Strategic Corporate Social Responsibility as Global Brand Insurance

Business Horizons (2005) 48, 317 — 324

www.elsevier.com/locate/bushor

Strategic corporate social responsibility as global brand insurance

William B. Werther Jr.*, David Chandler

Center for Non-Profit Management, Department of Management, School of Business Administration, University of Miami, Coral Gables, FL 33124, USA

KEYWORDS

Brands/brand management/brand loyalty; Corporate social responsibility; Stakeholder(s); Strategy; Globalization

Abstract When the competitive strategies of multinationals rely on global brands, corporate social responsibility (CSR) offers insurance against management lapses. The practical need for CSR as brand insurance comes from changing social expectations, affluence, and globalization. Corporate actions that violate societal expectations damage, even destroy, brand image among networked stakeholders who are affluent enough to buy branded products and services. The premiums for CSR brand insurance are paid by leaders who create an organization-wide commitment to CSR as a means of redefining dprofit maximization.T By integrating a stakeholder perspective, management is best placed to optimize stockholder returns over the longer term. D 2004 Kelley School of Business, Indiana University. All rights reserved.

1. All hail the brand!

Global brands are often central to competitive strategy because they serve as profit platforms that differentiate even commodity-like products and services. Brands work by ensuring customers of quality, consistency, and security. Such guarantees create repeat customers and provide producers with potentially higher margins. In turn, brand acceptance creates a virtuous cycle by facilitating greater investments in research, product development, advertising, and distribution that further strengthens the brand and increases sales. Ultimately,

* Corresponding author. E-mail addresses: werther@miami.edu (W.B. Werther)8 dchandler@miami.edu (D. Chandler).

however, a brand’s appeal rests upon its...