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Article history: This study builds on corporate innovation, social innovation, and corporate social innovation literature to develop
Received February 2014 a preliminary theory. The study then uses case studies to build a framework that describes factors leading to
Received in revised form September 2014 successful corporate social innovation (CSI).The study focuses on social innovations that create social value and
Accepted January 2015
competitive advantage. In the framework, three organizational components enhance CSI: strategic alignment,
Available online xxxx
institutional elements, and clarity in intent. Three institutional elements enable CSI processes: stakeholder
Keywords:
engagement, operational structures and processes, and organizational culture. Integrating CSI into strategy and
Social innovation operations creates opportunities for co-creation, thereby creating shared value and enhancing competitive
Corporate social innovation advantage. This study concludes by highlighting managerial implications and future research opportunities.
Shared value © 2015 Elsevier Inc. All rights reserved.
Case study method
Co-creation
Competitive advantage
http://dx.doi.org/10.1016/j.jbusres.2015.01.036
0148-2963/© 2015 Elsevier Inc. All rights reserved.
Please cite this article as: Herrera, M.E.B., Creating competitive advantage by institutionalizing corporate social innovation, Journal of Business Re-
search (2015), http://dx.doi.org/10.1016/j.jbusres.2015.01.036
2 M.E.B. Herrera / Journal of Business Research xxx (2015) xxx–xxx
Most cases involve partners of the Asian Institute of Management Fully implementing a social solution can take months, years, or even
(Ramon V. del Rosario, Sr. Center for Corporate Social Responsibility) decades. A disciplined approach to implementing social solutions helps
and recent nominees for the Center's Asian CSR Awards. All cases achieve positive, widespread social outcomes (Murray, Caulier-Grice, &
provide exhaustive information from company executives, employees, Mulgan, 2010).
and stakeholders. The third case study examines CSI processes within
Intel, which treats innovation as a source of competitive advantage. 2.3. Institutionalizing social innovation
This case study tests the full framework. The Intel case study uses data
from literature and documents, presentations, interviews, CSR program Innovation is most powerful when organizational systems and struc-
case studies, and site visits. Because of its extensive nature, the second tures can institutionalize this innovation. Organizational structures—both
case study does not appear in full in this article. Fig. 3, however, presents formal and informal—yield innovation benefits for companies (Hana,
a summary of key examples from the second case study. Full details of 2013; Pfitzer, Bockstette, & Stamp, 2013; Tushman & Nadler, 1986).
the 3M and Intel case studies appear later in the article. The framework herein describes the institutionalization of social
innovation. The framework has three key components: 1) strategic
2. Theoretical framework alignment, 2) institutional elements that enable social innovation, and
3) clarity in intent. Revisions to the framework draw upon inputs
2.1. Defining social innovation from practitioners attending the 2012 Asian Forum on Corporate Social
Responsibility. Systematic assessment of the business context helps
This research adopts the following definition of social innovation: achieve strategic alignment. Identification of social objectives helps
Social innovation is a measureable, replicable initiative that uses a clarify corporate intent. The framework helps companies set social
new concept or a new application of an existing concept to create share- goals consistent with standard CSR outcomes (Herrera, 2011b) (Fig. 2).
holder and social value. Identifying drivers, enablers, and barriers to
idea generation, experimentation, and implementation is critical to 2.3.1. Strategic alignment
understanding CSI institutionalization. Significant business innovations can result from integrating envi-
ronmental and social issues into corporate strategy (Fiorina, 2004).
2.2. The process of social innovation Socially responsible companies systematically integrate market and
non-market conditions into strategic planning (Herrera, 2007; Sabir,
This study uses a framework (Fig. 1) that establishes a five-stage Kalyar, Ahmed, & Zaidi, 2012). In particular, during the environment
process combining CSR implementation and business innovation. The analysis and strategic assessment phase of strategic planning, compa-
five stages are assessment, design, development, systematization, and nies should already be considering social and sustainability elements.
institutionalization and scaling up. The first stage of embedding social In addition to reviewing market-related factors, management should
innovation is the assessment stage (active sensing), which involves review non-market factors through footprint and stakeholder analysis.
continuously and actively gathering information. This active sensing Non-market factors should also contribute to the environment-
provides employees with triggers for innovative ideas that lay the foun- sensing and strategic assessment mechanisms that are part of strategy
dation for the design or ideation stage. Pilots during the development implementation.
