European Management Journal (2012) 30, 564– 576

journal homepage: www.elsevier .com/ locate /emj

The organizational virtuousness of strategiccorporate social responsibility: A case study of theSri Lankan family-owned enterprise MAS Holdings q

Mario Fernando a,*, Shamika Almeida b,1

a School of Management and Marketing, Faculty of Commerce, University of Wollongong, NSW, Australiab School of Management, Faculty of Business, University of Technology, Sydney, P.O. Box 123 Broadway, NSW 2007,Australia

0263-2373/$ - see front mattehttp://dx.doi.org/10.1016/j.e

q An earlier version of thisAcademy of Management Con* Corresponding author. T

42272785.E-mail address: mariof@uo

1 Tel.: +61 2 9514 3609; fax

r Crownmj.2012

paper wference,el.: +61

w.edu.a: +61 2 9

KEYWORDSCorporate social respon-sibility;Strategic corporatesocial responsibility;Organizational virtuous-ness;Asia;Sri Lanka

Summary Relatively little is known about strategic corporate social responsibility (CSR)in Asian companies. In the post-tsunami period, the authors interviewed 23 senior execu-tives at ten prominent companies in Sri Lanka. Nine of the companies responded to thetsunami with philanthropy based CSR initiatives. Interviews with three senior executivesat the family-owned enterprise MAS Holdings revealed an explicitly strategic CSRapproach. MAS Holdings, an apparel manufacturer owned by three brothers, is VictoriaSecret�s lead strategic partner and an ethical buying source for other well-known apparelretailers. This paper examines the organizational virtuousness of MAS Holdings� strategicCSR initiatives. The analysis uses Bright et al.�s (2006) conceptualization of organizationalvirtuousness in terms of the three dimensions of human impact, moral goodness andunconditional societal betterment. The case study findings for MAS Holdings illustratehow strategic CSR initiatives could be virtuous due to positive contributions to the com-munity in those dimensions despite generating profits, publicity and reputation advanta-geous to the firm. While the empirical findings are limited to one company in Sri Lanka inthe post-tsunami period, the paper discusses the broader implications of and directionsfor future research into the organizational virtuousness of strategic CSR.Crown Copyright ª 2012 Published by Elsevier Ltd. All rights reserved.

Copyright ª 2012 Published by E.08.003

as presented at the AnnualMontreal, 2010.2 42214053; fax: +61 2

u (M. Fernando).514 3602.

Introduction

The purpose of this paper is twofold. The first is to examinethe moral dimension of strategic corporate social responsi-bility (CSR). In their seminal work, Donaldson and Preston(1995) proposed that the stakeholder theory consists ofthe descriptive, instrumental and the normative dimen-sions. From a stakeholder theory perspective, strategicCSR is a justifiable approach for firms to allocate resources

lsevier Ltd. All rights reserved.

The organizational virtuousness of strategic corporate social responsibility: A case study of the Sri Lankan 565

to internal and external stakeholders. Promoting initiativesthat are good for business as well as for society, strategicCSR is a type of philanthropy aligned with the pursuit ofprofits. Organizations genuinely engaged in strategic CSRinitiatives to promote social good are bound to benefit bythe ensuing positive impact on profits and firm reputation,and thus be criticized for the self-serving nature of theirstrategic CSR initiatives (Brenkert, 1996). However, only ahandful of researchers have empirically examined this issue(see Brønn & Vidaver-Cohen, 2009; Graafland & Van De Ven,2006). We conform to the view that business is a deeply hu-man institution and that every aspect of value creationwithin business is embedded with moral complexity (Free-man & Harris, 2009). Within this context, we empiricallyexamine the moral dimension of strategic CSR initiativesby assessing the firm�s strategic CSR initiatives against a nor-mative framework (i.e. organizational virtuousness).

The second purpose is to address the general lack ofawareness on strategic CSR in Asia. CSR practices in Asiahave traditionally been driven by a philanthropy based CSRagenda (Ramaswamy & Yeung, 2009). While CSR is becomingan integral part of the strategic planning process of Asiancompanies (Chapple & Moon, 2005), very little is knownabout the strategic CSR practices in Asia. Porter and Kramer(2006, 2011) suggest that through strategic CSR initiatives,companies in the region have the potential to use their un-ique attributes to address an array of social needs (seeJamali, 2007). Especially at a time when Asia has the poten-tial to become the long-term custodian of global civilization(Whelan, 2007), the findings of this Sri Lankan study providean opportunity to enhance our understanding of the moralaspects of Asian firms� strategic CSR practices.

The findings of this study are important for several rea-sons. Sri Lanka is emerging out from a 30-year old civilwar. In 2011, the economy recorded an impressive 8.3%growth, the highest since gaining independence from Britainin 1948 (Department of Census, 2011). Sri Lanka was alsothe second most affected country in terms of loss of livesfrom the 2004 Boxing Day Asian tsunami. Ironically, thecatastrophe brought in a new chapter in CSR practices inthe country when it resulted in the mass launch of formalCSR programs. Few Sri Lankan based firms had formal CSRpolicies prior to the 2004 tsunami. Most of these firms werelocal subsidiaries of multinational firms or firms operating inthe apparel industry (Altered Images, 2003). This study isalso important because the featured case study in this pa-per, MAS Holdings, is South Asia�s largest lingerie manufac-turer and recognized as one of the world�s first �ecofactories� making lingerie (Telegraph, 2009). Another appa-rel company participating in this study became the world�sfirst certified apparel manufacturer to secure the energymanagement standard ISO 50001 (Daily News, 2011). Lastly,the findings of this study are unique because of the longstanding tradition of charitable giving among the peopleof Sri Lanka (Simpson, 2004). Despite its developing status,Sri Lanka is consistently ranked among the top donors in theworld (World Giving Index, 2011). These contextual factorsare further explained in the research context section.

The rest of the paper is organized as follows. The nextthree sections describe the concept of strategic CSR, thenthe concept of organizational virtuousness, and then theoverlap between strategic CSR and organizational virtuous-

ness motives. The subsequent section explains key informa-tion about the research context in Sri Lanka. The nextsection explains the case study methodology based onface-to-face, in-depth interviews, followed by the findingsof the study. This section leads to a discussion on strategicCSR and organizational virtuousness. The final section setsout the implications and concluding thoughts.

The strategic view of CSR

While we continue to witness a lively debate over the role ofbusiness in society (e.g. Basu & Palazzo, 2008; Godfrey &Hatch, 2007; Jamali, 2007, Maitland, 2002; McWilliams, Sie-gel, & Wright, 2006; Porter & Kramer, 2006, 2011), the CSRliterature also gathers diverse definitions of CSR. The con-cept of CSR is contextual and is therefore influenced bythe environment in which an organization operates. Earlyin the development of CSR, Carroll (1979) proposed a fourpart definition of CSR; economic, legal, ethical and philan-thropic. Most of the definitions of CSR are concerned abouthow a business manages its economic, social and environ-mental dimensions. In addition to these dimensions, afteranalysing 37 CSR definitions, Dahlsrud (2006) proposed anextended CSR definition to include the stakeholder and vol-untariness dimensions.

