Taking a three-pronged approach to achieving business sustainability
Business sustainability has been increasingly conceptualised in terms of corporate social responsibility (CSR) from a stakeholder perspective.
The fundamental idea is that socially responsible enterprises tend to sustain a longer life span in business operation than those that are not socially responsible.
There is growing evidence to show that enterprises that are committed to CSR are more likely to build a positive corporate image, nurture high employee commitment, cultivate customer loyalty, gain community popularity, be environmentally friendly, forge partnerships with government and, ultimately, reduce business risks.
In addition, research on corporate social performance has generally found that being responsible to stakeholders helps to strengthen enterprises' competitive advantage and financial performance in the long run. In this way, CSR provides an avenue for enterprises to achieve economic, social and environmental sustainability - the so-called triple bottom line.
This CSR perspective of business sustainability puts CSR at the core of business sustainability and requires that it be integrated with business strategy and operation practices. In the process of doing business, not only should economic profit be considered, but also the greater need to be concerned with social development and protecting the environment.
How should enterprises pursue business sustainability through the CSR business model? The model consists of three aspects. The first and starting point is the corporate values (V) of an enterprise, requiring the formulation of a vision and mission of CSR and business sustainability that are conceptually sufficient to inform its strategic positioning. The second is the process (P) of practicing CSR, asking an enterprise to institutionalise the management of CSR and its CSR projects.
The third is the impact (I) of CSR practices, obliging an enterprise to evaluate the contribution of its CSR endeavours to economic, social and environmental sustainability in terms of the well-being of individual stakeholder groups.
This VPI conceptual scheme makes the CSR business model interactive and progressive, enabling it to guide enterprises to achieve business sustainability through continuous improvement. The virtuous cycle of VPI takes the form of the value driving the process, the process generating an impact, and the impact providing feedback for improvement.
Carlos Lo is director of the Sustainability Management Research Centre at Hong Kong Polytechnic University's department of management and marketing, and Eric Ngai is the centre's co-director