Introduction and Significance of CSR
Corporate Social Responsibility (CSR) can be termed as the business approach that subsidizes sustainable development by delivering social, economic and environmental advantages (Hopkins, 2013). It is a comprehensive concept and addresses different aspects such as human rights, environment rights, health and safety, corporate governance, etc. This area is very important for the business image as it make evident to both customers as well as media that the company is participating in several wider social issues that do not have any direct impact on the profit margins.
Wagner, Lutz and Weitz, (2013) added that the CSR provides the chance to all the workers of business entity to contribute for the welfare of environment, society, and country in which they are residing. It provides long term benefit regarding creating positive image for the organization as a whole. CSR plays a very crucial role in making the brand of the company popular and not only among the competitors but also in media, other organizations and most importantly among the people who are the direct customers of the company. With the increase of CSR by the company, the people start developing positive feeling towards a brand which helps the companies in their business.
Kitzmueller and Shimshack, (2012) studied that in the recent times there has been an increasing interest in terms of the understanding of this concept and particularly in the developing countries. However, many of the companies fail to understand the contextual factor that influences the CSR, and because of that they are not able to take the full advantage of this concept, and this makes this topic interesting to research on. Capaldi, (2013) argued that despite the widely accepted ideal of the shared value in terms of creating the value for the society, researchers have suggested that this is not the norm. Most of the companies practice a multidimensional version of the CSR that runs from the pure philanthropy to the environmental stability in terms of active pursuit towards the shared values.
Due to all these factors, this particular topic has been selected to understand the importance of CSR in the today’s business, the ways it can be used and the ways it influences the company in a different manner.
The main aim of this study is to understand the need and importance of CSR in today’s business context and the ways in which it can be used by the companies to gain maximum advantage. Research questions related the present study are-
- What is the importance of CSR in today’s business context?
- What are the advantages that firms get with the implementation of CSR?
- What are the different ways in which CSR can be done by the company in a sustainable manner?
Schreck, P., 2013. Nonfinancial disclosure and analyst forecast accuracy: International evidence on corporate social responsibility disclosure. Social and Environmental Accountability Journal, 33(3), pp.180-181.
Schreck, (2013) explains that in this complex as well as dynamic business environment most of the organizations are adopting the global attitudes to make sure that they can participate in the global environment. The organizations have become very powerful and have great influence over the societies and because of that the notion of corporate social responsibility functions in today’s business work as an emblem. It is mainly done so that these companies can rise in the social revolution which can benefit all the stakeholders of the society. This particular theory directly relates to the various environmental issues that are faced globally. This corporate social responsibility now a day is taken as an essential instrument in terms of paying attention to all the social demands of the economic agents involved. Many of the multinational organizations are under constant pressure in terms of adopting an ethical and responsible posture so that they can have a good and positive impact on the society.
Homburg, C., Stierl, M. and Bornemann, T., 2013. Corporate social responsibility in business-to-business markets: how organizational customers account for supplier corporate social responsibility engagement. Journal of Marketing, 77(6), pp.54-72.
Homburg, Stierl and Bornemann, (2013) added that in the current business scenarios, ethical issues are some of the most important subjects that concern the organization all across the world and now are viewed not only as business ethics but also in terms of the administrative compliance with different set of legal standards, rules, and regulations as they used to do in the past. There are many business organizations which are creating their own business as well as the ethical codes in written in terms of the social responsibility so that they can create as well as maintain an ethical organization culture. With the use of this social responsibility, the organizations are increasing their conscience in terms of matching their own interest and the interest of the society by taking the complete responsibility in terms of the impact of their activities on the employees, stakeholders, suppliers, communities and much more.
Aguinis, H. and Glavas, A., 2012. What we know and don’t know about corporate social responsibility: A review and research agenda. Journal of management, 38(4), pp.932-968.
