Corporate social responsibility practices in the pharmaceutical industry

Purpose – The purpose of this paper is to provide practitioners of management a sense of the importance of strategically leveraging social responsibility in the pharmaceutical industry, such that it provides a sustainable competitive advantage is that it requires a culture that can successfully execute a combination of activities. These firms should educate their employees towards the value‐added processes that accompany CSR‐based strategies. The internal as well as the external stakeholders of the pharmaceutical industry should also buy in the concepts of being socially responsible. CSR should be strongly supported in the company culture; thus including CSR in the training process of new employees and reinforcing the concepts to existing employees. Design/methodology/approach – A review of the applied literature on practices and actual examples of international firms with major headquarters in the Pittsburgh area have shown that innovative responsible strategy, exceeding government requirements and considering multiple stakeholders, as a long‐term objective. Findings – Case studies of GlaxoSmithKline and Bayer Corporation, which are two of the world's leading research‐based pharmaceutical companies, highlight the need and practice for sound corporate social responsibility. Historically, a concentration on improved operational effectiveness and overcapacity created a temporary economic advantage accompanied by increased profit and firm value. Such an advantage is short‐lived; investors may be satisfied, but competing companies will eventually mimic technological and material improvements. Practical implications – It is particularly difficult for pharmaceutical companies to allocate its strategic resources necessary to CSR strategies, due to so much of its funds are allocated for R&D and promotional activities, which are relatively risky in nature. The demand for its products is based on consumer motivation, which can vary greatly amongst different countries depending on the responsibilities of consumers, government and economies, and insurance companies or a mix of the three.. Originality/value – The pharmaceutical industry is under immense pressure by external and internal stakeholders with hopes of developing and distributing drugs efficiently. The pharmaceutical companies and their lobbyists command considerable influence on healthcare initiatives by governmental agencies and must continually emphasize effort and investments in R&D in order to compete in the industry on a global perspective. The pharmaceutical industry must take into account the ability to be socially responsible to the external stakeholders. The prolonged advantage of corporate social responsibility ensures sustainable economic advantage of any organization.