The Significance of Responsible Leadership in Implementing Corporate Social Responsibility as a Source for Sustainable Competitive Advantages

Abstract

Many studies try to emphasize the importance of CSR for the sustainability of a firm; however, for the majority of firms, CSR still remains as a periphery activity, rather than being embedded into the business model or strategies and used as a competitive advantage. While a few studies provide a foundation for the business case of CSR used as a competitive advantage, the hidden force behind these cases – responsible leadership -- is rarely discussed. This study acknowledges the significance of responsible leadership in implementing CSR as a source for sustainable competitive advantage. For this purpose, this study takes a lesson from nature, that is, the balance among organic/inorganic participants around a tree and proposes a model, called ‘ARBORE‘ to apply to CSR in practice. The proposed model utilizes the theories of responsible leadership and stakeholder theory and seeks to provide implications as to how a balanced CSR strategy, imbedded into the business model, can be used as competitive advantage for a firm. The study employs a case study of two firms: an internet retailer from Korea and a restaurant chain from Taiwan, which are analyzed to validate our model. Both companies have CEOs who have created CSR strategies which exceed requirements mandated by law and society, and have found the balance between fulfilling internal and external stakeholders demands while leading to the healthy growth in highly competitive industries.

Many studies try to emphasize the importance of CSR for the sustainability of a firm; however, for the majority of firms, CSR still remains as a periphery activity, rather than being embedded into the business model or strategies and used as a competitive advantage. While a few studies provide a foundation for the business case of CSR used as a competitive advantage, the hidden force behind these cases – responsible leadership -- is rarely discussed. This study acknowledges the significance of responsible leadership in implementing CSR as a source for sustainable competitive advantage. For this purpose, this study takes a lesson from nature, that is, the balance among organic/inorganic participants around a tree and proposes a model, called ‘ARBORE‘ to apply to CSR in practice. The proposed model utilizes the theories of responsible leadership and stakeholder theory and seeks to provide implications as to how a balanced CSR strategy, imbedded into the business model, can be used as competitive advantage for a firm. The study employs a case study of two firms: an internet retailer from Korea and a restaurant chain from Taiwan, which are analyzed to validate our model. Both companies have CEOs who have created CSR strategies which exceed requirements mandated by law and society, and have found the balance between fulfilling internal and external stakeholders demands while leading to the healthy growth in highly competitive industries.