Advantages and Disadvantages of Corporate Social Responsibility - Essay Example

Corporate Social Responsibility in Organisations Corporate Social Responsibility (CSR) is a technique for corporations to make gains for themselves while also benefitting humanity (Porter & Krammer, 2011). Therefore, the firms conduct their business in such a way that the business itself is ethical, amiable to the society and beneficial to the public in terms of development. The definition of CSR has been evolving from the classical view of philanthropy to the stress on the business society relations, particularly how the company offers to provide solutions to social problems. Currently, CSR is a concept whereby organisations take into consideration the interests of the society by being accountable for the effects of their activities on their clients, suppliers, employees, shareholders, people, other stakeholders as well as the environment (de Paiva Duarte, 2013). There are three CSR theories, which are interdisciplinary; utilitarian, relational, and managerial theories (Lindgreen & Swaen, 2010). Utilitarian theories emphasize on maximization of profit, hence related to theories of competitive advantage. The managerial theory on the other hand has the CSR approached internally; meaning that anything exterior to the business is taken into account for the firm’s decision-making. The Relational theory has to do with the complex firm-environment relationships. The implication here is that the firm-environment relationships form the focus of the CRS analysis. In the CRS, business in society comes up as a matter of interplay between the two. Thus, the relational theory is value based and interdependent between the corporation and mankind. This paper will cover discuss the importance of corporate social responsibility; its advantages and disadvantages. CSR is important to both the agency and the consumers in a number of ways: for companies, it helps them create a better public image, since their public image is at the mercy of their social responsibility strategies and how their customers are mindful of them. According to Cone Communications, 90% of the consumers would avoid doing business with corporations if there were no social responsibility plan (Caccioppe, Forster, & Fox, 2008). Studies indicate that firms heavily involved in funds and goods donation to Non-governmental and other non-profit making organizations and schools are likely to increase the likelihood of consumers buying their products. At the same time, a corporation that takes care to ensure that the primal matter used in its products are environmentally secure and the manufacturing process is sustainable is more eye catching to the society (Like & Celebrity, 2009). Corporations that form relationships with local media outlets are likely to have the stories offered to these media more covered. These relationships will in turn ensure better and more media coverage of the business. As a result of establishing these relationships, the company will ensure that only positive light is shed to them, and not bad news. This is because bad news spread very fast, and are likely to taint the corporation’s image to the public.CSR promotes a confident workplace environment since workers enjoy working for companies with good public images and are continuously in the media for better reasons. Since these employees will be happy working in these organizations, their output is likely to be very positive. There is a greater possibility of corporate partnerships, which are vital the corporation’s endeavours to the local community and also to a non-profit that may not have capital for major merchandising crusades. CSR plays a major role in community development directly or indirectly through helping firms and the public share the negative impacts of industrialization (Elijido-Ten, Kloot, & Clarkson, 2010). This has a correlation with the increasing limelight on marketplaces requiring more ethical business processes. For instance, there is a higher road tax in the United Kingdom for higher emission vehicles, lessening the burden of small vehicle owners among the citizens (Wang, 2010). Some corporations like Walt Disney are funding environmental conservation activities in South America and the African continent. CSR also ensures that there are closer links between the society and the nation. By changing the community’s perspective on the organization as not just a place for employment and production of goods and services, corporations and the community are likely to co-exist peacefully and harmoniously. CSR helps to get and nurture talents in the society. This is true particularly when the workers’ perception on the organization is bettered by the management that supports innovation, resulting to their loyalty and trust in the organization. Good worker attitude on the company leads to the community that treats the business as an important economic asset to the nation. The Corporate Social Responsibility aids in ensuring corporate sustainability goals (Tate, Ellram, & Kirchoff, 2010). The European Union has come up with a corporate sustainability framework, which diagnoses a dynamic set of economic, social and environmental objectives companies are heartened to accomplish. The Waitrose chain of supermarkets serves as a good example in the UK for setting its policies and laws and summarising how it is going to manage its environmental impact (Taylor, Pollar, Rocks, & Angus, 2012). Its report also summarises how it is working with its affiliates and local communities, and how its partners contribute to and share the returns of commercial success. The Corporate Social Responsibility is vital in environmental protection, as seen in small businesses in the UK which are seriously involved in social and environmental activities, and they have considered this a normal part of business progress. The Green Peace is a good example of CSR initiative aimed at benefitting the society in ensuring their rights towards realizing a healthy environment (Adeyanju, 2012). In 2013, Microsoft Corporation stood out as the best in corporate social responsibility programs. The corporation was awarded due to its philanthropic efforts (Kanig, 2012). Despite winning the award, the corporation boasts the meaningful programs and individual efforts by its employees who dedicated to refund the community. The corporation had included YouthSpark and 30th employee campaign in the year 2013. The YouthSpark is a network of hundreds