Impact of CSR on Business Performance: A Case Study of Woolworths Group in Australia

This report is based on the impact of corporate social activities of organizations on business performance. The major purpose of the report is to investigate how CSR activities influence the business performance. Both large and medium size firms tend to contribute to social development as their responsibility but such activities often act as a significant tool as well to enhance brand image both in domestic and global market.

Running head: PROFESSIONAL BUSINESS
PROFESSIONAL BUSINESS
Name of the Student
Name of the University
Author Note

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Table of Content
1. Introduction............................................................................................................................2
1.2 Background to the report..................................................................................................2
1.3 Research Aim...................................................................................................................3
1.4 Research Questions and Objectives.................................................................................3
2.0 Literature Review.................................................................................................................3
2.1 Importance of CSR in business........................................................................................5
2.2 Relationship between the CSR and employee turnover...................................................5
2.3 Empirical evidence on CSR and CFP relationship..........................................................6
2.4 Gaps in the existing literature..........................................................................................6
3.0 Research Methods................................................................................................................7
3.1 Research Philosophy........................................................................................................7
3.2 Data Collection Techniques.............................................................................................7
3.3 Data Analysis...................................................................................................................7
4.0 Research Findings................................................................................................................8
4.1 Discussion......................................................................................................................11
5. Conclusion and Recommendation........................................................................................12
References................................................................................................................................14

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Topic: Impact of CSR on Business Performance
1. Introduction
This report is based on the impact of corporate social activities of organizations on
business performance. The major purpose of the report is to investigate how CSR activities
influence the business performance. Both large and medium size firms tend to contribute to
social development as their responsibility but such activities often act as a significant tool as
well to enhance brand image both in domestic and global market. Thus, to understand how
the implementation of CSR initiatives help brands to enhance business performance and
positively reflect on the brand image, this report considers the business operation and CSR
initiatives of Woolworths Australia, which is a supermarket chain located across many large
cities in Australia. To meet the purpose of the report, this report presents a detailed
background and the findings of existing papers. A clear presentation of research techniques
used to perform the report has also been discussed. A secondary data analysis has been
performed collecting data from annual report, CSR reports, company’s blogs and other
reliable secondary resources.
1.2 Background to the report
Multiple scholarly papers have investigated corporate social responsibilities and its
impact on business performance but their outcome largely vary. Even though the social
drawbacks have been debated for decades and just in the recent time they have entered the
mainstream management studies as the significant areas of examination. Boulouta and Pitelis
(2014) mentioned that social initiatives are the heart of a business as well as social endeavour
could be consistent with the business objectives for gaining profits. This should also express
the values of serving the society as the soul of the business. A growing phenomena of studies
on CSR in the social welfare has demonstrated that some firms have positively responded to
the above stated concerns by gathering more resources to CSR. However, the major flaws in

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the existing studies are such as many inadequately controlled variables, lack of explanations
about the particular growth areas caused by CSR. For example, it can be mentioned that CSR
can be a proactive business strategy and an effective marketing tool to generate and hold
competitive advantages. Therefore, the importance of performing a study on the impact of
CSR on business performance lies in the exploration of areas in business that are and can be
affected by CSR activities. When investigating the impact, particularly focuses on how CSR
activities influence operational performance, financial performance, create platform for
gaining competitive advantages and other core areas of Woolworths Group in Australia.
1.3 Research Aim
This report aims to examine the impact of Corporate Social Responsibilities on business
performance of Woolworths Group in Australia.
1.4 Research Questions and Objectives
Research Questions
 What are the potential impacts of CSR activities on business performance?
Research Objectives
 To critically analyse the importance of CSR in business
 To investigate the impact of CSR on business performance
 To provide suitable suggestions to plan for CSR to enhance business performance
2.0 Literature Review
Social development and profitability of the company build a relationship in the present days
which forms significant subjects of academic papers and research in the context of social
responsibility. Tingchi Liu et al., (2014) mentioned that CSR better explains possible
obligation of business to develop and protect social welfare and this is also helpful in future