The body of strategic CSR literature suggests that in thecase of public firms, stakeholders outside the stockholdergroup are considered as means to the ends of maximizingshareholder wealth (Graafland & van de Ven, 2006; Jamali,2007; McWilliams et al., 2006). However, until recently, notmuch attention has been given to empirically studying themoral aspects of strategic CSR. While McWilliams et al.(2006) call for an examination of the strategic use of CSRactivities, Brønn and Vidaver-Cohen (2009) call for qualita-tive studies in strategic CSR. More research into strategicCSR is also echoed in industry by a McKinsey and Companyfinding that more than 90 percent of 391 CEOs surveyedadmitting to incorporating environmental, social and gover-nance issues into �core strategy more than they did 5 yearsago� (2007, p.19). Jamali (2007) supports further study intostrategic CSR in the context of developing countries. Thechallenge in this respect is to identify CSR initiatives thatpromote the reconciliation of the interests of the organiza-tion with those of its stakeholders, promoting win–win out-comes to all stakeholders (Jamali, 2007).

For example, in the case of an automobile company en-gaged in socially responsible production processes, a �hy-brid� version of a car generating less pollution than astandard model would motivate some consumers to pay aprice premium, given that the social characteristic of lesspollution is �valuable� to them (McWilliams et al., 2006). Thistype of differentiation could strengthen the reputation ofthe firm, and consequently, organizations engaged in strate-gic CSR are more likely to be criticized for the self-servingnature of their CSR initiatives (Brenkert, 1996). Thus, thereis a strong case for examining the moral dimension of stra-tegic CSR initiatives. In this context, the genuineness ormoral motive of strategic CSR becomes an increasinglyimportant issue (Bright, 2006).

In one of the rare published empirical studies on the mor-al dimension of strategic CSR, Graafland and Van De Ven(2006) examine �the relationship between management�s

566 M. Fernando, S. Almeida

view on corporate social responsibility (CSR) and firms� ac-tual CSR efforts� (p.111). After analyzing the practices of111 Dutch organizations, they find that �the moral (intrinsic)motive, which holds that CSR is a moral duty of companiestowards society, induces a stronger involvement in CSR thanthe strategic (extrinsic) motive, which holds that CSR con-tributes to the financial success of the company in the longrun� (ibid). Graafland and Van De Ven explain intrinsic motiveas the �will to obey a certain moral norm because it is desir-able for itself; it is an end in itself� and, extrinsic motive asthe �will to perform a certain act or to adhere to a moralnorm because it is instrumental in realizing another end(such as earning money)� (2006, p.119). The correlation ofactual CSR performance was relatively higher for the moralview of CSR than the strategic view of CSR. Based on thesefindings, Graafland and Van De Ven suggest that a moral com-mitment to CSR provides a stronger motive to contribute toCSR in practice than a positive strategic view on CSR.

In the Asian context, organizations have the opportunityto use their strengths to address various social needs in theregion, thus promoting alignment between business andsociety (Porter & Kramer, 2006). However, organizationsin this region are likely to execute CSR practices in an envi-ronment with weak drivers for CSR adoption on the supplyand demand side, limited CSR advocacy and awareness rais-ing (Jamali, 2007), and coupled with limited regulatorycapacity (Lee & Oh, 2007; Whelan, 2007). Scholars havefound that rather than strategic CSR, philanthropy basedcommunity involvement was the most established form ofCSR in developing countries (e.g. Jamali & Mirshak, 2007)and in the Asian region (e.g. Chapple & Moon, 2005;Ramaswamy & Yeung, 2009). Some propose that deeplyrooted native cultural traditions of philanthropy could bea key contributing factor for such prevalence on philan-thropy based CSR (see Visser, 2008). However, accordingto Ramaswamy and Yeung (2009) and Chapple and Moon(2005), Asian companies are beginning to accept that char-ity does not form the basis of a sound CSR program. Thisshift away from charity driven CSR practices of Asian com-panies to more strategic forms of CSR (see Verma, 2011)can be defended by drawing on Maitland�s (2002) �humanface of self-interest� argument which advances the positionthat reasonable self-interest is not a vice, and extremealtruism may be no virtue.

Maitland (2002) takes the position that some degree ofself-interest may be morally neutral or even morally manda-tory. Drawing distinctions between self-interest and selfish-ness, Maitland argues that profit maximization should not bemorally condemned as without virtue, that self-interest maybecome morally questionable only when such profit maximi-zation crowds out concerns for others and impinge uponothers� rights. That is, if managers �conscientiously try tomaximize stockholder wealth, then they are the livingembodiments of duty, not of self-interest� (Maitland,2002, p.13). Claiming that the confusion between profitmaximization and self-interest is the source of much misun-derstanding, he faults not with �reasonable, measured, pro-portionate self-interest but with excessive or inappropriateself-interest� (p.13). Similarly, Maitland also faults excessivealtruism if it leads to neglecting one�s own interest, capac-ities and projects. Thus strategic CSR initiatives which pro-mote deeds that are believed to be good for businesses as

well as for society would satisfy Maitland�s (2002) thesis aslong as these CSR initiatives� profit maximization aims donot crowd out other stakeholder interests, and also, if thealtruistic nature of the CSR practices are not excessive soas to compromise organizations� commercial interests.Within this context, we examine the motives for engagingin strategic CSR initiatives in Asia by using the concept oforganizational virtuousness.

Organizational virtuousness

Virtuousness is increasingly being promoted in the manage-ment literature as an often overlooked yet indispensable to-pic (Manz, Cameron, Manz, & Marx, 2008). Severalresearchers have called for corporations to emphasize an�ethos of virtuousness in corporate action� (e.g. Bright, Cam-eron, and Caza, 2006, p.249; Godfrey, 2006). Bright et al.(2006) assert that virtuousness is a form of character excel-lence that can be attributed not only to individuals but toorganizations as well, and is necessary for genuineness incorporate philanthropy. Genuineness can be explained asthe �perception that an organization�s philanthropic activi-ties are well intentioned and not merely for instrumentalgains� (Bright, 2006, p.752). The idea of genuineness is par-ticularly relevant to strategic CSR activities because consis-tent strategic CSR activities could generate moral capital bypromoting corporate reputation (Bright et al., 2006; Cam-eron, Bright, & Caza, 2004). Moral capital can act as a sociallicense, a form of insurance against unforeseen risks to cor-porate image, reputation or profits (Godfrey, 2006).

Virtuousness demands organizations to go beyond the �dono harm� assumption and is �the pursuit of the highest aspi-rations in the human condition. It is characterized by humanimpact, moral goodness, and unconditional societal better-ment� (Bright et al., 2006, p.249). Organizational virtuous-ness refers to virtue in organizations and virtue throughorganizations (Bright et al., 2006). Virtuousness in organiza-tions relates to the behavior of individuals in organizationalsettings that helps people blossom as human beings. Typicalmanifestations and consequences of individual virtues arehope, gratitude, wisdom, forgiveness, courage and othersimilar virtues (see Seligman, 2002).

Virtuousness through organizations relates to the ena-blers such as CSR programs in organizations that foster virtu-ousness. With virtuousness, groups of people act in ways thatdemonstrate virtuousness, which may include actions thatwould not be possible for individuals to achieve by actingalone (Bright et al., 2006). The effect of collective virtuous-ness in CSR actionmay support a condition where the impulseto seek human excellence becomes a part of the organiza-tion�s culture (Cameron et al., 2004). Although organiza-tional virtuousness should not be motivated by instrumentaloutcomes, there is reason to expect that virtuousness pro-duces, as a byproduct, positive organizational outcomes.According to Park and Peterson (2003), virtues can be tonicor phasic. Tonic virtuousness is a generalized condition,whereas phasic virtuousness is dependent on an externalevent. Tonic virtuousness such as integrity, kindness, hopeand virtuous purpose are constantly present. Phasic virtuous-ness such as forgiveness occurs only when events such asretrenchment (Bright et al., 2006) or natural disasters likethe Hurricane Katrina or Asian tsunami create a need for it.

