by Sudeepa Nair

Created on: March 17, 2009   Last Updated: June 13, 2009

Corporate Social Responsibility (CSR) has recently come under the scanner as an important tool for evaluation of businesses by their various stakeholders. CSR is being seen as a strategic initiative by local as well global businesses and it is not surprising to see considerable efforts in this area. In order to understand how CSR impacts businesses, let us try to define and understand its characteristics.

Philips Kotler and Nancy Lee, in their book, Corporate Social Responsibility, define it as a "commitment to improve community well-being through discretionary business practices and contributions of community resources". The emphasis is on the word "discretionary", as opposed to "mandatory" practices directed by regulatory agencies or the government. So that leaves out activities like lead content regulation or hazardous material regulation as may be mandated by local and national governmental bodies. CSR refers to the initiatives undertaken by businesses of their own accord, with an objective to bring about community betterment.

Traditionally, CSR has been associated with corporate giving' or corporate donations to charitable causes and institutions. However, lately, businesses have realized that CSR initiatives can be aligned with the business objectives to bring beneficial value to the company along with the community at large. Businesses are picking some areas that match with their corporate values, or those that support their business objectives. This article talks about how such Strategic CSR initiatives can impact businesses.

A common form of CSR is cause related marketing, where a company commits to donate a part of its revenues from a product to a social cause. An example would be that of a product that when bought, helps you donate a dollar to the local school. Here the manufacturer not only contributes to a local cause but also wins over socially responsible consumers who would have wanted to contribute in some way. Another way in which CSR impacts business is by increasing the brand value thus, ultimately, increasing brand recall, or even brand loyalty. An effective technique adopted by businesses to achieve this is the promotion of causes through sponsorship. Many businesses sponsor Marathons or other such events tied to social issues like AIDS prevention. Corporate philanthropy in the form of volunteering work by its employees, help provide a much required employee work life balance, contributing to increased employee motivation thus, helping to

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