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days, as it remains in the form of sustainable benefits for stakeholders. It is identified that
when it comes to exemplified relationship between social responsibilities as well as the
rewards in economy, previous studies often provide contradictory opinions on the context.
Cavaco and Crifo (2014) stated the major intention of a business is to make profits and
business is only additionally concerned when something is about the stakeholders. The author
of this article also argues that ethical and other related consideration sometimes remain
irrelevant but sometimes it becomes a concern when it affects the financial performance of
the business.
On the other side, Bresciani and Ferraris (2016) presented a contradictory view by stating that
business needs to consider social issue as significantly as market factors, since determining
the long-term success could require a great amount of effort that required in the past in a
market place. In response to this statement, Rangan, Chase and Karim (2015) argued that
sometimes social initiatives might involve additional costs which could put business at stake
compared to a business which is aware in terms of social responsibilities. It is observed that
such costs may come from additional activities like welfare programs, development programs
for the community, manufacturing plant and eco-friendly environments. Lee, Herold and Yu
(2016) performed a study and mentioned that business’s stock market performance and social
responsibility should be aligned together. Nonetheless, possible explanations provided by
these studies for the findings mostly include enhanced relationship with important
stakeholder groups like banks, investors and governmental setting.
The above presented study has stated the fact that a business could be profitable due
to the implementation of social activities and the decisions related to the development of the
environment could lead to limited cost. The example found in this study is a Ford
manufacturing factory in Texas was modified to decrease excessive waste-water and this
leads to limited regulatory charges for pollution and the estimation indicates the initiatives

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saved the firm from paying millions dollars as penalty. Furthermore, it is worth stating that
such enhanced relationship could increase investment in business by the involvement of
shareholders, elevate employee morale, increased customer morale, and customer goodwill.
Likewise, this enhanced relationship with government agencies that minimize the regulatory
cost.
2.1 Importance of CSR in business
It is identified that the term sustainability has now been essential element in business
terminology along with sophisticated implications. According to Kolk (2016) when it comes
to gaining competitive advantages savvy leaders better understand that they have to
incorporate sustainable approaches to ensure and gain long-term success of their business. In
this context, Taghian, D’Souza and Polonsky (2015) commented that irrespective of the size
of business, showing a good corporate relationship could likely to result in significant
business benefits. It is identified that a successful corporate social responsibility endeavour or
initiatives could enhance business’s profitability and brand image by presenting it as business
which is intended to remain at the bottom line. Therefore, such sort of philosophy could
attract all including clients, customers, employees and partners.
2.2 Relationship between the CSR and employee turnover
Kiliç, Kuzey and Uyar (2015) mentioned that employees are their most valuable asset
and that an organization’s capability to retain employees remains as a hallmark of sustainable
organizational performance. Indeed, the capability to retain employees indicates that a firm is
suitable place where retention of employees has a positive impact for firm’s financial
performance and productivity. Rhou, Singal and Koh (2016) mentioned that employee derive
justice perception of organizations on the range of fairness shown by the businesses. Studies
show that work environments or businesses that are perceived to be fair should have positive

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influence on organizational outcome, such as in the form of lower employee absenteeism and
increasing level of employee commitment.
2.3 Empirical evidence on CSR and CFP relationship
A major issue in corporate governance and its impact is often the effect of CSR firm’s
performance. Particularly, the financial performance is most affected. A traditional
perspective provides a fact that implementation of CSR initiatives could be expensive as
when a business is involved in social activities, it might have to bear the additional cost
(Singal, 2014). For example, a social responsible step might involve a large investment for
controlling pollution, stipulated package for employee benefits as well as particularly
sponsorship to the community. On the basis of the conventional perspective, it is worth
stating that such expenses may deteriorate the profits of the business but lead to a competitive
edge. However, a contradictory perspective derived from the stakeholder theory
(Freeman1984) is the dissatisfaction of any stakeholder group, which has a strong negative
impact on the business (Eccles, Ioannou & Serafeim, 2014). Corporate Social Responsibility
is thus, a precondition and the author of this article that talk about the fact that organizational
members or the operational bodies should consider all individuals and other stake instead of
selecting a group of stakeholders only. If it is managed appropriately, stakeholders involved
in a business might enhance the level of satisfaction.
2.4 Gaps in the existing literature
Undoubtedly, the existing studies have presented a broad view about the importance
and implementation of CSR in business. However, most of the studies are quite vague in
terms of the effect of CSR on businesses. The studies lack proper evidences about how CSR
is affecting employee turnover or the financial performance of the business. The real-world
evidences would have justified the facts presented in the study but they lack in the existing
papers. For example, a study performed by Rangan, Chase and Karim (2015) mentions that

