2.

Corporate social responsibilities and strategy integration

While the implications of social issues upon a firm’s corporate strategy have indeed been dealt with in
economics and management literature, up until the mid-1990s, the discussions in the literature specifically
regarding the integration of CSR into a firm’s business strategy (Galbreath, 2006) remained somewhat
limited. Traditional studies on strategy have always placed their focus on issues related to competitiveness,
economic and financial aspects and business portfolio management, whilst defining social factors as mere
constraints, yet important ones, that should be taken into account in decision-making and operational
management. At a later stage, many studies have addressed, specifically and directly, the theme of the
integration of CSR and of the links between CSR and strategic management, based on different perspectives
and approaches; below we are going to explain the different areas of study through which the literature on
the subject can be assessed.

Literature debate about ethical issues related to the separation and integration thesis
Integration in general studies on strategic management and CSR literature

Theoretical hybridization: strategic dimension in CSR studies and social perspective in strategic
management literature
The strategic dimension has been analysed also in the context of some fields of research that deal with
CSR: the Corporate Social Responsiveness (Frederick, 1978), which analyses the ability of firms to respond
and manage the environmental pressures; the Corporate Social Performance (Carroll, 1979), with particular
reference to studies that analyse the relationship between social responsibility and economic performance;
the Stakeholder Theory (Freeman, 1984; Post et al., 2002) in an instrumental perspective, which identifies
strategic motivations for relationships with the different categories of stakeholders. Until the 2000s, in the
field of strategic management, few contributions were reported that dealt directly and explicitly with the
theme of CSR: Schendel and Hofer (1979) and Ansoff (1984) equate the concept of social strategy with the
strategy of legitimization; Drucker (1984) emphasizes the possibility that business could transform social
responsibility into business opportunities; Meznar et al. (1990) states that CSR is incorporated into strategic
management at the enterprise strategy level; Burke and Logsdon (1996) examine social responsibility
policies which create financial benefits for firms; Husted and Allen (2000) define social strategy in relation
to the allocation of resources to achieve the firm's social and competitive objectives; studies of the Italian
school of “Economia Aziendale” (Matacena, 1984; Coda, 1988; Invernizzi, 1999) emphasize the synergistic
relationships between the social, competitive and financial dimensions; Hart (1995) analyses, in a resource-
based perspective, the relationships between CSR and competitive advantage. Other attempts of
hybridization in the field of strategic management are more recent and are connected to the evolution of
neoclassical economics, in which the analytical tools, that had previously been used for profit maximization

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analysis, began to be applied also to analyse social responsibility (Baron, 2001; McWilliams and Siegel,
2001; Bagnoli and Watts, 2003; Orlitzky et al., 2011).

3. The dynamic perspective of strategic management

The strategic analysis takes different connotations depending on whether one adopts a static approach,
which focuses mainly on the contents, or a dynamic approach, which focuses on the formation of the strategy
and change processes of the strategic approach and on the context conditions (strategic and organizational)
where these processes are conducted (Coda, 2003; Garzoni, 2003). The static approach allows us to
understand the reasons why some firms achieve an economic-financial and competitive performance which
is superior to that achieved by other firms. The dynamic approach proves complementary to the static
approach because it can provide an explanation for the causes of success (the route taken by the firm to
succeed in attracting a certain position in the competitive system) and allows one to understand how to keep
the firm on, or bring it back to, a successful path. The logic of the processes is the fulcrum on which the
dynamic approach to management is based on (Forrester, 1961).
With reference to the dynamic approach, strategic management studies have long focused on strategy
formation processes. Minztberg (1990) has divided the numerous contributions into two schools of thought:
prescriptive and descriptive. The prescriptive schools are characterized by the normative nature of the
considerations relating to strategic management processes, while the descriptive schools are characterized by
the representation of the implementation of the firms’ processes. To the schools of thought identified by
Minztberg, the evolutionary school must be added, which focuses on the dynamic processes of strategic
change.

4. The dynamic perspective of strategic corporate social responsibility

Specifically, we will carry out a theoretical integration based on the theoretical reciprocity with the
purpose of creating an overarching explanatory framework that incorporates business and social concepts
(Treviño and Weaver, 1994).
The formulation of intended strategic CSR
The social management philosophy will result in an intended strategic CSR that will be characterized by
innovative business ideas that are aimed at the creation of shared value (Porter and Kramer, 2011) through an
increased meeting of the expectations of the different categories of stakeholders, an improvement of the
reputational profile and broadening of the basis of competitive advantage in the socio-environmental
perspective. This philosophy is the only one to support a socio-competitive creativity, which allows to seek
integrated managerial (and entrepreneurial) solutions aimed to reach social, financial and competitive goals;
a social management philosophy determines a pervasive strategic integration, in which the synergies
between social and economics perspectives are the company’s main development engine that impacts on the
overall strategic and organizational structure.

