Implementation of Corporate Social Responsibility Strategy to Enhance Firm Reputation and Competitive Advantage

Ngoc Khuong Mai,An Khoa Truong Nguyen,Thanh Thuy Nguyen

doi:10.7441/joc.2021.04.06

Abstract

Corporate social responsibility (CSR) is an important strategy for firms to gain a positive reputation. This study aims to identify the mediating role of firm reputation on the relationships of CSR dimensions (economic, legal, ethical, philanthropic and environmental) and competitive advantage, and how a firm directly gains competitive advantage through CSR implementation. Data were collected by surveying 869 managers, as representatives of small and medium enterprises, and large enterprises, in the trade and service, real estate and manufacturing sectors in Vietnam. Then, SmartPLS 3.0 software and the partial least squares structural equation modelling method were used to process the data and test the hypotheses. The empirical results are impactful and enhance the existing literature on strategic management. The results show that implementing environmental, ethical, philanthropic and legal CSR activities contribute positively to increase the firm reputation and thus generating competitive advantage. The findings indicate that the implementation of economic CSR activities does not enable firms to gain a reputation. In contrast, active involvement in environmental CSR activities results in building firm reputation, thereby creating a source of competitive advantage for firms. The study provides guidelines for top-level management to adjust their CSR strategies more effectively to improve reputation and competitive advantage.

Highlights

Stakeholders have been placing greater emphasis on organisations’ responsibilities to integrate social and environmental concerns in their operations (Kim et al, 2020)
The present study aimed to examine the effects of Corporate social responsibility (CSR) dimensions on firm reputation and firm competitive advantage, a mediating role of reputation on the relationship between CSR and competitive advantage was discussed
The results indicated it is crucial for firms to gain intangible resources of reputation by implementing CSR practices resulting in competitive advantage

Summary

Introduction

Stakeholders have been placing greater emphasis on organisations’ responsibilities to integrate social and environmental concerns in their operations (Kim et al, 2020). Vietnam, an increase in environmental catastrophes, such as climate change, the sea-level rise in the Mekong River Delta, has become more serious. This has led to the implementation of CSR in business operations in Vietnam in particular and developing countries in general; CSR has become more crucial and urgent than ever ( Jamali & Karam, 2018). Walker et al (2019) pointed out the importance of investigating how CSR create values in different contexts To clarify these issues, this research aims to study the impact of CSR on competitive advantage with a mediating role of reputation in a developing country. The research is hoped to contribute to the existing literature review of strategic management

Objectives

Results

Discussion

Conclusion