stage then test the design. Results of the pilot systematize the innova- The business context consists of stakeholders, the corporate footprint,
tion. Finally, institutionalization involves embedding and scaling up and general strategic considerations. Analyzing the corporate footprint
across the entire organization. involves analyzing company operations' economic, environmental, and
Please cite this article as: Herrera, M.E.B., Creating competitive advantage by institutionalizing corporate social innovation, Journal of Business Re-
search (2015), http://dx.doi.org/10.1016/j.jbusres.2015.01.036
M.E.B. Herrera / Journal of Business Research xxx (2015) xxx–xxx 3
Please cite this article as: Herrera, M.E.B., Creating competitive advantage by institutionalizing corporate social innovation, Journal of Business Re-
search (2015), http://dx.doi.org/10.1016/j.jbusres.2015.01.036
4 M.E.B. Herrera / Journal of Business Research xxx (2015) xxx–xxx
encourage social innovation through corporate values supporting time on innovation-related activities. This program strengthens 3M's in-
experimentation, risk-taking, and collaboration. Structural democrati- novation culture and creates opportunities for employees to engage in
zation can also encourage social innovation. Social innovation is more personally meaningful activities. Some examples of 15 Percent Time
likely to increase competitive advantage when both operational and products include Scotch® Brand Tapes, Post-it® Notes, and Scotchgard™
organizational mechanisms allow co-creation. Fabric Protector (3M, 2012a). 3M has a clear active-sensing policy for
both market and non-market factors. 3M also has a clear policy of active-
2.3.3. Focus areas ly engaging stakeholders in co-creating products and services.
Clarity of intent with regard to business outcomes is often easy, but
clarity with respect to desired social outcomes can be more challenging. 3.2. Case study: Intel
Social goals fall into one of three focus areas: governance and society,
customer and product responsibility, or value chain and environment. Intel is one of the giants of IT innovation (Intel, 2014a). Through its
The focus area of governance and society refers to managing the products, Intel is able to champion and gain from social innovation.
company's relationship with society in general through initiatives Intel's environmental sustainability and social responsibility initiatives
such as community involvement, education and culture, livelihood address social issues and business concerns. The company traces its
programs, technology development and access, education, and health journey along the maturity curve—from CSR awareness to an ability to
care. This focus area also includes ethical and governance practices in use CSR for transformation (Fig. 5).
areas such as human rights and transparency. The focus area of product
responsibility and consumer rights refers to consumer-related initia-
tives (e.g., fair marketing, product labeling, product safety, and sustain- 3.2.1. Business context: footprint, stakeholders and strategic considerations
able consumption). The focus area of environment and value chain Intel's business context focuses on adopting socially innovative
management involves value chain management for optimizing the approaches to be globally competitive. Intel incorporates environmental
social and environmental footprint (e.g., host community engagement performance goals in its operations to improve energy efficiency,
and environmental protection practices). emission reduction, and resource conservation. In 2008, Intel became
the largest voluntary purchaser of green power in the United
3. Illustrative case studies States.Clearly, Intel includes non-market factors in its strategic assess-
ment and monitoring.
3.1. Case study: 3M Intel's strategy responds to customer demand and product innova-
tion to make Intel a global IT leader (The Times 100, 2014). Intel
As a global innovation company, 3M claims that innovation is in its presents itself to the industry and international community as an inno-
DNA. Innovation is in the essence of 3M's strategy, culture, operations, vation champion. In promoting innovation through public policy, Intel
and organizational structures and practices. 3M's innovation culture is advocates tax and trade, health and environment, content, communica-
team based and collaborative. Customers, suppliers, and other stake- tions, and privacy innovation. Intel constantly explores how technology
holders are innovation partners. can transform lives. Intel identifies fresh marketplace opportunities
while managing to broaden and deepen technology applications,
3.1.1. Business context including improving education and health care among marginalized
3M's innovation culture and corporate citizenship strategy responds sectors. Intel practices active sensing to drive innovation in both market
to its business context. 3M's environmental footprint consist of gas and non-market aspects of the business.
emissions, air emissions, water use, energy consumption, waste dispos-
al, and toxic chemicals the production process generates. Intellectual 3.2.2. Institutional elements: stakeholder engagement, operations, and
property rights and patent protection are important to 3M's successful organization
innovation strategy. The ability to change and successfully engage Intel's key organizational processes and structures exemplify inno-
with new distributors and suppliers and to bring products to multiple vation. Intel develops stakeholder-specific programs that create shared
markets is crucial to 3M's success (Fig. 4). value. To engage stakeholders, Intel's CSR department conducts annual
face-to-face meetings and generates discussion using social media
3.1.2. Institutional elements: stakeholder engagement, operations, and (Intel, 2014b). Intel Education Programs focus on expanding academic
organization opportunities. Intel argues that technological literacy alone is insuffi-
3M's history contributes to the cultural bias toward a collaborative cient to address poverty but that technology can be a vehicle for social
approach to innovation. Collaborative mechanisms include stakeholder inclusion through learning, livelihood, and employment.
consultation, employee involvement in R&D, and active participation in Intel's stakeholder engagement platforms help develop strong rela-
research networks. AccountAbility's AA1000 Stakeholder Engagement tionships with institutions and individuals to improve understanding
Standard is the basis of 3M's global stakeholder engagement program. of market opportunities and trends. These characteristics allow Intel to
3M consults consumers in product development and participates in contribute to society and build competitive advantage, either by broad-
research networks to develop eco-friendly products. Furthermore, 3M ening markets or by developing innovative, low-cost solutions.
works with the World Resources Institute and the Design for the Intel's environmental programs include the Intel Open Energy Initia-
Environment Program. 3M adopts the triple bottom line approach. tive, LEED green building certification, water use and recycling, and
3M's 2015 sustainability goal is to “reduce volatile air emissions 15%, solid waste recycling program. Intel's supplier code of conduct covers
reduce solid waste 10% and improve energy efficiency by 25%, all from labor and environmental standards. Intel also supports the global
a 2010 base” (3M, 2012b). campaign against conflict minerals.
