Corporate Social Responsibility - Coursework Example

Introduction

The primary drive and major focus for business entities around the globe is to make profits. This applies to all commercial organizations unless they are charitable, or non-profit-making organizations. However, in 1970, Milton Freidman identified social responsibility as a fundamental subversive virtue that exists in free society. He noted that the most significant duty of business entities is its responsibility to ensure the well-being of its stakeholders. This means that the business should focus on ensuring that all its participants are taken care of well. The society is a significant component of organization’s stakeholders; firms were then obliged to focus their efforts on activities that will ensure that the environmental and social wellbeing are considered. Hence, Freidman termed it as the corporate duty to ensure that all the stakeholders in the business environment are accounted for.

Additionally, activities conducted by organizations across the globe poses detrimental effects on the ecosystem. This significantly reduces the environment’s power and ability to hold and adequately sustain life. All these activities assist these firms to achieve their goals and realization of massive profits. On the other hand, they reduce the ability of various ecosystems to support the life of its inhabitants. For instance, oil spills into water bodies or on the land lessening the amount of oxygen that is availed to the inhabitant of such ecosystems. This makes it impossible for such creatures to survive under these conditions. Hence, businesses should be held accountable to at least share their profits with the community, through the initiation of projects and programs that improve the well-being of the residents. Evidently, these programs may focus on recuperating the state of the environment and enhancing its capacity to support life. Hence, it would be appropriate if policies are put in place to dictate the portions of the company’s profits, which ought to be allocated to the Corporate Social Responsibility program.

The Managerial Theory of Social Corporate Responsibility

This approach insists on the need for internal control of the CSR activities, where the organization’s management determines and allocates resources to facilitate its external activities. This theory subdivides duties of the administration into three subgroups: Social Accountability, Auditing and Reporting (SAAR), Corporate Social Performance, and Social Responsibilities for Multinationals (Ismail, 2009). The SAAR attribute indicates that the firm is held accountable for its actions, and how they contribute to its efforts towards the maintenance of a conducive and a healthy environment. Hence, enterprises should ensure that they channel adequate resources toward programs that enhance the well-being of the society since it is a requirement of the law. The management is hence obliged to ensure that the firm accounts for its actions, or else, face legal consequences if the audit reports indicate instances of negligence.

The firm is also required to report on its CSR activities and actions according to this subgroup. For instance, according to Torres et al. (2012), the Coca-Cola company publishes its CSR activities on its annual director’s report, which indicate the firm’s operations undertaken in the previous year. They incorporate all the actions conducted by the business to ensure that the community welfare is considered. Notably, the firm also publishes the Coca-Cola Company Sustainability Review, which is released after every two years. It majors in indicating the progress of the firm’s initiative, especially the targets of the water stewardship program (Torres et al., 2012). This move depicts the responsibility of the company in ensuring that it accounts for its activities and actions toward the maintenance of a conducive environment.

The CSP indicates the contributions made by the social variable to the economic performance of the society. This virtue links the success of an enterprise with the well-being of the community. Thus, the management of business tends to participate in activities that promote the sustainability of the community and its resources to facilitate its growth and development. For instance, according to Torres et al. (2012), Walmart publishes its sustainability report based on three parameters namely: the social, environmental and goals. Such activities have helped the firm to map itself in the market as one of the best retailers. This is associated with the positive image created by its efforts to maintain a sustainable environment. Walmart communicates the progress and steps taken to reduce the emission of greenhouse gases, by setting a target that it ought to achieve by 2015. Further, the CSR for multinational companies has mandated managers to adopt policies that define tools that can be used in the international market, and facilitate the proliferation of such organizations (Goel & Ramanathan, 2014). Hence, these classifications explain the involvement of the corporation’s management in the activities that ensure maintenance of conducive CSR programs through internal regulations.

Utilitarian Theories

The theory considers the firm as an integral part of the economy, and it has an ethical responsibility to ensure that the social well-being of the society is maintained (Ismail, 2009). The significant motive of corporations in this theory is to make profits, whereas, its engagement in social activities only focuses on the achievement of economic results. The proponents of this theory identify it as a continuous process, which aims at ensuring that natural resources are utilized dynamically, and making it possible for such firms to attain competitive advantages. The theory additionally associates these activities with marketing strategies. The maintenance of a conducive environment and the concern for the society’s well-being creates a positive image of the organization to the market. This, in turn, increases the following and affection of the firm. This perception leads to improved sales of the firm’s products and services since the occupants of the ecosystem develop interests and love for the organization.

Indisputably, Ismail (2009), divides the utilitarian theory into two categories: the functionalism idea and the corporation’s social cost. The concept of functionalism considers the firm as an investment. The stakeholder's interest is making profits; hence the business should yield gains. Therefore, its engagement in corporate social responsibility is a shield from external attacks of the firm. Thus, for an enterprise to ensure its success in an economy, it should fulfill its obligations, and participate in activities that will contribute to the maintenance of a sustainable environment. Some firms tend to take advantage of such free will and limit the extent to which they engage in promotion of the societal well-being. Hence, there is a necessity for government intervention to ensure that the organization strikes the right balance between making profits and accomplishing their social objectives. Moreover, the corporation’s social cost category suggests that the involvement of business in a CSR program is influenced by non-economic factors (Goel & Ramanathan, 2014). The political position and interaction of an enterprise with the society are considered as the primary drive in the attainment of social power, which determines the influence an organization holds in the ecosystem. Hence, according to this approach, the business is a separate entity in the economy, and it seeks political powers in the society through its involvement in corporate social responsibility.

