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Overview of Business Organization and Corporate Social Responsibility

Question:

Discuss about the Socially Responsible Business Activity.

Business Organisation can be seen as a system where various resources are used for the purpose of             attaining some common predefined goals. These resources can be of many types such as human resources, money resources, raw materials, land and many others. These resources are utilised to produce something valuable namely product and services, and they are exchanged for monetary value. This monetary value is used to repay the cost of resources used and the excess value is kept with business organisation as profit. Conceptually, business organisation is a mechanism of performing economic activities. (Stimpson & Smith, 2015) This concept worked well in past decades. But, in recent business arena, wealth maximisation is not considered to be the only objective of any business organisation; Business organisation should focus on giving back to source of these resources used, in a proper way. This is about giving back to the society which is predominantly the source of all the resources used in business. Giving back to society by a business organisation is the principle outline behind being socially responsible (Chernev & Blair, 2015).

Concept of Corporate Social Responsibility (CSR) has gone through a long evolution period and it has a strong impact on image of the organisation in the society. It impacts organisation behaviour in particular the way business operates. Many experts discussed and defined concept of CSR in different ways. CSR is the commitment of any business organisation to contribute in economic development of society within which it operates, helps in improving living standards of their workforce; and at large for the betterment of local communities and society (Tai & Chuang, 2014). It assumes that a business organisation which is responsible for its financial performance, in the same way it is also responsible its society and environment. In overall sense, CSR is the way to create a positive impact on the society in which it operates. It describes that responsibility of business organisation is not range bound to superior financial performance, but it is wider in contributing towards better society and cleaner environment. In this context, business organisation must consider three bottom lines for their balanced performance. First bottom line is corporate profit which is the profit and loss generated through business operations; Second bottom line is “people account” which is the measure of how socially responsible a business organisation is; and third bottom line is “planet account” which measures the responsibility towards environment (Glac, 2015).

Dimensions of CSR

To become a good corporate citizen, every business organisation should consider its approach towards CSR in a significant way as this concept is gaining importance in present business environment. Business organisations have certain obligations; social responsibility is one of the most important of them. Being socially responsible means, a business organisation is having positive impact on its stakeholders namely owners, customers, suppliers, government, employees, society and environment. Concept of social responsibility can be discussed through four broad dimensions, namely economic, legal, ethical and philanthropic (Chernev & Blair, 2015).


Philanthropic dimension of CSR by any business organisation includes its positive impact and contribution towards local community and society at large. Through philanthropy, business organisation can improve living standards of its employees, customers and of overall local community (Porter & Kramer, 2002). It also helps in decreasing involvement of government in charity programs to help people in society. Through philanthropy programs, business organisation can improve morale of its employees; also building leadership quality in volunteering employees can be implemented. Experts argued that through corporate philanthropy some business organisations tried to increase social impact as well as economic goal in long term planning horizon. This concept of “Context Focused Philanthropy” has been well adopted and practiced by a large number of big and well-known corporates. In this aspect, Cisco System is a good example. It has invested a huge amount in its ambitious socially impactful education program. Through this program, they trained computer network administrators who are high school graduates; these graduates became job ready and they became trained human resources for Cisco. Cisco Networking Academy, the corporate philanthropy program of Cisco worked beneficial for itself and also benefitted local community at large. Through times, business experts commented and suggested that philanthropy dimension of CSR can improve competitive context of business organisations in a cost effective way (Porter & Kramer, 2002).


Through corporate philanthropy, business organisations use its corporate resources for doing well to society. These activities should not be within the near scope of business operations and should not provide any direct benefits. Another group of experts stated that a company can improve its own corporate image and reputation. It includes business firms’ contribution regards to financial resources and time of executive for making contribution in arts, education at larger local community space. It will certainly help business organisations to work for society but it is regarded as voluntary. It can be suggested that corporate philanthropy is the way through which a business organisation can associate itself with the society in which it operates. With the time, leaders of well-known business organisations considered corporate philanthropy as viable strategic choice in planning for their marketing strategies. Organisations are planning their related strategies in such a way that these programs can contribute positively in developing brands, enhancing recognition in market and creating positive customer viewpoint (Weeden, 2011).

Philanthropic Dimension of CSR

In this aspect, Nissan Motor Corporation is an example for all other internationally renowned companies. It has adopted their corporate philanthropy under “Distinctly Nissan” and making social contribution in areas like education, environment and providing humanitarian support. Nissan is working closely with many non-profit organisations and non-governmental organisations to make effective social contribution. Nissan has contributed approximately 1.6 billion yen in financial year 2016 (Nissan Blue Citizenship, 2017). Nissan has primarily focused their priorities on environmental aspect; they are educating future generations about environmental issue in countries like Japan, China, U.K. and Spain. Nissan has also made investment in education area to run educational programs to provide education to children and young generations in countries like Brazil, Australia, U.K. and China. In their humanitarian support, they have provided support in terms of providing monetary support, assistance to victims to areas which are majorly affected by natural disasters. In Kumamoto earthquakes, Nissan has provided 100 EVs free of cost to support swift relief work. During forest fire in Chile, Nissan has supported relief work through providing vehicles. Since 2007, Nissan has made number of school visits in U.K., China and Japan to share car manufacturing knowledge base. Through “Nissan Waku-Waku Eco School”, Nissan is positively contributing towards global environmental issues. In education area, Nissan has donated near about 220,000 copies of children story books and picture books in various schools, libraries nearby its offices. Nissan South Africa is working to provide support for mobile eye clinic. Nissan Global Foundation is working to provide better education globally (Nissan Motor Corporation Sustainability Report, 2017).