3M's innovation culture encourages exploration; the company is Intel promotes an innovation culture by communicating that
open to new technology—which may not have immediate practical innovation is part of the company's competitive business strategy. Intel's
applications—and encourages collaborative internal networking through innovation culture relies on employees' capabilities and strengths. For
the Technical Forum, formed in 1951. 3M exhibits a strong culture of example, half of Intel's 82,000 employees “have engineering degrees
flexibility, responsiveness, and change. The company believes that the and a quarter have master's degrees” (Karlgaard, 2011, February
best approach to innovation involves people working together, especial- 16).Through IT labs and research grants, employees collaborate with
ly in close coordination with customers and suppliers. Accordingly, the co-workers. Intel also funds research projects between employees and
15 Percent Time Program encourages employees to spend 15% of their universities. Intel's integrated approach to social innovation clearly
Please cite this article as: Herrera, M.E.B., Creating competitive advantage by institutionalizing corporate social innovation, Journal of Business Re-
search (2015), http://dx.doi.org/10.1016/j.jbusres.2015.01.036
M.E.B. Herrera / Journal of Business Research xxx (2015) xxx–xxx 5
BUSINESS CONTEXT
Fig. 4. Integrating social innovation and sustainability using 3M's innovation process, culture, and products.
allows the company to create competitive advantage while creating indicates that a disciplined approach to social innovation in all five
social value (Fig. 6). stages increases the likelihood of success. Results also indicate how
companies can institutionalize mechanisms that increase the likelihood
4. Implications of initiating and implementing successful social innovation. Companies
can use this study's conceptual framework to improve CSI approaches
This study has important implications for companies seeking to and create competitive advantage.
engage in social innovation. The research shows that a deliberate,
systematic approach to social innovation can create both competitive 5. Discussion
advantage and social value. Private companies can engage in social
innovation in many ways, but a consistent approach and support from This study explores social innovation implementation and presents a
institutional mechanisms increase the likelihood that companies conceptual framework that companies can use to improve social
initiate and successfully implement social solutions. The research innovation implementation. Companies wishing to promote CSI must
Please cite this article as: Herrera, M.E.B., Creating competitive advantage by institutionalizing corporate social innovation, Journal of Business Re-
search (2015), http://dx.doi.org/10.1016/j.jbusres.2015.01.036
6 M.E.B. Herrera / Journal of Business Research xxx (2015) xxx–xxx
Fig. 6. Integrating social innovation and sustainability using Intel Corporation's innovation process, culture, and products.
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articles/entry/the_case_for_stakeholder_engagement
The study indicates that certain institutional elements can permeate a Ferauge, P. (2012). A conceptual framework of corporate social responsibility & innova-
company's operations and strategy and can lead to a synergy between CSI tion. Global Journal of Business Research, 6(5), 85–96.
and (market and technical) innovation. Active sensing of the business Ferauge, P. (2013). The complementarity of corporate social responsibility and innova-
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Hana, U. (2013). Competitive advantage achievement through innovation and knowl-
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motes and supports efforts toward co-creation with customers, a particu- Herrera, M.E.B. (2007). CSR and value creation. In V.O. Santos, & A.B. Moss (Eds.), Doing
larly valuable approach in highly competitive industries. good in business matters: CSR in the Philippines (pp. 114–195). Makati City: Asian In-
Currently, when attempting to understand CSI and social innovation stitute of Management and De La Salle Professional Schools.
Herrera, M.E.B. (2011a). Corporate social responsibility in Southeast Asia: An eight-country
in general, detailed narrative descriptions such as the one in this study analysis. Makati City: Asian Institute of Management.
may be more helpful to understanding CSI and building systemic theory Herrera, M.E.B. (2011b). Towards strategic CSR: Aligning CSR with the business and embed-
than a large-scale yet superficial survey of many companies would be. In ding CSR into the organization (A manual for practitioners). Makati City: Asian Institute
of Management.
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Jacobson, M. (2013, September). The role of social innovation in inclusive growth.
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Indonesia: Presentation at the Asian Forum on Corporate Social Responsibility of
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Please cite this article as: Herrera, M.E.B., Creating competitive advantage by institutionalizing corporate social innovation, Journal of Business Re-
search (2015), http://dx.doi.org/10.1016/j.jbusres.2015.01.036