms to flourish. Firms avoid
marring their reputation because they will not attract bad publicity. All
these will happen only when firms see developing and emerging eco-
nomies not as markets to exploit but opportunities for civic innovation.
(vi) Disruptive-entrepreneurial SCR, social entrepreneurship and civic inno-
vation. Understanding the contextual needs of different environments
and employing new business models and offering products that
meet the ‘latent needs’ of consumers and other stakeholders is the new
way of doing responsible business. When responsible strategies towards
sustainable innovations make a positive socio-economic, ethical, politi-
cal and environmental difference by creating a competitive advantage
for the organization and value for society, the process can then qualify
as the D-L of SCR; a paradigm shift from defensive, offensive and

PR-seeking traditional CSR that is no longer fit for a new era of greater
accountability and institutional expectations.
LIMITATION OF THE STUDY

The number of theoretically sampled works was minimal. Nevertheless they
fall within the parameters that we set: they were theories and conceptualiza-
tions proposing the integration of CS and CR. While it is fair to argue that
such parameters do not preclude the analysis of a higher number of works,
we looked at the content that aimed at laying the grounds for a more
extensive review. In other words, no claim of total paradigm shift (but
paradigm shifting) is being proposed here. Nevertheless, the precarious
balance between firms and the planet help make this case of the D-L of SCR
and its institutional embeddedness. It is argued that the post-millennium
forces are the prominent socio-economic factors that are strongly
emblematic in the way they constrain, enable and shape firms towards
sustainability. These forces and the dimensions of the D-L of SCR are hence
the prerequisites for acquiring institutional legitimacy. They need to be
studied in detail in future since they take different forms in different
institutional contexts. Several arguments may be raised about this article but
that is the purpose of it since debate is what advances scientific research and
philosophical reflections.
CONCLUSIONS AND SUGGESTIONS FOR

FUTURE RESEARCH
The global forces and dimensions of the D-L of SCR are theorized within the
framework of institutional theory as the systemic variables which are causing
a shift in paradigm towards sustainability via value co-creation as a D-L.
Strictly speaking, ‘science cannot produce relevant knowledge; rather,
practice has to make scientific knowledge relevant by incorporating it into
the specific logic of its system’ (Rasche & Behnam, 2009, p. 243). The
relevance of this article is the contribution it makes to strategic management
and the broader domain of CR. The plausible explanations as to what
constitutes the responsibility of a firm and under what conditions firms will
naturally embark on SCR are carefully delineated. Strategy or CR makes no
sense without considering the implications of institutional and prevailing

market and non-market forces within varieties of contexts at a historical point
in time. Both strategy making and ethical responsibility refer to the internal
system linking itself to the external environment to purposefully achieve an
objective that satisfies multiple beneficiaries. There is an unnecessary
dichotomy between strategy making and ethical responsibility of the firm
which must not be confused with philanthropic actions for PR purposes.
Further, SCR, competitive advantage and the quest for pragmatic, moral,
and cognitive legitimacy (Suchman, 1995) underpins all the above. While the
global forces appear systemic in their influence of firms’ actions, there remain
institutional barriers to innovation especially in developing economies. The
relevant question for further study is: under what institutional conditions will
pharmaceutical firms respond to global forces with sustainable innovations in
global health? This chapter provides a conceptual basis for explaining how
context, temporal dimension and pragmatism in theory building drive the
debate about what the responsibility of the firm is. Our arguments shed light
on the existing confusion about the use of traditional CSR whereby firms
are required to give to society without asking how such value can be
created co-created. We maintain that the post-millenium forces represent
turbulences that are also viewed as opportunities and not as threats to the
firm’s survival. Future research will also explore the differences in the SCR
logic in multinationals and small scaled companies in different institutional
contexts. Further research questions are proposed below:
What are the responsibilities of the organization and whose interest should it
promote in order to gain legitimacy?
Objective: to investigate what the fundamental obligations and purposes
of different organizations and different sectors are and what are the limits
within which they should operate.
Proposed method: Grounded theory, ethnography, and multiple case
studies with well defined sectors.
Theoretical underpinning: The purpose of this is to apply the theoretical
knowledge into answering problem-based questions in practical ways about
how to determine the parameters of the firm’s scope, scale and objective and
who carries out the responsibilities of the firm and to whom are firms
accountable.
Whose responsibility is it to implement sustainable practices?
Objective: What is the role of leadership in enacting responsible corporate
strategies?
Proposed method: New methods incorporating sense making, critical

discourse analysis and different experimental studies.
Theoretical underpinning: Theories from psychology and neuro-economics
would prove helpful in advancing analysis on the key role of managers in
actualizing sustainability.
What are the parameters by which we can measure the limits of the rights
and obligations of the firm?
Objective: Authors can propose new pragmatic research approaches.
Proposed method: Economic philosophical analysis or some other

