Does socially responsible behaviour positively affect the cooperation's profitability?

Table of Contents

Abstract:

Acknowledgement:

List of Abbreviations:

1.0 Introduction
1.1 Background & Academic Context:
1.2 Purpose and Research Question
1.3 Choice of Case Study- Marks & Spencer

2.0 Theoretical Framework - Literature Review
2.1 Brief history on CSR
2.2 CSR Definitions
2.3 Creating Sustainable Value
2.3.1 Sustainable Value Framework
2.4 Problem Discussion:
2.5 CSR & Profitability
2.5.1 CSR brings in the cash
2.5.2 Waste of shareholder money
2.6 Possible results for CSR
2.6.1 Employees & Work Environment
2.6.2 Cost Reduction
2.6.3 Sales & Marketing
2.6.3.1 Differentiation
2.6.3.2 Brand Reputation

3.0 Methodology
3.1 Research Model:
3.2 Research Strategy:
3.3 Analysis Technique:
3.4 Nature of the Data and Information
3.5 Critique of Approach:

4.0 Findings and Analysis
4.1 Introduction to Case Study
4.2 Findings on CSR initiatives by M&S
4.3 Framework application onto M&S case study:
4.3.1 Balance Score Card Suitability
4.3.2 Structure and origin of the findings
4.3.2.1-MARKS AND SPENCER- Learning and Growth Perspective-
4.3.2.2 MARKS AND SPENCER- Internal Business Process Perspective-
4.3.2.3 MARKS AND SPENCER- Customer Perspective
4.3.2.4 MARKS AND SPENCER- Financial Perspective
4.3 Analysis & Discussion:
4.3.1 Analysis of the BSC findings on M&S plan A
4.4.1.1 Learning & Growth Perspective discussion
4.4.1.2 Internal Business Perspective Discussion
4.4.1.3 Customer Perspective Discussion:
4.4.1.4 Financial Perspective Discussion
4.4.2 Findings’ Analysis in light of Hart & Milstein’s framework:
4.4.2.1 Internal Today - Growing profits and Reducing risk:
4.4.2.2 External Today - Enhancing Reputation & Legitimacy:
4.4.2.3 Internal Tomorrow - Accelerating Innovation & Repositioning:
4.4.2.4 External Tomorrow – Crystallising the firms’ growth path

5.0 Conclusion, Recommendations & Reflection
5.1 Creating Sustainable Value
5.2 Does responsible business behaviour lead to profitability?
5.3 Hart and Milstein View

6.0 Reference List

List of Abbreviations:

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Abstract:

Corporate Social Responsibility and sustainability are terms that are increasingly associated with businesses today. In this thesis we take a closer look at the practices involved in being a socially responsible cooperation and assess its influence on the performance of the cooperation to see if CSR behaviour adds to the corporation’s profitability?

The author’s choice was to study Marks and Spencer’s sustainability strategy; plan A, for its responsible initiatives across its business operations have been creating debate and interest in the UK’s consumer market since its announcement in the year 2007.

The methodology’s process was inductive and followed a qualitative in-depth approach with the application of BSC, balanced score card; an assessment of M&S’ sustainability plan was conducted on four business aspects, customers, employees, internal processes and last the financial aspect. All was analysed in the light of Hart and Milstein’s sustainability value framework. Nevertheless a quantitative approach was adopted through a financial performance comparison to British retailer John Lewis; to draw conclusions if M&S sustainability plan has indeed acted as a differentiator in performance against a competitor.

The findings supported no increased profitability for the cooperation. However they did reveal that socially responsible co operations do achieve better value proposition, better branding, and are generally more resilient to scandals as a result of higher trust from the customers’ side. Conclusions drawn from M&S study were that CSR practices help maintain and attract talent; it engages customers and increases their likelihood of repeat purchases, it also creates savings through a variety of efficiency measures on operational levels; small savings scattered across locations and departments which could substantially decrease the total cost of doing business.

Acknowledgement:

My Master thesis- my sweat, fret and worry of several months has at last taken shape. It has been produced with diligence, attentiveness and interest throughout the whole process that took place in the winter and early spring of 2010/2011.

I would like to thank my dear parents who has made this Master’s degree possible and encouraged me throughout this year and all the ones prior.