The organizational virtuousness of strategic corporate social responsibility: A case study of the Sri Lankan 567

The idea of virtuousness of CSR is in an embryonic stageand several issues regarding frameworks, measurementsand empirical methods are yet to be developed. A usefulframework frequently referred to in the management liter-ature is that of the three attributes of organizational virtu-ousness; human impact, moral goodness and unconditionalsocietal benefit (Bright et al., 2006). In this paper, the vir-tuousness of strategic CSR is examined through this threeitem framework.

In relation to CSR, the human impact is the effect CSRactivities have on improving the living conditions, well-being and the resilience of beneficiaries. The moral good-ness is based on the conception of �character traits in peopleand organizations that are seen as desirable� (Bright, 2006,p.753). The last attribute, unconditional societal benefitis the �intention to create goods of first intent and to pru-dently use goods of second intent to instrumentally bringbenefit to society� (ibid). Organizations demonstrating thisattribute would initiate CSR activities because it is the �rightthing to do�.

Examining these three attributes of organizational virtu-ousness in the strategic motive of CSR initiatives should pro-vide criteria for managers to balance the �strategic logic ofsocial involvement with other, more tangible strategicinvestment projects� (Godfrey & Hatch, 2007, pp. 93–94).While acknowledging that financial management tools pro-vide managers with clear decision tools for allocating anorganization�s capital resources, these researchers claimthat the assets generated, or liabilities mitigated throughstrategic CSR will be difficult, if not impossible to measure(ibid). Consequently, such an undertaking should reveal the�intricacies of real and potential tradeoffs at a level ofsophistication far beyond the general exhortation that man-agers should balance stakeholder interests and needs� (God-frey & Hatch, 2007, p.94). Adopting Valand and Heide�s(2005) conceptual model on CSR relating to �bad episodes�,we propose a model based on the notion of organizationalvirtuousness to examine how these conflicting stakeholderand organizational needs can be balanced through strategicCSR, and the virtues of such initiatives.

Strategic CSR and organizational virtuousness

Strategic CSR could be shaped by several firm specific fac-tors that also influence CSR outcomes. Valand and Heide(2005) label these factors as regulators which may reduceor amplify the effects of a CSR initiative (see Figure 1).

As a regulator, CSR Internal Tools refer to firm�s ownrules, processes and structures that safeguard a �socially

Economic

Environmental

Social

Stakeholder

Voluntariness

Virtuousness in CSR Outcomes

StrategicCSR Initiatives

Stra

tegi

c C

SR g

oals

External Drivers

Regulators CSR Dimension

Human impact

Moral goodness

Internal Tools

Unconditional social benefits

Figure 1 Strategic CSR and organizational virtuousness.

responsible� firm (Valand & Heide, 2005). Based on the cul-tural context, resources and needs of the firm, strategic CSRinitiatives could address a mix of economic, environmental,social, stakeholder and voluntary dimension related issues(Dahlsrud, 2006). For example, although a publicly listedfirm has a variety of stakeholder needs that determine theshape and form of internal tools, in a family-owned firm,these internal tools could be shaped significantly by theowner�s value framework. Other factors such as a firm�sindustry, internal and external resources, market leadershipand dominant employee characteristics (such as number ofmales vs. females employed) could also influence theemphasis on a particular CSR dimension over others.

CSR external drivers such as increased awareness amongstakeholders, public media interest and more integration/higher interdependencies between firms lead to increasedemphasis on CSR outcomes. As companies are facing grow-ing expectations that they measure, report and continuouslyimprove their social, environmental and economic perfor-mance, increasing public media interest tends to reinforcestakeholder awareness. More integration and higher inter-dependencies between stakeholders mean that firms areincreasingly held accountable throughout the value chain(Valand & Heide, 2005). Thus internal tools and externaldrivers could shape a firm�s strategic CSR goals andoutcomes.

In this paper, we examine the motives for strategic CSRinitiatives by analyzing the extent of overlap with Brightet al.�s (2006) three organizational virtuousness attributes.Strategic CSR initiatives are driven by a motive for �doingwell by doing good�. Strategic CSR appeals to firms becausethese initiatives are economically and morally justifiable asthey benefit the bottom-line, are linked to a social purposeand are also aligned with other stakeholder needs. Thus,when formulating strategic CSR initiatives, a key challengefor firms is to achieve an appropriate balance between thepursuit of profits and social good. A firm�s own rules, pro-cesses and structures that safeguard a socially responsiblefirm (internal tools), and stakeholder and public mediainterests (external drivers) can play a major role in deter-mining this balance. It is our contention that the moraldimension of strategic CSR initiatives whether they aredetermined more by internal tools or external drivers couldbe examined by applying the three attributes of organiza-tional virtuousness; human impact, moral goodness andunconditional societal benefit. We turn to this analysis laterafter explaining the research context and the methodologyof the study.

The research context

The research was conducted in the capital of Sri Lanka, Co-lombo. There are several factors contributing to situatingthis study in Sri Lanka. In addition to easy access to thetop leadership in influential business organizations in SriLanka, the participants of the study, drawn from the multi-religious, multiethnic and multilingual Sri Lankan culture,are products of a whole host of influences due to Sri Lanka�sgeographic proximity to India and the decades of the Portu-guese, Dutch and British occupations. With a population of21 million, the island is home to several ethnic and religiousgroups. The Sinhalese are the majority ethnic group (74%),

568 M. Fernando, S. Almeida

followed by the Tamils (18%), Muslims (7%) and others suchas the Dutch Burghers (1%) (Sri Lanka Central Bank, 2012).According to Jones (1997), Sri Lanka represents one of theworld�s most highly religious and diverse cultures—with awide variety of religious expression being apparent amongthe various groups in the island. Its main religions are Bud-dhism (69%), Hinduism (15%), Christianity (8%) and Islam(8%) (Sri Lanka Central Bank, 2012). Due to a unique culturalsystem that has been formed by a process of syncretic fu-sion embedding various religious elements, religion influ-ences almost every aspect of peoples� lives in Sri Lanka(Gombrich & Obeyesekere, 1988). Studying the motives ofstrategic CSR in such an ethnically and religiously diverseAsian context is novel and unique.

Furthermore, in 2009, with the end of a 30-year old civilwar, Sri Lanka was hailed as the eighth fastest growingeconomy in the world. In 2009, while the per capita incomewas US$ 2053, the GDP grew at three and a half per cent(Central Bank of Sri Lanka, 2010). This outcome was perhapsunimaginable after the devastation caused by the 2004 Box-ing Day Asian tsunami. The tsunami killed 32,000 people,displaced 443,000 and caused an estimated US$ 1 billion indamage (US Department of State, 2010). In the immediateaftermath of the tsunami, the long term consequences in-cluded an estimated 250,000 people falling below the pov-erty line. The estimated reconstruction cost was US$1.6billion, primarily to rebuild key coastal infrastructure andre-establish livelihoods. However, the tsunami�s overall eco-nomic impact was less severe than originally feared, withthe economy growing by 6% in 2005, and 7.7% in 2006 asthe damage was offset by the reconstruction effort (USDepartment of State, 2010). On the other hand, the 2004Boxing Day Asian tsunami has ironically been a watershedevent for the growth in CSR practices in Sri Lanka. It re-sulted in a mass launch of formal CSR programs by Sri Lan-kan based organizations. An international NGO,International Alert�s (2005) study findings on the CSR per-ceptions and attitudes of Sri Lankan business organizationsbefore the tsunami provides a snapshot of the state ofCSR practices in Sri Lanka.

