62

Int. J. Business Competition and Growth, Vol. 1, No. 1, 2010

A resource-centric perspective on strategic and

sustainable Corporate Social Responsibility (CSR)
initiatives
Som Sekhar Bhattacharyya
Faculty Room No-212, Training Block,
National Institute of Industrial Engineering,
NITIE Campus, Vihar Lake Road,
Mumbai 400 087, India
E-mail: somdata@gmail.com
Abstract: Corporate Social Responsibility (CSR) has become an established
mantra for business firms to address social and environmental issues
challenging the present-day world. CSR activities require firm resources. CSR
initiatives in turn also generate resources of various qualities and varying
quantity. It is indeed interesting to study the quality and quantity of resources
dedicated for CSR activities and the resources generated from the CSR
activities. The purpose of this paper is to develop a typology for resource based
classification of CSR and provide a guiding framework to managers for
planning CSR activities to make them strategic in nature.
Keywords: CSR; corporate social responsibility; slack resources; strategic
resources; typology of CSR; strategic CSR; sustainable CSR.
Reference to this paper should be made as follows: Bhattacharyya, S.S. (2010)
A resource-centric perspective on strategic and sustainable Corporate Social
Responsibility (CSR) initiatives, Int. J. Business Competition and Growth,
Vol. 1, No. 1, pp.6284.
Biographical notes: Som Sekhar Bhattacharyya has pursued Doctoral Level
(Fellow Programme in Management, FPM) studies and research in Strategic
Management from Management Development Institute (MDI), Gurgaon, India.
His research interest is in Strategic Corporate Social Responsibility (CSR).
He has published in various Indian and international journals on CSR.
Currently, he is working as an Assistant Professor of Strategic Management at
National Institute of Industrial Engineering (NITIE), Mumbai, India.

Introduction

Corporate Social Responsibility (CSR), as a mechanism to address the social and

environmental issues, has gathered momentum in the last few decades (Lance, 2001).
It has, to a certain extent, become even fashionable to do CSR. But, whether a firm
visualises these issues as a trivial concern or as a challenge (to cure social and
environmental ills) or as a business opportunity can be contested. Increasingly, business
firms are engaged in social and environmental initiatives of different colours and varying
shades. The CSR initiatives undertaken by the firms are sometimes related to the firm
Copyright 2010 Inderscience Enterprises Ltd.

A resource-centric perspective on strategic and sustainable CSR initiatives

63

business and sometimes are strikingly unrelated. Another new mantra for firms is to
engage with society in a continuous manner (Waddock, 2004; Altman, 1998) rather than
in a fragmented manner. Whether firms are doing justice to its primary constituency
(that is shareholders) by these unrelated CSR activities has been debated in the past
(Drucker, 2001). The dominant and primary goal of profit institutions (which business
firms are) is to generate wealth for its owners. It has been advocated by management
researchers and thinkers that business should indulge in those CSR initiatives that help
realise business benefits (Porter and Kramer, 2006; Crawford and Scaletta, 2005;
Salzmann et al., 2005; Meehan et al., 2006; Kotler and Nancy, 2005; Windsor, 2006;
Altman, 1998; Waddock, 2000; Ricks, 2005; Perrini, 2005; Bhattacharya et al., 2004).
This kind of CSR, which makes business sense, is called Strategic CSR (Porter and
Kramer, 2006; Johnson, 2003; Lee and Logsdon, 1996; Werther and Chandler, 2006;
Lantos, 2001; Carroll, 2001; Ricks, 2005; Quester and Thompson, 2001; McAlister and
Ferrell, 2002). The concept of Strategic CSR, however, still waits to be looked into from
the angle of RBV particularly from the viewpoint of the nature and type of resource
namely Slack Resources and Strategic Resources. This study theorises to bridge this
gap. The initial sections of this paper describe the concepts of CSR, RBV and
Resources (strategic and slack resources). In the subsequent section, the role of
Strategic Resources in providing a firm Competitive Advantage is discussed. In the
penultimate section, a Typology of CSR is conceptualised based on the nature of resource
input and resource output from the firm CSR initiatives. Finally, this paper proposes that
the best kind of CSR can be done when Strategic Resources are generated from Slack
resources repeatedly. The benefits of strategic CSR have also been deliberated in this
study. This conceptual research paper ends with a discussion on how future researchers,
based on the theoretical insights made in this study, can build empirical perspectives and
contribute towards further theoretical development in this field of enquiry.

The basics of Corporate Social Responsibility (CSR)

Researchers and practitioners over the years have found it very difficult to arrive
at a single universal definition (or meaning) of the term CSR (Meehan et al., 2006;
McWilliams et al., 2006; Windsor, 2006; Leisinger, 2005; Valor, 2005; Munshi, 2004;
Waddock, 2004). At a very macrolevel, CSR captures the dynamics of the equation
between business and society (Hill et al., 2003), whereas CSR at a microlevel talks about
the minimisation and internalisation of negative externalities generated by a firm as well
as greater generation of positive externalities (Jones, 2005).
Carroll (1979) in the seminal paper The Pyramid of Corporate Social Responsibility
wrote that business firms have four responsibilities to cater to namely
1

economic

legal

ethical

philanthropic.

