Corporate Social Responsibility in Business Development
The concept of concept of corporate social responsibility has been challenged severally. There are those who argue that it adds value to the overall performance of the business and contributes to the well-being of not only the corporate employees but also the community at large. But on the other side of the divide are those who argue that government should set up strong regulatory measures that ensure that businesses create and market quality products and services in a more ethical manner (Clarkson, 96).
This school of thinkers believes that the call for corporate social responsibility is not only irresponsible but also deprives businesses and their shareholders of their profits. Due to these arguments for and against corporate social responsibility, the concept of business responsibility has been redefined severally over the years.
However, the corporate social responsibility is essentially tilted to help companies and businesses realized their missions and also act as a guide to what an organization stands for and upholds not only to its customers but also the general public (Fields, A142). It will be the objective of this paper to argue in support of the statement that strong CSR policy has a greater benefit than loses to the company, the
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Corporate social responsibility is broad term within the discipline of business ethics and is sometimes referred to as corporate citizenship, corporate responsibility or responsible business. It is considered a form of business self-regulation whereby a corporate would be able to monitor and ensure compliance with the law and regulations, ethical standards and international norms. Businesses are then expected to assume responsibility for the effects of its activities and operations on the consumer, environment, community, staff, and stakeholders as well as on other members of the society in the public sphere (Davis & Blomstrom, 67).
Moreover, businesses are expected to further the public interest by supporting community growth and development, as well as voluntarily assisting members of the public eliminate certain discriminative practices that may harm the general well-being of the public. Essentially, corporate social responsibility is simply the inclusion of the community and public interest into the business decision-making and strategies (Clarkson, 102).
Business ethics is considered a form of applied ethics, which assesses the ethical principles and ethical problems that may arise in a corporate environment (Bansal & Roth, 720). The demand for ethical businesses has been increasing in the 21st century which is owed much to the ever-increasing awareness among consumers and the general public in today’s marketplaces. Simultaneously, corporate bodies and businesses are under constant pressure to improve ethics in business processes and actions through the various public initiatives, regulations and laws.
The development of business ethics date back to 1980 and 1990 when a number of business managers and corporate heads showed a great interest in the subject and started to incorporate it into their decision-making processes and strategies (Wheeler & Maria, 69). The subject of business ethics may be considered as both a descriptive and normative discipline. It is normative in the sense that it is a business practice as well as a professional specialization.
But when studied in the academia, the discipline incorporates descriptive approaches. The range of corporate ethical issues is an indication of how a company relates its economic values with the non-economic social values (Fry, Keim, & Meiners, 99).
Since the subject of business ethics gained momentum in the 1980s and 1990s, companies have been reviewing their commitments to improving non-economic social values (Bansal & Roth, 723). For example, a number of companies are currently laying emphasis on their commitment to improving social well-being of their stakeholders and business environment through their websites. A number of such websites that have the companies’ core values have undergone re-branding in line with the needs to commit to certain business ethics, for example, the BP has “beyond petroleum” environmental tilt, which stresses it commitment to protection of the environment (Fields, A142).
Different businesses have different activities and therefore benefit differently from corporate social responsibility. The scale and nature of such benefits would depend on the nature and activities undertaken by the enterprise. Although, there are a number of literatures urging corporations to take up initiatives beyond the financial ones, the benefits of such ventures are quite hard to quantify. However, studies have found a strong correlation between corporate financial performance and social/environmental performance (Fombrun, 13).
Nevertheless, businesses developing corporate social responsibility policies should not expect short-run economic gains. The definition of what corporate social responsibility is also differs from one organization to another. Such definitions may range from the commonly used phrase of stakeholder impacts to environmental impact and would include charitable activities and volunteering programs.
Again different companies have different structures on implementation of the corporate social responsibility policies (Davis & Blomstrom, 87). The CSR policies may be implemented within the corporate development, public relations, or human resources departments of a company. But accepting social responsibility means first a company accounting for its actions and activities (Clarkson, 112).
Social accounting is a commonly used concept that requires a company to communicate the social and environmental impact its economic activities would have on a particular group of people or on the larger society. Social accounting simply stresses the ideas of the corporate accountability. Different countries have different laws stipulating the requirements under social accountability by companies and organizations (Fields, A144).
The social accounting and the subsequent development of a corporate social responsibility policy are geared towards long-term financial and social benefit for both the business and the public (Davis & Blomstrom, 90). Strong business case for developing a CSR policy within a company would be based on one or more of reasons argued below.
