Value drivers of Corporate Social Responsibility: The role of explicit value and back value

Purpose

Perspectives on corporate social responsibility (CSR) permeate contemporary society and its impact poses important strategic issues within the private sector. How CSR initiatives contribute to economic success has become one of the key strategic agendas. Although extant research largely signals a positive link between CSR initiatives and economic performance, existing frameworks for extrapolating economic value from CSR initiatives are highly complex, onerous, and sometimes precluding plausibility. A simplified version of economic value generation in CSR initiatives is needed to assess CSR relevance to strategic planning, particularly the contributions of short- and long-term value acquisition from CSR engagement.

Design

This paper offers a theoretical framework of CSR induced economic value generation, derived by examining research on the business case for CSR/ sustainability and its value drivers.

Findings

The study identifies and orders a number of economic CSR induced value drivers along a continuum according to their value added properties in terms of (a) ability to directly affect the firm's higher cash flows, termed 'explicit value'; and (b) level of time lag involved in relative economic value acquisition, termed 'back value'. 'Explicit value' and 'back value' are opposing but mutually enhancing ends of the continuum.

Contributions/Implications

The paper offers a theoretical basis to less explicit and monetarily tangible CSR value chain facets, and contributes a straightforward tool for incorporating CSR into long-term strategic planning.

Limitations

The framework is theoretically derived. Applying it to different CSR contexts would determine whether and how different CSR initiatives deliver both explicit and back value.