Samsung's Corporate Social Responsibility - Essay Example

? Samsung CSR Issues of the of the Executive summary Corporate governance can be described as a systemthrough which corporate controlled and directed. The government defines a structure specifying distribution of responsibilities and rights among various corporate participants such as, managers, directors, creditors, shareholders, regulators, auditors as well as other stakeholders. It also specifies various procedures and rules for forming decisions in organizational and corporate affairs. Corporate governance and social responsibility have become important part of organization’s strategy. The current report will throw light on the critical aspects of corporate governance and corporate social responsibilities of Samsung Company. While corporate governance is majorly concerned with the internal issues of an organization, corporate social responsibility is that department which deals with the external environmental factors affecting the company. However, these external and internal relationships are mutually inclusive as well as intertwined. The report will analyze the two critical corporate governance issues which the company has initiated and is following. 1. Introduction Corporate governance can be described as a set of guidelines, rules, regulations and procedures which help an organization to run smoothly and take care of the stakeholders (Steiner & Steiner, 2009). These stakeholders include customers, employees, society, government, members, promoters, investors as well as all other members who are directly and indirectly associated with the organization (Gruiseri & Seppala, 2010; Ferrell, 2004). As a result of the increasing awareness among consumers and society regarding environment, health and safety, organizations have also started considering investing back into the society. Thus, the concept and application of corporate social responsibility have evolved (Allen, 2005). The current paper will explore corporate governance as well as corporate social responsibility issues of Samsung Company. Two issues will be taken in specific in order to be discussed in detail. The study will also analyze the firm’s contribution as well as interest in improving corporate governance through these activities. Few of the other noticeable issues will also be discussed and analyzed. 2. Samsung’s CSR overview The general objective of Samsung’s CSR is to improve the conditions across the globe with the help of its various social programs contributing to the environment as well as people. Corporate sustainability includes environmental, economic as well as social performance of the organization. At present, the company is involved in various CSR activities such as, maintaining harmony among the society, people and environment, green management, social contributions, partner collaborations, integrity management and also, environmentally sustainable services and products. The CSR strategies of Samsung can be summarized as follows a) Relevant focus: Samsung has been focusing on developing the lives of numerous children as a part of its philanthropic umbrella across the globe (Bebchuk & Hamdani, 2009). The program has supported STEM educational campaigns which are critical for the workforce needs of Samsung. The various products which are utilized from the portfolio of the organization are also a relevant example of the numerous ways by which the needs which are expressed by the educator are met (Samsung, 2013d). b) Partnerships: In order to contribute to the communities, Samsung has partnered with various government organizations such as, NEEF (National Environment Education Foundation) and PTA (National PTA). Through the involvement with these government agencies, the brand was assured that real needs of these communities are met with and it is able to impact the social lives in a practical manner (Samsung, 2013c). It also helps the company to better understand the sensitivities of parents and teachers and execute these programs in an enhanced manner. Also, the company is able to connect with its desired audience which is children and youth (Waddock & Graves, 1997). c) Participation: The company’s participation in various CSR activities is not only granting products or funds, but the organization is also well-orchestrated with participatory activities such as, producing videos, writing essays, online voting and sharing of social posts (Samsung, 2013b). These processes not only broaden Samsung’s support for community development, but also ensure that the willing participants are involved in these activities. 3. Two strategic issues The two strategic issues which have gained critical importance for Samsung Company are environmental sustainability and education for children. 3.1 First issue Samsung is engaged in many environmental initiatives. One of the visions of the company is to give back to the community. The brand believes that since it utilizes various natural resources in order to sustain and grow, it is the responsibility of the organization to return favors in order to maintain a sustainable balance. Environmental management involves a series of steps which determine the critical nature of the issues and strategies to minimize their impact. The first stage involves identification of critical issues. The second step is risk analysis where the company looks into the physical risks, regulatory risks, indirect risks as well as cultural and social risks. After that, the brand analyses its internal competency levels as well as gap analysis. Internal significant and stakeholder’s interest are evaluated and development of long term as well as short term strategies is established. The major environmental initiatives of Samsung include development of eco-conscious products, recycling products as well as reducing the carbon footprint in the environment. The importance of the company’s environmental sustainability issue can be derived from the fact that it is ingrained in the basic philosophy undermining Samsung’s vision and objectives. The eco-conscious products manufactured by Samsung are energy efficient, besides helping to reduce the overall carbon footprint. For example, the LED technology used by Samsung generates less waste and reduces energy consumption. The company also carries out external and internal environmental audits