Over the last 20 years, CSR has worked its way up the business and political agenda. Evidence of firms’ increased CSR investments is not matched, however, by clear evidence of how CSR creates value for firms.
That some firms invest in CSR suggests it can provide a competitive advantage, yet a vast body of research into the business case for CSR has not been conclusive. Recent research typically has focused on either a) how CSR supports core business activities, or b) how it improves stakeholder relations and so reduces transaction costs.
In this paper, it is argued that for mutual insurers, CSR offers value from both a strategic and economic perspective, which can be explained through the concepts of stakeholder influence capacity and absorptive capacity. On the one hand, CSR helps build trust with stakeholders, on the other, CSR that addresses (emerging) social and environmental risks builds the firm’s knowledge of risk.
A two-tier model is presented for managers of mutual insurers to assess the extent to which their CSR creates value from an economic and strategic perspective, and consider opportunities for further value-creation, including the communication and learning processes that enhance value. The model is applied to information obtained from four UK mutual insurers to demonstrate its value for managers.