The most basic is the Economic responsibilities, which expects businesses to be

productive and profitable. Second important responsibility is legal responsibility, which

64

S.S. Bhattacharyya

expects that, for profit organisations attend to the economic responsibility within the
boundaries of legal frameworks. The third responsibility is the ethical responsibility.
Society expects that businesses not only comply with the laws of the land but also respect
and oblige the moral values and norms of society. The last, but one of the main defining
responsibilities of business firms is the philanthropic responsibility. It talks about the
obligation of business organisations to take care of the problems in society and solve
them to better the social context.
Thus, to provide a comprehensive conceptualisation on CSR, businesses not only
have to pursue its business activities within the boundaries of ethical and legal settings
but also have to address the needs and problems facing society. CSR encompasses those
business thoughts and actions that are primarily directed towards benefiting the society
(Hopkins, 2003).
Thus, the sound that business has to take care of its stakeholders is loud and clear.
The concept of CSR provided indicates that CSR activities cover a broad set of activities.
It varies from being just more than merely complying with the various legal standards,
to undertaking various employee welfare programmes, to the socio-economic
development of community, to pollution prevention and environmental care initiatives.
So, CSR consists of a broad range of activities and generally a firm engages in a number
of CSR activities.
If the society is a pond full of social problems, the CSR activity of a firm is seen as a
pebble, which creates a ripple in the pond. If one calls it a CSR pebble, then if there are a
few pebbles in the pond it will create ephemeral good ripples here and there and soon the
pond surface water will become silent after the ripples are down. But, as like in a nuclear
chain reaction if the number of CSR pebbles being thrown achieves a critical mass such
that CSR pebbles are being thrown continuously (sustainably over time) and all over the
pond (geographically everywhere in the pond so that inequality is not there) then a man
standing in the banks of the pond will see that continuously ripples are being created
everywhere and at all times. This is a situation where the businesses are taking care of all
the ills of the society at all times. Of course, the government will create its own ripple
like the wind blowing across the pond (one cannot neglect it). The only point to note is
that the problems in society are so large that we do not have a pond where ripples have to
be created but it is as big as an ocean where ripple has to be created! So, one should
always appreciate any CSR pebble falling into the pond big or small. One has to think of
making that world a little better place by each and every incremental addition of
beneficial surplus.
Engaging with communities by various CSR initiatives requires firms, to spend
resources. This is important in the context of this study. The next section discusses the
concept of resources.

Firm resources and types of resources

Exactly what is meant by resource has been debated (Rugman and Verbeke, 2002).
Resource has been viewed as the production process factor inputs (Grant, 1991)
controlled or owned by the firm (Amit and Schoemaker, 1993). Other researchers have
conceptualised resources as a stock of assets, skills and capabilities of a firm (Collis and
Montgomery, 1998). Resources of a firm has also been thought not just as what is
located within the firm (not limited to what the firm owns and controls) but all the real

A resource-centric perspective on strategic and sustainable CSR initiatives

65

assets it possesses (what business firms can draw from the environment) (Chamberlain,
1968). In simple terms, resource stands for those entities that actually belong to the
organisation or to other potential entities, which the firm can easily acquire (Caves, 1980;
Wernerfelt, 1984).
Resources occupy the input as well as the output side of any firm. Firms use resources
(such as raw material, labour and managerial skills) as inputs to produce goods and
services (the input side resources of the firm). The produced goods and services when
traded in market in turn also generate resources (the output-side resources of the firm).
Like earning profit is generation of financial resources while earning reputation (goodwill
in society) is generation of intangible resource. This has been depicted in Figure 1.
Figure 1

Firm activities resource input and output

Resources are a fundamental and primary requirement for a firm (Amit and Schoemaker,
1993; Collis and Montgomery, 1998) and hence a basic unit of analysis of a firm
(Grant, 1991). Resources can be classified into three types (Aaker, 1989; Hall, 1992;
Venugopal, 1999).
1

Tangible resources/assets

Intangible resources/assets

Skills (also seen as capabilities, Miller, 1998; Aaker, 1989; Hall, 1992;
Venugopal, 1999).

The classification of resources (Venugopal, 1999) has been shown in Figure 2.

Figure 2

Classification of resources

Tangible resources/assets are those resources that have physical existence (Venugopal,
1999), whereas intangible resources/assets are those assets that do not have physical
existence (Venugopal, 1999; Miller, 1998; Aaker, 1989; Hall, 1992). Skills are the
individual abilities of human beings to perform an action (Miller, 1998; Aaker, 1989;
Hall, 1992). Skill is something, which is not possessed by any passive asset. Skills could
be used to build asset for the firm. Some examples of the three kinds of resources
(Hall, 1992; Venugopal, 1999) have been tabulated in Table 1.

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S.S. Bhattacharyya

Table 1

Examples of resources

Tangible assets

Intangible assets

Skill

Plant

Political Acumen

Ability of individuals (like of workers,

managers to perform organisational tasks)

Machinery

Reputation

Raw material

Patents

Research and development skills of

engineers and researchers of the firm

Financial assets like cash,

bank deposit, etc.