According to International Alert (2005), the perceptionsof CSR among the Sri Lankan organizations before the tsu-nami varied from a concise understanding to only a vagueawareness of the concept. However, at that time, a livelydebate was taking place in Sri Lanka as to what actually con-stituted CSR activities, and what did not. CSR in Sri Lankaencompassed both regulation and voluntarism. While largelocal businesses tended to be involved in general, CSR-re-lated issues, only few businesses had formal CSR policies.Most organizations were aware of the short-term benefitsarising from the practice of CSR but fewer were aware ofthe long-term benefits. Those few organizations that hadformal CSR policies tend to be local subsidiaries of multina-tional organizations or firms operating in the garment indus-try (Altered Images, 2003). These firms conducted businessexclusively with large apparel buyers in the world. It wasalso interesting to note that in the present study, few par-ticipating businesses did not seek publicity for certain CSRrelated activities because the initiatives had been �guidedby Sri Lankan culture� and publicity would �take away fromthe spirit of giving�. The need to shy away from publicitycould have been due to the influence of 2500 years of

Buddhism on the national culture. For example, in Thera-vada Buddhism, the type of Buddhism practiced in Sri Lanka,the merit from the dana (charity) offered by lay people arejudged according to three factors; the quality of donor�smotive (selfless and gainless thought), the spiritual purityof the recipient (charity to be received humbly), and thekind and size of the gift (must be proportionate to need)(Simpson, 2004, p. 842). The practice of these types of rit-uals for over thousands of years is likely to have a consider-able impact on the national cultural consciousness of SriLankans.

According to a Gallup survey report (2009), Sri Lanka wasranked with Bangladesh as the second most religious coun-try in the world. 99% of the Sri Lankan population believesthat religion is an important part of their daily lives. Sri Lan-kans� high level of religiosity coupled with their well knownhospitable nature could be a contributing factor to thecountry�s high level of participation in giving. For example,on a per capita basis, Sri Lanka leads the world in corneadonations (USA Today, 2012). Despite being a developingcountry, in terms of charitable giving, Sri Lanka also topsAsia, and has been ranked eighth in the world (World GivingIndex, 2011). The World Giving Index study covering 95% ofthe world population in 153 countries was conducted by theCharities Aid Foundation. The study evaluated countries onthree dimensions: volunteering, giving money and helping astranger. While the survey found that Sri Lanka ranked thirdin the world for volunteering time for others, Sri Lanka re-corded a dramatically higher ranking than the rest of thecountries in the region for overall charitable giving.Although the 2011 report attributes the recent surge in eco-nomic growth of the country for the high world ranking, itsunique cultural system embedding various religious ele-ments influences most aspects of Sri Lankans� daily lives.

The International Alert�s (2005) report shows that themajority of businesses indicated the main reason for theirCSR policies is genuine concern for society, but a minoritycited publicity as the primary purpose. The majority publicview, by contrast, was that businesses practice CSR policiesfor motives of publicity, and only a minority believe thatthey have a genuine concern for society. While there is along history of charitable giving in Sri Lanka due to its strongreligio-cultural influence, few companies had a formalstrategy or policy for doing so. While 73.2% of companiessurveyed had a CSR policy, of those, only 17% had formal,written policies. The majority of organizations engaged inCSR activities relating to education (54.9%) but significantnumbers focused on internal practices, such as employeewelfare (51.2%) and unemployment issues (48.8%). A nota-ble number of organizations engaged in religious activities(36.6%), environmental concerns (31.7%), health (30.5%)and the provision of infrastructure facilities (28%).

The data on which this paper is based was collected inthe post-tsunami era. Thus all of the above and other cul-tural and contextual factors would arguably contribute toSri Lankan people�s understanding of CSR and virtue.

Methodology

McWilliams et al. recommend that CSR researchers need touse �more direct methods, such as interviews and surveys, to

The organizational virtuousness of strategic corporate social responsibility: A case study of the Sri Lankan 569

�tease out� less self-serving information about the motiva-tions for CSR activity� (2006, p.9). In-depth interviews havebeen claimed as the �best method� of qualitative researchmethods (Smith, Thorpe, & Lowe, 1991, p.72), enablingrespondents to give an in-depth perspective of the con-structs of the study. This form of interviewing is recognizedto provide a greater breadth than other types, given its�qualitative nature� (Denzin & Lincoln, 1994, p.365).

Using the case study method, the study is based on face-to-face, in-depth interviews conducted in Sri Lanka duringNovember 2005 and October 2007. A total of 23 interviewswere conducted with 10 influential business organizationsknown to practice CSR in Sri Lanka (Table 1). The job titleof interviewees ranged from Chairperson, Board Director,CEO, Director, Group Manager, Manager and Executive. AtMAS, the Director of Corporate Branding and StrategicCSR, Head of �Go Beyond� CSR Programme and the Head ofHR were interviewed during October 2007. The companieswere contacted first by email and phone. Interviews wereaudio taped, and later transcribed.

Interviewees were requested to narrate their story ofCSR in their organizations and how CSR practices evolvedover time. To seek the participants� perspectives on CSR,the interview guide was based on an open-ended format.This format was used to encourage participants to shareinformation in a style that they were comfortable with. Dur-ing each interview, additional probing questions were askedto seek verification and explanation. While the questionswere framed to capture a wide range of experiences, inter-viewee responses to these questions generated specificexperiences as well.

We followed a two stage process to analyze the data. Inthe first stage, the case study data was organized accordingto a timeline (Van de Ven & Poole, 1990). Then the descrip-tions of key events drawn from interview transcripts, fieldnotes and company documents, and other relevant publicdocuments available from the United Nations, compliedcase studies on organizations, CSR partner documents andmedia reports were ordered chronologically. Multipleaccounts were juxtaposed against each other to determine

Table 1 Sample of participating companies.

Company (no. of interviewees) Details

A (3) Family ownedB (1) Public limited liability c

business conglomerateC (2) Public limited liability cD (2) Public limited liability c

E (2) Family ownedF (1) Public limited liability c

business conglomerateG (1) Family ownedMAS Holdings (3) Family owned

I (1) Public limited liability cJ (7) Subsidiary of a multinat

company

the extent of overlap. With the significant influence the tsu-nami had on the CSR practices of Sri Lankan organizations,the chronological analysis of events was useful to explainhow and why different organizations adopted differenttypes of CSR approaches in the post-tsunami era.

