Developing A Framework Linking Csr To The Organization’S Strategy Using The Balanced Scorecard

Organizations operate to ensure valuable return to its shareholders. Yet, they are not the only party affected by and interested in organization’s operations (Smith, 2007). Society has been expecting more responsible and ethical roles from organizations, especially, during the last fifty years. No longer organizations should be ethical, but rather engage in what is known “social responsibility” or have “corporate citizenship” (Lantos, 2001). Keith Davis, in 1960 defined social responsibility as “decisions and actions taken for reasons at least partially beyond the firm’s direct economic and technical interest” (Dennis et al., 1998: 387). Since then, many practices have been developed assessing organization’s social impact and role (Meehan et al., 2006) and the term “CSR” or “Corporate social responsibility” was found in organizations’ reports, on their websites or part of their mission statements (Scott, 2007). CSR recently have been considered as new organizational innovation (McManus, 2008) and consequently it became of wide interest between researchers. It is no longer viewed as indication of organizations’ social role but rather as a competitive edge making CSR an integral part of organizations’ strategies (Galbreath, 2009; Gyves and O’Higgins, 2008; Porter and Kramer, 2002). Managers need CSR to be aligned with their mission, organizational strategic issues, market, customer needs, resources and competitive advantage. As highlighted by Prahalad and Hamel (1990) and the resource-based view (Barney, 1991), activities should be linked to organizational core competencies and resources to enhance long-term competitiveness. And since CSR is considered a valuable, rare, non-imitable resource (Galbreath, 2009; Gyves and O’Higgins, 2008) -by boosting both financial and non-financial indicators such as sales, customer satisfaction, productivity and technological capabilities (Smith, 2007; Moir, 2001; Galbreath, 2010; Gallego-Alvarez et al., 2011)- it is crucial to link CSR to the organizations’ strategic direction and functions. A tool used to translate organizational strategy into financial and non-financial objectives is the Balanced Scorecard (BSC) and it includes four main perspectives: financial, customer, internal process and learning and growth (Kaplan and Norton, 1996). This paper introduces a developed framework explaining the process of linking CSR to the organizational strategy through each of the four dimensions in the BSC. The framework highlights: (1) the different stakeholders’ expectations from the firm; (2) how CSR could improve competitiveness through the core competence model; and, (3) how CSR’s financial and non-financial benefits could be integrated in the BSC’s dimensions.