Tangible and intangible resources alone do not contribute to firm performance.

When the skills and capabilities (Miller, 1998) residing in the firm exploit the tangible
and intangible resources properly, it results in superior performance of the firm over other
firms (Barney, 1991; Rumelt, 1987).

Resource-Based View (RBV)

As have been discussed, resources are central to a firms survival. Hence, there is a
school of thought whose protagonists proclaim that the firm resource possessed, used and
generated by a firm differentiates the performance of one firm from another. This school
of thought is popularly known by the name of RBV (Barney, 1991; Miller, 1998) in the
strategic management literature. RBV is an approach for the strategic management of
firms. The philosophy of looking inside the firm for achieving success (as RBV
prescribes) is one of the oldest concepts in strategic management championed by the
early works of Barnard (1938), Selznick (1957) (distinctive competence) and
Penrose (1959) (bundle of resources). The quality of resources a firm uses as input
reflects on the quality of the goods the firm produces (Wernerfelt, 1984). According to
RBV, firm resources that have costly-to-copy attributes serve as sources of superior
economic rents and, thus enhance firm performance (to attain and keep profitable market
positions) and hence lead to Competitive Advantage (Barney, 1991; Rumelt, 1984,
1987). Thus, RBV explains the differences between firm performances based on the
heterogeneity of resources that a firm possesses with respect to its competitor firms
(Barney, 1991; Rumelt, 1984). The RBV school believes that a companys strategy
and success can be determined based on the unique resources and competencies, which
the company possesses. Incorporating an RBV perspective, Christensen et al. (1987)
conceptualised strategy as a fit between the internal resources of a firm and the external
opportunities.

Concept of strategic resources

Resources occupy the starting and central point in the RBV line of thinking and it is the
possession of Strategic resources that makes one firm more successful than other
competing firms in the industry (Venugopal, 1999; Barney, 1991, 1986a; Dierickx and
Cool, 1989; Wernerfelt, 1984). According to RBV, Strategic resources have the set of
characteristics of being unique, resources, valuable, imperfectly imitable and imperfectly

A resource-centric perspective on strategic and sustainable CSR initiatives

67

substitutable and resources. Resources lacking the mentioned characteristics are

non-strategic resources (Venugopal, 1999). Firm success is strongly influenced by the
generation and possession of strategic resources by firms (Penrose, 1959). Thus,
from an RBV perspective, it is important for a firm to generate Strategic Resources
(Barney, 1991). The characteristics of strategic resources have been tabulated in Table 2.
Table 2

Strategic resources

Characteristic Explanation of the

S. No. of the resource characteristic

Why it is important

Unique to the
firm

The resource is specific to the

firm, that is no other firm
posses the resource
(Barney, 1991)

If the resource is not unique to the firm

then the advantage because of the resource
will also be with other competitors. So the
firm will not be able to attain sustained
competitive advantage from the resource

Scarce/rare

The resource is not available

in plenty or in abundance
with the firms competitors
or in the environment to be
drawn easily by the firm or
its competitor (Barney,
1986a, 1991; Dierickx and
Cool, 1989)

If the resource is available in plenty

or in abundance then other competing
firms could easily gain access to (or own)
that resource and thus nullify
the advantageous position the firm
commands. Thus there will be no
competitive advantage for the firm

Imperfectly
imitable

The resource cannot be easily If the resource can be created or recreated

or fully (re)created by
by competing firms then again the high
competitors (Barney, 1991) ground achieved by the firm is eroded
(Peteraf, 1993; Barney, 1986b) as the
resource advantage is lost. Thus the
competitive advantage cannot be sustained
by the firm

Imperfectly
substitutable

Very similar to the notion of

Imperfectly imitable. There
should not be substitutes
available exhibiting the
resource properties (Dierickx
and Cool, 1989; Barney,
1991)

If competitors develop a substitute

resource exhibiting relevant and necessary
valuable features of the resource then the
unique resource advantage is lost
(Barney, 1986a; Conner, 1991). Thus the
competitive advantage cannot
be sustained by the firm

Valuable to
customers

The resource should be

valuable to the customers
(Barney, 1991; Amit and
Shoemaker, 1993)

The resource should be valuable to the

customers so that the resource creates
values for the firm (finally leading to
profits)

Possession of strategic resources can lead to competitive advantage for the firm
(Barney, 1991; Wernerfelt, 1984). Resources in and of themselves do not lead to
competitive advantage (Venugopal, 1999); this is just possession of resources per se by a
firm and is a necessary but not a sufficient condition for superior financial performance
(Miller, 1998). The ability of the firm to combine and integrate the strategic resources is
decisive in generating superior firm performance. Strategy must be concerned with the
development and deployment of firm-specific factors into activities, which can contribute
to competitive advantage. The resources developed by the firm should be aligned with the
firms competitive context. Since the world is constantly changing, superior returns

68

S.S. Bhattacharyya

can be only be sustained, if new superior resources are constantly generated over its
competitors. This perspective has to be explored from the concept of CSR.

