Strategic Decision Making for the Triple Bottom Line

Corporate social responsibility (CSR) has become a mandate for strategic managers and is often an important element of a differentiation strategy, but there is little research on how managers can make socially responsible decisions within the context of competitive strategy. In this study we explain how data envelopment analysis (DEA) results can be used to determine the trade-offs inherent in managing the triple bottom line of profits, people and the planet. Once the trade-offs are well understood, managers can implement sustainable competitive strategies that incorporate socially responsible decisions. Using public data from the electric power generation industry, we demonstrate how DEA can be utilized to determine the trade-offs between efficiency, costs and pollution reduction, allowing managers to make and champion socially responsible decisions. We discuss the general applicability of our method for making strategic decisions incorporating the triple bottom line.