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CHAPTER 17 CORPORATE SOCIAL RESPONSIBILITY AND ETHICS
were not actually ‘green’ and did not last longer – the makers claimed that ‘Eco’ stood for 
‘economy’ not ‘ecological’ (Spencer, 2015a).
In fact, the real shift in attitudes towards consumption may be difficult to track – for 
example, while many consumers claim they would pay a 5–10 per cent premium for many 
ethical products, in practice such brands usually have tiny market shares (Grande, 2007b). 
Moreover, a five-country survey conducted by market research group GfK NOP suggested 
that consumers in five of the world’s leading economies believe that business ethics have 
worsened in the past five years, and they are turning to ‘ethical consumerism’ to make com-
panies more accountable (Grande, 2007a). Respondents believed that brands with ‘ethical’ 
claims – on environmental policies or treatment of staff or suppliers – would make business 
more answerable to the public, and that companies should ‘promote ethical credentials 
more strongly’ (Grande, 2007b).
Some commentators on branding have long suggested that ethical consumption is one 
of the most significant branding issues in modern markets, and underlies change in the 
automotive sector, food, retailing, technology, and health and beauty sectors. Its influ-
ence is behind the strong sales growth of hybrid cars, ‘cruelty-free’ beauty products and 
dramatic growth in sales of organic food. The position appears to be that ethical and envi-
ronmental questions are being posed by growing numbers of consumers, but they are not 
always favourably impressed by companies’ responses. Nonetheless, the impact of ‘ethical 
consumerism’ is likely to be large and of escalating significance.
The growing frequency of issues of this kind suggests that questions relating to corpo-
rate social responsibility initiatives and the ethical standards evidenced by companies are 
increasingly relevant to the decisions about marketing strategy and positioning relative to 
competitors, because:
● 
they represent a new kind of corporate resource that has implications for building a 
sustainable and defensible competitive position;
● 
the measurement and reporting of corporate social responsibility ‘scores’ (often com-
puted with questionable methodologies) imposes new requirements for openness and 
transparency in company behaviour – the majority of the world’s largest multinationals 
publish corporate social responsibility reports;
● 
reflecting the norms of behaviour determined by buyer organisations is increasingly 
mandatory in sustaining buyer–seller relationships in business-to-business markets (and 
is made yet more complex where those relationships are global in nature and span dif-
ferent cultures);
● 
failure to conform to or exceed the standards of behaviour defined by a media-influenced 
and Internet-literate consumer may undermine conventional efforts to establish the cre-
dentials of a brand and to build a position in a market;
● 
increasingly, employees and managers expect their companies to reflect emerging soci-
etal values as well as superior ethical standards, and the retention of critical talent in a 
company may be closely related to these perceptions and beliefs – indeed, companies 
such as Azco, one of the world’s biggest chemicals businesses, and TNT and DSM in the 
Netherlands, have already started to roll out executive bonus schemes linked directly to 
meeting sustainability targets (Goodman, 2010; Milne, 2010);
● 
most telling of all, increasingly corporate social responsibility is not being viewed as 
purely altruistic, but as an element of competitive advantage (Porter and Kramer, 2006) – 
companies are challenged to ‘outbehave’ their competitors in corporate virtue to achieve 
advantage (Murphy, 2010).
This chapter addresses the evolving question of the impact of corporate social respon-
sibility and ethical standards on marketing strategy and competitive positioning. First, we 
examine the scope of CSR, and the corporate drivers of CSR strategies. This is followed 
by a review of CSR as a defensive strategy, and then as a source of sustainable competitive 
advantage.

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THE SCOPE OF CORPORATE SOCIAL RESPONSIBILITY
17.2 
The scope of corporate social responsibility 
The modern marketplace increasingly is characterised by a variety of anti-business senti-
ments and activism. Examples include the anti-globalisation movement, shareholder activ-
ism and corporate governance reforms – indeed, some suggest that we are experiencing a 
climate of ‘defiance’ towards business ( Maignan and Ferrell, 2004 ). Certainly, global busi-
ness scandals, such as the accounting abuses uncovered at Enron and Arthur Andersen and 
the bribery accusations at VW and Siemens, plus the economic downturn and recession, 
have done little to improve perceptions of business ( Piercy et al ., 2010a ). Indeed, VW’s posi-
tion was further harmed by the 2015 scandal regarding the ‘defeat software’ fitted to millions 
of its diesel vehicles, specifically to cheat emissions tests. 
Even at a trivial level, businesses of various kinds are under media-orchestrated attacks 
for their normal ways of doing business. Recent examples of these pressures include: public 
campaigns to complain and demand repayment of bank charges; protests about ‘4
* 4’
(SUV) vehicles, inspired by global warming fears; the conditions under which the tobacco 
and alcohol industries now operate; demands that airlines should reduce the number of 
flights they operate and that, like cigarette packs, holiday packages should carry ‘health 
warnings’ related to fears about carbon emissions; the anti-obesity campaign pressure on 
food retailers and restriction of the advertising of junk food products to children; and anti-
salt and sugar campaigns to persuade food manufacturers to reduce salt and sugar content 
in processed foods. There is growing evidence that the way in which products are marketed 
in many sectors is changing because consumer groups and public authorities believe busi-
ness practices to be irresponsible. 
Accordingly, the belief that consumers are more likely to buy from companies they per-
ceive as socially responsible, and would switch brands to favour products and stores that 
show concern about the community, has led to growing pressure on firms to behave as good 
‘corporate citizens’. In contrast to the traditional view that the only responsibility of the 
firm is to make a profit ( Friedman, 1970 ), companies have been encouraged to undertake 
activities that provide benefits to various groups: supportive work–family policies, ethics 
compliance programmes, corporate volunteerism and green marketing. In this sense, ‘cor-
porate citizenship’ has become a term that describes the activities and processes adopted 
by businesses to meet their social responsibilities. 
One link between these various trends and issues is the effect of inhibiting the ability of 
companies to develop effective marketing strategy, or to establish and defend their desired 
competitive positions, without making allowance for a societal dimension in their actions. 
Perhaps the most significant issue now in being a good ‘corporate citizen’ is not so much 
moral obligation, as a business case for initiatives that protect and provide new business 
opportunities. 
The growth in corporate attention to CSR has not always been voluntary, instead reflect-
ing surprise at public reaction to issues not previously thought to be their responsibility: 
Nike faced consumer boycotts after media reporting of abusive labour practices in its Indo-
nesian suppliers’ factories; fast-food and packaged-food companies are being held responsi-
ble for obesity problems and poor nutrition; and pharmaceutical companies are expected to 
respond to the AIDS pandemic in Africa, though it is far removed from their main product 
lines and markets ( Porter and Kramer, 2006 ). 
More positively, CSR may be associated with important and measurable benefits to 
companies. For example, cause-related projects may impact directly on income: if firms that 
create social gains realise cash value in terms of increased purchases by morally-conscious 
customers (or those customers are willing to pay higher prices), or in reduced costs. More 
broadly, CSR may have the impact of building long-term customer loyalty, legitimacy, 
trust or brand equity ( Godfrey and Hatch, 2007 ). Indeed, some companies have made high-
profile efforts to position themselves as socially responsible as a core part of their strategy, 

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