Michael E. Porter Harvard Business Review

Michael E. Porter and Mark R. Kramer (December 2006). Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility

– Harvard Business Review Article P1-P16

Many companies respond to their CSR for four reasons which include moral obligation, maintaining sustainability, compliance, and gaining reputation. Michael Porter and Mark Kramer identify the deficiencies of each reason and focus on the tension between business and society, rather than their interdependence. In this article, Porter and Kramer argue that the deficiencies of current CSR approach neither make any meaningful social impact nor strengthen the firm's long-term competitiveness. Subsequently, Porter and Kramer suggest a new CSR approach to look at the relationship between business and society because the current approach to CSR is disconnected and fragmented with business goals.

This new approach describes that a CSR strategy should be predicated on an acceptance of the interdependence of business and society. In other words, the points of intersection between companies and society are both 'inside-out' linkages (i.e. internal activities which affect the external environment such as 'hiring practices, emissions and waste control') and 'outside-in' linkages (i.e. social conditions which affect a company's capacity to conduct business, such as rules and regulations, local education and health supports).

Porter and Kramer believe that companies will “make the most significant social impact and reap the greatest business benefits" by using this new approach to CSR which

(i) acknowledges the interdependence of companies and the broader community, and

(ii) enables companies to develop a tailored, not a generic, CSR strategy.

In order to implement new CSR strategy, Porter and Kramer’s practical tool to developing a new CSR strategy encompasses 4 steps:

1. Identifying the points of intersection

2. Choosing which social issues to address

3....