Relation theory

This approach identifies a complex relationship between the business and its environment. It utilizes these interactions to analyze the firms’ CSR programs. The theory categorizes these relationships into four: the business vs. the society, corporate citizenship, stakeholder approach, and the social contract (Ismail, 2009). The first category tries to examine the interaction between the society and the business entities. During such interactions, organizations partake the CSR program as a resultant factor during the engagement of the two entities. Thus, businesses are urged to possess greater social power in the society; this will be achieved through channeling more investments in the CSR activities. This creates a strong relationship between these entities in the long run, which enables the business to achieve its goals and objectives. Most importantly, the social contract tries to attach the corporations’ social activities to the accomplishment of ethical requirement of the firm. Thus, a company has the responsibility to maintain the labor and human rights, and the maintenance of a sustainable environment.

Further, the stakeholder's approach has been established to direct the firm’s social behavior, to ensure that its activities are aligned with the promotion of the society’s well-being. The method creates an interconnected web displaying the different objectives of the firm. The enterprise’s personal goals and the society’s considerations occur interdependently. This signifies that an organization cannot achieve its optimal profit levels without the attainment of the community’s welfare (Ismail, 2009). Additionally, the corporate citizenship considers the enterprise as a separate entity, which has responsibilities on the environment as the typical human being. This, therefore, legalizes the involvement of the government, to push them to accomplish their duties in the society and the environment. Thus, the corporations can be held accountable by a nation’s framework, in case they fail to engage in the CSR programs.

Corporate Social Responsibility as an Obligation

According to Fontaine (2013), it is the legal duty of the organization to establish CSR programs in the society. These restrictions are made to help firms recognize and appreciate the role played by the environment and the community in ensuring that it achieves its targeted profit margins. This function assumes that businesses are aware of their shareholders, and they acknowledge the enterprise’s duties to ensure that such responsibilities are achieved. Additionally, Goel & Ramanathan (2014), states that organizations have the moral obligation to cater for the concern of all its stakeholders, regardless of their status. It is accountable for not only the owners of the enterprise (Shareholders), but also to other stakeholders such as employees, customers, the society, and suppliers. This is considered to be part of the business ethics, that are driving factors towards ensuring that there is a conducive coexistence between organizations and the business enterprises.

It is the duty of the governing body (government) to determine policies that will determine the number of deductions paid by firms in term of taxes (Fontaine, 2013). The organization is obliged to fill in returns in the form of taxes, which represents the portion of the earned profits. The state administration is the representative of the people, it collects such allocations, which are then utilized in initiating other developmental projects in the society. This virtue brings in the relevance of the government inclusion in the move to oblige adamant administrations to engage in such programs. Hence, through paying tax, the government ensures that part of the profits earned by these institutions finds their way back to the society. This helps in repaying occupants of such ecosystems for the impacts caused by activities of the organization.

The CSR and Creating Shared Value

This virtue tries to find a balance between the success of the corporation and the maintenance of the social welfare. It states that the two components are interdependent, and organizations should ensure that the right combination is identified (Fontaine, 2013). The corporate society relies on the services such as skilled and healthy workforce, adept state administration, and adequate and sustainable resources, which are offered by the society, to be successful. This means that in the absence of the community, the firms will not be able to achieve their goals and objectives. Typically, for the social order to excel, there ought to be the presence of competitive and profitable businesses, which creates regular incomes, tax revenues, and opportunities for self-empowerment. However, in some cases, the enterprise enjoys the service awarded by the society but ends up not replicating such efforts to repay the community for its contribution towards its success. Thus, this necessitates the involvement of the government in the process, which outlines policies that facilitate the participation of such enterprises in programs that improve conditions of the society.

Criticism of the Corporate Social Responsibility

The critics of the CSR program terms it as a branding strategy, which aims at shielding negative impacts of the business. Some organization’s motive to engage in these initiatives is not voluntary. They are forced to take part in them to wipe out the adverse effects caused by the firm’s products or services to the society (Graafland, 2017). For instance, the McDonalds fast foods are considered as causative factors of obesity. Thus, the firm engages itself in CSR activities so that it can create a positive image in the society, making its customers forget the adverse effects caused by such foods. Significantly, manufacturing companies such as chemical producing firms participate in the corporate social responsibility activities to mask the adverse effects caused by their emissions into the environment. However, regardless of the motive of businesses, and the reasons for involvement into such activities, the impact of the CSR action benefits the society, which is the primary motive of these programs.

In conclusion, the paper has identified the major theories that have touched on the relevance of the program to the society’s well-being. The managerial, utilitarian, and relational approaches have indicated the interaction between the business and the community and expressed the need to engage in Corporate social responsibilities. However, these studies have not concisely instituted the involvement of the government, in the process of regulating the scope of CSR. This gap leads to conducting research to identify and determine the relevance of regulation of the responsibility of the organizations’ role towards the society. This will involve the collection of data from government agencies and corporations, which will help in identifying the policies that have been adopted to govern the corporate responsibility to the residents of the society. The questionnaire will utilize closed and open-ended questions to assist in obtaining the real situation on the ground, and help in coming up with appropriate conclusions and recommendations.