Concept of slack resources

All resources are not strategic resources, some such non-strategic resources are slack
resources. Slack Resources (or slacks) are those firm resources that are possessed by a
firm but are not committed to a necessary organisational activity (Bourgeois and Singh,
1983; Bourgeois, 1981). Slack has been seen as the excess of resources over and above
those required to complete a task (Waller, 1988). Slack is generally defined as resources
and effort towards activities that cannot be justified easily in terms of their immediate
contribution to organisational objectives (March, 1988). Slack has been seen as a
deliberate underestimation of revenues and productive capabilities or overestimation of
costs and resources in the budget (Lukka, 1988). Slack has also been seen as
dysfunctional (Merchant, 1985; Schiff and Lewin, 1968; Williamson, 1964). Budgetary
slack is commonly defined as the excess of the amount budgeted over what is necessary
(Merchant, 1985). Budgetary slack is created during the budgeting process. For most
firms generally, slack resides in the budgetary allocation (Schiff and Lewin, 1970).
According to Bourgeois and Singh (1983), there are three types of slacks.
1

Available slack

Recoverable slack

Potential slack.

The characteristics of the three types of slack resources have been tabulated based on the
works of Bourgeois and Singh (1983) and Venugopal (1999) in Table 3.
Slack resources have been seen to have both merits and demerits in organisational
perspective. From the merit angle, slack is seen as a resource base, which can provide for
experimentation and innovation (Dimmick and Murray, 1978). Pfeffer and Salancik
(1978) advocated that maintaining slack resources was a mechanism to buffer and protect
the core of the firm from rapid changes in the firms external environment. Thus, slack
resources play an important role amongst managers (Barnard, 1938; Thompson, 1967).
When there is a goal conflict, slack resource deployment resolves goal conflict
(Bourgeois, 1981; Cyert and March, 1963). Slack has been seen to provide departmental
managers with the capacity to respond effectively to changing operating conditions
(Cyert and March, 1963; Merchant and Manzoni, 1989). The demerits of slack resources
are that, it represents inefficiency and managerial self-interest that can harm the firm
value (Williamson, 1964). That is managers may intentionally create and bargain for
slack (Cyert and March, 1963; Schiff and Lewin, 1968; Williamson, 1964). Thus, slack
represents a mixed bag of good and bad (Merchant and Manzoni, 1989) but Slack being
good or bad is dependent on the manner in which it is used (Onsi, 1973). So, if slack
resources can be used for generating strategic assets, then it is a healthy process. CSR can
provide the means to achieve this result. Onsi (1973) had also stated that slack is present
in operating budgets of any firm in any year and further Merchant (1985) had concluded
that, slack exists in most organisations. This is important and relevant for this study, as it
provides for a scope of slack resource being used for CSR initiatives for a firm.

A resource-centric perspective on strategic and sustainable CSR initiatives

Table 3

69

Slack resources and its classification

Available slack resources

Recoverable slacks resources

Resource that a firm posses but The amount of available slack

resources, which is absorbed in
is not
the firm because of the
Committed to any firm
inefficient utilisation of
activity
resources or in other words the
firm inefficiencies. These slack
Tied to any firm activity
resources can be recovered from
These are a sort of free
the firms business operations,
resources. Managers can
if the firm starts utilising its
sacrifice these resources for
resources committed in an
any activity of their choice
optimal way
based on their jurisprudence
Implication for CSR

Implication for CSR

This type of slack can easily

get into CSR activities

This type of slack resource

is little difficult to be utilised
for CSR programs

Potential slack resources

Resources which a firm does
not posses in real time
But can gain access to
Acquire easily own from the
environment
For use in future by the firm
Implication for CSR
This type of slack resource can
easily be gained from the
environment and utilised for
firm CSR activities if there is
such a need

Source: Bourgeois and Singh (1983) and Venugopal (1999)

CSR typology based on CSR activities resource input

and resource generation

Most firms having business operations operating in different locations engage in a variety
of CSR activities, which requires a wide range of resources. CSR activities require funds,
management time, management effort and other tangible/intangible organisational
resources. These firm resources could have been put to some other firm activity for
earning profit. All resources have opportunity cost. Thus, if a company does some CSR
activity, then it is actually sacrificing the resource for the CSR activity, as against some
other core business activity. Some of the resources used for CSR activities are possessed
by the firm and some are not possessed by it. For the resources, which the firms do not
have, the firms collaborate with other firms and institutions like NGOs and government
to acquire it.
As shown in Figure 3, any firm engaging in CSR initiatives will use a combination of
various resources (slack as well as strategic) as input for the CSR activities. Further as
output of the CSR initiatives also, a combination of various resources (slack as well as
strategic) will be created. The nature of resource input and output for CSR initiatives
brings a new angle towards looking at CSR.
On the basis of the type of resource used for CSR initiatives by a firm and the type of
resources generated from the CSR initiatives, the CSR initiatives have been classified
into four types by the authors. This can be seen as a classification of CSR from an
RBV perspective. This has been shown in Figure 4 and explained in Table 4.
The characteristics of the dominant nature of the resource are used for the classification.

