Business Ethics and Corporate Social Responsibility - Essay Example

Cooperate social responsibility CORPORATE SOCIAL RESPONSIBILITY Introduction Corporate social responsibility refers to a company’s sense of responsibility towards the community and the environment (both social and ecological) that they operate. Companies tend to express this through a number of ways including pollution and waste reduction processes, social and educational programs and by getting back adequate returns from the used resources. Building a reputation as a responsible business and one that is concerned with societal affairs sets that business apart. Companies always portray favoritism to those suppliers who demonstrate responsible policies, since this can influence the perception of customers. It is quite apparent that some clients do not just prefer to deal with responsible companies but insist on it (Abbott & Monsen 1979). An organization’s implementation of CSR goes past compliance and engages in activities that seem to further some social ethics beyond what is expected by the law and the interests of the firm. CSR aims to embrace responsibility for actions of the various corporate businesses and encourage a positive influence on the environment and the stakeholders including investors, consumers, employees, communities and others. Nowadays almost every company displays a level of commitment towards to the society that usually goes beyond legal requirements. Due to its benefits, the companies are highly motivated in purposefully and actively assuming corporate social responsibility. The larger the company, the more the capacity it has at its disposal, and more often they become involved. Companies should be required to take up CSR initiatives as they benefit both them and the society, in the end (Branco & Rodrigues 2006). There are different types of CSR, namely: Community-based CSR: here businesses work with other organizations to improve the quality of life of those in the local community; Environmental CSR: here the focus is on eco-issues such as climate change; Human Relation based CSR: these are projects that improve the well-being of the staff; Philanthropy: here businesses donate money for a good cause, usually through a charity partner; Common Actions. Common CSR actions include: Community involvement: This can include providing volunteers, employing local workers, raising money for local charities, engaging in fair trade practices, supporting local economic growth, etc. Environmental sustainability: reusable materials, waste management, recycling, reducing paper use and adopting and renewable energy water management (Carroll 1999). Ethical marketing: Companies that conduct ethical marketing place a higher value on their customers and respect that they are people who are ends in themselves. They by any chance do not try to advertize falsely or manipulate potential customers. This is significant to those companies that to be viewed as ethical. Importance of Corporate Social Responsibility Satisfied employees Employees always seek for some sense of pride in the organizations they are working. It is quite evident that employees with a positive attitude are less likely to look for a job elsewhere. It also follows that more job applications will be received, as more people would want to deliver their services to a company that is affiliated with good deeds for the society. With more people seeking employment, then there will be a variety of people to choose from. Thus, the company will end up having a better workforce (Fitch 1976). The role of the Human Relations in managing corporate social responsibility projects is of vital importance due to the high positive impact of corporate social responsibility on the employee’s motivation and wellbeing. Employees tend to be less attracted to organizations that are irresponsible and careless about how their actions impact the society. Employees now want more than just a paycheck from their employees. They want a sense of fulfillment and pride from their work. They also seek a purpose and significantly a company whose values match their own. According to research conducted by Cone Millennial Cause group, that was detailed in The 2020 Workplace found that 80% of a sample population of 1800 13-25 years old. They wanted to provide their services for a company that cares about how it contributes and impacts the society. More than half of the sample population refused to work for an irresponsible company. Furthermore, according to research conducted in The 2020 Workplace, by the year 2020, millennial will form 50% of the workforce (Jones 1980). It is for this reason companies like International Business Machines (IBM) in the United Kingdom that are already committed to social responsibility are using the social media platform to communicate their corporate social responsibility efforts. Annually about 40,000 corporate social responsibility reports are being released from over 9000 companies, as per the Corporate Register. IBM is currently one of those businesses that people would love to work for due to it responsible nature and good reputation (Márquez & Fombrun 2005). Customer Satisfaction Research has revealed that consumer attitude towards an individual company is improved through engaging in corporate social responsibility activities. The customer will end up liking the business, and they will tend to buy more products and services from that company. It is less likely for that customer to change to another brand. According to Better Business Journey, UK small Business Consortium, 88% of consumers said that they would be more likely to buy from an organization that engages in and supports activities that improve the society. There is a tremendous relationship between CSR, corporate image, and customer satisfaction. CSR has a significant impact on the corporate image of a particular company. The better the picture of that company the more the customer satisfaction. Customer perception of corporate image is of vital importance. The customer expectation towards CSR activities leads to a much stronger evaluation of corporate image. Firms consider their involvement in some CSR initiatives such as customer relation and environment support. In the long run, this will enable to increase customer intentions for repeat business and favorable attitude for their clients who will consequently lead to behavior disposition (Mcguire et al. 1988). Every year the International Business Machines Company runs the Smatter Cities Initiative. Certain cities are given the opportunity to apply for grants and in turn, they get services of a dedicated team for a whole three weeks. The team will enable the residents identify challenges that are unique to that city. Recently they ran a project in Glasgow, in