to monitor and determine the present status of green management programs and fix potential problems (Pava & Krausz, 1996). The company is also engaged in Green Management in which the overall impact of technology on natural environment is closely monitored. Samsung follows a three stage policy of protecting, conserving and renewing. Protection is a prevention stage where the company is involved in manufacturing innovative and smart designs, so that minimum energy is consumed. The RD (Recycling Direct) program of Samsung ensures that consumers are able to recycle their old goods and electronics in a convenient manner. In order to keep its financials regulated and ethical, the company also conducts cost management audits for its environmental programs. Another important environmental issue is climate change. The company has been involved in the reduction of green house gases by establishing gas treatment plants, improvement of equipments in the facilities and overall recovery of the waste products. 3.2 Second issue The second issue which takes priority in the corporate governance initiatives of Samsung is the improvement in the lives of underprivileged children across the globe. The corporate activities involving children include employing and training individuals from regional committees, providing support to underprivileged children financially, building schools for the children to have access to education and establishment of various communal facilities. Samsung has been involved in raising the overall quality of living for people around the world. The company applies its innovation, resources and technology to advance the health and education of children worldwide through global citizenship initiatives. The most important initiative is SHC (Samsung Hope for Children). It is one of the methods through which Samsung utilizes its innovation for the support and development of individuals across the globe. The Initiative is spread across 79 subsidiaries and more than 236000 employees have partnered with well-known non-profit organizations across the globe, with the objective of initiating a positive change (Samsung, 2013a). By supplying products of Samsung, giving financial support as well as lending expertise, the brand is able to provide numerous children with the access to mentorship, education, leadership skills and various life-saving medical management skills (Mcguire, Sundgren & Schneeweis, 1988). Apart from developing schools, Samsung has also established many libraries in various communities. The company has been continuously involved in rebuilding neglected schools and libraries across the globe. The project had started in the year 2012. For book donations, the company is running a parallel program to give out books as charity. Samsung has also started building technical campuses near major project sites, so that local women and men can be given basic training skills such as, carpentry and wielding. It is clear that through these initiatives, Samsung is targeting its future audience, children and youth. Thus, the company is also involved in providing employment opportunities to numerous graduates. 4. Discussion and Findings Ethical responsibilities as legal practices have yet not been codified into law system. Members of the society expect organizations to act in a manner which is fair and correct according to them. Since businesses organizations are present at the top of the pyramid, they have a social as well as philanthropic responsibility towards community. The basic fundamental of corporate governance is that companies are expected to be ethical corporate citizens and contribute towards improving the overall quality of life (Bebchuk, Cohen & Ferrell, 2009). Multinationals and their various operations had begun to be monitored and scrutinized by numerous society segments right from early 2007 (Psaros, 2009). As a result, corporate governance as well as CSR has become an important element in the decision making process. Following on this concept, Samsung has tactfully ventured into those CSR activities which have helped the organization to gain an international reputation (Wood, 1991). The organization emphasizes on utilizing its strengths, resources and capabilities in order to benefit various local and scarcely privileged communities as well as helping families and children in need (Margolis & Walsh, 2003). Individual employees and managers are encouraged to participate in the numerous volunteer programs organized by Samsung, thereby contributing to the society. Samsung also contributes and communicates with various local communities through outreach programs, mentoring and employee donations. The company’s involvement in education for children across the globe is not only commendable, but it has been noticed by some major governments too (Heracleous, 2008). However, the practice of CSR and corporate governance was not able to prevent the unethical practices followed by Samsung in few of its plants (Bhagat, Bolton & Romano, 2008). It was found out the facilities and manufacturing plants were following unhealthy work environments. They also paid very low wages to the workers in China and made them overwork. Even though Samsung has tried to deviate and cover these issues, they have invariably become national news. The above situation demonstrates a critical area where the company needs to improve its ethics and corporate governance (Schuler & Cording, 2006). It has also been observed that the company has been constantly criticized for copying from other mobile companies. Samsung has been sued many a times by Apple for copying the former’s models, designs and applications. 