of millions of youths with chances of furthering their education, employment and entrepreneurship. The 30th Employee Giving Campaign was celebrated in October 2012, with $ 1 billion employee contribution, the highest since 1983. On average, Microsoft employees in the US have volunteered 2.5 million hours of their time to causes they care about since the volunteer match program in that began in 2005. According to Dan Bross, Microsoft’s senior director of citizenship and public affairs, the corporation’s mission is to serve the needs of around the world. Microsoft has done this for over 30 years and is committed to positively influencing local societies and provides the youth with necessary technology for creation of a better future. Microsoft’s donations are aimed at helping charities clout technology for enhancement of their efficiency, effectiveness and innovativeness in their work. Since 2006, Microsoft in conjunction with Technology Trust has provided software donations to eligible UK charities. Over 1200 charities had gained from these donations by the end of 2013, and Microsoft had donated software worth over 100 million pounds. The corporation has also developed the Office 365 options for Charities, Low Cost Hardware, and Microsoft Digital Literacy Curriculum for charities. Microsoft treats its employees well by offering them decent working hours. Its flexibility with working hours enables the employees to work from home. The staffs are accorded a lot of respect and the performance appraisal for all its imperfections is very fair. No employee is fired because their project did not succeed, but they are judged for their individual work and on their success within the scope of the project. The code at Microsoft stresses on no excuses and focuses on performance. Performance is given a notable priority over gender, race and sexual orientation; all employees are rewarded for good performance and not on the above-mentioned factors. In case of major changes in the direction of the project, managers usually take into consideration the employees’ opinion before effecting the change. This provides the employees with a very encouraging and warm working environment since it makes them feel significant within the corporation. The working environment at Microsoft is characterised by highly committed employees since to them, their success is the company’s success, and success is necessarily not measured in terms of remuneration and stock, but their happiness emotionally. There is a free communication system whereby employees can freely report to the management when something goes wrong. The management usually addresses concerns raised by the employees, and the employees are always free to ask questions. The Walt Disney is another company that is well known for practicing CSR. The corporation has an obligation to give back to the community, which has helped it become what it is today (Culler, 2010). The corporation was named a leader in CSR in the year 2009 by the Boston College Centre for Corporate Citizenship and Reputation Institute. The Walt Disney’s focus is on the environment, society, labour standards and volunteerism. The firm gives to charity, and focuses more on natural calamities such as the Haiti earthquake in 2010. Disney Company won the Jane Goodall Global Leadership award in 2011, an award that honours a business that has taken meaningful steps to improve the world through sensible business. The company offers millions of tickets ton people to go and offer volunteer services in organizations of their choice. Part of the moves from three Disney nature films, Earth, Oceans and African Cats have financed re-aforestation in Brazil’s Atlantic Forest, ensured protection of 40,000 acres of coral reef in Bahamas and conserved about 50,000 acres of savannah wildlife in Africa. The Disney Corporation offers compliance and the Company’s Standards of Business Conduct and Ethics to all its workers and Cast Members all over the world. The training is meant to enable workers and Cast Members operate legally and ethically. The Walt Disney Company gives equal opportunity for all workers and job seekers regardless of their social status. The same policy applies to promotion, demotion, termination, remuneration, transfer and training. It is illegal at Disney Corporation for an employee to harass a colleague during business because of their sex, gender, race religion, age among other reasons prohibited by the law. There are three types of CSR, namely: altruistic, strategic and ethical CSR (Halme & Laurila, 2009). A good understanding of these types of CSR help firms set up their own social responsibility programs. There are organisations that focus on all the three of them whereas some focus on one or two of these areas. Altruistic CSR usually surpasses the ethical behaviour to deliberately grant time and/or money towards certain groups of stakeholders in spite of the fact that the time and money committed may eschew the profitability of the business. Altruistic CSR emboldens utilitarianism and offsets the Deontology theory; no wonder it is seen as unethical from a business point of view. Strategic CSR involves performing activities that are beneficial to the society besides making profit through goodwill. For example, a brewing company may invest in responsible drinking education rather than beer centred events. By so doing, such a company benefits the society with information while making profits in a friendly way. The Carroll’s four-part model of CSR is in form of a pyramid, with basic responsibilities closer to the bottom (Carroll & Shabana, 2010). A company’s economic responsibility is at the base of the pyramid, followed by legal responsibilities, ethical responsibilities, and philanthropic responsibilities at the top of the pyramid. Starting from the base of the pyramid, a company’s basic responsibility is its economic responsibility, which is making profit. Profit is what runs the business, and failure to make profit means an organization cannot sustain the employees. It also means that a company will not be able to think of corporate citizenship if it does not make money. Without making money, an organization cannot be able to fulfil ethical and philanthropic responsibilities, which according to the model are not the company’s primary responsibility. Legal responsibilities are requirements placed on an organization by law, such that as the company makes profit as its primary responsibility, it must obey all