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The altruistic management philosophy does not promote any integration since it only aims at achieving social
objectives. On the contrary, in the presence of an economic or instrumental management philosophy, the
intended strategy will be socially low-level; it will be characterized by relationships with employees based
on the respect of union rights only; reporting activities limited to those aspects exclusively concerned with
compliance with current regulations and obligations; relationships with suppliers restricted to contractual
terms; tenuous ties and connections with the community and so on. In this case CSR does not entail strategic
implications; la presenza di fattori di contesto di esterno the presence of external context factors
(globalization, environmental issues, crisis and financial scandals, and pressures from governments, non-
governmental organizations, corporate interest groups, etc) might determine the extension of CSR to the
operational management (logistics, production, sales, marketing). Infine, the altruistic management
philosophy non è alla base di alcuna integrazione in quanto finalizzata al solo raggiungimento degli obiettivi
di carattere sociale. Finally, the altruistic management philosophy does not promote any integration since it
only aims at achieving social objectives.

On the basis of the analysis, one can define the following propositions:
PROPOSITION 1
The process of strategy formulation, if it is based on a social management philosophy, will lead to the
identification of an intended strategic CSR, characterized by the integration of the CSR into the strategic
intent.

PROPOSITION 2
The process of strategy formulation, if it is based on a economic or instrumental management philosophy,
will lead to the integration of CSR to the operational management in presence of the external context.

The execution process

The second process concerns the execution (Andrews, 1971; Ansoff, 1965): the top management should be
able to implement the intended strategy and to transform their declared and expressed good intentions into
concrete actions. From this viewpoint, the most critical effort lies in the translation of the strategic intent into
the company’s management as well as in the solution of the problem that might derive from it (Bansal,
2003).
The execution consists in the creation of managerial activities that translate the intended strategy into
actions, which allow its realization. Therefore, managerial actions must be coherent with the strategic
approach of the firm. Consequently, CSR actions must be interrelated to the core activities through an
activity-based approach that is primarily concentrated on the social aspects of the value chain (Porter and
Kramer, 2006).

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From an operational point of view, it is necessary to consider all of the social issues linked to the firm’s core
activities, both primary and supporting activities that are part of the value chain, so that those which need to
be enhanced can be evaluated in order to maintain and broaden the social consensus. Value chain tools allow
to translate in operational terms the strategic conditions linked to CSR: the strengths of those (core)
activities that are most likely to contribute to seizing social strategic opportunities as well as the weaknesses
that relate to the social strategic threats that need to be dealt with.
The core activities of value chain create an organic and systematic link between the intended strategic CSR
and operational management at the base of the execution and realized strategic CSR. The activity approach
could be combined with the approach based on best practices (Tenbrunsel et al., 2000), which refers to the
CSR actions carried out by other firms. Best practices represent an important factor in the implementation
phase of the intended strategy. The danger deriving from this approach has to be intended in terms of the so-
called imitative__________ that could be observed as an apparent internalizing of social aspects within the
core activities of the firm; in this case CSR actions do not represent the execution of the intended strategic
CSR, but are simple herding behaviours of formal adaptation to the external context. Likewise, sporadic CSR
actions of a philanthropic nature, disconnected from the intended strategy, and CSR activities, carried out
unsystematically and linked to particular aspects of the management, cannot be attributed to the strategic
process of execution.

On the basis of the analysis one can define the following proposition:
PROPOSITION 3
The execution process will lead to the realization of the intended strategic CSR if CSR actions are
incorporated in a systematic and non-imitative way into the core activities of the firm.

The analysis, diagnosis and assessment of realized strategic CSR

The third process, analysis, diagnosis and strategy assessment, concerns the interpretation that the
management gives of the firm’s situation (Hofer and Schndel, 1978). The function of this process is to
support management in adopting corrective actions when the realized strategy is different from the intended
strategy. (Horovitz, 1979). It should allow the gap between the intended strategy and the realized strategy to
be filled (Simas et al., 2013). The management philosophy influences this strategic management process too.
From social management philosophy derives a socially oriented attitude in analysis, diagnosis and
assessment of realized strategic CSR.
This kind of attitude is fundamental to identify the strategic gaps and to undertake the appropriate CSR
corrective actions.
Firstly, the high level (large number)of social objectives, connected to the social management philosophy,
make it very likely that in the analysis and diagnosis phase some social gaps, linked to the failed meeting of
the social aims and to the incomplete realization of the intended strategic CSR might come up. Secondly, the
socially oriented attitude in the analysis, diagnosis and assessment of realized strategic CSR impacts on the