70

S.S. Bhattacharyya

Figure 3

CSR, nature of resource input and output

Figure 4

CSR classification based on CSR resource input/output scenario

From Table 4, it is obvious that firm managers should attempt to design firm
CSR in such a manner that Slack Resources are sacrificed in CSR initiatives to generate
Strategic Resources (that is undertake Strategic CSR). If firm CSR is such that Strategic
Resources are being sacrificed in CSR initiatives to generate Slack Resources,
then it tantamount to wasting valuable shareholder wealth. CSR as Usual and Suboptimal
CSR neither add value nor destroy value so it makes little difference to the firm from the
RBV perspective.

A resource-centric perspective on strategic and sustainable CSR initiatives

Table 4

Scenario
1 CSR as
usual

2 Sub
optimal
CSR

3 Wasted
CSR

4 Strategic
CSR

71

Explanation of CSR classification (based on resource input/output scenario on CSR

initiatives)
Description
of scenario

Input
Output
resource resource Remarks

Slack
Slack
This context of doing CSR is a no gain no
resource resource loss scenario, as there is no consumption of
important and/or valuable resources for the
CSR initiatives and there is no creation of
important and/or valuable resources for the
firm. It more like a firm has earned more
profit, so it provides more into charitable
or philanthropic acts in distant terrains for
unrelated causes
Strategic Strategic Similar to the first scenario, in this state
Strategic
resources being resource resource also there is no gain-no loss situation.
In this case important and/or valuable
sacrificed in
resources are input to the CSR initiatives to
CSR initiatives
again generate important and/or valuable
to generate
resources for the firm. So this type of CSR
Strategic
can be called as Sub optimal CSR. It is sub
resources
optimal CSR because the generation of
strategic resources comes at the cost of
strategic resources
Strategic
Strategic Slack
This scenario is the most undesirable state.
resources being resource resource The organisation spends its valuable and/or
sacrificed in
important resources to create unimportant
CSR initiatives
and/or unvaluable resources, which are
to generate slack
available in plenty and of no use to the
resources
firm. The sacrifice of the strategic
resources has a huge opportunity cost
attached to it.
Thus one can say that this is a waste of the
shareholders resources (negligence of
economic responsibilities in Carrolls
(1979) pyramid). This can be in other
words put as a loss scenario for the firm,
though it might benefit the societal or
environmental cause greatly
Strategic It is the most desirable CSR scenario;
Slack resources Slack
being sacrificed resource resource rather
it is strategic as the firms puts unimportant
in CSR
and/or un valuable, extra available
initiatives to
resources to generate strategic resources
generate
for the firm. As strategic resources are the
strategic
possible sources of competitive advantage.
resources
This type of CSR can lead to competitive
advantage. Thus in this type of CSR a firm
achieves strategic gains from non-strategic
inputs. This is an example of strategic
CSR. Firms attempting to achieve win-win
perspective from CSR should design their
CSR in such manner that this criterion is
fulfilled
Slack resources
being sacrificed
in CSR
initiatives to
generate Slack
resources

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S.S. Bhattacharyya

Managerial implications: generation of strategic resources from firm

CSR activities using slack and non-strategic resources

The big question before managers is how firms can indulge in strategic CSR. How can
firms do strategic CSR? This section talks about how managers can design and work to
use slack and non-strategic firm resources in firms CSR initiatives to generate Strategic
Resources for the firm. The work of Porter and Kramer (2006) explained what type of
CSR initiatives should be undertaken keeping firm benefits in mind. In the context
of CSR, a competitive advantage of a company comes when a manager designs such CSR
activities, which also reinforce its business activities (Porter and Kramer, 2002).
CSR activities have to be designed such that it reduces the cost of the product or
differentiates the product (Miles and Covin, 2000) to be strategic in nature. This section
of the paper deliberates on strategic CSR from the nature of resources sacrificed and
generated from the CSR initiatives. Thus, this section brings the two worlds of CSR and
RBV together. CSR can become strategic when the CSR activities generate strategic
resources. Russo and Fouts (1997) had discussed the environmental performance of firms
with firm profitability from an RBV perspective. Branco and Rodrigues (2006) had also
analysed CSR from an RBV perspective, but they stopped short of providing any
framework for the designing of strategic gains out of CSR. Further, they discussed CSR
rather than Strategic CSR, which is the focus of this paper.
CSR activities can be designed in such a manner that the CSR activities enhance the
value of the firm (Porter and Kramer, 2006). Porter and Kramer (2006) wrote that for
CSR to be strategic CSR should contribute to firm value chain (Porter, 1985) practices or
improve the context of competitiveness (Porter, 1990). Porter and Kramer (2006) had
talked about how certain CSR activities can be done in such a way that the CSR activity
formed a part of the firm value chain by supporting either the primary activities or the
support activities of the firm value chain. CSR activities can help firms to secure
purchased inputs like raw material by sustainable harnessing of the natural resources,
reduce operational costs, smoothen inbound/outbound logistics or contribute to the
marketing and sales function in the value chain activities. CSR activities can also help in
value addition of the support activities (like in procurement, manpower development,
etc.) of the firm value chain. On similar lines, Porter and Kramer (2006) wrote that when
firm CSR activities improve the context of competitiveness of the firm then the CSR
activity becomes strategic in nature. The reinforcement of the context of competitiveness
can be seen as opportunities for CSR initiatives. CSR activities can improve the factors of
production, such as skilled labour or infrastructure, necessary to compete in a given
industry. CSR activities can modify the demand conditions of a market by stimulating the
demand for

better standards of product quality and safer products

environment-friendly products

socially responsible products.

