Corporate Social Responsibility Essay
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Corporate Social Responsibility
Corporate Social Responsibility (CSR) is a very controversial topic. A question that has been debated for the past few decades is; is it corporately viable to introduce social responsibility as a proposed addition to the work ethic of business organisations. As well as, if adopting the framework of corporate social responsibility would yield positive improvements for those organisations.
The purpose of this essay is to research the notion of CSR and uncover its true framework and outline what social responsibility truly means to corporate organisations, and whether it should be seriously considered to be a legitimate addition to the corporate framework of an organisation.
This will be done by…show more content…
However, nowadays CSR is simply defined as ?operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society demands of business? (Gillis & Spring 2001: 23).
Corporate citizenship is commonly defined as ?a company's management of its influences on and relationships with the rest of society? (Marsden 2000: 9). A recent study conducted by Hill and Knowlton found that 79% of Americans consider corporate citizenship when deciding to buy a particular company?s product, 36% of which considered corporate citizenship to be an important factor (Verschoor, 2001: 20). This shows us that by achieving good corporate citizenship, a company?s practices become transparent to the interested public and provide a basis for accountability for the future (Waddock, 2000: 324).
The stakeholder theory made popular by Ed Freeman (1984) does seem to represent a major advance over the classical view (Freeman, 1984). It might seem inappropriate to refer to the stakeholder position as neoclassical. Bowie (1991: 56-66) has defined stakeholders as a group whose existence was necessary for the survival of the firm--stockholders, employees, customers, suppliers, the local community, and managers themselves.
The framework of corporate social responsibility is such that it is relatively complex and multidimensional. A three-dimensional
Usually CSR and sustainability use to signify the same thing but conceptually there are slight difference as CSR focus on triple bottom lines i.e. economic, social and environmental responsibility while sustainability emphasis to societal and environmental development. The purpose of establishing CSR into core business strategies is to bring stability for in long run and meeting the need of the society at minimal impact on environment. CSR is a vital component of sustainability or sustainable development that comprises corporate economic responsibility, corporate environmental responsibility and corporate social responsibility (WBCSD, p. 3). This means organizations is responsible for impact of their activities on environment, society and various stakeholders such as shareholders, employees, communities and customers (Guarnieri & Kao 2008). This is what we refer to triple bottom line approach of CSR which can described with two broad definitions
”an umbrella term for a variety of theories and practices all of which recognize the following:
a) Those companies have a responsibility for their impact on society and the natural environment, sometimes beyond legal compliance and the liability of individuals;
b) That companies have a responsibility for the behavior of others with whom they do business (e.g. within supply chains); and
c) That business needs to manage its relationship with wider society, whether for reasons of commercial viability or to add value to society.’ (Blowfield & Frynas 2005, p. 503)
”The way in which a company manages and improves its social and environmental impact to generate value for both, its shareholders and its stakeholders by innovating its strategy, organization and operations.’ (CSR Europe 2003, as quoted by Sebhatu 2010, p. 43)
These are very extensive definitions that cover every aspect and integrate different views of CSR. It is mainly defined as concepts and strategies by which companies voluntarily integrate social and environmental concerns into their business operations and stakeholder interactions (Enquist et al., 2006; 2008). In simple words, CSR refers to responsibility and accountability of organization for its impact on all relevant stakeholders.
3.5.1 Economic Responsibility
According to Campbell (2007) corporations’ level of social responsibility are influenced by factors such as financial conditions of the firm, health of the economy, and well-enforced state regulations. In convention terminology economic refers to assets minus the liabilities, but in a broader there are other factors need to be taken into account in a long run such as the human capital, the intellectual capital and the natural capital (Elkington, 1999). According to Nidumolu, et al. (2009) sustainability is a key driver of organizational and technological innovations that result in bottom-line and top-line returns because becoming environment friendly lowers the input costs. Therefore emphasis of sustainable organizations not only toward shareholders and profitability but also taking into consideration responsibility for social and environmental bottom lines (Elkington, 1999). To be sustainable, business needs to more committed on two major dynamics such as top management commitment and involvement to an issue result in quick change and Recruitment and retaining of right kind of workforce (Nidumolu 2009, p, 10). There is growing sense among executives that taking after society and environment initiate greater efficiencies in revenue growth and cost reduction which also translates to increased purchasing power for the local consumers, as well as access to innovation (Prahalad & Hammond, 2003).
3.5.2 Environmental Responsibility
Another essential component of CSR that are effect by the corporations’ actions is environmental bottom line. Johnson, (2007) described (WCED, 1987:43) sustainability definition from the perspective of scare resources i.e keep the capital stock of natural resources to such an extent that the quality of life for future generations is not compromised. Corporations must effectively react on the consequences on natural capital by their action when it is used or harvested (Elkington 1999). It can be done through tougher regulation educating and organizing consumers so that they will force businesses to make companies more responsible to environmental challenges (Nidumolu et al. 2009). To be environmentally responsible, corporations induce suppliers and retailer to develop eco-friendly inputs and outputs of entire value chains and reduce waste (ibid). Such compliance to regulations assists corporations to take greater responsibilities on the environment by making decisions to invest in protecting and improving the environment (Elkington, 1999).
3.5.3 Social Responsibility
Third pillar of CSR is social responsibility. Social responsibility encourages the idea of bring corporate performance up to a level where it is compatible with prevailing social norms, values, and expectations of performance (Sethi, 1975). Similar views has been express by Frederick, (1960) as social responsibility is to imply a public posture toward societies, economic and human resources and to see these resources are used for the welfare of society. Aim of the social responsibility of companies is to educate and trained the human capital, to turn a social problem into economic opportunity and economic benefit, into productive capacity, into human competence, into well- paid jobs, and into wealth (Drucker, 1984). Heal (2005) also designate the link the advantages of social responsibility for generating returns for corporations through help in reducing conflicts with their stakeholders or NGOs and building business trust or reputation, which boost stakeholders’ confidence in corporations and protects their market value (Waddock, 2008). Corporations as an essential part of the society must take responsibilities on the areas which they affected by their actions to build trust among the corporations and the stakeholders in order to attain long term sustainability (Elkington, 1999).
To sum up, businesses must integrate CSR concepts into the organization’s core business strategies by aligning CSR concepts with strategy and process innovations and treat them as new frontier for innovation to be sustainable innovative (Zadek, 2004). All three pillars of CSR, economic, environmental and social need to be considered as business norms by corporations in order to persuade the expectations of all stakeholders. This can be achieved if the company concerned and responsible in their actions as impact on society and environment while taking care of its profitability. The phenomenon of embedding CSR into core business strategy is increasing in order to show their commitment in implementing these strategies (Guarnieri & Kao 2008). Porter and Kramer (2006) also support the argument of treating CSR as core business value and norms of applying it on their core business strategy, to ensure CSR as a source of opportunity, innovation and competitive advantage rather than expense, restriction, or a charitable deed. In short corporate social responsibility is concepts whereby corporations respond responsibility and feel accountable for their actions to their stakeholders by integrating social and environmental concerns in their business operations (Tanimoto & Suzuki, 2005).