According to Aguinis and Glavas, (2012) businesses are now adding value-creation to their core business by considering the needs of all of its stakeholders. It is done so that a strategy can be developed that can allow the company to get the competitive advantage position in the market. All these things drive the company to strive in management initiatives, especially if these achievements are helping them to get the sustainable development. There is a great revolution in the form of CSR in terms of the macro-societal level to the organizational levels, and because of that, the great emphasis is made on the managerial, strategic and financial issues to integrate CSR into the core business. The use of power in firms and CSR are very much correlated to each other as the main of the implementation is to follow all the legal rules that are set by the government and also to get various other advantages.
Cheng, B., Ioannou, I. and Serafeim, G., 2014. Corporate social responsibility and access to finance. Strategic Management Journal, 35(1), pp.1-23.
Cheng, Ioannou and Serafeim, (2014) studied that there are many advantages that companies get with the implementation of the CSR into their business practices like when the consumers see that a particular invest a lot in the local community, etc. they are naturally attracted towards it and use the services of this particular business only as compared to the companies which are less involved in terms of local community. Consumers feel very good while shopping at the institutions that help the community. Other than that the company also receives lots of free media coverage which has a significant impact on its bottom line. The company which engages more in the community events gets more and more media coverage. With this media coverage, the company is able to create a good brand image in the market which not only increases its sales but it also helps in the development of the new customers which is very apt.
Moser, D.V. and Martin, P.R., 2012. A broader perspective on corporate social responsibility research in accounting. The Accounting Review, 87(3), p.797.
Moser and Martin, (2012) added to the above discussion that with all the media coverage and positive coverage, there are many more advantages that a company gets with the inclusion of CSR like the positive work environment as the employees like to work in the company that has a very good public image and is in the media for all the good reasons. Also, being a successful company finds it very easy to recruit the new staff and also is able to retain the existing ones. Employees are motivated to stay longer which indirectly reduces the cost of the company in terms of the disruption of recruitment and retraining. When the company is good in terms of the implementation of the CSR, they are able to make good relation with the local government which allows them to get good grants in terms of the development of some of the policies.
Tai, F.M. and Chuang, S.H., 2014. Corporate social responsibility. Business, 6(03), p.117.
Tai and Chuang, (2014) argued that although the CSR has become very important to the strategy of the company’s success but still the relation between the CSR and the corporate financial performance is still equivocal. There are various situations which can lead to the negative outcomes of the CSR towards the company as well as for the consumer too. The potential for the CSR activities directly leads to the negative financial outcomes through the producer contagion between the different stigmatized population and the products that they produce. Many of the consumers believe that the implementation of the CSR in the company decreases the value of the products, but stigmatized population can also contaminate the products by transferring all the negative properties to the products through the production process. Various researchers have also identified that mediating the effects of the product intimacy can easily end the vulnerability of the user which might be useful.
Hilson, G., 2012. Corporate Social Responsibility in the extractive industries: Experiences from developing countries. Resources Policy, 37(2), pp.131-137.
Hilson, (2012) studied that there are various ways in which the CSR is done by the different companies and of the best ways is by supporting the local community. There are many companies which support the communities by providing them with employment opportunities, helping them in educating the illiterate people and much more. It not only increases the reputation of the company in the market but t also instigates the community to purchase from the company which has helped them. Other than that, the companies can also help in terms of protecting the environment as it can initiate the cleanliness program by encouraging the community to clean the surroundings. The company can also plant trees, reduces the wastage and harvest the water to make a good impression in front of the people. All these initiatives will not only help the company to get the attention of the media, but the employees of the company will also feel good.
Flammer, C., 2013. Corporate social responsibility and shareholder reaction: The environmental awareness of investors. Academy of Management Journal, 56(3), pp.758-781.
Flammer, (2013) also added that there are some of the companies which support the weaker communities in terms of providing the poor children with education, food, shelter so that they can grow and do some respectable work. It creates a huge impact on the mindset of the government, and it starts considering the company to be a respectable one. Other than that, the company can bring total transparency in its business and can invite people to see the ethical business that is done by the company for the benefit of the local community so that they can get good quality products for the best price possible. All these initiatives have a great impact on the mindset of the consumers, and they start intercepting the company as a company with good brand value and high ethical principle. This not only increases the profits of the company but it also helps them to get the competitive advantage among the competitors.
