The Role of Corporate Social Responsibilities (CSR) in Maximizing the Firm’s Profitability for Sustainable Competitive Advantage

Abstract

This study explores the role of Corporate Social Responsibilities (CSR) in maximizing the firm’s
profitability for sustainable competitive advantage in Indonesia. CSR refers to the obligation of
corporations to consider not only shareholders’ interests, but also the interests of other stakeholders, like
employees, customers, suppliers and communities directly affected by corporate actions. CSR nowadays
is approached as a shared value, recognizing that not only the conventional economic needs but also
societal needs define the market. A corporate social agenda has moved from simply helping to reduce
social and environmental harm to improving social conditions as a way to strengthen its core business
strategy to maximize its profitability for a sustainable competitive advantage. This study uses personal
interview with respondents of selected companies from various industries in Indonesia. The interviews’
results are emphasizing the four major aspects which explains how exactly is the role of CSR in the firm’s
profit maximization. First is the company’s brand image will be affected by the CSR, leading the
company to accordingly gain the trust from the customers, the customers’ trust is the second aspect. Third
is by doing CSR, the sense of proudness towards the company felt by the employees will increase, this
will increase the employee’ productivity. Last but not least is the enrichment of the human beings across
the company, this will create a harmonize atmosphere and simply promote a healthy society. In
conclusion, these four major aspects will interact with one another and influence the profit maximization,
which means eventually will as well act as a sustainable competitive advantage for the company.