Corporate Social Responsibility - Essay Example

? Corporate Social Responsibility (Insert Corporate Social Responsibility Introduction Corporate social responsibility is an act that is known to have a positive impact on the reputation of a business. This is because it is known to ethically dictate the activities of a business in relation to its surroundings and stakeholders. However, it has been argued about the impact of corporate social responsibility beyond reputation. CSR has been known to have a great positive impact on the reputation of a business but very little, if any, impact on the profit margins of a company. This is a research to find out the kind of impact that CSR has on a company beyond positively impacting the reputation. The objectives of this research are: To determine the extent to which CSR impacts the reputation of a business; To investigate how and if CSR is a profitable activity to the company; and To determine how CSR as a process can have a positive impact on both the reputation and profits of a company. This research has been conducted for the purpose of establishing how CSR impacts the reputation of a business while investigating on the impacts that it has on the profits of a company. It is widely debated that CSR does not necessarily have an impact on the profits of a business and therefore it is necessary to determine how much CSR will impact on the profits of a business. Literature Review Corporate social responsibility (CSR) refers to a form of corporate self-regulation integrated in to a business model (Schwartz, 2011). According to Chandler (2001), corporate social responsibility generally refers to business practices that are based on ethics, adherence to legal requirements and a profound respect for people, communities, as well as the environment. The main aims of CSR as a process are to embrace responsibility for the actions of the company and to inflict a positive impact upon the environment, the clients, the employees, and all other pertinent stakeholders. The term corporate social responsibility begun to be used commonly in business in the 1950’s (Sawhny, 2008). This was after businesses realized that their activities not only have an impact on shareholders as their major stakeholders but also on people who have an association with the organization, for example, the people living around the area of business (Freeman, 2012). Just like any other business variable, CSR is measureable. Much interest has grown on the measurement of CSR and as a result, people have developed numerous literary documents that try to explain how CSR can be measured. The most common approach for measuring CSR is a systems model that is referred to as the 3p Model (Hopkins 2012). This model evaluates the CSR performance of a business on three levels namely: Principles of social responsibility; Processes of social responsiveness; and Products or the outcomes as they relate to the firms societal relationships. Principles of Social Responsiveness The level to which these principles are applied is institutional and is on the basis of a firms basic business obligations as a business unit. Principles of social responsiveness are of value simply because they define the institutional relationship between businesses and the society and gives a specification of what is expected of the business. This being the first level of measuring CSR, it is all about the relationship between the relationship between businesses and the society at large. This level has three major elements. The first major element is legitimacy. This concerns the business as a social institution and it frames the analytical view of the relationship between a business and society. The second element is public responsibility. This concerns the individual firm and its processes and outcomes within the framework of its own principles in terms of what it actually does. The third element is managerial discretion. This element refers to the members of the organization, managers especially, as moral actors of the company. Managers are under obligation to exercise discretion as is availed to them towards socially responsible outcomes within every domain of corporate social responsibility. Processes of Social Responsiveness This refers to the ability of a business to respond to societal pressures. In other words, it is the ability of a business to survive through adaptation to its own business environment. For the business to have a smooth adaptation to its environment, it must have an in depth knowledge of its business environment, be capable of analyzing the data available, and most importantly, it must be able to react to the results of this analysis. However, it is key to note that the environment of a business is dynamic; the circumstances are ever changing and this dynamism is a fairly complex process. A business environment can be stable for a long period of time but then it can change rapidly within a very short period of time. With such complexity, a business must equally use the complex mechanisms if it is to successfully scan, interpret and react to the changes in the business environment. This level also has three basic elements. The first element of this level is business environment scanning. This element indicates the informal gathering within a business organization and the manner in which information that is gathered will be transmitted throughout the organization. The second element is stakeholder management. A stakeholder can be defined as any individual or group that is affected or affects the activities of an organization through achievement of its objectives. It is therefore important to map out the relationship between the business and its stakeholders and also the inter-relationship between stakeholders themselves and striving to attain a balance through listening and acting upon their legitimate concerns. This is a fundamental issue in the measurement of CSR. The final element of this level is issues management. This is an analysis of the main issues that concern the stakeholders. This is done after the motivating principles of an organization have been identified and the relationship and powers of stakeholders has been mapped out. Products or Outcomes When measuring CSR, this is the main focus. It is the level where the effects of CSR are measured. For this to happen, all the stakeholders that are relevant to a particular issue or issues must be included in any assessment of performance. Just like the other two levels, this level similarly has three elements or categories. The first category of this level is internal stakeholders effects. This is an assessment of the effects that affect the stakeholders