Conclusions and Findings
The present report was in order to understand the ways in which the CSR initiatives are taken by the company and also to know the manner in which these initiatives help the company to get popular on the market. From the report, it was completely understood that the CSR is one of the most important activities that the business today consider as essential. There are lots of advantages that the company obtains with the implementation of this activity like it allows them to get a good brand value which lures people towards the company and increase its sales. The employees of the company also feel motivated in terms of working for a company that has good brand value and image among the people. With appropriate CST activities, the company is able to retain the employees by saving the cost of turnover. There are many ways in which the CSR is done by the company like by supporting the local community in terms of their growth, by protecting the environment, by helping the weaker section of the society to grow, etc. However, there are some of the negative impacts of the CSR too like it affects the financials of the company and the people believe that the companies that do CSR have low-quality products.
All the journals which were taken into the considerations helped in answering all the research questions which were defined in the most appropriate manner, and it will also help the future researchers to research on the particular concept.
One of the theories that were learned was the stakeholder theory and in the words of Hörisch, Freeman and Schaltegger, (2014) it can be defined as the theory of the organizational management and the business ethics that completely addresses the morals and the values required to manage the organization in an effective manner. The particular theory states that the shareholders are just one of the many stakeholders in the company and the real stakeholder ecosystem involves anyone invested and involved in or affected by the company like employees, suppliers, government, local community and much more. The real success of the company directly lies in the manner in which it can satisfy all the stakeholders and not just those people who can get profit from the stocks of the company. ‘
Bridoux and Stoelhorst, (2014) added that this particular theory has great importance in the new global economy. It is very important for an organization to be mindful not only for the people who hold the stock in the company but also for those who work in the stores of the organization and also the competitors as the company may shape the landscape in the industry. Many of the companies in today’s world are reinventing themselves to use the stakeholder’s theory on a regular basis. With the implementation of the stakeholder’s theory, the company is able to treat all the stakeholders with proper equality which not only increases their trust but also motivates them to work in such manner that it can fulfil all the goals and objectives of the company. When the stakeholders in the words of Harrison and Wicks, (2013) of the company are happy then it can be said that the company is able to get good brand value in the market which later on turns into the competitive advantage.
Bridoux, F. and Stoelhorst, J.W., 2014. Microfoundations for stakeholder theory: Managing stakeholders with heterogeneous motives. Strategic Management Journal, 35(1), pp.107-125.
Capaldi, N. ed., 2013. Encyclopedia of corporate social responsibility (Vol. 21). New York: Springer.
de Grosbois, D., 2012. Corporate social responsibility reporting by the global hotel industry: Commitment, initiatives and performance. International Journal of Hospitality Management, 31(3), pp.896-905.
Du, S. and Vieira, E.T., 2012. Striving for legitimacy through corporate social responsibility: Insights from oil companies. Journal of Business Ethics, 110(4), pp.413-427.
Garay, L. and Font, X., 2012. Doing good to do well? Corporate social responsibility reasons, practices and impacts in small and medium accommodation enterprises. International Journal of Hospitality Management, 31(2), pp.329-337.
Harrison, J.S. and Wicks, A.C., 2013. Stakeholder theory, value, and firm performance. Business ethics quarterly, 23(1), pp.97-124.
Hopkins, M., 2012. Corporate social responsibility and international development: is a business the solution?. Earthscan.
Hörisch, J., Freeman, R.E. and Schaltegger, S., 2014. Applying stakeholder theory in sustainability management: Links, similarities, dissimilarities, and a conceptual framework. Organization & Environment, 27(4), pp.328-346.
Kitzmueller, M. and Shimshack, J., 2012. Economic perspectives on corporate social responsibility. Journal of Economic Literature, 50(1), pp.51-84.
Wagner, T., Lutz, R.J. and Weitz, B.A., 2013, May. Corporate hypocrisy: Overcoming the threat of inconsistent corporate social responsibility perceptions. American Marketing Association.