Will CSR Continue to Be Ignored as Businesses Try to Get Out of Crisis - Research Paper Example

 Will Corporate Social Responsibility (CSR) continue to be ignored as businesses try to get out of the economic crisis? Introduction Economic crisis refers to the condition where the resources such as an employee and wages have gone higher due to increased cost of living, increased cost of doing business, the rapidly fluctuating value of the world currencies such as the dollar among others. As a result of this phenomenon, most businesses are evidently finding their operations significantly affected. As a result, there have been increased retrenchments and forced retirements together with massive lay-offs by the corporate, and even some opting for austerity measures. Some companies and businesses, which used to participate in the charity events of the community where they had their business interests, have been tempted to back off. This raises questions in the minds of many people about the place and future of CSR (Horrigan 2010, p. 12-30). Corporate Social Responsibility (CSR) is an obligation for a business to pursue the long term goals in the society beyond those stipulated by law. The desire of all business establishments is the making of profit. However, this goal seems threatened whenever the return on investment and return on sales show a discouraging trend. The main aspects of any business are to enhance productivity of the human resource and the creation of a positive image of itself and become a household name, taking over the hearts and minds of its main consumer base (Anderson, 2007). Role of corporate social responsibility CSR involves, among other things, the need for the business to conduct the operations ethically and also in the interest of the larger and greater community from which the business operates. Therefore, it is necessary for the establishment to ensure that they offer higher quality products than their competitors. As a result, the organization has more options to ensure that they enhance their consumer brand loyalty. This will then ensure that the most loyal consumers will still do business with the enterprise rather than shop around for better offers by competitors. In the long run, the services and products offered to the consumer will not only make the business thrive in economic crisis, but will also enhance the profitability of the business, thus saving the enterprise the possibility of running out of operations (Horrigan, 2010, p. 12-30). On the other hand, ethical issues with regard to the employee or human resource management are of considerable importance. The business should also ensure that it looks at every employee first as a person deserving of respect and fair treatment and not as another input to the production practices. Therefore, it follows that CSR plays a significant role in enhancing the companies continued success in the face of challenges such as economic crisis. Therefore, instead of businesses ignoring this technique due to the economic crisis, they should enhance their CSR programmes (DeTienne & Lee 2005, p. 359-376). Society is also changing so rapidly in its priorities and expectations. In the olden days, the society consisted of several groups of people related by blood. These people shared a lot amongst themselves. These groups had elderly people and the young people who mingled together so frequently. There was ideally no pressure to have recreational facilities as people did a lot of work than fun. In the present era, issues such as urbanization and civilization have pushed the extended families into wider zones. In that spirit, many families are presently made up of the father, mother and their children. They live in the urban setting where their lives are more controlled by the desire and drive for wealth accumulation than in any era seen in the past. As a result, demand for social amenities and recreational facilities supersedes what governments can avail. In such a scenario, it is evident to find people looking for ways of unwinding. Some go to unwind by playing the readily available video games and computer games (Garriga & Domènec 2004, p. 51-71). Studies also show that a significant number of people are becoming victims of lifestyle diseases such as cancer, diabetes, obesity, heart and lung diseases among others. These diseases are associated with the rapidly changing trends. As every other person feels the heat of such changes, the business world is not left out. The employees may be unproductive as the stress levels, and pressure builds up. This, therefore, would end up complicating the economic fate of any business in these hard economic times. The only way and option left for these businesses is to ensure there is not discontent in their production levels. Thus, the business will have no feasible alternative rather than responding to these emerging societal priorities and expectations. This strengthens the need for the business to invest in the CSR rather than withdraw support for the same (Garriga & Domènec 2004, p. 51-71). When a business acts in advance in accordance with certain regulatory requirements, their operations have a near full percentage of success. While it is recommended and advisable to act voluntarily in accordance with the law, some businesses find it an uphill task to respect regulations. Such businesses ignore the enormous financial burden it exerts on their operations and financial pockets. In the actual sense, all businesses prefer to have large financial returns on investment so as make the shareholders happy since this assures them of high dividends at the end of the financial year. The equation gets more unbalanced during hard economic times, and as this business resorts to austerity measures, those activities that do not seem to be directly increasing the returns on investment are always the first ones to be ignored (Goodman 2007, p. 78-90). One thing that these businesses fail to understand is that the advertisements will give half the outcome that CSR practices can ordinarily give. Those legal requirements would mean a waste at such times. The question is or should be: how much more will be spent in trying to do damage control as the customers are given a different image of the company of their trust? It is worthy of any business to act willingly ahead of any regulatory confrontation. It does not help the company to have expensive regulatory problems to address. These would allow the business more resources and time to focus on the income generating aspects of the business than wait to do repairs on the image destroyed. Customers have a tendency of associating with legally and regulatory compliant businesses because it assures them of success and dependability of the business. Therefore, it will be a business suicide to ignore such a tool on the basis of dwindling business fortunes (Goodman 2007, p. 78-90). Any business manager would admit that among the hardest people to satisfy are the shareholders. They never want to understand how hard it is to raise the huge dividends they receive at the end of any financial year, yet they would prefer the firm operated as they deem fit. In that case, their greatest concern is on how to minimize expenditure and maximize