that are within the firm such as employees. When this is examined, it shows how a corporate code of ethics in a business will affect the day to day decision making of a firm with reference to social responsibility. The second category is external stakeholder effects. This category examines the impact of corporate actions and activities on the individuals or groups that are outside the firm. The impact can involve the negative or positive effects of a product to the consumers, how corporate philanthropy affects the community as a stakeholder in a business, and the effects of waste disposal on the environment and how effective disposal measures are.The third category of this level is external institutional effects. This category measures the effect that actions of a business may have on the industry players rather than on one single stakeholder group. For example, if the waste disposal measures of a company are found to be ineffective and harmful to the environment, then the result of this will be tighter regulations inflicted on all the players within that particular industry rather than on the specific firm found to be at fault. Company Profile To determine the association between corporate social responsibility, business reputation, and profits, it is necessary to evaluate a company in order to achieve the main objective. The company that will be analyzed during this research project is Tesco PLC. Tesco is a UK based multinational grocery and general merchandise retailer store. The headquarters of the company are in Cheshunt in the United Kingdom. Tesco PLC is the leading retailer in the UK commanding the biggest share of the market which is about 30%. Tesco is the world’s third largest retailer in terms of revenues and the world’s second largest on the basis of profits earned. The company has stores in 14 countries across the world. Tesco PLC was founded as a group of market stalls by Jack Cohen in 1919. However, the company came to bear the name Tesco in the 1924. Cohen had purchased a shipment of tea from T. E. Stockwell. He then took the initials of the company he had bought the shipment from, TES, and then combined these three initials with the first two initials of his surname. That was where the name of the company originated from. Tesco was originally a food retailer but since the 1990’s the company has diversified its scope to dealing with books, clothing, furniture, electronics, among other merchandise such as software. Tesco PLC trades its shares as a constituent of the FTSE 100 index in the London stock exchange market. Tesco’s corporate social responsibilities are founded on the basic core purposes and values of the company. These two elements are the driving force of their day to day operations and prioritize the key issues of for the business all in an attempt to fulfill and address the issues that concern their various stakeholders. Out of their core purposes and values, the company has developed an analysis mechanism called a steering wheel. This wheel consists of five segments; community, operations, people, finance, and customer. Below is a diagram of the wheel. Tesco PLC highly values its community. According to Tesco, their community comprises of their customers, their suppliers, their neighbors and their environment. The community partition of the wheel is one of the major ways that the company uses to communicate, manage, and monitor their corporate social responsibilities to their stakeholders. In this segment, the company includes the promises that it makes to their stakeholders and these promises are one of the elements that ensure that the company acts in a responsible way towards its stakeholders. The wheel is a just a tool for monitoring the social responsibility of the company. In terms of articulating CSR, the company uses a philanthropic approach. The company’s commitment to CSR is in the form of contributions to charities and local community programs. Tesco allocates approximately 2% of their pre-tax profits to charity donations and community donations. An example of Tesco’s acts of charity as a way of fulfilling corporate social responsibility was the 1992 “computers for schools scheme” (tesco.com, 2012). The aim of this scheme was to offer computers to schools and hospitals and in return, the institutions were to get vouchers from people who shopped at the mall. Through performing their corporate social responsibilities, Tesco PLC sponsors sporting activities too. The company is the main sponsor of the Tesco cup which started to run during the 2005-2006 football season in the UK. This league tournament aims at promoting football among the youth all over the UK. (Courtesy of tescoplc.com). With the information that has been presented above, the best research design for this research project will be questionnaires. Research Design For this research project, a survey research strategy will be employed. The reason for this strategy is because the research has been put forward to evaluate the extent to which corporate social responsibility as a process affects the profit margins of a company in addition to having an impact on the reputation of the company. The survey strategy uses a deductive approach to acquire information. This approach will target the customers as a source of information and by virtue of this strategy, the research will be able to address questions such as what impact CSR has on the profit margins of a company. In addition, survey strategy is an economical way of collecting data. It will help us to cut on costs while at the same time manage to collect quantitative data. The sampling strategy of the research will be cluster sampling. The clusters will be selected randomly from customers of the company in the 6 different regions. This kind of sampling is relatively fast and it is easy to collect the data.Each region will be given an equal number of questionnaires. Equal sampling of data gives an accurate outcome and the information produced is not biased or heavily inclined on one side of the sources of data information available (Saunders, et. al, 2007). Since we will need to collect information from a wide pool of stakeholders, it will be necessary to employ a second strategy; the case study strategy. The reason why this strategy is necessary is because it will facilitate the use of multiple sources of evidence. From this strategy, the research will be carried out using an inductive approach (Bryman& Bell, 2007, p.14). This approach will be aimed at acquiring feedback from the various managers of Tesco PLC in the 6 UK regions. On the issue of collecting data, the following techniques will be employed. The first technique will be interviews. The