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modes of perceiving the reality in its complexity and on the ability to identify the social gaps: actually, only
if one can perceive the reality in its complexity he will be able to identify the gaps between intended strategic
CSR and realized strategic CSR (for example, a social gap linked to a level of satisfaction of stakeholders
which is not in line with their expectations).Thirdly, the possibility to perceive the characteristics of the
reality is directly linked to the socially oriented attitude in the building and using the tools for the analysis
and diagnosis: this determines the widening, in a social perspective, of the functionality and the purposes of
the diagnostic models (for example, the measurement of the level of stakeholder satisfaction; the influence of
CSR on financial results and on competitive advantage; the impact of CSR on the intellectual capital; the
consequences of CSR on processes linked to the core activities of the value chain; the commitment, in terms
of resources and activities, to achieve social outcomes, etc.). In short, the socially oriented attitude in the
analysis and diagnosis process involves identifying a series of outcome prospects that must necessarily be
analysed for undertaking effective feedback loops aimed at reducing the gap between the intended strategic
CSR and the realized strategic CSR. In fact, only the integrated representation of the realized strategic CSR
can bring out both the financial and competitive gaps and social-environmental gaps; also only through an
integrated analysis of the realized strategic CSR will be one able to identify the appropriate feedback loops
that bridge the social-environmental strategic gaps. On the contrary, in the lower social profile type of
intended strategy, it is not frequent that no gaps are to be found because the less challenging social goals that
have been planned, have been easily met. Furthermore, in these cases, the analysis and assessment of the
strategy, given that these are influenced by attitudes that are not typically social issue-oriented, may cause
reality to be perceived uniquely through the lens of its competitive and economic dimensions while not
revealing any possible misalignments with the social goals that are, although marginal, comprised in the
intended strategy.

On the basis of the analysis one can define the following proposition:
PROPOSITION 4
The strategic analysis, diagnosis and assessment process, if it is based on a socially oriented attitude, will
lead to the identification of the social strategic gaps and to the activation of the feedback loops aimed at
improving the realized strategic CSR.

On the basis of the analysis the following proposition may be determined:

PROPOSITION 5
The learning process of the top management, if it is based on a social management philosophy and a
proactive approach, will lead to socially improving the process of formulation of the strategy and to
innovating of the intended strategic CSR.

On the basis of the analysis performed, one can define the following propositions:
PROPOSITION 6

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The organizational context based, if it based on the social management philosophy, will lead to the
generation of the socially oriented internal variations and emergent strategies.
PROPOSITION 7
The process of selection and retention of the internal variations and emergent strategies, if it integrates
socially oriented criteria, will lead to expansion and improvement, from the bottom to up, of the content of
the realized strategic CSR.
7. Conclusions
The aim of this paper was to fill the theoretical gaps relative to the systematic analysis of the integrated
processes of strategic CSR based on a social oriented management philosophy. Actually, the previous
studies, on the one hand focused on the financial effects of the integration of CSR into strategic
management, on the other deserved little attention to the dynamic approach of strategic CSR.
The innovative character of this work consists in the application of a social oriented philosophy to the typical
aspects of strategic management, using, at the same time, a dynamic approach extended to all processes.
Actually, in this paper, in order to fill the theoretical gaps, we have developed a conceptual model based on
the social oriented relationships characterizing the dynamic integration of CSR into strategic management.
The building of the model has been preceded by the identification of the strategic processes that are part of
integration: the intended strategy formulation; the management actions aimed at realizing the intended
strategy; the analysis, diagnosis and strategy assessment; the top management learning; the generation of
bottom-up internal variations; the selection and retention of internally generated variations. The dynamic
relationships that characterize the strategic context show in a clear way the impact of social management
philosopy on the integration of the CSR into strategic management. Firstly, the process of strategy
formulation will lead to the identification of an intended strategic CSR characterized by integrated business
ideas that are aimed at the creation of shared value (Porter and Kramer, 2011) through the development of
synergies between social, financial and competitive dimensions; secondly, the execution process will lead to
the integration of CSR in a systematic and non-imitative way into the core activities of the firm. Thirdly, the
strategic analysis, diagnosis and assessment process will lead to the identification of social strategic gaps
and to activation of the feedback loops aimed at improving the realized strategic CSR and the relative level
of integration. Moreover, the combination between management philosophy and a proactive approach
allows the activation of a learning process aiming at the detection of innovative solutions, integrated in a
social perspective. Finally, the social connotatation of the organizational context and the integration of social
criteria of selection and retention of the internally generated variations will determine the creation of
emerging socially oriented strategies