CSR initiatives can, apart from making the local demand sophisticated, further make the
size of this market of substantially bigger volume. CSR initiatives could lead to framing
rules and regulations on governance for healthy competition, protection of intellectual
property, strengthening investment climate, etc., which make the Firm Strategy,

A resource-centric perspective on strategic and sustainable CSR initiatives

73

Structure, and Rivalry context favourable for the firm. Finally, CSR could also improve
the situation of Related and Supporting Industries concerns by building the capacity of
supporting industries so that the suppliers provide the raw material (often strategic
resources) of proper quality, at a competitive price delivered in adequate quantity in time.
Firm managers can put slacks like uncommitted manpower and other uncommitted
resources for CSR initiatives. Further, free slacks like certain percentage of excess
firm profit (like x % of net profit) or budgetary surplus can be dedicated for CSR
activities involving the firm value chain or the firm context of competitiveness.
From these CSR initiatives, firms could generate strategic resources. Figure 5 shows a
schematic diagram showing how firms can put slack resources into CSR activities
supporting firm value chain and firm context of competitiveness activities to generate
Strategic resources in the process.
Figure 5

Strategic resources generated

Source: Porter and Kramer (2006)

CSR activities in the firm value chain can generate raw material to be used for firm
business activities. Swiss MNC Nestl (Porter and Kramer, 2006) gets milk and Indian
FMCG giant ITC gets farm produce as raw material (Prahalad, 2004) for their business
inputs by doing CSR activity in villages involving the villagers. Some technology giants
like Intel, Microsoft are developing technology with local rural communities to cater to
the Bottom of Pyramid (BOP) market to serve the poorest of the poor. Unilevers Indian
company HUL has developed process (i.e., Shakti microfinance) and technology
(iodised salt) for the BOP (Prahalad, 2004; Prahalad and Hart, 2002) market. This has,
apart from benefiting the communities in various manners, helped HUL not only to build

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S.S. Bhattacharyya

a brand name (intangible resource) in BOP but also to sell its products to earn profit
(financial resource, a tangible resource). Similarly, in India, MNC and private banks,
alike, have developed products (microfinance) to benefit the economically marginalised
especially the women. BOP market provides firms with the opportunity to serve the
needy with profit (financial resource, a tangible resource) (Waddock, 2000). Business
firms particularly in developing countries are, individually and collectively, opening up
educational, research and other institutions so as to generate a pool of desired quality and
quantity of skilled human resource (a strategic resource) such that it can serve as potential
employees for business. Many such collaborative programmes have become Public
Private Partnerships. Firms are also building capacity of supplier firms so that these
smaller related and supporting industries (suppliers) have the requisite technological and
management skills to deliver desired quality of raw material, input products and services
of the required quantity (that is towards the development of industrial clusters). While
generating the tangible resources via the value chain and context of competitiveness, the
firm manager and employees also acquire and develop on an array of skills and
capabilities (like on working with governmental on policy issues to product and
technology development for BOP or on environmental aspects). These skills, which are
unique to those firm managers who are doing CSR, are rare. Firms, which are not
indulging in CSR initiatives, will never be able to impart such skill to their managers.
These sets of skills collectively residing with the managers in the firm are strategic
resource, as it would help to develop new products to meet the social and environmental
needs. These skills are contextual in nature differing from one industry to another or from
one firm to another. At a macrolevel, these skills make managers to better understand the
social (like BOP market) and environmental (waste management, sustainable natural
resource management and climate change) context of doing business, which can lead to
new products or new markets.
Intangible resources are difficult to copy by competing firms and hence intangible
resources are sources of competitive advantage (Barney, 1991; Hall, 1992, 1993). CSR
activities generate intangible resources like goodwill or positive corporate reputation.
This good and healthy image of the firm brings benefit to the firm on different frontiers
and helps the firm to serve from different stakeholders better.
It is of common knowledge to managers of today that Positive corporate image,
trust, goodwill, etc., lead to the perception of a good character of the company in the eyes
of the society (Riordan et al., 1997; Fombrun, 2005). Society is nothing but a sum of
consumers (Leisinger, 2005). Consumers prefer the products and services of those
companies that are perceived to have a good character (Fombrun, 1996; Turban and
Greening, 1997; Arpan, 2005). Increasingly consumers are becoming more educated and
aware of firm actions. So, what the customers or the society perceives about the company
is important for a firm. CSR, Cause Marketing and other such initiatives are important
ways to appeal to customers.
Managers must understand that in information-rich modern-day market environment,
various corporate watch institutes and NGOs are continuously monitoring the good and
bad actions of the corporate. Social and environmental aspects of business have become
important issues for companies. The government is also monitoring business for
regulating any deviant behaviour. CSR, therefore, has become an important tool to
maintain and advance the intangible resource of a good corporate citizen in society.
Government, while framing policies on the social and environmental front, favours those
firms that are leaders in the social and environmental dimensions. Not only the firms

