Corporate social responsibility (CSR) is now growingly viewed as a strategic tool for achieving and maintaining sustainable competitive advantage in the rapidly changing marketplace. Some of the opportunities that can arise when financial institutions and other business organizations adopt a policy of corporate social responsibility (CSR) in Bangladesh include:
• Increase corporate reputation and goodwill: When a company adopts a CSR policy and contributes towards the society, environment and other stake holders, a positive evaluation of the company generally occurs in the marketplace. CSR programs can also help to establish a positive corporate reputation that makes consumers resilient to negative company news. It can increase the social acceptability of the company as good corporate citizen and enhance its reputation and goodwill.
• Enhancing firms and brand image: Company or brand image is important because it ultimately provides the company a competitive advantage for their business. By increasing the reputation and goodwill, CSR can be used to enhance the image of the company or to prevent it from potential deterioration. It also contributes to building brand equity and making a brand strong in the competitive market. Thus CSR increase the chances of its survival in a highly competitive environment through building a positive brand image through goodwill creation.
• Brand differentiation: In crowded marketplaces companies strive for ‘X Factors’ which can separate them from the competition in the minds of consumers. In Bangladesh, CSR practice can help a bank or NBFI to easily differentiate it from its rival. Organization like Dutch-Bangla Bank Ltd. is well known for their CSR contribution in education and health sector all over the country which enables them occupy separate place in the consumer mind.
• Avoid governmental threat: Any business cannot operate in any country without following the laws and regulations of that particular country. If any business doing something that can cause harm to society or environment, then government can seize its license to operate. Besides, mandatory welfare contribution provision is not rare for business concern. Corporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps they can persuade governments and the wider public that they are taking current issues like health and safety, diversity or the environment seriously and so avoid intervention.
• Social & community development: CSR practice makes good business sense of give back to society. Charitable contributions, employee volunteer programs, corporate involvement in community education, employment and homelessness programs, product safety and quality etc. all are directed towards the development of society and community as a whole.
• Environmental protection: CSR practice is synonymous to ensuring sustainable development in countries like Bangladesh. CSR ensures sustainable development as the developments that meet the needs of the present without compromising the ability of future generations to meet their own needs also implies the continuation of the company as a going concern apart from serving society and natural capital. Corporations should not do anything that can cause imbalance and harm in the natural environment. Many companies in Bangladesh are undertaking tree plantation, beach cleaning, greener waste management, greater material recyclability, better product durability and functionality, greater use of renewable resources, integration of environmental management tools into business plans, including life-cycle assessment and costing, environmental management standards, and eco-labeling etc. initiatives to protect environment ant to be recognized as environment friendly.
• Efficient human resources management: Corporate Social Responsibility can be an important aid to recruitment and retention, particularly within the competitive graduate market. CSR can also help to build a ‘feel good’ atmosphere among existing staff. CSR increase benefits and motivation to staff, increase employee satisfaction, loyalty and retention. CSR enables the better management of workforce sensitive to the ethical dimension as employees are increasingly looking beyond paychecks and benefits, and seeking out employers whose philosophies and operating practices match their own principles.
• Increased customer loyalty: When customers see that the company not only earning profit from them, but also supplies them quality products, undertakes social and environmental development programs such as health support, educational scholarship, arts and music preservation and promotion programs and so on, it usually increase the loyalty of customers towards that company.
• Positive word of mouth communication: Increased customer loyalty resulting from visible CSR activities reduces the rate of customer defection and increase positive word of mouth communication. Nowadays positive word of mouth promotion and advocacy is seen as the strongest and credible tool of promoting a product and company which enables attracting new customers with lower costs and thus increasing market share.
• Increased sales: There is evidence that the ethical conduct of companies exerts a growing influence on the purchasing decisions of customers. In a recent survey it is found that, more than one in five consumers reported having either rewarded or punished companies based on their perceived social performance. Consumers of Bangladesh are growingly conscious about social responsibility of business and tend to reward the company with larger CSR involvement.
• Increase profits: CSR has positive effect on increasing profits. CSR not only increases sales and market share but also lowers the operating costs of the company by increasing workforce productivity and efficiency, protects resources on which the company depends, improves supply chain performance, create positive relationships with other institutional players etc. and thus increase profits of the company.
• Media limelight: When a company adopts a policy of CSR, then it intentionally follow the German rules of “do something good and talk about it”. It enables the company to generate ever greater media attention and positive media coverage. Media limelight can strengthen a company’s market position through repeated exposures.
• Meet the competition: When consumers are in a situation to have a choice between two products or services that are relatively the same, the CSR practice associated with those companies can be an influencing factor in their decision to purchase a product or service. Consumers can purchase the products of that company which has clear cut CSR practice relative to their competitors. Well-designed CSR practice can be used as a strategic tool to meet the competition and gain sustainable competitive advantages.
