University of Vaasa - Vaasan yliopisto

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Strategic orientation of firms toward CSR philosophy can support both its financial
and stakeholders interests (Burke & Logsdon 1996). Burke and Longsdon have
proposed a model for strategic analysis of CSR which has five dimensions: 1)
centrality (closeness to fit to the firms mission and objectives, 2) specificity (ability
to capture private benefits by the firm), 3) proactivity (degree for to which the
program is planned in anticipation of emerging social trends and in the absence of
crisis, 4) voluntarism (the scope of discretionary decision-making and the lack of
externally imposed compliance requirements), and 5) visibility (observable,
recognizable credit by internal and/or external stakeholders for the firm). These
dimensions should help managers develop CSR strategies that pay off.
Husted and Allen viewed Burke and Longsdon model as not fully developed with
testable hypotheses. In their study, Husted and Allen examined three (visibility,
appropriability, and voluntarism) of the five dimensions in more detail and set out a
hypothesis of the relationship of each dimension to value creation. The other two
dimensions, centrality and proactivity, do not affect value creation in the Spanish
context where their empirical study was conducted. The conclusion of their study
was that visibility is clearly understood to be related to value creation. To the extent
that consumers and other stakeholders are perceived to observe CSR activity, they
are able to reward firms for their participation. Appropriability also significantly
affects the creation of value through CSR projects. In other words, firms perceive
that designing CSR projects with the intent to generate benefits is necessary for value
creation. Voluntarism is an essential element for the creation of value, but not in the
direction hypothesized by Burke and Logsdon. They thought that greater voluntarism
would lead to greater creation of value from strategic CSR projects (Husted & Allen,
2007).
To increase a firm’s competitive advantage, CSR projects should be cost effective
and produce a clear return on investment. CSR governance refers to organizing the
activities of transferring of firm resources for the production of social goods and
services. Husted describes three types of common modes of governance: 1)
outsource CSR through corporate charitable contributions, 2) internalize CSR
through in-house projects, or 3) use a collaborative model. When deciding on a mode,
managers should consider two attributes, coordination (autonomous or cooperative)
and motivation (incentive intensity or administrative control). The two drivers for
internalizing CSR are the centrality and specificity as developed by Burke and
Logsdon. A decision matrix was developed for choosing among the CSR
governance structures where specificity and centrality are treated as being only high
or low when in fact they are both continuous. For example, if specificity is high and
centrality is high, then the best CSR governance structure is an in-house project
(Husted 2003).
Falck and Heblich propose a planning process of strategic CSR action. Decision
making is initiated by looking and evaluating a social trend. Once the trend is
evaluated, then it will be determined whether any of the company’s stakeholders are
interested in it and its impact on the financial system of the company. Depending on
what is at stake and the type of committed resources, the company will choose a
strategic action without any risk of opportunistic behavior on the part of competitors
(exclusive stake) (Falck & Heblich 2007).