A resource-centric perspective on strategic and sustainable CSR initiatives

75

doing CSR are called for such dialogue with the government officials, it influences
government policies and benefits from the terms and conditions of the policy formed.
Further, the firm managers are also skilled on policy-making process (a rare, valuable and
unique skill set). Employees (current and potential), another important stakeholder,
get attracted and motivated to work for firms, which have a healthy image in the
community as it will bring them respect in the society.
Managers must cognise the fact that when a company does something wrong
affecting stakeholders, the firm earns bad name. In such cases, local communities might
indulge in theft of corporate properties, sabotage firm activities and instigate strikes
or launch an agitation. What is worse is that the bad name will not only have local unrest
but also cause backlash from various other constituents of the broader society. NGOs
might hold antagonistic demonstrations; consumers might boycott firm products;
media might criticise the firm image at national or international level. This may
ultimately lead to the company being subjected to strict enquiries and then directed to
adhere to compliance standards set by governments and regulators and also may be fined.
Managers must also understand that Financers (strategic resource, providers) of the
company might shun the firms having unethical or disturbing pasts. Financial institutions
do not want to support such organisations where returns could take a beating because of
business uncertainty caused by bad business pedigree. In the present-day scenario,
current employees have ample opportunities to leave the present job and move to new
jobs in rival companies. The better performing employees have more of such
opportunities. The talented and valuable employees (strategic resource) might get
dissatisfied and leave job if a firm has got displeasing image in society for poor social
and environmental actions. It becomes a source of competitive disadvantage to lose such
good employees. Further, it becomes a source of competitive advantage for its
competitors to have such employees on their rolls. In addition, this whole saga will lead
to surge in the cost of running the business as compliance will mean expenditure. Thus,
the company takes double beating both internally as well as externally.
This brings us to the belief that in modern day the common business senses is that
CSR is a very important tool for building the very crucial intangible strategic resource of
a good, healthy, positive and caring corporate citizen in society. Thus, CSR activities add
value to intangible resources and its benefits are spread out from higher motivated
employees to social licence to operate in a community. As imitating intangible resources
are difficult for competitors, so if a firm gains competitive advantage by virtue of its CSR
activities then the competitors would find it difficult to catch up.
Firm managers should attempt to design the firm CSR activities in such a manner that
the CSR activities create strategic resources. CSR activities add value to intangible
resources and its benefits are spread out from more motivated employees to social
licence to operate in a community. As imitating intangible resources are difficult for
competitors, so if a firm gains competitive advantage by virtue of its CSR activities then
the competitors would find it difficult to catch up. The primary goal of a business firm is
sustainable corporate wealth creation. For sustainable corporate wealth firms generally
earn profit by pursuing certain core business activities as shown in Figure 6.

76
Figure 6

S.S. Bhattacharyya
CSR activity preference for value addition

In the diagram, A, B and C are core business activities. For a manufacturing company,
production of products is a core business activity, for an IT firm software development is
a core business activity, for an FMCG company marketing could be a core activity. So,
the core business activity of a firm would depend on the nature of business of the firm.
Generally, a firm engages in a number of CSR activities. Figure 6 also indicates that the
given firm is engaging in eight CSR activities in this case. But, all CSR activities
contribute to the business in a differential manner. One can classify the eight CSR
activities based on how the CSR activities contribute to the core business activities.
CSR activities require funds, management time, management effort and other tangible
and intangible organisational resources. These resources could have been put to some
other use for earning profit by managers. All resources have opportunity cost thus if a
company does some CSR activity then it is actually sacrificing the resource. As shown in
Figure 6, certain CSR activities contribute to business in a direct (apparent) manner and
these are linked to business. These sorts of CSR activities could be called as Contributing
CSR Activity (CCA), e.g., CSR activities 15. Some CSR activities would contribute to
business activities in an indirect manner, this could be called as Indirectly Contributing
CSR Activity (ICCA), e.g., CSR activity 8. Certain CSR activities are not at all related to

A resource-centric perspective on strategic and sustainable CSR initiatives

77

the business activities of the firm and these activities are de-linked to business of the
firm; these types of CSR activities could be called as De-linked CSR Activities (DCA),
e.g., CSR activities 67. The classification of the type of CSR activities to the abovementioned three categories is based on

Whether the CSR activity is a part of the business activity or not? If the CSR activity
is a part of the business activity or supports the core business activity, then it is better
CSR activity.

The gestation period of the CSR activity giving profit. If the gestation period
of the CSR activity for generating profit is less, then that CSR activity is to be
given priority.

The intangibility or the immeasurability of the CSR activity causing profit.

If the tangibility benefits or the measurability of the CSR activity causing profit
is more, then that CSR activity should be done.