In the second stage, the interview transcripts and fieldnotes were broadly coded into CSR and organizational virtu-ousness. A two level coding process was followed: (1) usinga glossary of concrete terms grounded in the data (e.g. �bot-tom-line�, �doing good�, �strategic�, etc.), and (2) using aglossary of more abstract terms arising from �the a priorispecification of constructs� (Eisenhardt, 1989) found in theliterature (e.g. �human impact�, �moral goodness�, �uncondi-tional social benefit�, etc.). Further steps to improve thevalidity and reliability of the research included feedbackfrom interviewees on the interim findings, as well as datatriangulation. For example, in the case of MAS Holdings,the featured case study in this paper, interview accountswere verified and triangulated against each other, and withthe post-interview participant feedback on interim findings,prior case studies on organizations (Watson, 2006), in-housesurveys, International Alert�s (2005) report, UN Global Com-pact report (2007), McKinsey (2007) report, and other inter-nal and external reports.

Findings

CSR practices

During the immediate aftermath of the post-tsunami era,the majority of the 10 companies followed a philanthropictype of CSR. These firms referred to philanthropic typeprograms, with little mention of ethics, legal complianceor economic interventions. Understandably, many organiza-tions reflected on the spontaneous reaction to the devasta-tion caused by the tsunami. The scope of socialinterventions in the immediate aftermath of the tsunamiwas extremely voluntary and altruistic. However, not allpost-tsunami CSR initiatives were voluntary and charitydriven. Companies with already established CSR platforms

Line of business

Apparel manufacturerompany, Beverages, financial services, real estate

and leisure sectorsompany Manufacture and marketing of cigarettesompany Provider of mobile and broadband

solutionsTea manufacturer and packer

ompany, Fast moving consumer goods, healthcare,transportation, leisure and investmentsAdvertising material manufacturerApparel manufacturer, South Asia�slargest intimate apparel manufacturer

ompany Providing banking facilitiesional Manufacturer of leading brands in foods,

home and personal care

570 M. Fernando, S. Almeida

engaged in CSR initiatives that are also aligned with itscore business activities.

From the 10 participating organizations, MAS Holdingswas prominent in demonstrating such a strategic orientationto its post-tsunami CSR initiatives. In contrast to other orga-nizations participating in the study, MAS stands out on thealignment of CSR programs and initiatives with core businessgoals and strategies. It was clear that MAS attempted tooptimize its unique capabilities to support CSR programs,thus remaining focused on its core business activities, andpromoting alignment between business and societal goals.The director in charge of CSR at MAS carries the title �Direc-tor of Branding and Strategic CSR�. According to MAS, it is�involved in strategic CSR, which also contributes to its vi-sion, contributes to business strategy, but yet impacts itsemployees, the communities and society�. Also, �we haveto move all companies from a CSR and a philanthropic mind-set to a strategic CSR mindset�. None of the participantsfrom the other nine companies proposed such a strong viewin favor of strategic CSR. Perhaps the strong strategic CSRfocus is due to the pivotal role played by the Director ofBranding and Strategic CSR since 2005 which is explained la-ter in the paper. Next we examine in detail the role of inter-nal tools and external drivers as regulators of CSR at MAS, itsstrategic goals, CSR dimensions and the virtuousness ofthese initiatives.

CSR Internal Tools

CSR Internal Tools refer to the firm�s own rules, processesand structures that safeguard a �socially responsible� firm.A US$ 700 million apparel manufacturer based in Sri Lanka,MAS is South Asia�s largest intimate apparel manufacturer.The firm is owned by three brothers of a well known Sri Lan-kan Hindu family. MAS employs 45,000 people in 28 plantsacross eight Asian countries. Women comprise 92% of the to-tal number of employees. In 2005, with the imminent cessa-tion of the favorable Multifibre Agreement which guaranteesa portion of the global apparel market to developing coun-tries such as Sri Lanka, MAS had to develop a strategy tocompete in the open market, and differentiate itself fromoperators in China, India and Bangladesh.

MAS interviewees recommend that CSR should be consid-ered as a strategic issue and only then �it becomes main-stream�. With strategy, �the bottom-line is how youdifferentiate yourself�. So, as a business, MAS demonstratesthat it makes sense to incorporate sustainability in main-stream strategy making. More importantly, MAS� success asan ethical buying source has shown how strategic CSR, de-spite the significant costs involved, could be useful to bal-ance the competing interests between various stakeholdergroups, promoting a win–win outcome to all stakeholdersby �doing the right thing�.

The Chairman of MAS observes that �Business has the po-tential to make a difference in its spheres of influence. Itsfuture success depends on making responsible corporatedecisions which positively impact the creation of a moresustainable world.� (Gap Inc., p.4). Using the �Women Go Be-yond� CSR program as a differentiator in the world market,MAS has become Victoria Secret�s largest supplier and anethical buying source for buyers such as Nike, Speedo, Marks

& Spencer and Triumph International. According to one ofthe three Global Compact reports showcasing MAS in 2007,the Sri Lankan based apparel manufacturer has attracted�ethically minded global clothing brands as a result of itsreputation for labor programs� (McKinsey & Company). Oneinterviewee said;

I strongly believe today what we are doing at MAS is notCSR, it is not philanthropy also, but Corporate Responsibil-ity. It means that a company engages in two sectors, thesociety and the environment. Any corporation can decideto engage with these two groups or disengage. The levelof engagement to me differentiates the organization.

External drivers of CSR at MAS

CSR external drivers lead to increased emphasis on CSR out-comes (see Figure 1). For example, increased awarenessamong stakeholders, public media interest and more inte-gration/higher interdependencies between companies aresome examples. On CSR and publicity, one MAS intervieweeclaimed that �our philosophy on publicity is that we don�t saya word�. On publicity related decision-making, this intervie-wee acknowledged that people in organizations �genuinelyknow what is right and what is wrong�. He believed that �itis not right� to tell your own story regarding your CSR effortsbecause �you start on the back foot�. Then he claims thatfirms have to justify first that �they are telling the truth�.Observing that �nine out of 10 companies� are doing goodto look good, he further claimed that �they are not doinggood because they want to do good�. What MAS wantedwas, the interviewee claimed, �to do good in a manner thatis making a difference in the lives of those who we do goodfor�. The desire to do good at MAS increased the significanceof CSR initiatives with internal and external stakeholders.

Furthermore, in keeping with MAS� publicity strategy con-cerning its CSR programs, the �global coalition for credibil-ity� was set up to ensure that MAS� Go Beyond program hasa neutral voice in the community. It includes UN agenciessuch as the United Nations Environment Program (UNEP),UNESCO, Global Compact and other activists that supportMAS� CSR programs. Based on the recommendations ofMcKinsey Consulting, MAS has now joined hands with Sus-tainability, Funtime, University of North Carolina, Womens�Edge Coalition (largest US women�s trade coalition) and sim-ilar institutions from Europe such as the Consumer Citizen-ship Network, INSEAD, London Business School,Copenhagen Business School and NGOs such as HabitatCouncil.

Strategic CSR goals

The company identified an emerging ethical group that wasbeginning to drive ethical purchases at the top end of themarket. As a result, MAS developed a strategy of differenti-ation on a ranking of nations based on the global responsiblecompetitiveness ranking developed by AccountAbility. Theemerging consumer groups were matched to each of thosemarkets and according to MAS, it showed that there willbe �140 million new consumers coming to this ethical marketevery 3–4 years�. Inspired by David Vogel�s The Market forVirtue (2005), the Director of Corporate Branding and

The organizational virtuousness of strategic corporate social responsibility: A case study of the Sri Lankan 571

Strategic CSR at MAS set out to analyze the company�sstrengths and what would set it apart from its competitors.He looked at all the differentiating options for MAS, and hisresearch has showed that differentiating on cost and serviceexcellence was not possible—especially against India andChina.