Equally important, I would like to thank my helpful supervisor. Mr. Richard Searle-Barnes, whose dedication, insight and guidance has added to my work and helped discipline my academic skills in striving for my answers!

Finally, a special acknowledgment is dedicated the Marks and Spencer café in Summertown, the place in which the idea to this research was conceived. A favourite spot by the window with a hot latté is a cherished Oxford memory I will always carry with me.

Lina Helena Kamal

Oxford- UK

2011-05-09

1.0 Introduction

1.1 Background & Academic Context:

Can businesses be successful both economically as well as socially?The question has baffled companies for ages. 200 years ago, particularly since the time of Adam Smith there has been this ongoing debate around social responsibility and the effective role of organisations beyond making a profit (Barnett, 2010).

However, it is probably accurate to say that all societies at all points in time have had some degree of expectation that organisations would act responsibly by some definition (Carroll, 2003; Senge et al, 2008) since there is a labour law to abide by as the minimum required. Yet, the public’s expectations are increasingly raising the bar as to what is acceptable behaviour and how much responsibility a cooperation should shoulder; for example the Nike cooperation scandal on child workers in Pakistan in early 2000 (Zadek, 2004). Nike workers’ young age- 9 years- and working conditions led many in the western world to boycott Nike’s products to show discontent of their business operations (Porter and Kramer, 2006). It could be argued that somehow, shifts in ethics or values precede the establishment of new laws, for these can be regarded as the driving force behind the initial creation of a new rule/law, as was exemplified above.

Today, associations, NGOs and intra-governmental organizations have been putting pressure on industries to consider their impact on human life and environment. With social and environmental issues getting more attention, consumer awareness is holding up. This has led to new requirements from the demand side (Carroll, 1999; Senge et al, 2010; Mullerat, 2009) Thus, there is rising consciousness in society on social and environmental issues, which is driven by the overall corporate social responsibility / sustainable development movement, and the wide availability of information on companies’ environmental and social practices. As a consequence, CSR acts have entered the personal consumption arena: in addition to traditional purchasing criteria like quality and price (Morris, 2007; Marketing week, 2009; BBC, 2010). Now, customers’ buying decisions are influenced by the growing concerns in the society on the matters of social imbalances, environmental pollution & sustainability of resources.

Furthermore, there is a growing acceptance that individuals in our “the well off” parts of the world can and indeed should make a difference by assessing our own social and environmental impact. Largely both impacts- social and environmental- are affected by our choice of companies to spend our money at; as it reflects our social values, personal consumption and disposal patterns. Now companies such as M&S seem to have realised the potential of this green trend and aligned its corporate strategy along the lines of responsible and conscious business.

Morris (2007) describes this phenomenon as “people today are using their pockets to make a point, not only a purchase”. Ethics is becoming big business in all production fields, cars, clothes, furniture, but particularly successful has been the food sector. The brilliant success of ethical consumption in food sector could be explained by it being an everyday necessity, and regular consistent action affirms the consumers’ stands, also it normally does not cost as much as other purchase items. Indeed research by Mintel (2009) proves that six in ten people will never buy products from a company they believe to be exploiting its workers. In UK, fair-trade products have witnessed a double digit growth year on year since 2004 (Mintel, 2008). Obviously older and more affluent consumers who have fewer concerns about price do consider the wider implications of their food purchase (Fraser, 2007), and many have argued that it is a middle-class luxury to buy fair-trade and ethically sourced products. However, recession has proven them wrong, for despite customers being less inclined to pay a premium price in recession, there are mixed evidence on “ethical products” being affected by recession, Mintel (2010). This may prove that the ethical consumption trend is a genuine, real and consistent habit of today’s consumer. Whichever the case, a clear message is sent here to shareholders and company owners; the growing number of ethical products on the market is a clear reflection of its relevance. More on ethical consumption is provided in the findings & analysis chapter, section 4.4.

