CSR in International Business - Creating Shared Value
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The world is experiencing several global issues of economic, social, cultural, and humanitarian characters, and they are continuously increasing in scale. Multinational corporations (MNCs) are considered as both contributors to the problems, but also as a big part of the solutions. Consequently, the pressure put on firms to take responsibility for their actions is increasing, and corporate social responsibility (CSR) has emerged as an inescapable priority for managers. However, MNCs investments in CSR are moderate, namely because the firms consider such investments as a cost factor only. A literature review on the subject of CSR within international business revealed that research investigating what MNCs may receive in return of their CSR investments, is absent. This study responds to the lack of research by addressing how MNCs may use CSR to create shared value, benefiting both the firm itself, as well as the society. The focus centres on the issue of whether and how shared value can be achieved through creating either a competitive advantage or a blue ocean, by engaging in responsible actions. In order to investigate the subject, a case study is performed on two Norwegian MNCs that have incorporated responsible actions in their business strategies, as the only actors in their respective industries. The findings of this study reveal that MNCs can create shared value by pursuing the two different methods investigated. It is found that MNCs can create a competitive advantage by differentiating themselves from their competitors by acting responsibly. Additionally, a blue ocean can be created by initiating a value innovation based on CSR. However, in order for both methods to be viable, certain guidelines must be followed, and preconditions must be fulfilled. Based on the findings in this thesis, a strategy framework and tool is developed in order to provide clear guidance for other MNCs, on how to best achieve shared value creation. We call it the Green Planet Strategy. In order to create shared value, the firm must develop a sustainable value innovation, that is, a value innovation based on responsible actions. Such an innovation is created by reducing firm risks and costs, while increasing the value offering to the customers. Additionally, the responsible strategy must have relevance, which is achieved by addressing the most pressing issues in the specific industry. Helpful guidance, preconditions, as well as tools are presented to help the firm create the best possible sustainable value innovation. The findings of this study provide evidence for managers that business opportunities exist within CSR, and that CSR is not solely an expense. Thus, managers must discard this wrongful perception of CSR and acknowledge the opportunities that exist within this field. However, without true commitment from the top management, these opportunities can never be fully exploited. Furthermore, policy-makers need to intensify their work to impose additional and stricter regulations on MNCs. Additionally, indirect policy-makers must acknowledge their responsibility regarding this work.