We looked for a weakness in the strength of these coun-tries. We found that for example, China�s strengths aremass manufacturing and regimented labor. The mainweakness of mass manufacturing is that they can�t beflexible and the main weakness of regimented labor islow labor law compliance.

Having understood MAS� differentiating options, he setout to identify a key differentiator for MAS.

In our manufacturing plants, there are no child labor orsweatshop conditions. We realized that immediatelywith this strength in the market, we can take China, Indiaand Bangladesh out of the picture. That was the basis forthe creation of the Go Beyond CSR programme.

Similar to Intel�s goal to be inside every PC, MAS wantedthe Go Beyond CSR programme logo to be attached to everypiece of MAS apparel. To achieve this strategic goal, MASadopted the World Business Council for Sustainable Devel-opment�s definition on CSR; �the continuing commitmentby business to contribute to economic development whileimproving the quality of life of the workforce and their fam-ilies as well as of the community and society at large�.

CSR dimensions

MAS� CSR program is geared towards the three main groupsin the definition: the workforce, community and society.Because 92% of the MAS workforce is female, the companyfocused on women empowerment through the Women GoBeyond programme. With its Eco Go Beyond programme,the company cares for its communities, with the Childrenof the Earth Clubs programme reaching 8800 children. Withregard to the responsibilities towards society, MAS haspledged to practice the UN Global compact principles.

MAS� CSR program is heavily oriented towards responsibleemployee relations practices. The company provides trans-port to work, free meals and medical care to all 45,000employees at its 28 plants. Because 92% of its employeesare females, MAS plants are situated in villages so that thefemale employees would not have to travel far from theirfamilies to attend work. At the year end, each plant chosean �Empowered Woman of the Year� at a ceremony in Colom-bo (Watson, 2006, p.62). MAS has won the American ApparelAssociation Award for Excellence in Social Responsibilityand been showcased by the UN Global Compact as a com-pany with exemplary labor practices. Going beyond theboundaries of the firm, MAS� Women Go Beyond program laidthe foundation for Sri Lanka apparel industry�s ethicalbranding campaign, �Garments Without Guilt�.

The impact of the Go Beyond program to the bottom-lineof MAS has been significant. Despite the cessation of theMultifibre Agreement in 2005, which allocated favorablemarket conditions for apparel manufacturers of developingcountries, it is widely accepted at MAS that the Go Beyond

program helped the company to maintain annual growth indouble digits. Over the years, as a recognized supplier ofethical garments, Victoria Secret, Speedo, Marks & Spencerand Nike have increased their business with MAS. The com-pany has grown from being a contract manufacturer wheremanufacturing was undertaken based on a given design,materials and technology pack, to being able to providethe customer with a fully integrated solution. MAS is nowthe lead strategic partner to some of the world�s most rep-utable and ethical apparel brands such as Victoria�s Secret(MAS Holdings, 2012).

Discussion

Strategic CSR and organizational virtuousness

MAS follows the �doing well by doing good� theme as theycontribute to their stakeholders not only because it is a kindand generous thing to do, but also because they believe it tobe in their best financial interest to do so. To MAS, strategicCSR appears to be moral and commendable because it ben-efits the bottom-line, and is aligned with other stakeholderneeds as well. Consequently, it seems that the companyfeatured in this paper has attempted to influence differentelements of their competitive context. For example, MASattempted to influence input factor conditions by initiatingstrategic CSR activities on responsible employee relations(Porter & Kramer, 2006). The company has thus followeda philanthropy led strategy increasing benefits accruing tothe company through contextual improvements. But arethese strategic CSR initiatives virtuous?

Virtuousness is the �pursuit of the highest aspirations inthe human condition. It is characterized by human impact,moral goodness, and unconditional societal betterment�(Bright et al., 2006, p.249). Virtuousness demands organi-zations to go beyond the �do no harm� assumption. Earlierwe noted that organizational virtuousness could refer tovirtue in organizations (individual level virtuousness) andvirtue through organizations (firm-wide virtuousness)(Bright et al., 2006). The presence of virtuousness throughorganizations was evident in MAS�s strategic CSR programs.The company enables employees to act in ways that dem-onstrate virtuousness, which included actions that wouldnot be possible for individual employees to achieve by act-ing alone. For example, all of the Go Beyond co-ordinatorsin the 28 plants are volunteers. By engaging in the Go Be-yond program, the volunteer co-ordinators foster moralgood, not just redressing the bad, and produce human ef-fects and social betterment, all without any personalreturn.

In a well monitored program such as the Go Beyond CSRprogram at MAS, the place of human impact in the CSR ini-tiatives is relatively easier to detect. For example, the CSRactivities of MAS are having a significant impact on improv-ing the living conditions, well-being and the resilience of itspredominantly female employees. MAS� first Go BeyondChampion, T. N. S. Kumari was also one of the first sewingmachine operators hired when one of its subsidiaries, Body-line opened (Watson, 2006). After she was promoted and of-fered management training, she was moved to the US andmanaged MAS� New York office.

572 M. Fernando, S. Almeida

Considering the role of the second attribute of organiza-tional virtuousness, evaluating the moral goodness of MAS�strategic CSR initiatives is subject to much difficulty (Park& Peterson, 2003). But organizations demonstrating thisattribute would initiate CSR activities because it was the�right thing to do� (Bright, 2006), right in terms of safeguard-ing the interest of both internal and external stakeholdersof the organization. MAS� strategic CSR goals are alignedwith its core business areas, thus generating win–win out-comes to all stakeholders. MAS� CSR programme seems toexemplify Porter and Kramer�s, �businesses acting as busi-nesses, not as charitable donors� theme (2011, p. 64). Oper-ating in the apparel industry, where most employees arefemales, there is significant alignment of MAS� core businessoperations with its major CSR programme targeting women(which constitutes 92% of its workforce). Also, in the con-text of the apparel industry, with the labour exploitationprocesses that were being adopted by some of the majorcompetitors of MAS, to strategically focus on being an eth-ical buying source for its suppliers such as Victoria Secret,Nike, Marks & Spencer and Triumph International, and bybeing recognized by the Global Compact report (2007) forthis initiative, MAS demonstrates a high level commitmentto its core business operations through its CSR practices.Thus not only the recipients� of MAS� CSR initiatives, but alsoother stakeholders of MAS stand to gain by its commitmentto safeguard and promote its business interests. This ap-proach seems to be fair and just to all concerned, and indi-cates the moral goodness of MAS� strategic CSR initiatives.

Another case in point demonstrating MAS� moral goodnessis its expectations on CSR publicity strategy. MAS� philoso-phy on publicity is to not to �say a word� but �to do good ina manner that is making a difference in the lives of thosewho we do good for�. The firm�s commitment to this policyis clearly demonstrated by its move to set up a neutral voicein the community, the setting up of the �global coalition forcredibility� consisting of several UN agencies. Although MAShas engaged in doing �what is right� type of altruistic CSR fornearly 20 years, the CSR team at MAS firmly believes thatwhat they are engaged in is something other than altruisticCSR. Compared to altruistic CSR, strategic CSR seems togenerate moral goodness for both internal and externalstakeholders. Altruistic or philanthropic CSR reduces profitsand they are against the interests of the owners (Jamali,2007; Maitland, 2002).