1.2 Purpose and Research Question

In today’s interconnected world, thinking about profits as if they were unrelated to the economic and social impacts of the business practices performed is short-sighted and counterproductive (Henriques & Laerke, 2006). Growing population, deterioration of natural resources, environmental pollution, rising energy costs, climate change and global warming are just a few examples of the large-scale issues endangering the prospects of development for upcoming generations (Vogel, 2005; Senge et al, 2010; BBC, 2010). With these issues in the spotlight, and the increasing number of people willing to combat it, it can be risky for businesses to continue running their operations under the “use and abuse mentality”, companies not considering the wider impact of their business in form of supply chain, employees and customer values, may not survive a bad publicity event, for there is fierce competition and an abundance of responsible business alternatives that cater for the conscious and ethical consumer (Henriques & Laerke, 2006; Barnett, 2011; Broomhill, 2007).

Thus social & environmental wakefulness is creating risks and opportunities that fundamentally change the playing field for individual firms and industries. The smart companies, and there are a few mentioned throughout this thesis, see the opportunities and are turning the trend to their advantage. There have been multiple cases suggesting lucrative profitability prospects for firms implementing responsible business practicesalong the lines of sustainable development. These promising prospects have been named; cost reduction, increased efficiency,and improved brand proposition and employee retention- to name a few (Idowu & Filho, 2009; Sims, 2003; Savitz & Weber, 2006). A closer look at the CSR business initiatives thatgenerates such results, and the potential gains in considering a more responsible way of conducting business, will be examined- from a general perspective applied onto a smaller- case study- scope.

This leads us to the significant question of this thesis; the current number of green business initiatives suggests that CSR is the corporate future. The current CSR debate suggests that companies acting irresponsibly towards society and environment could be abandoned by their communities, punished by their environment; and consumption/ production of their goods could likely decline over time. While responsible companies that are announcing their initiatives to engage and educate customers will reap benefits on many levels of the organisation, thereof the main hypothesis to be tested in this study:

Does socially responsible behaviour positively affect the co operation’s profitability?

The main objectives to address the question will be:

1- Critically appraise the CSR literature,in order to shed light on sustainability practices and profitability prospects of socially responsible businesses supported by various examples.
2- Develop a case study on British retailer M&S: analyse and examine their current CSR strategy ´Plan A’, evaluate the profitability of the plans’ initiatives by applying the “balance score card” framework on the four affected dimensions of its business.
3- Conclude the findings and develop a set of recommendations for retailers on how CSR strategy best affectsfuture profitability.

1.3 Choice of Case Study- Marks & Spencer

Winston Churchill once said: the more power, the more responsibility (Quote Garden, 2010). M&S has been ranked as UK’s most trusted brand (Marketing week, 2009); furthermore, it announced its ambition to become the world’s most sustainable retailer by 2015 through various initiatives- which are discussed in detail in chapter 4. Yet it has been argued that they cannot claim sustainability superiority as there are no clear measures to apply, still, M&S is following through on their plans. Plan A (See appendix A) is a comprehensive set of initiatives that cover over a 100 improvement areas towards sustainable sources of production that address both environmental social concerns (Nagappan, 2009), the plan’s deadline is end of 2012, however as of today M&S have achieved 62 of their 100 initiatives, so in March 2010 they added another 80 new eco commitments that it has already started fulfilling (Green wise business, 2010). Plan A has gained huge public support, probably for its heavy exploitation through various marketing and in-store campaigns to shed the light on it (Cuthbertson, 2010). The latter claims that Marks and Spencer’s are currently “the company” to copy in sustainable practices and should act as a role model, as it has invested over £150 million over a three-year course to pursue their sustainability Plan A.

M&S have expressed their choice to align its ethical values with those of its customers on main aspects such as ethical consumption, sustainable business practices and green ideas of products and services that contribute to less waste, pollution and carbon dioxide emissions. Now certainly, there are many other businesses in the UK that claim to be similar, however, M&S have practiced transparency, through exploiting their strategic plans and its achievements to date online; in addition to being held accountable for its overseas factories’ business practices that form part of their supply chain. Having gone public with their intimate business practices and bold environmental statements, measuring a possible relationship between profits/ investments in their sustainability strategy “Plan A” should be feasible.

For the measurement, the balanced score card, created by Kaplan and Norton (1996), will be applied. It introduces customer metrics into performance management systems. Anything related to customer value proposition like market share, satisfaction and retention is included. Hence, the application of this framework onto Marks & Spencer case study.

More on this framework will be included in chapter 3 –Methodology- under measures.

