Trust and Policy Influence Effects of Csr and Cpa

The authors, through this article, provide a thorough examination of strategies that can enhance competitive advantage a business. The article reasons that nonmarket strategies can be useful for businesses in order to gain competitive edge. The article also presents an analysis on an unclear mechanism through which effective nonmarket strategies can give rise to the success of a firm. With a specific end goal to exhibit the analysis to address the uncertain mechanism, the authors study the role trust plays in the accomplishment of nonmarket strategies and the potential synergies between the two key components of nonmarket strategies which are Corporate Social Responsibility (CSR) and Corporate Political Activity (CPA).

Since government is a fundamental element of the non-market strategy, the article mainly focusses on government and its various policies. To outline the part of trust in connection between CPA, CSR, and policy impact, the authors constructed a conceptual model. The model abstracts trust with three parameters - benevolence, integrity, and ability, and argue that all three parameters must be present between firms and the polity if the firms are to succeed in influencing policy (Mayer et al., 1995). The authors also argue that in order to create strong trust, both the strategies (CSR and CPA) should have all the three parameters, which is not the case in reality. While both the strategies have integrity in common, CSR possesses benevolence while CPA possesses policy skills and ability. On combining both the strategies, CSR and CPA foster strong trust, create access to the polity, reduce voter resistance to corporate political activities, and enable broad policy issues (Liedong et al., 2015).

After having provided significant backing to the topic and through extensive research and examinations, Hond et al’s analysis of the nonmarket strategy model states that, when CSR and CPA are aligned, it creates additional value and the synergies that occur are likely to have fewer limitations as compared to when CSR and CPA are not aligned or are misaligned (Hond et al., 2014). Similarly, in their study of lobbying efforts for social causes, Peterson and Pfitzer (2009) pointed out that firms that align their nonmarket strategies (CSR and CPA) are likely to witness an increase in the positive reputation effects from CSR. Any negative effects accompanied with a firm’s CSR (if present), then the alignment of the nonmarket strategies eases the negative reputation effects of CSR. Same is the case with CPA (Peterson and Pfitzer, 2009).

Overall, the authors have maintained the flow of the article, and have provided clarity to most concepts by backing them up strongly with conceptual models and real-life examples wherever necessary. They have highlighted that over the last few years, the requirement of the firms to engage in CSR has increased, but, there still remain some unanswered questions originating from the framework. Questions include further examination about the kind of CPA strategies that help to develop trustworthiness (Liedong et al., 2015). Having said that, additional research is needed to unravel whether there is a trade-off in combining both strategies (CSR and CPA) that the author suggests integrate.