At this point, it is pertinent to revisit Maitland�s (2002)argument that reasonable self-interest is no vice and ex-treme altruism may be of no virtue. It was pointed out ear-lier that some degree of self-interest may be morallyneutral or even morally mandatory. Especially noteworthyat this juncture of our discussion is Maitland�s point thatprofit maximization should not be morally condemned aswithout virtue; that self-interest may become morally ques-tionable only when such profit maximization crowds outconcerns for others and impinge upon others� rights. Onthe other hand, Maitland would also fault excessive altruismif it leads to neglecting one�s own interest, capacities andprojects, in this case the MAS owners� property rights, un-justly seizing the family�s wealth and bestowing benefitsfor the general welfare at the expense of those for whomthe firm should care in closer relationships, i.e. employeesand customers. Claiming that the confusion between profit

maximization and self-interest is the source of much misun-derstanding, MAS� strategic CSR agenda seem to enact Mait-land�s �reasonable, measured, proportionate self-interest�(2002, p.13).

The final attribute of organizational virtuousness isunconditionality of social benefits, which according toBright is the �intention to create goods of first intent andto prudently use goods of second intent to instrumentallybring benefit to society� (2006, p.753). The key task ofassessing the virtuousness of a firm�s activities rests onwhether those activities generate goods of first intent (a vir-tuous pursuit) or goods of second intent (an instrumentalpursuit) (Bright, 2006, p.752). Using Aristotelian explana-tion on ethics, Bright elaborates that �goods of first intent�;a chief good which is in itself is worthy of pursuit, such asconcern for others and common good, refers to virtuousness(2006, p.752). MAS� concern for others particularly womenare demonstrated by its commitment to establishing facto-ries in rural areas with easy access for women. This initia-tive promotes work-life balance and has minimal impacton family life due to work. The Global Compact recognizedWomen Go Beyond programme is another initiative thatclearly demonstrates concern for others. However, the pur-suit of goods of second intent refers to those goods that areproduced for the �sake of obtaining something else such asprofit, prestige and power� (ibid), and is amoral. The pursuitof strategic CSR programs at MAS generates these second or-der goods. The intention behind MAS� CSR programs is notexclusively limited to the creation of first order goods.Thus, unlike in altruistic CSR where one could argue the ab-sence of a profit or instrumental motive in the creation offirst order goods, there is an inherent profit motive in stra-tegic CSR. Therefore it appears that strategic CSR would failto meet the last attribute of unconditionality of social ben-efit, and consequently is without virtue.

However, the findings do not reveal that MAS� CSR expec-tations were exclusively based on the pursuit of second or-der goods in itself. The intention behind strategic CSR isalways �doing well by doing good�. The findings suggest thatthe company intended to create first order goods as well assecond order goods. In this context, it is worthwhile to fur-ther scrutinize Bright�s (2006) analysis of unconditionality ofsocial benefits. According to Bright, unconditionality refersto �the intention to create goods of first intent and to pru-dently use goods of second intent to instrumentally bringbenefit to society� (2006. p.753), and that �social and eco-nomic interests are complementary. The pursuit of eco-nomic interests for the promotion of social interests isvirtuous and genuine, whereas the sole pursuit of economicinterests risks ingratiation� (ibid). Thus, Bright recommendsfirms to engage in CSR activities from the basis of �virtuousrationality�. For example, based on this notion, MAS� strate-gic and intentional creation of market leadership via marketdifferentiation focusing on �garments without guilt� tag canonly be incidental to some common good, not a pursuit initself. The key point here is that firms such as MAS engagingin strategic CSR through market differentiation would rec-ognize that not only economic needs but social needs alsohelp define markets. In other words, virtuous rationalitywould be enacted by firms through strategic CSR when a so-cial purpose is aligned with its core business activities be-come part of its mainstream strategy making. Thus based

The organizational virtuousness of strategic corporate social responsibility: A case study of the Sri Lankan 573

on Bright et al.�s (2006) three attributes of organizationalvirtuousness, it appears that strategic CSR initiatives atMAS promote the presence of tonic virtuous qualities suchas integrity, kindness, hope and virtuous purpose. Also,from several CSR theoretical perspectives, the moral motivefor strategic CSR at MAS appears to be virtuous.

From a stakeholder theory perspective, strategic CSR is ajustifiable approach for firms to allocate resources to inter-nal and external stakeholders. It also clearly supports thesocial contracts perspective of CSR. �Doing well by doinggood� theme of strategic CSR offers opportunities for firmsto acknowledge the firm�s position in society and its recipro-cal obligations to its communities. From a legitimacy per-spective, strategic CSR allows firms to engage in thedissemination of its CSR activities without feeling morallyguilty. Strategic CSR overcomes no-win situations manyfirms run into when defending its moral intentions associ-ated with CSR programs. For example, MAS has shown thatit is not ashamed to tell the world that it is engaged in stra-tegic CSR. According to Jamali, the common misconceptionthat strategic CSR is self-serving and insincere is a key rea-son why organizations tend to avoid publicity, and favor CSRinitiatives that are distanced from their core business activ-ities (2007, p.24).

According to Bright�s conception of organizational virtu-ousness, strategic CSR initiatives could be virtuous despitegenerating profits, publicity and reputation, and privatelyowned firms such as MAS can still claim virtuousness of itsstrategic CSR initiatives. In short, MAS� strategic CSR focusseems to demonstrate a strategy that is not CSR or philan-thropy, but just smart differentiation linked to a social pur-pose. Thus, the MAS case study demonstrates that strategicCSR initiatives aligned with firms� core business activitiesand linked to a social purpose allow firms to pursue profitswithout necessarily adopting a philanthropic posture, andstill be able to be associated with unselfish and sincere mo-tives. This case study of a private firm then bears on how tounderstand Bright, Friedman and Maitland.

Implications and concluding thoughts

This paper examined how linking organizational virtuousnesswith the strategic motives of CSR can be instructive for abetter understanding of the moral dimension of strategicCSR in the Asian context. The findings suggest that strategicCSR initiatives could be virtuous despite generating profits,publicity and reputation.

Several limitations of this study are to be noted. First,more in-depth case studies as well as longitudinal studiesof Asian organizations engaged in strategic CSR could havehelped to capture a better understanding of the moraldimension of strategic CSR. Due to the distance between afirm and its stakeholders (conceptually, physically and tem-porally), significant lags between action, response and per-formance changes could exist. Future studies could adoptappropriate time horizons to capture this time lag (Godfrey& Hatch, 2007). Second, while the single case study and thecase study method used allows exploring the richness ofinterviewee�s experiences and provides a sound basis fortheorizing, it also means that generalizations must be made

with caution. Social bias in interview responses could haveinfluenced the findings of this study. To overcome the limi-tations of case study method such as bias and the tendencyto use incomplete evidence, researchers could use multi-methods to evaluate strategic CSR practices. Finally,although significant cultural and political differences be-tween Sri Lanka and other nations remain, the generalizabil-ity of this paper�s findings to other cultural and politicalsettings, therefore, is uncertain.

