Discsus about the Importance of Corporate Social Responsibility.
Shaukat, Qiu, and Trojanowski (2015) define Corporate Social Responsibility (CSR) as the description of the general liability of an organization, firm, or a company for its suitability in sustainable management concerning the social, ecological, and economic respect. Carroll, Primo and Richter (2016) also identify it as a fundamental concept with the primary goal of helping companies integrate both environmental and social concerns into their corporate relationships and activities with stakeholders. Therefore, it determines how firms or organizations manage their business activities to impact the overall society positively. This paper discusses the importance of CSR as well as its advantages and disadvantages.
Whether corporate social responsibility is based on the environment, community, human resource, or charity, it has become a standard business practice of the current world. Diemont, Moore, and Soppe (2016) points out that CSR enhances the overall reputation of every organization thus giving a sound statement in what the organization is standing for in the often competitive and dynamic business community. It thus calls for a strategy of values, policies, and procedures in place that integrates environmental, ethical, social, or consumer concerns as well as human rights into the primary strategies of business (Rehbein & Fort 2015, p. 393). As a result, the business operations will effectively build a foundation for the success of the organization
In their study and publication of the response of organization towards CRS strategies, Carroll, Primo and Richter (P. 68) found out that firms had different results. For instance, organizations that genuinely commits to CSR showed a substantial performance with an average of 21% higher return on asset as compared to organizations that did not. Falkenberg and Brunsæl (2011) also points out that such organizations had a higher level of employee engagement and hence provided markedly better standards of customer service. The study reports that CSR encourages professional growth in addition to promoting the achievements of both the employees and the organization.
Advantages of Corporate Social Responsibility
According to Chernev and Blair (2015) points out that CSR improves the image of the corporation regarding their value and goodwill when its policies are properly in place. CRS thus increases the prestige of the corporation giving it a synonymous name with goodness, perfection, and reliability. Villagra et al. (2016) also report that the safe and clean image of a business organization will encourage customers to buy from the firm. It will also encourage other businesses to associated or do business with the organization due o good performance. The corporation hence becomes a major player in the market since customers do tend to associate with the best and most favorite things in the market.
It increases the attraction, retention, and engagement of employees in an organization with substantial CSR commitments (Rehbein & Fort 2015, p. 395). Financial assistance in times of appraisals, needs, and attention to personal achievements shows the positive and compassionate attitude towards employees and would make them want to remain in the organization. Firms that care about the wellbeing of the employees and provide them with safe working conditions find it easy retaining or recruiting employees. It is because workers will tend to desires working in organizations that treat them with dignity.
Active CSR programs also reduce the hostility of regulatory authorities as it is for organizations without the programs. When the authorities feel that the institutions are complying with all its regulations, it creates leniency in support of the firm and the welfare of the employees (Villagra et al. 2016, p. 141). The authorities will only fast-track the preferences of the company, thus reducing the paperwork required in setting up beneficial projects to the community. Hsieh (2015) also points out that CSR programs create responsible environmental stewardship and give organizations positive publicity among the market competitors thus and attract more capital inflow from different sources.
Disadvantages of Corporate Social Responsibility
Milton Fredman, an economist, is known to be the biggest critic of CSR. He argues that CSR tends to shift the focus of organizations from their primary profit-making objective that makes it a financial entity (Rehbein & Fort 2015, p. 140). According to the economist, the company use up funds for community welfare and neglects its obligations towards the shareholders instead of focusing on profit-making goals. It also hits the reputation of the organization as companies are forced to disclose any shortcoming even on their activities and products if they are found violating the CSR programs according to Hsieh (2015, p. 437). The enhancement reflects in the price of the goods which have to be ultimately paid by the customers. It consequently results from an increase in the cost of production as the CSR will often increase the organization expenditure. The CSR programs thus affect small businesses that are forced to raise their product prices to meet the increased expenses while large companies can absorb the increase in expenditure (Chernev & Blair 2015, p. 1419).
The increase in the product prices consequently results to dwindling conviction of the customers as they will be made to believe that the CSR programs are good for a cause at the initial stages. However, the customers will go weary without instant results from the CSR programs when the companies fail to convince the client of a positive result with time. The impatient customers with a constant desire of being appraised tend to lose trust in the organization and will opt for another solution (Villagra et al. 2016, p. 139).
A good workforce and customer availability are the success of any business. As a result, CSR will be vital in enabling any business organization to achieve its business goals and objectives. It is thus important for an organization to embrace CSR strategies in the current competitive business world where economic, social, environmental, and ethical issues together with human rights have taken a central point in determining the long-term success of operations. Despite the disadvantages discussed above, CSR programs encourage consumers’ behavior and the employee’s performance.
List of References
Carroll, R, Primo, d, & Richter, B 2016, 'Using item response theory to improve measurement in strategic management research: An application to Corporate Social Responsibility', Strategic Management Journal, 37, 1, pp. 66-85, Business Source Premier, EBSCOhost, viewed 12 May 2016.
Chernev, A, & Blair, S 2015, 'Doing Well by Doing Good: The Benevolent Halo of Corporate Social Responsibility', Journal Of Consumer Research, 41, 6, pp. 1412-1425, Business Source Premier, EBSCOhost, viewed 12 May 2016.
Diemont, D, Moore, K, & Soppe, A 2016, 'The Downside of Being Responsible: Corporate Social Responsibility and Tail Risk', Journal Of Business Ethics, 137, 2, pp. 213-229, Education Full Text (H.W. Wilson), EBSCOhost, viewed 30 August 2016.
Falkenberg, J, & Brunsæl, P, 2011, Corporate Social Responsibility: A Strategic Advantage or a Strategic Necessity? Journal Of Business Ethics, 999-16.
Hsieh, N 2015, 'The Social Contract Model of Corporate Purpose and Responsibility', Business Ethics Quarterly, 25, 4, pp. 433-460, Business Source Premier, EBSCOhost, viewed 30 August 2016.
Rehbein, K, & Fort, T 2015, 'Enhancing the concept of corporate diplomacy: Encompassing political, corporate social responsibility, international relations, and peace through commerce', Academy Of Management Perspectives, 29, 4, pp. 387-404, Business Source Premier, EBSCOhost, viewed 12 May 2016.
Shaukat, A, Qiu, Y, & Trojanowski, G 2016, 'Board Attributes, Corporate Social Responsibility Strategy, and Corporate Environmental and Social Performance', Journal Of Business Ethics, 135, 3, pp. 569-585, Education Full Text (H.W. Wilson), EBSCOhost, viewed 30 August 2016
Villagra, N, Cárdaba, M, & Ruiz San Román, J 2016, 'Communicating Corporate Social Responsibility: re-assessment of classical theories about fit between CSR actions and corporate activities', Journal of Business Communication & Society, 29, 2, pp. 133-146,