2.0 Theoretical Framework - Literature Review

2.1Brief history on CSR

This Section will shed the light on a few chosen socio-political developments that affected the current formation of corporate social responsibility from a profit sharing and philanthropic perspective to a holistic perspective encompassing many business functions and rarely separated from the firms’ strategy & mission statement (Vogel, 2005, CIPD 2009). The context in this section is global, with mention of European examples in support of the thesis’ case study.

Corporate Social responsibility is a relatively new term; the phrase has only widely been used from the 1960’s (Fifka, 2009; Barnett, 2010; Carroll, 1999). However, the concept can be traced long back to classical Athens of 500 B.C, (Avlonas, 2011) the idea at the time was that those in an advantageous position, either in terms of money or power, shouldshare a portion of their wealth with their fellow citizens.

Indeed up till the last 30 years almost, CSR was largely about charitable work; that co operations could contribute with profit sharing or philanthropic responsibilities to serve the greater good (Barnett, 2010; Vogel, 2005). An example can be wealthy businessmen in the early 1920’s- 30’s, 40’s and 50’s giving away sums of money for community involvement or to build a nursing home or caring centres for the disabled (Henriques & Laerke, 2006).The environmental concept of bringing sustainable and responsibly sourced products to a mass market, happened much later, when the freedom of speech emerged, people could build coalitions, express opinions, and revolt against capitalism, mass consumption or what else they viewed as unfair treatment of resources; environmental and human (Fifka, 2009; Carroll, 2003). In recent times firms have tightened their regulations due to law formations and public demands, but often the rising awareness and concerns arose from scandals, human exploitation and mismanagement, rather than for the compliance and good of the society, an example can be Nike’s child labour in 1990’s (Zadek, 2004). Similar scandals helped discipline companies to get transparent while statuary bodies along with the general public demands for extensive information on whether companies are meeting acceptable standards (Henriques & Laerke, 2006; CIM, 2010). Furthermore, communication channels today are out of the co operations’ control, which makes it of critical importance for firms to monitor own business practices, involve the community whenever possible through partnerships and act transparently. Many have opted to publishing own business practices online in support of transparency, and involving the customer in product formation via questionnaires or suggestions, build trust (Vogel, 2005; Barnett, 2011).

Moreover, stakeholders’ changing expectations of businesses have led to more open communication and clarification of demands, frequently they wish to spend their money at co operations that share their values and principles (Perrirni, 2006; Sims, 2003; Carroll & Buchholtz, 2003). Those stakeholders can be the suppliers, consumers, employees, investors, shareholders or even the government among others (Mitchell et al, 1997), they all have one thing in common and it is; power over the specific firm’s existence- power that can turn negative in an instant. Thereof, the increased need in today’s business to portray businesses ethically; below is an example to support this view.

Sometimes the misalignment of values coupled with the speed of information can be very damaging, and ruin a reputation without the co oporations’ involvement; In 2006 Arla Foods' Middle East sales plummeted during a boycott of Danish products in the region following the publishing of cartoons depicting the Muslim prophet by a Danish newspaper. A certain Arla butter brand – Lurpack, is very popular in the Middle East and has been since 1960’s; if one asks in Saudi Arabia what they know of Denmark, the answer would be Lurpack Butter, (Business Management, 2009.) As a result, the company's sale dropped to nil in the Middle-east region and was forced to cut 100 jobs (Business Management, 2009); the boycott cost Arla Foods $ 2 US million a day.

The point the author wishes to makes is, stakeholders (in this case, customers), had substantial power over the firms’ existence in their market. For good or bad, Personal values and principles coupled with today’s exploiting media are adding a large dimension onto conducting businesses today, not always positive. Therefore it is of utmost importance to affect whatever can be within a firms’ scope, positively, since brands can easily be associated with bad deeds and mud sticks (Fraser, 2007). This example is to strengthen the view of CSR as way to manage risk and decrease the damage, as will be argued in section 2.6.3.2. Arla foods managed to communicate an apology for the offending cartoons in all local newspaper in the affected countries. Only then, its products were visible on shelves again (Business Management, 2009). That is despite the firm had no responsibility for the event.