For example, the predominantly philanthropy based CSRrelated activities of the participating companies could havebeen influenced by the long history of giving in the Sri Lan-kan culture. The concept of CSR has been found to be inher-ently context-specific (see Azmat & Samaratunge, 2009).The Sri Lankan culture could play an important part in influ-encing how the owners of MAS developed its strategic CSRframework because culture could influence an individual�sethical orientation (Fuller & Tian, 2006), and also, theirconception of virtue. According to Pitta, Fung, Tsiang, andIsberg (1999), cultural factors such as parenting, socialisa-tion, education and religion and also differences in regula-tory frameworks, human resources management systems,organisational culture and professional culture could allhave an impact (see Azmat, 2010). These factors in �nationalculture influence an individual�s mental constructs, values,beliefs, behaviours and business practices and this explainsthe differences in cultural values and how they impact onshaping an individual�s perception of social responsibility�(Azmat, 2010, p. 382). Thus the findings of this study shouldbe used with due regard to the cultural and other contextualattributes that may be specific to the Sri Lankan context.However, this study has several potential practical andtheoretical implications for strategic CSR in Asia andelsewhere.

In practice, the appeal of strategic CSR to managers ofpublicly listed firms seems to be underpinned by its poten-tial to deliver shareholder value while promoting societalvalue (Jamali, 2007). With the wide spectrum of socialneeds prevailing in the Asian region and the large numberof family-owned enterprises operating in Asia, family-owned firms� strategic CSR contribution to social develop-ment could be significant. Strategic CSR should becomemore integral to the strategy making of Asian family-ownedbusiness organizations. However, as Asian companies� CSRpriorities vary according to the countries� norms and values,such as the religio-cultural contexts favoring charity in SriLanka, the majority of the organizations are likely to engagein philanthropic CSR, undermining the impact and valueaddition of strategic CSR to both the organization and soci-ety. The need for more Asian managers to adopt strategicCSR practices in Asia becomes even more compelling whenphilanthropic CSR is practiced in a developing country con-text with weak drivers for CSR adoption, limited CSR advo-cacy and awareness building, limited regulatory capacityand macroeconomic constraints that serve to divert com-pany attention to issues of basic economic viability (Jamali,2007; Porter & Kramer, 2006).

However, managers pursuing strategic CSR in Asia arelikely to be exposed to some criticism for adopting aninstrumentalist approach for doing good. The study findingsreveal that strategic CSR allows managers to follow win–

574 M. Fernando, S. Almeida

win outcomes for all stakeholders and is therefore supportsthe notion of organizational virtuousness. Even if profits,publicity and reputation enhancement follows from a CSRinitiative, the managers� motive to do good while perform-ing well stands firmly within Aristotelian moral reasoning.Managers are thus able to justify their strategic CSRdecisions both within the firm with internal stakeholdersas well as outside with external stakeholders. Then CSRbecomes part of the mainstream firm level strategy makingrather than a fringe activity. Also, by championing orbeing part of a social purpose initiative, strategic CSRinitiatives are likely to promote Asian managers� personalwell-being.

In terms of implications to theory, one important area ofinterest would be the role of national culture and context indetermining strategic CSR, and in general, CSR initiatives.As a regulator of CSR initiatives (see Figure 1), we earliernoted that internal tools include firm�s own rules, processesand structures that safeguard a �socially responsible� firm.Based on the cultural context, strategic CSR initiativescould address a specific or a mix of economic, environmen-tal, social, stakeholder and voluntary dimension related is-sues. In a family-owned business context in Asia, theadoption of strategic CSR by MAS is unique, and suggests vir-tuousness could be complementary to strategic purpose.This point has implications on Bright and Godfrey�s (2006)discussion on whether CSR or philanthropy could be virtuouswithout genuine motive. The MAS case study has shown thateven if the motive is driven by self-interest, yet the CSR out-comes can be virtuous. Linking Maitland�s arguments on self-interest and Bright�s (2006) virtuous rationality concept, theissue seems to be one of extent. That is, CSR initiatives witha reasonable degree of self interest without crowding outothers� interests and linked to a social purpose seem to en-act the idea of Bright�s virtuous rationality. This insight pro-vides an interesting opportunity for researchers to examinethe role of self-interest and virtuous rationality in CSR mo-tives. Furthermore, testable hypotheses could be developedto study the virtuousness of different CSR approaches byassessing the presence of the three organizational virtuous-ness attributes in different types of approaches to CSR inprivate or public firms (i.e. economic, strategic, altruistic,legal, etc.).

Alternatively, researchers could examine the virtuous-ness of CSR programs through the three fundamental �linesof CSR inquiry� dominant in the academic literature; stake-holder driven, performance driven and motivation driven(Basu & Palazzo, 2008). New research could examine howfirms could generate virtue by balancing the diverse needsbetween the stakeholders when initiating CSR programs.Would the firm�s actions be more virtuous if the resourceallocation is actually allocated to an external stakeholdersuch as the local community? By examining the human im-pact, moral goodness and unconditional social benefit toeach of the stakeholder groups, the firm could determinewhich CSR program is more virtuous.

The second line of inquiry that could be considered is onperformance driven CSR. It can emphasize the link between�external expectations and a firm�s concrete CSR actions,focusing on measuring the effectiveness of such actions

(Wood, 1991), as well as determining which activities mightbe best suited to deliver the requisite performance� (Basu &Palazzo, 2008, p.122). New research could examine theplace of virtuousness in the CSR-performance relationship.For example, does virtuousness have an increasing impacton organizational performance over time? How does theamplifying and buffering effects from organizational virtu-ousness contribute to organizational performance? (seeBright et al., 2006).

Lastly, future research could examine the motivationdriven CSR line of inquiry. This line of research can lookinto either the extrinsic reasons for a firm�s CSR engage-ment (e.g. enhancing corporate reputation, respondingto NGO action) or the intrinsic reasons (building on philo-sophical concepts such as contract theory, Aristotelian vir-tue ethics and Kantian duty ethics) to advance particularnotions of firm�s obligations and responsibilities. The moti-vation behind CSR is central to determining the presenceof organizational virtuousness. Moral goodness and the in-tent to produce first order goods is a direct result of themotivation for a particular CSR program. For example,spontaneous altruistic CSR programs such as urgent disas-ter relief after a tsunami or hurricane will have minimalexpectations of a �return� from the firm�s resource alloca-tion. On the other hand, in the case of a sports goodsmanufacturer, a targeted CSR program to sponsor schooland club level sports programs projects a motivation forprofit.

Further exploration of the points raised in this paper islikely to help organizations to develop CSR programs thatserve economic as well as social objectives without havingto defend its moral intentions. Due to the difficulty in gaug-ing managers� genuineness of motive through empiricalstudies, more recent virtue ethics based inquiries into busi-ness as that of Moore�s (2012) work on the application ofAlasdair MacIntyre�s notion of virtue ethics could providealternative approaches to extend the current investigationinto the motives of CSR.

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MARIO FERNANDO holds a Ph.D. from Vic-toria University of Wellington, New Zealand.He is an Associate Professor in the School ofManagement and Marketing at University ofWollongong, Australia. His teaching andresearch focus is on business ethics, work-place spirituality and leadership. He haspublished in several academic journals andpublished a book titled Spiritual Leadershipin the Entrepreneurial Business: A Multi-faith Study (2007, Edward Elgar).

SHAMIKA ALMEIDA holds a Ph.D. from Uni-versity of Sydney, Australia. She is a Lec-turer in the School of Management atUniversity of Technology, Sydney. Herteaching and research focus is on skilledimmigrant worker issues and she has pub-lished in journals such as the InternationalJournal of Human Resource Management,Journal of Business Ethics andTechnovation.