**5. Conclusion**

A defensive strategy focuses on meeting regulatory compliance. With this defensive strategy, management targets at complying with regulatory requirements so that the firm can be relieved of regulatory pressure. Also, CSR activities are considered as additional cost burdens to business operation and management's involvement in CSR is very limited. The regulatory requirements are thus at significant odds with the norms and cognitive beliefs held by the industry. A good example is that, in 1991, Japanese recycling law set industry standards to make electronic products easier to disassemble. Although Hitachi initially resisted the law, the firm eventually responded by redesigning products to simplify disassembly in order to protect its market share. In the end, the company was able to reduce the parts in its washing machines by 16% and in vacuum cleaners by 30%. These electronic products became not only easier to assemble/disassemble, but also cheaper in terms of costs of goods sold, thus providing Hitachi

Both the reactive and defensive strategies are considered as passive strategies, in which firms are not voluntarily engaged in CSR activities. Consequently, firms responding to CSR concern with the two strategies may make a controversial argument that excessive regulatory pres‐ sures or governmental regulations in environmental protection, food safety, or other areas may result in increasing operational cost and thus lose competitiveness to foreign competi‐ tors which are subject to less demanding regulations. However, economists generally would argue that these governmental regulations simply force firms to pay real costs that they oth‐ erwise place on others. If a firm pollutes, it is imposing a cost on the surrounding community that must either live with the pollution or pay to clean it up. By imposing a pollution tax that roughly equals the cost to the community, the firm has to account for pollution as a real cost,

An accommodative strategy is defined that management may take a positive view toward CSR activities and thus is willing to partially participate in these activities or invest some corporate resources in them. When taking this strategy, managers may accept the fact that CSR is a fundamental corporate responsibility and thus becomes to form the mindset that CSR is legitimate and social obligations to society. For example, in 2007, Marks and Spencer determined not to purchase endangered species of fish in its famous CSR program "Plan A" by signing a contract with its seafood suppliers, which in turn led to the effect on preserving

Another corporate strategy in response to CSR is a proactive strategy, which is character‐ ized by adopting a set of written corporate policies that includes a firm's acceptance of CSR. In this situation, CSR has legitimacy to become management's major agenda, as well as formal corporate duties in practicing CSR. Furthermore, management taking this view‐ point is willing to proactively conduct CSR programs at the expense of more current cor‐ porate profits to reach a long‐term "shared value." From a CSR perspective, the firms take a proactive strategy when engaging in CSR, constantly anticipating their responsibility and endeavoring to do more than is required. For example, ice cream maker, Ben Jerry, not only has adopted recycled packaging on its products and redesigned its dairy farms to become more environment‐friendly, but also commits to donate 15% of its net profits to charities

with a significant cost advantage.

112 Corporate Governance and Strategic Decision Making

meaning to internalize a negative externality.

precious ocean resources.

and foundations.

As increasing empirical evidence finds that there exists a positive relationship between CSR and firm performance, one might wonder how CSR can generate a positive value to a firm. Business practices from successful firms shed light on several managerial implications: first, CSR activities may serve as a good marketing program to improve corporate image and thus increase sales revenues. For instance, the British retailer, Marks, and Spencer, initiated a "Plan A" campaign since 2007, aiming to change 100 things to protect the world we live in. Within 3 years of time, this new campaign has successfully boosted the firm's sales revenues over 20%.

Second, CSR may provide encouraging motivations for product or production innovations. For example, Nike, once accused of sweatshop with the use of child labor, adopted new fabric materials made of recycled plastic for high efficient sports clothing. This new campaign not only significantly improved corporate reputation, but also increased sales in the sports apparel market. In addition, French airliner Air France‐KLM initiated a project to reduce carbon dioxide by 20% per passenger by adopting newly developed biofuel. This project has not only maintained its fuel cost at the long‐term sustainable level, but also reduced in‐cabin noise during the flight.

Third, CSR activities may serve for the purpose of business management. The famous US supermarket chain, Costco, paid over \$20 per hour to its employees, which exceeded the double of national average on hourly wage. In addition, the firm provided over 90% of its employees with medical benefits. With high employee's satisfaction and commitment, the firm operated with a low turnover rate less than 15%, which not only obviously reduced explicit and implicit training costs, but also significantly raised employee's productivity, leading to record high net corporate profits in 2014.

Last but not least, CSR activities may attract interested investors to maintain long‐term owner‐ ship so as to enjoy long‐term stock return. Wang [19] demonstrates that a portfolio including CSR stocks may empirically outperform conventional style portfolios, such as market and growth stocks, in the long run.

In conclusion, since each firm can vary in terms of corporate in resources, investment size in CSR may be different. In general, large firms may have more economic resources and influ‐ ence on conducting CSR activities than smaller firms. As firms continue to grow in size, more CSR activities incorporated into business practices become increasingly important. In the end, CSR should not just serve for the window‐dressing purpose, yet it should be incorporated into practical business operations and then turn into a key corporate growth strategy as firms grow in size. For firms aiming to become multiple national enterprises (MNEs), the golden rule to success is crystal clear.