5. Conclusion From the above findings it can be said that though Samsung has been able to create an impression as an organization with high corporate governance, it is not free from unethical activities. In an organization, these activities can be perpetuated by individuals or by a group of individuals operating with unethical practices (Watson, 2007). However, it is the responsibility of the organization as a whole to monitor these inconsistencies. Any neglect in terms of code of conduct or ethical behavior inside the corporation might result in forming a negative image of the company. One of the most critical evaluations which have occurred in the above study is that most of the present organizations are so focused on building their external image that they tend to neglect their internal work environment (Moon, Crane & Matten, 2005). As a result, the organization has faced many trials and legal obligations. Even though external CSR focus is important, organizations should not undermine the critical internal factors. Thus, Samsung should also take strict steps for violation of the code of conduct by the employees as well as managers. The company can also establish training and development programs where company employees will be trained on how to conduct ethical behavior and the various benefits of it (Porter & Kramer, 2006). Presenting oneself as a social contributor is important for organizations. However, it is much more critical to understand the nature of internal management and work ethics. Thus, for an organization to grow internally as well as internationally, it is critical that work ethics and internal CSR is given as much importance as external corporate governance. References Allen, F. (2005). Corporate governance in emerging economies. Oxford Review of Economic Policy. 21, 164-177. Bebchuk, L.A. & Hamdani, A. (2009). The elusive quest for global governance standards. University of Pennsylvania Law Review, 157, 1263-317. Bebchuk, L.A., Cohen, A. & Ferrell, A. (2009). What matters in corporate governance? Review of Financial Studies, 22, 783-827. Bhagat, S., Bolton, B.J. & Romano, R. (2008). The promise and peril of corporate governance indices. Columbia Law Review, 108, 1803-82. Ferrell, O.C. (2004). Business ethics and customer stakeholders, Academy of Management Executive, 18(29), 126-129. Gruiseri, P. & Seppala, N. (2010). Business Ethics and Corporate Social Responsibility. New Jersey: South-Western Cengage Heracleous, L. (2008). What is the impact of corporate governance on organisation performance? Corporate Governance: An International Review. 9(3), 165-173. Margolis, J.D. & Walsh, J.P. (2003). Misery loves companies: Rethinking social initiatives by business. Administrative Science Quarterly, 48, 268-305. Mcguire, J. B., Sundgren, A. & Schneeweis, T. (1988). Corporate Social Responsibility and Firm Financial Performance. Academy of Management Journal, 31: 854 – 72. Moon, J., Crane, A. & Matten, D. (2005). Can Corporations be Citizens? Corporate Citizenship as a Metaphor for Business Participation in Society. Business Ethics Quarterly, 15(3): 429 – 53. Pava, M. & Krausz, J. (1996). The Association between corporate social responsibility and financial performance: The paradox of social cost. Journal of Business Ethics, 15(3), 321-327. Porter, M. E. & Kramer, M. R. (2006). The link between competitive advantage and corporate social responsibility. Harvard Business Review, 12, 1-13. Psaros, J. (2009). Australian Corporate Governance - A review and analysis of key issues. New Jersey: Pearson Prentice Hall Samsung. (2013a). Sustainability report 2013. Retrieved from http://www.samsung.com/us/aboutsamsung/sustainability/sustainabilityreports/download/2013/2013_Sustainability_Report.pdf Samsung. (2013b). Corporate social responsibility. Retrieved from http://www.samsungengineering.com/sustainability/corporate/project/suView Samsung. (2013c). Hope for children program. Retrieved from http://www.samsung.com/us/aboutsamsung/citizenship/hopeforchildren/ Samsung. (2013d). Corporate governance. Retrieved from http://www.samsung.com/us/aboutsamsung/investor_relations/corporate_governance/ownershipstructure/ownership_structure.html Schuler, D. A. & Cording, M. (2006). A Corporate Social Performance: Corporate Financial Performance Behavioural Model for Consumers. Academy of Management Review, 31(3): 540 – 58. Steiner, A. & Steiner, J. (2009). Business, Government and Society: A Managerial Perspective, Text and Cases. New York: McGraw Hill Irwin. Waddock, S. A. & Graves, S.B. (1997). The corporate social performance financial performance link. Strategic Management Journal, 18(4): 303-319. Watson, T. (2007). Reputation and ethical behaviour in a crisis: Predicting survival, Journal of media Studies.11 (1), 10-30. Wood, D. J. (1991). Corporate Social Performance Revisited. Academy of Management Review, 16: 691-718. Appendix I Case between Apple and Samsung Both Apple and Samsung belong to same industry and are arch rivals, selling almost similar products. Both companies conduct general meetings with the objective of keeping the shareholders informed. Briefing the investors about various developments of the organization is an important part of these meetings. However, there are some differences on the methods implemented by the two companies in terms of CSR implementation. Samsung has been able to create a flexible schedule for work namely, ‘Work Smart’ which helps employees in maximizing their work performance. Apple on the other hand, conducts various developmental programs in order to improve the knowledge of its employees in various topics and subjects. Samsung has established itself as a social organization, helping underprivileged and poor children worldwide with their education and living. Apple, on the other side, is more focused on supplier development programs, where it promotes supplier diversity as well as disadvantaged companies. Both companies have rigorous auditing processes occurring annually, where the companies have to comply with various regulations and guidelines regarding worker’s safety and health, human rights and labor, child labor and environmental sustainability. It is difficult to conclude on who is benefitting more (or less) from these CSR activities. However, some of the earnings of shareholders are dedicated towards CSR initiatives. Although both Apple and CSR have certain flaws in the corporate governance and CSR activities, they are continuously developing and evolving in terms of strategies and implementation, so that they are trusted and involved in the overall welfare of the society. Appendix II Figure 1: Samsung CSR and Corporate Governance Vision (Source: Samsung, 2013a). Figure 2: CSR initiative “Education for Children” (Source: Samsung, 2013a). Figure 3: CSR contributions around the globe (Source: Samsung, 2013a). Figure 4: Global environmental certifications (Source: Samsung, 2013a). Figure 5: Green Management (Source: Samsung, 2013a). Figure 6: Development of ecological products (Source: Samsung, 2013a). Read More