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socially responsible initiatives could generate additional cost that might put business at an
economic risk compared to less socially responsible business. However, the author did not
provide any supportive evidence to prove this point.
3.0 Research Methods
Research methodology or the selection of research techniques determine the outcome
of the research. In order to perform the current study, a secondary data analysis has been
performed. The following sections present major principle used in the study and the
approaches of collecting data for the analysis.
3.1 Research Philosophy
Research philosophy is a set of principles controlling the ways in which the information
regarding a phenomenon need to be gathered and used (Mackey & Gass, 2015). Research
philosophy compromises of three categorizes namely positivism, interpretivism and realism.
In the present study, interpretivism research philosophy has been selected, research findings
are conventionally judged against the criteria of meaning as well as casual adequacy and
contextual sensitivity. Moreover, unlike other research philosophy, positivism research
philosophy give importance to an in-depth and intelligible understanding of meaningful
context. So, in the present study, impact of CSR cane be examined by a broad and in-depth
understanding.
3.2 Data Collection Techniques
Data Collection methods compromises of secondary data collection and primary data
collection (Lewis, 2015). As the study performs a secondary data analysis, secondary data has
been collected. Secondary data has been collected from books, journal articles, sustainability
reports of Woolworths Group, Annual report of Woolworths and official blogs of the
company.

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3.3 Data Analysis
The presents study includes the qualitative data analysis method; qualitative data
analysis technique is referred to non-numeric information such as interview transcripts,
reports, images and text documents (Alvesson & Sköldberg, 2017). However, in the present
study, images and notes have been omitted and the analysis is completely based on the text
documents and reports. Particularly for performing the analysis, the study uses a framework
analysis method such as charting and interpretation of data.
4.0 Research Findings
Secondary data analysis
Theme 1: “Initiatives to a healthy environment”
When it comes to corporate social responsibility, Woolworths plays great role in
environmental sustainability as the business recognizes the environmental impact that has
across its value chain and work with other suppliers, service providers as well as operation to
innovate for a healthy planet. However, Richards et al., (2015) mentioned that the
“initiatives toward zero food waste going to landfill” as Woolworths’ sustainability initiative
has not been achieved properly. It has been identified that presently a whale of waste stream
is still waste food because of the insufficient sorting at the outlet. Nonetheless, in response to
its CSR objective, Woolworths, in every year until 2020, is supposed to achieve a year-on-
year increase in tonnes of food waste diverted from the landfill. This was supposed to be
done through persistently reducing the waste in stock and improving the store management
behaviour as well as enhancing the effectiveness of farmer’s program. Devin and Richards
(2018) mentioned that when it comes to recyclability of its own brand and packaging for the
contribution of circular economy, the organizations should develop more initiatives. This is
because Australians are avid recyclers and customers consider it as company’s responsibility

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to enable them to play their part in preserving the environment by making its packaging
recyclable. So, as to improve the strength of the initiative, the business needs to enhance the
recyclability of its own brand packaging for the contribution of circular economy. The
sustainability report also indicates that Woolworths have reviewed the packaging materials of
more than 30000 own brand products and the overall products account for more than 34% of
own brand sales as well as required the use of more than 323000 tonnes of packaging
materials.
Figure 1: Consumption of Packaging in Woolworths supermarket
(Source: Woolworthsgroup.com 2018)
Theme 2: “A step toward corporate social responsibility”
According to the sustainability of Woolworths Group, the organization tries to value
diversity across its operation, from its business perspective, the customers should observe
Woolworths’ people a reflection of themselves as well as their communities. In such
approach, the business embraces targets which support diversity. According to the annual