profits. The customer, on the other hand, demands that the business should not only care about its interest. They will, at times, demand that the business participates in their financial wellbeing, educational progress, health programs, and creation of recreational and social amenities among other things (Hunnicutt 2009, p.89-110). To the customer, the participation of a business in Corporate Social Responsibility is non-negotiable as it is an evidence of good faith and a reward for their loyalty to the brand name, failure to which competitors have new clients to whom they can prove a point. With all these conflicting interests that have financial implications on the business operations, there are certain options available to the management. Therefore, CSR provides a platform for the business to balance the unlimited interests of the shareholders against those of the wider community. After all, the business exists to cater for the people's needs by providing goods and services (Timpere 2008, p.90-100). In other circumstances, the shareholders may recommend the production of a product that when sold to the customer may have far reaching health and other implications. Such may include the release of defective automobiles that have higher break failure problems. To the shareholders, recalling such products would be costly and incur far reaching image destruction problem. As such, they would prefer to ‘let the sleeping dogs lie’ at the expense of the customers. CSR will thus demand that before such are left in the market or even the industrial waste that would increase cost of production if properly disposed off are left, the interest of the wider community must be factored. This ensures the growth and sustainability of the business in hard economic times (Hunnicutt 2009, p.89-110). Everyone desires to belong; businesses are not left out in such desires. Any business will wish to be recognized as a good ambassador for their countries of origin, their brands and even to present the best image possible to their consumers. This enhances the survival of the business in the face of adversities (Jenkins 2005, p. 525-540). Corporate Social Responsibility (CSR) also entails the continuing voluntary commitment by business and even businesspeople to behave ethically. This then would mean investing on the people and community so as to enhance their quality of life. When people are financially empowered, they are able to spend on goods and services. As such, they increase the size of the market for the business to serve (Shaw 2009, p. 565-576). Looking at Corporate Social Responsibility as an instrument for value creation would mean that CSR should be employed as a way of enhancing innovation and promoting sustainable business model. This has far-reaching fundamental, strategic and operational impact in the sense that it will enhance shared values between the business and the community. This will then ensure competitiveness and foster innovation as the community knows and appreciates what the business does. In some cases, the community may propose a totally different line of investment since they can identify the gap that exists in the market through innovation. Thus, they promote a sustainable business model (Kreng & May-Yao 2011, p. 529-541). Since businesses have overwhelming presence in the lives of the community, they will be integrated into the community, and this provides safety and security to the business. CSR also enhances development of human capital, which is critical in the developing countries. Instead of expecting the business to close down due to the economic crisis, the available human capital will provide the necessary innovations and develop ideas that would ensure the business remains afloat in such times (Kreng & May-Yao 2011, p. 529-541). As a risk management tool, CSR will foster compliance and provide the business with high strategic and operational impact. This will mitigate the operational impacts of such periods as economic crises. It will ensure that all the operational practices that would otherwise demand withdrawal from business are cautioned; this is because the community will rise to defend the business survival in the face of adversity. This will also mitigate the operational risks associated with poor business through enhancing community relationships. As a result, all the risks that the business may end up facing are properly mitigated way before they even manifest themselves, thus leaving the business with ample time and resources to address other pressing issues and areas of the business (Maloni & Michael 2006, p. 35-52). Corporate Social Responsibility also enhances the building and sustenance of external relationships. These relationships may ensure the business attracts the most productive and self motivated individuals into its workforce. This feature establishes the business where others have failed (McWilliams & Donald 2000, p. 603-609). Conclusion In view of the above arguments, businesses cannot continue to ignore corporate social responsibility in the face of economic crisis since this would be demeaning. Businesses can only do that at their own expense. For any company that experiences these economic hard times, the cure would not be to withdraw from the community. Rather, they should involve the community in ensuring their survival. It will be dangerous for businesses to ignore this technique as they try to get out of the economic crisis. Thus, businesses should not continue not continue to ignore Corporate Social Responsibility even as they strive to get out of the economic crisis. References List Anderson, C. (2007). Corporate Social Responsibility, London, SAGE. DeTienne, K. & Lee, W. (2005). The Pragmatic and Ethical Barriers to Corporate Social Responsibility Disclosure: The Nike Case. Journal of Business Ethics 60(4). pp. 359-376. Garriga, E. & Domènec, M. (2004). Corporate Social Responsibility Theories: Mapping the Territory. Journal of Business Ethics 53(1/2). pp. 51-71. Goodman, J. (2007). Corporate Social Responsibility, London, Ark Group. pp. 78-90. Hunnicutt, S. (2009). Corporate Social Responsibility, Detroit, Greenhaven. pp. 89-110. Horrigan, B. (2010). Corporate Social Responsibility in the 21st Century: Debates, Models and Practices across Government, Law and Business, London, Edward Elgar Publishing. pp. 12-30. Jenkins, R. (2005). Globalization, Corporate Social Responsibility and Poverty . International Affairs 81(3).pp. 525-40. Kreng, V. B. & May-Yao, H. (2011). Corporate Social Responsibility: Consumer Behavior, Corporate Strategy, and Public PolicySocial Behavior and Personality. An International Journal 39 (4). pp. 529-41. Maloni, M. J. & Michael, E. B. (2006). Corporate Social Responsibility in the Supply Chain: An Application in the Food Industry. Journal of Business Ethics 68(1).pp. 35-52. McWilliams, A., & Donald, S. (2000). Corporate Social Responsibility and Financial Performance: Correlation or Misspecification. Strategic Management Journal 21(5). pp. 603-609. Shaw, W. H. (2009). Marxism, Business Ethics, and Corporate Social Responsibility. Journal of Business Ethics 84(4). pp. 565-76. Timpere, A. R. (2008). Corporate Social Responsibility, New York, Nova Science. pp. 90-100. Read More