interviews will be targeting the managers considering that managers are time conscious and the interview will ensure proper use of time due to its instant feedback nature. The second technique will be observations. The researchers will also collect data from documented analysis. This way they will be able to compare the documented results of CSR on the company against the results of the firsthand information collected during the research. Data presentation will be the next step after all the information has been received and analyzed. Because the findings will have two variables, the best possible way of presenting the data will be by use of graphs. The graphs will show the percentage of the stakeholders that believe that CSR has a direct impact on both the profits and the reputation of the company, in comparison to those who only believe that CSR has little or no impact on the profit margins of a company. By virtue of this research design, the reader will be able to understand the fundamentals of CSR and will be able to know how much of an impact CSR has on the profits of a company, if at all there is an impact. Practical and Ethical Issues During the research, access to data will be relatively easy because of the approaches that will be used. There are, however, some limitations that will be present in the whole process of collecting data. Though cluster sampling is a fast way of accessing information, it is limited in that it does not reflect the opinions of the majority. The data collected may therefore be or not be a reflection of the opinion of majority of the population. The second approach, the inductive approach, which is aimed at obtaining information from two managers at a time will have two fold disadvantages. Firstly, there is the possibility of information obtained from the managers during the interviews being biased because they might reflect on only the good things of the company. Secondly, it might be difficult to get an audience with some of the managers as they may not want to be interviewed. The data collected may also have some inefficiency. For example, it is possible that a new customer of Tesco PLC may be given the questionnaire to fill and the knowledge that they may have about the CSR activities of Tesco may be inefficient for consideration of the objectives of the research (Carlin & Louis, 2000). Timetable of Activities and Findings The first activity will be to identify the various the 6 regions that will be visited to collect data from. After this, we will list down all the Tesco stores that are available within the regions of survey. To make the travelling much easier, the various stores will be pointed out on a map and the distances from one store to another will also be noted. After this, the relevant authorities of the company will be contacted for permission to conduct the research in their premises to be granted. After the regions and stores have been identified, and the permission has been granted by the relevant authorities, the research team will begin travelling to that various regions. The research on each region will take approximately 1 week. This research process will be broken down in to stages. The researchers will collect data for a period of between 3 to 4 working days in a week. The group will divide itself in to two; one group will proceed to administer questionnaires to the various customers from the different stores while the other group will be interviewing the managers of the various stores and branches. The 1 week duration of research is inclusive of travelling from one region to the next. Therefore, the whole process of obtaining data from all the 6 regions is scheduled to take approximately 6 weeks if all the people participating in the feedback process are cooperative enough. After the data has been collected from all the 6 regions, it will need to be analyzed for the purpose of presenting it to the relevant stakeholders. The analysis of the data collected from research will take approximately 8 weeks. The reason why the analysis will take long is because it is necessary to compare the data collected from the field and that obtained from documented sources and then formulate an appropriate way in which data will be presented. After analysis, the findings of the research will be presented in two ways. First of all, the research will be presented as a report. This will give an account of how the whole research project was carried out and the problems that were encountered in the field. The second way in which data will be presented will be figuratively. Figure will be efficient as they will show the percentage of the population representative that believes CSR does have a positive impact on the profits of a company. Appendix 1) What does the term Corporate Social Responsibility (CSR) mean to you? 2) For how long have you been a customer of Tesco PLC? 3) Tesco PLC is a company that has been known to efficiently perform its corporate social responsibilities over the years. Has the company’s CSR’s consciousness impacted your buyer behaviors for the time that you have been a stakeholder of the company(Have you increased your spending due to the company’s CSR success)? 4) How has the CSR performance of Tesco PLC influenced the reputation that you have of the company (positive or negative)? 5) Do you believe that CSR has any kind of impact on the profit margins of a company? 6) With reference to your answer above, give (a) reason(s) why. References Brejning, J. (2012). Corporate social responsibility and the welfare state: the historical and contemporary role of CSR in the mixed economy of welfare. Farnham, Surrey, Ashgate Pub. Bryman, A., & Bell, E. (2007).Business research methods.Oxford [u.a.], Oxford Univ. Press. Carlin, B. P., & Louis, T. A. (2000).Bayes and Empirical Bayes methods for data analysis.Boca Raton, Chapman & Hall/CRC. Chandler, G. (2001). Defining corporate social responsibility: Ethical performance best practice. Canterbury, UK: Dunstans Publishing. Freeman, R. E. (2010). Strategic management: a stakeholder approach. Cambridge, Cambridge University Press. Saunders, M., Lewis, P., &Thornhill, A. (2007).Research methods for business students. Harlow, Financial Times Prentice Hall. Sawhny, V. (2008).Analyzing Corporate Social Responsibility Measurement Parameters. Institute for public relations. Schwartz, M. S. (2011). Corporate social responsibility: an ethical approach. Peterborough, Ont, Broadview Press. Tesco PLC, (2012). [Online].Available at: [Accessed on December 3, 2012]. Werther, W. B., & Chandler, D. (2011). Strategic corporate social responsibility: stakeholders in a global environment. Los Angeles, SAGE. Read More