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report, Woolworths employs more than 205,000 people from all walks of life
(Woolworthsgroup.com 2018) A growing majority is in customer-facing roles. The
sustainability report implies that the organization is trying to make sure proportionate
representation across several businesses of women and different culture as well as indigenous
groups in order to support diversity with the inclusion of culture. The organization aims to
recruit and build a team that reflects Australian community and under this initiative, the
organization is trying to equip its training managers as well as executives with cultural,
unconscious training and gender. Thus, to enhance understanding of diversity, the business
should be completing cultural an ethnic mapping of stores, which is considered to be setting
the business on a path to reflect the diversity of their community.
Figure 2: Waste Minimization rate achieved by Woolworths
(Source: Woolworthsgroup.com 2018)
Theme 3: “Financial performance and CSR”

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According to the first quarter of financial performance, Woolworths has experienced a
significant achievement which includes almost 42% of reduction in carbon emission from
facilities on the basis of estimated growth levels followed by 25% or above, reduction in
carbon emissions per square metre in new supermarkets, while almost 30% reduction in
business car fleet emission. Consequently, almost $56.7 billion which is above 3.4% from
2017. Likewise, the net financing cost is around 20.6%, while the gross profit is around
29.5% which is driven primarily by the gross profit enhancement in Australian Food
(Woolworthsgroup.com 2018).
Figure 3: Financial performance of Woolworth as the result of CSR activities
implementation

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(Source: Woolworthsgroup.com 2018)
4.1 Discussion
The above presented dataset also helps to understand that by considering the
importance of CSR activities, the organization Woolworths Group significant paid attention
to its CSR commitments with the sub-areas of people, planet and propensity. The CSR
strategy of the organization indicates that Woolworths tend to develop market centric
approaches that are aligned to its CSR initiatives. The organization has hired 197,426
employees with a diverse approach of employment, reported almost 42% in carbon emission
from the facilities and the prosperity is around 114 billion. It was also found in the literature
that business that has fair policies for all its stakeholders, employees prefer to work in or
continue with that organizational setting (Rhou, Singal & Koh, 2016). Nonetheless, the data
presentation helps to understand that organization is not able to align its financials goals with
the performance of corporate social responsibilities.
The findings also indicate that Woolworths has successfully achieved 91% of the
major targets and commitments in their strategy. Nonetheless, it is worth highlighting that in
spite of the overall success of the strategy, Woolworth’s commitment to achieve zero food
waste to landfill has not been successful. In addition to this, there is another significant fact
which needs to be noted that as the strategy timeline is on the verge of completion, the firm is
still not properly able to maintain a stable focus on the movement. According to () social
issues could be as important as market factors in determining long-run success which
deserves same attention and rigorous analysis that have been devoted in the past to the
markets. Thus, when it comes to CSR, business should make and give equal amount of efforts
towards all its initiatives. The organization is in the need of incorporating a model that
promote a stable and prosperous business, supply chain and community.

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5. Conclusion and Recommendation
This report reviewed existing studies and sought support for this contention and the
findings of the study imply that Woolworths has many initiatives in place to fulfil and
perform its social duties and some of them have achieved the goal while some are in the need
of more efforts and attention. However, one significant factor that needs to be considered is
that even if positive CSR initiatives do not reflect on the profitability but they could be used
as a tool to reduce the risk of damage to brand evaluation in the future.
It is believed that the findings of this study performs several significant implications for
future studies.
 The study particularly suggest that the social responsibility/ organization’s
performance could be context specific. Consequently, the enhancement of a
theoretical understanding as well as organizational implications could largely rely on
the circumstantial factors that improve a healthy relationship between CR and
organizational performance.
 Operational factors of business could play a significant role in building a relationship
between CSR and business outcome

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