Studies shown that through social investment, business organisations can achieve stakeholders’ engagement and also manage risk strategically. Now, business organisations have shifted their vision from traditional philanthropy to strategic philanthropy. In modern arena, global companies are following two important ways to do corporate philanthropy. The first one is business organisations are matching their employees’ contribution and providing donations to eligible non-profit organisations. This act is increasing the total value of contribution. Apple is an important case in this context. Apple has matched $25 million of employee contribution for donation and which resulted in total $50 million of donation for charity work around world. This act is internally acclaimed and appreciated; as a result Apple has got a good corporate image. The second one is when employees of business organisation donate their working time to non-profit organisations, and then it becomes volunteer grant. In this aspect Wells Fargo has contributed total $25 million to NeighborWorks which is a non-profit for the purpose of supporting financial education and paying down-payments for purchasing homes. Also it has allowed their interested employees to receive two days of paid leave to volunteer in any non-profit as per their convenience and choice (Inside Philanthropy, 2017).        

PepsiCo, a global food and beverage giant has priorities it corporate philanthropy program for empowerment of women, sustainable agriculture, providing clean water, employability programs and any more. “PepsiCorps” has placed PesiCo employees in countries like India, Ghana and New Mexico to work in its corporate initiatives. It has started “Food for Good” and since 2009 it served 1.6 million food to inner-city children (PepsiCo Global Citizenship, 2017).    

In conclusion, it can be said that corporate philanthropy has narrower scope that corporate social responsibility. It is one of the way to giving back to society in which a business organisation is operating. Through corporate philanthropy, business organisation and its employees can contribute towards society and business organisations become responsible toward local community. This way companies can develop and improve citizen’s trust. In long run, these programs and initiatives will increase business organisations’ credibility and performance (Wang et al., 2016). When a business organisation is permitted to operate in a society and also permitted to use the resources from the society, then are expected to do good for that society. Some experts found some limitations attached with corporate philanthropy such as transparency issue, ranking of certain activities, managements’ involvement which can weaken the purpose of philanthropy (Gautier & Pache, 2015).

References

Carroll A.B., Brown J., & Buchholtz A.K. (2017). Business & Society: Ethics, Sustainability & Stakeholder Management . Cengage Learning.

Chernev, A., & Blair, S. (2015). Doing well by doing good: The benevolent halo of corporate social responsibility. Journal of Consumer Research, 41(6), 1412-1425.

Gautier, A., & Pache, A. C. (2015). Research on corporate philanthropy: A review and assessment. Journal of Business Ethics, 126(3), 343-369.

Glac, K. (2015). Triple Bottom Line. Wiley Encyclopedia of Management.

Inside Philanthropy (2017). Retrieved 17 September 2017, from https://www.insidephilanthropy.com/guide-to-individual-donors/tim-cook.html

Nissan (2017). Blue Citizenship: Nissan’s CSR. Retrieved 17 September 2017, from https://www.nissan-global.com/EN/CSR/STRATEGY/PHILANTHROPY/

Nissan Motor Corporation Sustainability Report (2017). Philanthropy Retrieved 17 September 2017, from https://www.nissanglobal.com/EN/DOCUMENT/PDF/SR/2017/SR17_E_P057.pdf

PepsiCo: Global Citizenship (2017).  Retrieved 17 September 2017, from https://www.pepsico.com/sustainability/Philanthropy

Porter, M.E., & Kramer, M.R. (2002). The Competitive Advantage of Corporate Philanthropy. Retrieved 17 September 2017, from https://hbr.org/2002/12/the-competitive-advantage-of-corporate-philanthropy

Stimpson, P., & Smith, A. (2015). Business management for the IB Diploma. Cambridge University Press.

Tai, F. M., & Chuang, S. H. (2014). Corporate social responsibility. Ibusiness, 6(03), 117.

Wang, H., Tong, L., Takeuchi, R., & George, G. (2016). Corporate social responsibility: An overview and new research directions thematic issue on corporate social responsibility. Academy of Management Journal, 59(2), 534-544.

Weeden C. (2011). Smart Giving Is Good Business: How Corporate Philanthropy Can Benefit Your Company and Society. John Wiley & Sons.                                                                                                                                

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