quantitative methods.
How do institutions and temporal dynamics define the nature of CR and CS?
Objective: To explore, describe and explain how CR is enacted in varieties

of institutions and define the variables that affect the changes.
Proposed method/strategy: Systematic review.
ACKNOWLEDGEMENTS
The previous version of this paper was presented as a competitive paper at

the European International Business Academy (EIBA) conference in
Bucharest, Romania, in 2011. We thank the two anonymous reviewers,
the session chair and all the colleagues for their constructive comments. We
would also like to thank the anonymous reviewers and the editors of this
volume: Dr. Liam Leonard, Institute of Technology, Sligo, Ireland and Dr.
Maria-Alejandra Gonzalez-Perez, Universidad EAFIT, Colombia for the
opportunity to contribute. We gratefully acknowledge the generous grant
support from the Turku School of Economics, the University of Turku
Foundation, Finnish Cultural Foundation, Matti Koivurinta Fund and
Stiftelsen för Handelsutbildning i Åbo.
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International Business, Sustainability and Corporate

Responsibility. Published online: 12 Mar 2015; 97-131.

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AND INNOVATIVE VALUE

Frederick Ahen and Peter Zettinig

International Business, Sustainability and Corporate Social Responsibility

Findings – The chapter delineates the salient dimensions of the dominant

Keywords: Corporate strategy; corporate responsibility; global

The purpose of the present chapter is to theoretically demonstrate that

CR and CS (Laszlo & Zhexembayeva, 2011; Orlitzky, Siegel, & Waldman,

started fading dramatically and is giving way to the generally acceptable

there is a ﬁnely nuanced difference between CSR and strategic corporate

the world’s economies and societies need to be questioned. We refer to the

or a cost. Rather, it is merely another way of dealing with the unnecessary

as ad-hoc programs. On the basis of these analyses, we offer policy

METHODOLOGICAL APPROACH: ECONOMIC

This economic philosophical analysis employs the content analysis

Criteria for Selecting (Theoretical Sampling of) the 22 Articles

1) Novelty in the discourse of CR – mainly articles written in the 21st

4) The strengths of the authors’ philosophical arguments or motivations for

tion towards creating a sustained competitive advantage. Without these

explore policies and measures that managers can

FREDERICK AHEN AND PETER ZETTINIG

FREDERICK AHEN AND PETER ZETTINIG

From Traditional CSR and SCSR to SCR at the Civic Level

positions (Orlitzky et al., 2011). Hence, the semantic distortions and

connotes a proactive attempt to induce change in the practical approach to

philosophical standing. While the need for CR in the implementation of

Disruptive innovations precede incremental innovation and a certain degree

Organizational core-values SCR, organizational change, R&D, innovation-

Fig. 1. The Co-Evolutionary Process of SCR.

some assertions which clearly qualify as limitations. How do our arguments

Strategic CSR – Medium Term or Transitional Level

SCSR involves the MNC or SME’s identiﬁcation of new lines of business

Brooks (2009) and Fowler (2000) refer to as social entrepreneurship or

implementation level), then all core competencies and dynamic capabilities

The Post-Millennium Forces Shaping the D-L of SCR Towards

board with non-traditional players such as NGOs, governments and private

Global market and non-market turbulence

Fig. 2. The Structure of Strategic Corporate Responsibility (SCR) and Its

institutional contexts. Global networking between socio-economic actors,

age-old practices and status quo to give way to deinstitutionalization

From de-regulation to re-regulation and institutional eco-protectionism

and pressures as eco-protectionism. In fact such arguments are too obvious

again brings in the question of regulatory regimes as the preconditions for

Global networking in innovation and technological change

nities on one hand and a set of complex problems requiring sophisticated

MANAGERIAL IMPLICATIONS: 21ST CENTURY

The Dominant Logic of Strategic Corporate Responsibility

FREDERICK AHEN AND PETER ZETTINIG

as the D-L of SCR; a paradigm shift from defensive, offensive and

LIMITATION OF THE STUDY

CONCLUSIONS AND SUGGESTIONS FOR

sense without considering the implications of institutional and prevailing

Proposed method: New methods incorporating sense making, critical

Proposed method: Economic philosophical analysis or some other

Objective: To explore, describe and explain how CR is enacted in varieties

The previous version of this paper was presented as a competitive paper at

Upper Saddle River, NJ: Pearson Education, Inc.

147–160. Retrieved from http://www.ics.uci.edu/Bcorps/phaseii/DiMaggioPowell-Iron

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