According to researchers from Penn State School of Hospitality Management, well-planned corporate social responsibility (CSR) initiatives that connect directly to a hospitality firm’s main business functions can generate both societal and business benefits.
The research team, led by Seoki Lee, a professor of Hospitality Management at Penn State, created a strategic framework designed to help hospitality businesses enhance their CSR efforts—such as environmental and social projects—to gain additional social and business advantages. Their findings are featured in the journal Tourism Economics.
Lee emphasized the importance of aligning CSR with a company’s primary business functions: “For strategic CSR, a company’s core operations and strengths are crucial.” He illustrated this with an example of a restaurant that engages in food donation programs, showing how such initiatives align with its core operations. “CSR activities should be closely tied to what the business does. When this alignment occurs, it fosters both societal impact and business growth.”
The framework for strategic CSR encompasses four key elements: shared value, enlightened stakeholder theory, resource-based theory, and CSR-fit perspective.
Shared value emphasizes that companies should ensure their CSR initiatives deliver both societal and corporate benefits. For instance, a coffee shop partnering with local farmers to produce coffee beans in an eco-friendly way not only supports sustainable practices but also gains a vital product for its operations.
Enlightened stakeholder theory focuses on a business’s capacity to generate long-term value through strategic CSR. Lee pointed out that the financial returns from CSR engagements usually manifest over time, as it takes time for businesses to communicate the advantages of their CSR investments to stakeholders and for the financial market to recognize these benefits.
The last two elements are CSR fit and resource-based theory. CSR fit ensures that a company’s CSR goals align with its operations and strengths, while resource-based theory illustrates how strategic CSR can enhance relationships with stakeholders, such as improving brand reputation and fostering better connections with consumers.
Lee stated, “Businesses need to address social and environmental challenges. When they understand this responsibility, they should consider, ‘What’s the best approach? How can we maximize value?’ Companies should strive to balance both social and business value from their CSR efforts.”
To gauge perspectives on this strategic CSR framework, the researchers conducted a survey with 310 participants recruited from a Qualtrics panel list. The survey explored how participants view the inclusion of business value in CSR and their thoughts on CSR activities tied to a company’s primary operations. Participants also evaluated the effectiveness of CSR practices in restaurants and hotel companies, with some practices closely aligned with the respective industries, while others were less relevant.
The results from the survey indicate that people are inclined to see CSR as more effective when the activities directly relate to a company’s core functions, lending support to the researchers’ four-component framework.
Lee added, “While larger corporations may attempt to engage in a wide array of CSR activities to cater to diverse stakeholders, a more focused approach on a select few CSR initiatives that align with their core strengths can yield greater business and social value. It’s essential for companies to create economic value alongside social value, as financial returns are key to sustaining CSR initiatives over the long term.”
Penn State doctoral student Samantha Hwang, along with Minjung Shin from the University of Houston and Kyung Ho Kang from Kyung Hee University, contributed to this research.
