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When companies enter communities

Companies are increasingly interacting with the communities of which they are part, even when the latter are at world level. How do they do this and why?

An important investigation into this aspect of corporate procedure has been carried out by Andrea Fosfuri and Marco Giarratana (from the Management and Technology Department of the Università Bocconi), with Esther Roca (from Universidad Carlos III of Madrid) in Community-Focused Strategies (published in Strategic Organization).

The three researchers base on specific cases such as Patagonia, manufacturers in California of outdoor clothing and an active member of various environmentalist communities, or Kiehl’s, which produces cosmetics and is known for its sponsoring of Heritage of Price, a non-profit group involved in human rights equality. Then there are those of Shell Oil and many others. Fosfuri, Giarratana and Roca examine the different specific examples from the viewpoint of corporate strategies and coin the concept of “community-focused strategies” (CFS), i.e. those corporate actions whereby a company is committed to setting up relational links with one or more communities which represent (potential) customers. The authors then classify the CFS in four types: signalling, identity-enhancing, identity-creation and avoiding.

Signalling strategies indicate the alignment of corporate values with those of the existing community, yet with weak corporate commitment to the values of the community. This is the case of Shell Oil, which invests in environmentalist advertising schemes. The second type of CFS, identity-enhancing, is marked by a strong investment by the company with respect to the social values of the community. For example O’Neill sponsors surfing competitions at the same time as days dedicated to cleaning and safeguarding beaches. Identity-creation CFS instead require a more active role to be played by the company in relation to the community. The company itself supplies, via a set of actions fully in tune with its products, most of the identity to the community in which it operates and which would not exist without the presence of the company. This is the case of famous examples such as Ducati, Harley-Davidson and Piaggio. Finally avoiding CFS are put in place when the company abstains from coming into contact with the communities.

All this, and this is possibly the most important feature, is tackled from a practical stance: one of the authors’ goals is in fact that of proposing a series of suggestions for managers about which strategy to choose, in which resources to invest and the potential limits and problems to be avoided.

Community-Focused Strategies

Andrea Fosfuri, Marco Giarratana, Esther Roca

in Strategic Organization, volume 9, issue 3, pages 222-239.