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The connection between corporate social responsibility and competitive advantage is the fact that effective corporate social responsibility can be used by an organization as a means of attaining competitive advantage over its competitors. That is to say that a well-planned corporate responsibility program often allows an organization to endear itself to consumers through its actions. There are many ways in which an organization may utilize corporate social responsibility to its advantage, such as by serving the interests of consumers and by becoming environmentally friendly.
When considering the connection between corporate social responsibility and competitive advantage it is important to analyze the various ways in which an organization may benefit its community and still manage to derive some benefits from the arrangement. The best type of corporate social responsibility framework is that which can be sustained and that also achieves the interests of the consumers and organization. For instance, a baby-product company that is looking for ways to be socially responsible might decide to hold periodic free maternity workshops and health clinics for expectant and new mothers.
Such a move will benefit both the consumers and the company, because it will allow the company to show its socially responsible or generous side to the mothers who constitute its chief target audience. An arrangement like this will allow the company to market itself and its products, which will create more awareness and increase sales. The company may distribute some of its products to the participants of the workshop for free, with the hope that they will maintain the relationship by patronizing the company in the future. This bilateral benefit establishes a connection between corporate social responsibility and competitive advantage.
Another example of corporate social responsibility is a situation in which a company takes steps to protect the environment from any detrimental effects of its production process. For example, a paper-manufacturing company might decide to show its responsible side by sponsoring efforts aimed at planting trees in the community and other areas. Since paper is mainly produced from wood, this will send a message to the consumers that even though the company is cutting down trees in order to produce paper, it also helps by planting new trees to replace the ones that were cut down. Such a move will give the company a competitive advantage over other related companies.
It is this connection between corporate social responsibility and competitive advantage that is the driving force behind the reason most companies are proud to include information on labels regarding the fact that their products are made from recycled products. Companies also show social responsibility by refraining from testing their products on animals, a factor that will help them increase their sales as they are perceived to be an ethical company. This is a competitive benefit and is in direct contrast to the perception of those companies that do not practice such ethics.