A strong corporate social responsibility may help companies in recruitment and long-term retention of employees, especially in the competitive graduate student market. Many job-seekers normally inquire about a company’s corporate social responsibility policies during interviews, and lacking a comprehensive policy may put a company at a disadvantaged position in the competitive market for skilled and talented employees (Fry, Keim, & Meiners, 105).
A corporate social responsibility policy can also help the company improve its image and change perception among its employees, particularly in programs where employees are used in fundraising activities, and community volunteering.
Recent studies have also shown that company that has strong corporate social responsibility programs is not only able to recruit and retain its employees but also develop a group of loyal employees who would be proud of their company and its deeds (Bansal & Roth, 733). Ideally, no employee would be happy or proud of an organization that engages in environmental degradation and is involved in scandalous deals every now and again. Good corporate behavior therefore would not only attract potential recruits to a company or organization but also determines how loyal they would to such company.
A good social responsibility program also helps improves teamwork and productivity among employees particularly when they are involve in such activities like community voluntary activities and paid community development programs. These activities are known to boost morale in employees hence a good working relationship between the employees and their managers (Wheeler & Maria, 156).
A comprehensive business responsibility program may also help an organization or a company in risk management. Managing risk and threats are essential elements of many organizations’ strategies and decision-making processes. An organization’s reputation that takes years and decades to build can be eroded in a matter of hours or days through scandalous business incidences like corruption or environmental accidents (Carroll & Buchholtz, 76). Not only would such incidences be damaging to a company in terms of financial loses but would attract unnecessary attention from governments, corporate regulators, media, and courts.
The company may not be able to overcome the numerous court suits related to damages caused by its mistakes and unethical activities. The government and the regulators would be warned and the company may just face numerous hurdles in its attempts to expand its operation. The media would forever castigate the company as reckless and lacking moral obligation to protect its stakeholders. Having a strong CSR policy and a constant practice of ethical business may help a company or organization prevent these risks (Clarkson, 114).
Corporate social responsibility can be a great marketing tool for business-savvy managers. In a crowded marketplace, corporations and organizations always strive to have a unique selling proposition, which can put them apart from their competitors. A strong CSR program associated with a particular company may help it develop a strong relationship with its consumers who would be more than proud to be associated with the company.
According to Fields (A145) corporate social responsibility can therefore aid a company develops a strong customer loyalty through its distinctive ethical values and practices. Some of the world major brands like American Apparel and The Body Shop were built on strong ethical values and practices. The corporate service organizations are also capable of making financial gain by using their CSR programs to build reputation for integrity and right practices (Fombrun, 15).
The current changes in the global market where the relationship between the consumers and the company is ever-widening, calls for a better corporate social responsibility policy to endear companies to their potential customers. As Carroll and Buchholtz (45) argue non-governmental organizations and consumer activists have been contributing to the bottom-up relationship between companies and consumers. A social responsibility program would be quite important in the global arena where branding and brand values are determined by the company’s reputation.
Because brands are built on perceptions, concepts and ideals that appeal to the higher values, corporate social responsibility would help the company match business operation with the stakeholders’ demands and values. Therefore, the companies that would be able to incorporate the conflicting values and interests of its stakeholders into their varied values and opinions within the decision-making processes would most likely succeed in building a loyal customer base (Davis & Blomstrom, 89).
Corporate social responsibility is also beneficial for businesses in that it may help a company improve its relations with both shareholders and investors. Many investors would want to put their money in a company with a good reputation. A company that is involved in scandalous deals like corruption and environmental degradation may find its shareholders and a base of potential investors turning away to other more reputable firms with their monies. Corporate social responsibility is one of the ways through which a company can develop a good reputation in a crowded and competitive market.
Shareholders and investors would continue investing in such companies hoping to reap from the company’s good name and reputation. Again, a company with CSR policies in a certain population or society would most likely attract locals to invest in its operations. This comes about as the level of trust and relationship between the locals and the company increases and the company consequently earning a good reputation in the community where it operates (Carroll & Buchholtz, 78).
Again, sticking to business ethics and right practices may help companies endear themselves to governments and regulators. By portraying good business manners, the government and its regulators may be persuaded to license and authorize a company’s business activities and operations in a community or country knowing that the company would stick to its good practices. Engaging in voluntary communal ventures and initiatives can also be beneficial to a company as it would show that it is taking seriously the issue of community and social development in its community or country of operation. It would be considered a good corporate citizen in regard to social responsibility and environmental protection (Fry, Keim, & Meiners, 106).