Thus, a variety of factors, such as social democracy, the speed of digital communication, rising awareness on environmental pollution, and the stakeholders’ increasing power has affected business practices in a radical manner, and contributed to a more informed, responsible and strategic development (Vogel, 2005;Henriques & Laerke, 2006; Carroll, 2003). Hence, it can be concluded that CSR may be an adaptation to the socio-political issues in its surrounding community/environment as they emerged. It started as profit sharing and developed into a reactive measure to face scandals (Zadek, 2004; Porter et al, 2007; Sims, 2003; Martin, 2002), but has now transformed into a proactive, innovative risk reducing business approach as will be contrasted in chapter 4, section 4.3 with Marks and Spencer’s.

Below are quick global highlights of author’s choice on critical events that came to affect the CSR concept today:

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*Table -1 (Avlonas, 2011;Carroll, 2003; Fifka, 2009; Zadek, 2004; DEFRA, 2011)

Despite two of the example in the table being American, globally, Europe is seen to be leading the way in promoting CSR (DEFRA, 2011; CIM, 2009). In the UK the labour government in 2000 appointed the world’s first minister for CSR in spring of that year. In 2002 a PricewaterhouseCoopers survey of 1,200 business leaders found that 70% of chief executives agree that CSR is critical to the profitability of any company (CIM, 2009). Furthermore, the European Commission aims to make Europe a ‘pole of excellence’ on CSR through rooted strategies to tackle key social and stakeholder issues (CIM, 2009). For a view on historical CSR term development see appendix (B).

2.2 CSR Definitions

In this section, universally proposed definitions & models of the CSR concept will be discussed, along with a variety of examples from around the world. This is to give an idea on the various terms and interpretations existing. The

classifications mentioned will include the CSR pyramid and Hart & Milstein (2003) sustainability definition. Both will be widely applied definitions in this thesis.

“CSR covers all aspects of corporate governance. It is about how

companies conduct their business in an ethical way, taking account

of their impact economically, socially, environmentally and in terms

of human rights.”

(CIPD, 2009, p.1)

This definition is simple and direct. It states the levels corporate social responsibility contains and addresses the triple bottom line (Savitz and Webber, 2004) of economy, society and environment. The inclusion of those three factors is rather recent and can be argued to have started in the 1980’s (Savitz and Weber, 2004; Vogel, 2005; Senge et al, 2010).

Several authors (McWilliams & Siegel 2001; Barnett, 2010; Mullerat, 2009; Rendtorrt, 2009; Zadek, 2004) define CSR as something going beyond the legal requirements and profit-making goal that has a positive impact on the society. This definition implies that a very wide range of activities and practices could be considered under CSR, such as supply chain conditions, employee treatment and engagement in the community.

Yunus, 2007, as well as (Idowu & Filho, 2009 and Porter,2007) second this opinion and claim that CSR relates to corporate citizenship, wherein the company is legitimized by the community for its involvement and participation; firms chose how they wish to strategise and legitimise their corporate existence, by the actions they take and the supply-chain working conditions they adapt to.

Another CSR classification can be:

“The economic, legal, ethical and discretionary expectations that

society has at a given point in time. “

(Carroll and Buchholtz, 2003; p.36)

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Probably the most established and accepted model of CSR (Fifka, 2009). Due to its simplicity, stating 4 dimensions, (Carroll et al, 2003). Prior explaining this model, there is a need to clarify that a stakeholder is any person or organization, who can be positively or negatively impacted by, or cause an impact on the actions of a company, government, or organization (Mitchell et al, 1997).

This model/framework is important and shall be discussed in Marks and Spencer’s’ context in chapter 4. The base is economic which indicates that it is the foundation upon which all others rest. Carroll and Buchholtz, (2003) show that focus is put on being profitable, maximising sales and minimising cost. Thus it suggests here that CSR would not be pursued if it was not looked on through a profit /loss perspective, as supported by Friedman (1970), and Yunus (2007). Naturally, Shareholders expect managers to make sound strategic decisions, be attentive to dividend policy; simply provide investors with attractive returns on their investments. On second step we note the legal responsibility; indicates obeying the law as the bare minimum and play by the set rules, an example can be avoiding corruption and fraud. Third step is dedicated the ethical side of business. This aspect embodies values and expectations that reflect what stakeholders such as consumers, employees, shareholders, suppliers and the community regard as fair (Zadek,2004; Sims, 2003; Hopkins, 2009) and these can differ from country to another, as was noted in clothing industry scandal and utilisation of child labour in countries like Cambodia and India. Finally philanthropic responsibility positively affects the quality of life for the members of that particular society (Savitz & Webber, 2006). Assisting educational institutions and enhancing communities “quality of life” or even participating in voluntary charitable activities in the local community; giving away the leftover fresh produce of sandwiches and fruits to homeless, by coffee shops like prêt a manger is a fine example.