Thus, logically we can conclude that those CSR activities that are CCA will provide help
to managers and business by adding some value and this type of CSR activity should be
preferred and prioritised by the company executives. Figure 7 shows that most firms
having business operations operating in different locations engage in a variety of CSR
activities, which require a range of resources.
Figure 7

Resource scheduling for CSR activities for value addition

78

S.S. Bhattacharyya

Some of the resources the firm possesses, some it does not have. For the resources, which
the firms do not have it collaborates with other institutions like NGOs, CBOs and
government for delivering the goods. A classification of resources used for CSR activities
in four categories has been tabulated in Table 5.
Table 5

Classification of resources used for a firms business or CSR activity

Category of resource

Characteristics of the resource used for a firms business or CSR activity

General resources company have but lying idle (not used for its business
activities now or in near future)

General resources company have/uses for its business activities now or

in near future

Scarce/costly resources company has/gets for use in its business activities

Resources company does not have so it specifically gets from outside the
firm to perform CSR activities

The managerial rule for using the above-mentioned four types of resources should be that
sacrifice preferentially use for CSR such resources that have characteristics like cheap,
general, abundant and idle (resource types A and B). Scarce and costly resources, which
the company gets from outside, should not be preferred to be used for use in CSR
activities (resource types C and D). The primary goal of a business firm is sustainable
corporate wealth creation. This agenda could be well catered to if the CSR activities add
value to Core Business activities. This should be the aim of a CSR manager. Any CSR
activity requires sacrifice of certain resources. If the CSR activities are not directed to
help or support the core business activities, then these types of CSR activities will not be
sustainable in the long run, as the company will not find it value adding to carry on and
sustain. Only those CSR activities that strengthen the core business activities will get due
attention from the managers as the managers will find it meaningful to pursue.
In the long run, managers and management will find only those activities worthy that
help them in securing their goals. They will have low level of motivation for carrying on
those activities. Thus, the best combination is using types A and B resource for CCA
or ICCA. The unfavourable combination of carrying out CSR is using types A and B
resource for ICCA. This should be the aim of any manager.
The concept of strategic CSR, the frameworks conceptualised has good scope for
future research. This study is of a conceptual level; future researchers can undertake
empirical studies to explore whether the amount of slack resources the firm possesses has
a bearing on the spending on CSR. Studies can be conducted to explain the state of affairs
of CSR based on the classification of CSR conceptualised in this study. Empirical studies
can also be undertaken to reflect on which of the four scenarios of slack and strategic
resources input/output interaction on CSR initiatives (Classification of CSR) is popular in
developed countries and which type of CSR is prevalent in developing countries. Last but
not the least, future studies can also explore how firm can use slack resources as inputs to
CSR activities to generate strategic resources for the firm. This will provide for further
theoretical contribution to the conceptualisation attempted in this study and thus make
this concept theoretically richer.

A resource-centric perspective on strategic and sustainable CSR initiatives

79

Conclusion

The primary goal of a business firm is sustainable corporate wealth creation. Any CSR
activity requires sacrifice of certain resources. The agenda of sustainable corporate
wealth creation is to do CSR activities to add value to core business activities of a firm.
If the CSR activities are not directed to help or support the core business activities, then
these types of CSR activities will not be sustainable in the long run, as the company will
not find it worth to carry on and sustain. Only those CSR activities that strengthen the
core business activities and help managers secure their goals will get due attention from
the managers in the long run, as the managers will find it meaningful to pursue such CSR
programmes.
Slack resources are less valuable and less important for firm, whereas strategic
resources, as discussed, are important and valuable for a firm. If firms are using slack
resources in CSR initiatives to generate strategic resources, it will be equivalent to saying
value creation from less valuable resources. The desired state will be when firms use
slack resources to generate Strategic resources while doing CSR. Available slack
resources should be primarily used for community development activities. Potential slack
resources can also sometimes be acquired to do CSR. Scarce and costly resources,
which the company get from outside, should not be preferred to be used for use in CSR
activities. When firm resources are used in business process, both slack and strategic
resources are generated. Strategic resources should be used for core business activities of
the firm (as strategic resources are valuable, unique and scare). While slack resources
should be utilised for strategic CSR initiatives of the firm for the generation of strategic
resources, which in turn could contribute to the core business activities of the firm to
create value for the firm (Figure 8).
Figure 8

Slack Resources, firm business activities and strategic CSR

If this cycle of action (use of slack resources into firm CSR initiatives to generate
strategic resources) is done repeatedly by a firm, then over a period of time
The sustainable Cycle of Strategic CSR (Figure 9) would be achieved.
Thus, more and more strategic resources would be created reinforcing and benefiting
the firm as the cycle of Strategic CSR progresses. Business firms should design their
CSR programmes in such a manner that they get in to the groove of the healthy
sustainable Cycle of Strategic CSR. This will secure ever-increasing gains repeatedly and
continuously.
From an RBV perspective, Strategic CSR is a very beautiful and proper fit.
One can say that from an RBV perspective Strategic CSR is not only a theoretically
viable concept but also operationable in practice as explained in Figure 5. As mentioned,
the concept of strategic CSR, the frameworks conceptualised and the virtuous sustainable

80

S.S. Bhattacharyya

Cycle of Strategic CSR represents enormous scope and promises for future. The typology
and classification of CSR and the frameworks conceptualised here are theoretically rich.
Managers can use the conceptualised frameworks to develop and plan their firms CSR
initiatives to make them strategic in nature with the four scenarios of slack and strategic
resources input/output interaction on CSR initiatives based on the classification of CSR.
Figure 9

The virtuous sustainable cycle of strategic CSR

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