The CSR programs are not only beneficial to corporations and businesses, but also to the general public and country at large. The corporate social responsibility program is a great avenue through which community and countries can develop. For along time governments and politicians have been charged with the responsibility of initiating and funding projects in a community or a country. But this is increasingly changing in the 21st century (Wheeler& Maria, 160).
Currently the most powerful institutions in the global arena are the non-governmental organizations and multinational companies while the institutions of the governments are increasingly losing power and influence in the development of the world (Clarkson, 112). As the multinational companies are becoming more powerful and having a lot of influence, it is important that if they adopt CSR policies they would just take a lead in finding solutions to the world social and environmental problems. Such initiatives have been taken by Unilever for example. Through its sustainable fishery programs, the company is taking a lead in fishery development that had long been the obligation of the government (Fombrun, 13).
Many companies and businesses have been quite influential in lobbying for formation of certain policies that affect their interests. A considerable sum of money and a lot of time is spent to sway the policy makers. Ranging from the international treaties like climate change to domestic policies such as those on health and transport, the corporate sector has shown that it can shape the way countries and the world develop. According to Davis & Blomstrom (77) with these influential capabilities, companies can use their social responsibility programs to lobby for not only policies that affect their interest but also those that affect their customers, employees, local community, environment and the general public.
This would benefit the business, the public and the environment. Since businesses depend on the environment and the general public and customers for their survival and operation, a social responsibility program would help an organization or company consider the common good a policy would have on its operation as well as on its stakeholders (Fry, Keim, & Meiners, 98).
Arguments against the Corporate Social Responsibility
The discipline of business ethics and specifically, the corporate social responsibility has attracted criticism from both corporate heads and scholars. These arguments are basically questioning the role of the business in the society (Fombrun, 14). One such argument claims that social responsibility programs simply deprive business shareholders of their rightful property. This people argue that CSR simply takes away the hard-earned resources of the company which are entitled to the shareholders.
They based their argument on the consideration that social responsibility involves giving away the company resources to those who do not own anything in the company. This argument may be true depending on the social responsibility program undertaken by the company. Wheeler & Maria (165) contend that if a company social responsibility engagements are considered as philanthropic ventures where money or company’s resources are donated, then the claim by the opponents would be true. But considering a CSR program as a process through which a company develops relationship with influential stakeholders that enables it operate, the social responsibility programs may turn out to be more beneficial to the shareholders than anticipated.
CSR is all about creating relationship with customers, attracting and keeping skilled workers, managing risks as well as building a good reputation. These may not produce results in the short-run but would be quite beneficial for the company’s continued existence and operation in the long-run (Clarkson, 113).
Critics of corporate social responsibility also argue that businesses are only responsible to their shareholders and not the larger society. Although they contend that businesses must comply with laws and regulations in the country where they operate, they however, assert that businesses are solely accountable to their shareholders and not the society or environment where they operate (Fombrun, 14). They further claim that CSR hinders free enterprise which according to them has led to improvements in life expectancy and in reducing infant mortality over the years across the world.
As true as these arguments may be, the very reason for the calls to have companies formulate social responsibility programs is to protect the society especially in the developing countries from exploitation. Many third world nations do not have strong labor laws and therefore their citizens are under the risk of being exploited by multinational companies (Fry, Keim, & Meiners, 101). A CSR would ensure that the companies adhere to international labor standards, protect the environment and also contribute to development of the community and country within which they operate.
Again, economic development of any society is very much dependent on the economic gains and operations of the business world. Businesses therefore have the potential of changing the world and as such are obligated not only to their shareholders but also to the society (Wheeler & Maria, 59). Religious and cultural values and beliefs have always viewed business as the integral part of development in the society.
The corporate bodies have numerous issues to deal with and must not be solely held accountable for the world social and environmental problems. Everyone including the business leaders, the politicians and the public must come up with plans and strategies to deal with the world problems. The real solutions to the world poverty and even environmental degradation and destruction must involve different views and incorporate everyone’s opinions; something that is yet to be seen.
While the solutions to the world perennial problems may be found, they must not involve big corporation trumping on others nor should the corporate bodies be forced to assume responsibility for the problems. Nevertheless, let us view corporate social responsibility as a corporate framework that ensures community development and wealth creation in an environment where people and the environment matters.
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