Another aspect of CSR, or indeed many argues it is just another name of CSR is sustainability.A classification of a sustainable development can be:

“ sustainability is the ability to meet the needs of the present without

comprising the needs of the future. .”

(Hart & Milstein, 2003: p. 56)

It is worth noting that there has been a debate on whether sustainability refers to business in a large sense, Porter and Reinhart (2007) reasoned that corporate responsibility concentrates more on the non-monetary societal activities that a company contributes to, whereas corporate sustainability focuses on both the impact of environmental factors on a company and the company's impact on the environment. However, the definition above, disregards Porter’s views and simply states no specific aspect, but generally informs on the future needs and present needs, those can be social , environmental, or financial, thus sustainability addresses all business aspects as per Hart & Milstein’s (2003) classification.

Perrirni (2006) writes of the need to approach global warming in the same manner as any other strategic threat or opportunity for it is indeed a business issue and must be dealt with strategically. Perrirni (2006) also stressed that ignoring sustainability issues related to climate or society is a great risk for co operations. Hart & Milstein (2003) support this view, and their model of sustainable value shall be demonstrated in the next section.

Hopkins (2009) disagrees with Porter and Reinhardt (2007) and claims that CSR and sustainable development are two sides of the same coin, since sustainability now incorporates economic and social phenomena in addition to the traditional environmental. Drawing on the arguments above, and the wide literature review on hand on sustainable and responsible companies, it can be identified that there is no one definition (one size fits all) for CSR practices universally. Each co operation applies their own interpretation of the term with what suits their business.

European Corporate Sustainability Framework (ECSF) uses one label for both corporate sustainability and responsibility (Fifka, 2009), so largely these terms are synonymous and will be treated as such here; both will be referred to as CSR. For instance, the fair-trade UK foundation is about maintaining small farmers, growers, manufacturers etc, and ensuring their social existence and wellbeing is being considered, thus the triple bottom line’s staples are all addressed in fair-trades, which make it a sustainable business practice (Vogel, 2005).

Nevertheless, various authors, thinkers and practitioners have used a broad terminology with subtle differences as contrasted above. CSR has been referred to as corporate citizenship, responsiveness, sustainable development, business ethics, green business and corporate sustainability among others less predominant in the CSR literature (Boatright, 2000 ;Carroll, 2003; Mullerat, 2009; Rendtorrt, 2009; Savitz & Weber, 2006; Wherther, 2011; Vogel; 2005). Among the reasons to why it is difficult to agree on a common definition of CSR, excluding the abundance of concepts available that create confusion, is down to the problem of “determining operationally the managerial implications of such a definition” (Carroll & Buchholtz, 2003). Companies have different sizes, products, purpose, resources, societal impacts, principles, etc. So it is natural that the adaptation of a specific definition will somehow depend on the specific attributes of the company, its strategic fit within its environment and the stakeholders that have an interest in its business.

Last, from the assortment of definitions available in the literature explored, the choice has been to shed the light on a few classifications that have relevance to Marks and Spencer’s CSR strategy- Plan A. Largely Marks and Spencer’s sustainability plan, plan A, is plausible with the definitions chosen and presented of Hart & Milstein (2003) and CIPD (2004). CSR classifications will be referred to frequently in Marks & Spencer’s case study in chapter 4.

2.3 Creating Sustainable Value

This section will analyse how sustainable business models create value, and will include the sustainability value framework by Hart and Milstein (2003) that will be applied in detail on M&S case findings in chapter 4.

In their article “competitive advantage of corporate philanthropy”, Porter and Kramer (2002) noted that organizations do not work in isolation; they are part of their communities and are constantly contributing so long they are operating. Furthermore, Hollender & Breen, (2010) as well as (Senge et al, 2010; Savitz & Weber, 2006) reason that the worlds’ diminishing resources and growing waste underlie a host of related economic stresses and reflect environmental and social imbalances that all point in one direction; without significant change, these problems will worsen and companies will gradually pay the cost of it.

