Application of Corporate Social Responsibility in a Company - Coursework Example

Application of CORPORATE SOCIAL RESPONSIBILITY in a Company Introduction The concept of social responsibility per se is not a new one. The creationof artificial beings to do business could not be conceived merely as instruments of profit generation for their owners. At the core of its existence is always the acknowledged purpose to improve the lives of the general public through the delivery of goods and services. However, in the past, the benefit to the community was always linked to the main business of the firm. Corporate Social Responsibility (CSR) as it is now known has taken on dimensions that go beyond the central purpose of the firm, and have elevated the function into one of corporate citizenship. Corporate Social Responsibility Defined Throughout the years, the various studies on the topic of “corporate social responsibility” have variably ascribed to it several meanings. Fitch defined corporate social responsibility, or CSR, as “the serious attempt to solve social problems caused wholly or in part by the corporation. The problem concept is operationally defined, and social problems are distinguished from non-social problems" (1976, p 38). In 1986, Murray and Montanari viewed CSR as existing within the context of the corporation’s marketing function. According to their study, corporate social responsibility is conceptualized as a "product" offered to key publics of the firm. The CSR approach is designed with the aim of increasing the firms relative competitive advantage, and enhancing the commercial benefits of socially responsive behaviours which the firm may adapt. (p. 815) As the concepts of social responsiveness and corporate citizenship took hold on business firms, a greater assimilation of business’ commitment to the general welfare found its way into the visions and missions of corporations, further integrating CSR with the firms’ strategic business goals. As time passed, social responsibility became more and more absorbed as part of the main goals of business until it came to a point when, for once, the value to stakeholders ranked at least equal to, if not at secondary importance to, the role of the firm as agent of social change. For example, Starbucks’ mission statement articulates six guiding principles, which mentions its commitment to contribute positively to its communities and the environment (the fifth principle), before it mentions its recognition of profitability as essential to its future success (the sixth principle). (Starbucks Mission Statement) The change in peoples’ perception of CSR also reflected in academic studies of recent vintage. In 2004, White views CSR as the strategy by which the organization actively promotes the interests of all stakeholder groups, or at least, to accommodate them. (p. 277). Likewise, Dess (2007, p. 22) saw social responsibility as that “expectation that business or individuals will strive to improve the overall welfare of society”. Both definitions express the general expectation of the public that business will work for the benefit society as a primary goal, and the implicit acceptance of business of this expectation. Compare this with Fitch’s definition which stresses CSR only as the means to repair the problems a corporation causes, or that of Murray and Montani which acknowledges CSR only as another “product” which the firm markets to its customers. CSR is, furthermore, concerned with meeting its stakeholders expectations. But since the different stakeholders of the business have different interests (employees, customers, shareholders, suppliers, etc.), CSR also addresses considerations as to how these conflicting demands of different stakeholders can be reconciled – for instances, shareholders aim for extra profit, employees additional pay, customers lower price, all considerations which are contrary to each other). (Johnson and Scholes, 2002 p. 220) CSR and Profitability Many studies have been conducted to test the relationship between CSR and a firm’s profitability and increase in shareholder value. The reason is fundamental to the reason for doing business. CSR programs require additional costs; the firm cannot undertake activities aimed at community welfare if it does not allocate a budget to defray the materials, manpower, equipment and other things needed to accomplish the activity. However, since the CSR activities do not per se directly advance the production and marketing efforts of the main business of the firm, then there is the perception that CSR expenditures are a drain on the firm’s resources and deviate from its purpose, that is, to create value through its products. The exception would be if the CSR contributes to the company’s greater value through an indirect way. CSR as applied in FedEx One of the international corporations that have conducted their business in complete accord with its corporate social responsibility is FedEx, which has been honoured with the 2008 AmCham Shanghai Corporate Social Responsibility Award, and which had been adjudged 13thof the top 50 companies (out of 200 companies surveyed) in the Corporate Social Responsibility Index. (See http://www.bcccc.net/). The stated FedEx mission is “to actively support and provide a valuable benefit to the communities it serves, and to strengthen its global reputation through strategic allocation of its people, resources and network.” (Fedex Social Responsibility Program, see ref.) The company forms partnership projects with global and grassroots organisations in Europe, the Middle East, India and Africe. In these locations, FedEx extends tactical and financial support under four specific areas that are aligned with the combined strength of the FedEx organisation, as well as its employees across the region. These four areas are identified in the official company website (FedEx Social Responsibility Program) as follows: 1. Emergency and Disaster Relief FedEx contributes funds and logistics/ transportation support for emergency and disaster needs, while working with local and international relief agencies, during times of crisis. 2. Pedestrian and Child Safety Safety is a core FedEx value, and thus has established a partnership with the Safe Kids Foundation, India, in the promotion of child and pedestrian safety. It also supports and coordinates with other organizations that work to enhance the safety of children and road-users.  3. Education FedEx views education as a vital element in the future of the communities as well as to FedEx itself. The company therefore joins civic and non-governmental organisations that pioneer educational programs such as the FedEx Brake Road Safety Academy in the UK.  FedEx also supports youth development organizations worldwide that pursue educational programs in the following areas: environment, cultural diversity, technology, global economics and trade. 4. Health and Human Services FedEx also endeavours to support health and human service needs. The company has joined forces and forged partnerships with Foundation de France, Child Relief and You (CRY), India, and SOS Kinderdorf in Germany. Through the programs run by these institutions with FedEx support, it is hoped that the health and wellbeing of the young and the needy segments of society shall be more closely addressed. Conclusion Through the last two hundred years, in the evolution of modern business corporations, there has been a gradual but unmistakable shift in the orientation of business goals. The change has progressed from maximizing shareholder value, to maximizing stakeholder value. (Sundaram and Inkpen, 2004, p. 359) It is further clearly evident that FedEx, as well as other companies which have embraced the tenets of modern business, have directly committed to the furtherance of social interests in matters that are not primarily contemplated to advance the interests of the business. This is the true measure of corporate social responsibility. 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