laws. Legal responsibilities include security, regulations to labour law, environmental law, criminal law, taxation among many other laws. Next after the Legal responsibilities in the pyramid are the Ethical responsibilities of an organization. After meeting the Economic and Legal responsibilities, the organization can now have its focus shifted to ethical responsibilities. A firm assumes these tasks because its owners think it is the proper thing to do. Some of the ethical responsibilities include environmental friendliness, fair remuneration among others. Lastly, at the top of the pyramid lies the last responsibility, the Philanthropic responsibility. It usually comes when the company is able to meet all the other four responsibilities. These responsibilities go beyond what is simply required of the business and may involve tying to assist the society. The corporation may decide to donate services to the social organizations, engage in environmental conservation practices like the Walt Disney or simply give money to charity. Some corporations are involved in nurturing talent in sports through sponsorships while others offer scholarships to needy members of society for study. The stakeholder model identifies groups in an organization, shareholders, workers, consumers and suppliers and tries to address their interests (Jamali, 2008). The model is basically centred in the organizational responsibilities, and asserts that the shareholders cannot meet their needs without satisfying to some extent the needs of other stake holders. Some scholars argue that an inclusive stakeholder approach makes sense commercially, since it allows the organization to optimize the shareholder riches while increasing total value added. Therefore firms according to this model should demonstrate social behaviour that satisfies the at least half of the needs identified for each stakeholder. There are four advantages of CSR, which include: protecting the relationship between employers and employees, the employees are likely to work in an organization longer if their rights and welfare are guaranteed. For instance, Microsoft offers software developers a lot of personal freedom over both the work and work environment. Treating employees in a socially responsible manner through modifications in the company’s internal culture like Microsoft does is likely to boost their morale of working for the company. CSR ensures that an organization gives back to the community by helping address global social and environmental issues. This in turn attracts consumers who want to be associated with a certain philanthropic company. Microsoft’s 80 plus CSR score in 2013 indicated that 64% of the clients would purchase the corporation’s products, 59% would approve them and 50% were willing to welcome the company to the society. Further, the corporation would employ 47% whereas 35% would have their resources invested in the company. CSR provides an environment in which employees respected, which is non discriminatory that boosts the workers’ morale, encourages teamwork and in turn enhances their efficiency. The employers benefit from the far reaching influences in the long run for a favourable working environment. For instance, a favourable environment will ensure low employee turnout hence saving resources that could be used for hiring and training. The non-discriminatory policy adopted by Walt Disney Company not only provides a favourable environment, but also makes them feel influential and significant within the company. In the same way, the freedom of employees reporting anything-wrong going on in the company or the art of being consulted is of much benefit to the employees’ psychology. However, CSR has four disadvantages, which include it is difficult to determine the profit of investment in CSR. This is because CSR’s basic requirement is that companies should recognize stakeholders outside the shareholders. Shareholders sometimes resist so such investments as they do not create immediate financial profit. Determining the gains on investment from social and environmental programs can be difficult, making detection of bottom line benefits a challenge. Secondly, it cannot guarantee all companies participation in CRS, since investment in CSR may make a firm lose its competitive power. This is because a company invests most of its resources on taking care of the environment and its community. The rival company that does not invest in CSR will retain its resources for making other business activities. Thus the company that invests in CSR loses its competitive power. Companies may focus on human rights, environmental sustainability and community development too much resulting to loss of focus. Since the guidelines for CSR have expanded beyond the initial emphasis of the customer, CSR initiatives can be too expensive for a company. Requirements on human rights, environmental sustainability and community development rather than focus on the customer may make companies lose focus, besides being too costly for individual companies. Despite its short comings, CRS still stands out as the best approach to ensuring a successful business since as organizations give back to the community, they in a way acts as a promote their products. The organization can nurture talent through encouraging innovation and sponsoring sporting activities, leading to the prosperity of the community, which will then embrace the products of that particular company. Therefore, such an organization will have created a public image, attracting more customers. However, CSR can be controversial since what is given back to the society may turn out to harm them. For example, a tobacco-processing firm may engage itself in funding community projects. Such a firm would create a public image, which will attract many to buy and smoke cigarettes. This is injurious to the environment and the community at large since passive smokers is the most affected group of people. References Adeyanju, O.D., 2012. An assessment of the impact of corporate social responsibility on Nigerian society: The examples of banking and communication industries. Universal Journal of Marketing and Business Research, 1(1), 17-43. Caccioppe, R., Forster, N., & Fox, M., 2008. A survey of managers’ perceptions of corporate ethics and social responsibility and actions that may affect companies’ success. Journal of business ethics, 82(3), 681-700. Carroll, A. B., & Shabana, K.M., 2010. 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