Mullerat (2009) along with Ward & Smith (2006), suggest we drop the word social and keep it corporate responsibility, for the idea of it being trendy and a word that firms should strive to associate with is “yesteryear” as he, Mullerat (2009) expressed it. This makes perfect sense as, to be effective, corporate responsibility must be integrated in co operations’ perceived value, rather than being added on. CSR is a matter of values, such as transparency, openness and trust; it is a case of dialogue and communication, not only branding,Mullerat (2009), as there should be depth and genuine actions behind the label, it should come as natural to the business as the forecasting of next months’ sales.

Porter and Kramer (2006) mean that businesses planning short term, at the expense of society in which it operates will find its success to be ultimately temporary, for that business can be exploiting those very materials which lead them to succeed in the first place. Clearly, it is not possible to have a fishing industry if there are no fish or a soft drink company without clean water.

Perrini et al (2006), supports this view of CSR being a process of value creation and social contributor, the business just needs to think of which values it wishes to address.

Just as Porter and Kramer (2006) and (Carroll & Buchholtz, 2003) argued that no business can solve all the global problems alone, co operations should rather choose a cause that creates shared value, represents a benefit for the society they are engaged in that also brings back benefit and is valuable for the business. They noted that being a responsible business does not have to be done altruistically, a belief that the business can differentiate itself and profit from such an engagement is important (Martin, 2002; Vogel, 2005; Crawford & Scarletta, 2005, Henriques and Laerke-Engelschmidt, 2006). An example Porter and Kramer (2006) provide is Nestlé’s milk district Moga in India, where Nestlé educated their Moga farmers’ and contributed to raising their social welfare via practices of educating the children and informing the farmers of best practices in looking after the cow cattle. By that Nestlé co operation ensured they get an excellent supply for own production network while providing a good lifestyle for its suppliers. Consequently, this raised Moga’s living standards and strengthened its purchase power. Also Honda New Zealand has joined the wave, and is now planting 10 trees for each car sold to lessen the pollution (Morris, 2007).

It might sound self-serving they publish such practices, but it could equally be considered a sincere commitment to show that co operations can and do serve shareholders' interests while also serving those of the larger community. Even if the initiatives initially may be small and sporadic, they still can make a difference.

Hart and Milstein (2003) have come up with a model to measure exactly how sustainable business models can be valuable and beneficial, on a larger scope than Porter and Kramer (2006) measured. Hart and Milstein (2003) confirm that sustainability is about not exploiting our current resources, nor relying heavily on today’s trends, but thinking long-term; their model sees a sustainable enterprise as one that contributes to sustainable development by delivering economic, environmental and social benefits.

2.3.1 Sustainable Value Framework

HartandMilstein (2003) created a model “Sustainable- Value framework” which is a simple diagnostic tool, to measure where the company is today in terms of sustainable practices, cost and risk reduction in addition to reputation management are addressed today in order to reach innovation and re-positioning as well as growth tomorrow.

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-Hart & Milstein (2003) Sustainable Value Model-

By developing those sustainable practices Hart and Milstein (2003) argue that firms can reach leading positions. Once the model is applied onto firms, it suggests missed opportunities and risk for firms that are not well positioned in either cost reduction or reputation management.

Furthermore, this model also suggests creative inclusion of stakeholders to differentiate the firms’ position and contribute to excellent brand reputation (Mitchell et al, 1997; Hart &Milstein, 2003). Therefore this tool is important for this thesis and highly applicable; the author intends to apply it on M&S case study findings due to its excellent match on several business practices in M&S’ plan A. Full application is found in chapter 4 section 4.4.

Briefly, the model illustrates four quadrants; firms must perform well in all four in order to be successful and must be applying the bottom 2 in order to be creating a sustainable value today (Milsten & Hart, 2003). The latter give an example of companies failing to adhere to changes and that have not scored well in those 4 quadrants, such as Kodak, this firm over-emphasised on today’s business that it excluded the ongoing technology of the market surrounding it. It seized to generate wealth and competitors soon overtook its once powerful position.

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