a bid to address fuel poverty. Finally, they were able to come up with a report that had sixty recommendations one of them being that people should automatically be offered the best tariffs depending on their circumstances. Positive Public Relations CSR provides people with the opportunity to share positive stories through traditional media such as radio and o online platforms. They would hold discussions on the events of the day that involved the company either gave back to the community or charitable activities. This is a plus to the companies since they get free publicity. They end up spending less on the expensive advertising campaigns. The companies also benefit from worth of mouth marketing. Consequently, this will lead to both the company and the customers benefiting from CSR initiatives; this has been the case with Microsoft Company in the United Kingdom (McWilliams et al. 2006). Costs Reduction As awkward, as it may sound companies can reduce their costs of production through CSR programs. These programs do not have to cost so much money especially when done properly. Businesses can do this through a number of ways including the use of more efficient staff hire and retention strategies. Through retaining their staff, companies will be able to save more since they will not be able to set money aside for recruitment activities. The businesses can also save costs by implementing energy-saving programs. According to the Confederation of British Industry, businesses in the United Kingdom waste on average 10-20% of the energy they buy. These companies can save energy through a number of ways including switching of computers and other electrical appliances when not in use also switching off the lights. Other strategies include knowing the amount of water being used by the company and checking for dripping taps and leaking pipes (McWilliams et al. 2005). The company can also reduce costs by investing less in traditional advertising methods such as the use of radios. These are costly and yet have little to offer when it comes to reaching people in large numbers. The companies should invest in online advertising that reaches lots of people within a short period. Online advertising may involve the use of social networking platforms such as Facebook and Twitter that majority of the people are familiar. Both IBM and Microsoft have a Facebook account and their website that acts as an interactive platform between them and their customers. More Business Opportunities A CSR program requires an outside and open oriented approach. The company must be in constant communication with suppliers, customers and other parties that directly and indirectly influence it. The constant interaction with other outside parties will enable the business to know of the available business opportunities that they can harness and expand the company even further. Through constant interaction with other parties, gaps will be easily identified. These holes will turn into productive business ideas that the company can take advantage. Through the CSR initiatives, the company can dialog with the society on a one-on-one basis. These dialogs will enable the company to know exactly the problems these people are facing and will make the business take necessary action by coming up with a business venture that will address these needs(Melé 2008). Long Term Future for the Business CSR is not a short term thing but rather long term that will ensure continuity of the enterprise and will enable the company to achieve their long-term goals and objectives. In the long run, the company will be able to shape a sustainable society. The CSR projects make the customer have more trust and faith in the enterprise’s products. These customer’s perceptions are difficult to erase, and they run for a very long time. Consequently, this ensures sustainability of the business for quite a long time. Profitability and Value A CSR policy enhances the company’s value and profitability. The introduction of waste recycling and energy efficiencies benefits the environment and cuts operational costs. CSR also increases the company’s transparency with investment analyst, the media, local communities and shareholders also; it increases the company’s accountability. This enhances its reputation among investors such as mutual funds that integrate CSR into their selection of the stock. Reduced Scrutiny Corporations are usually very cautious and keen when it comes to matters that can interfere with their business especially when it involves taxation and, or regulation. CSR initiatives can persuade the public and the government that the company takes environment and diversity also health and safety seriously. This will reduce the likelihood that business actions and practices will be carefully monitored. The company will no longer have to check over its shoulders whenever it wants to do something as they have gained the trust of the authorities through CSR programs. Triple bottom line Planet, people, and profit referred to as triple bottom line forms one way to evaluate CSR. "People" refers to fair labor practices, the community and region where the business operates. "Planet" refers to sustainable environmental practices. Profit is the economic worth by the organization after deducting the cost of all inputs, plus the cost of the capital. This measure we claimed to help some companies is more conscious of their social and moral obligations. However, critics argue that it is selective and substitutes a firms perspective for that of the society. Another criticism concerns the absence of a standard auditing procedure (O’Connor & Meister 2008). Risk Management Risk management is a significant executive responsibility. Reputations that may have taken decades to create can be ruined in hours through environmental accidents or corruption scandals. These draw unwanted and unnecessary attention from media, courts, regulators, media and governments. Brand differentiation CSR can aid in building customer loyalty based on distinctive ethical values. Most companies use their commitment to CSR as their primary positioning tool, e.g., The Body Shop, The Co-operative Group, and American Apparel. Some companies use CSR techniques as a strategic tactic to gain public support for their presence in global markets, assisting them sustain a competitive advantage by using their social contributions as another form of advertising. Supplier relations the right CSR programs can increase the attractiveness of supplier firms to potential customer corporations. E.g., a fashion merchandiser may find value in an overseas manufacturer that uses CSR to establish a good image and to reduce the risks of adverse publicity from uncovered misbehavior. Cost-benefit analysis of CSR In competitive markets analysis of cost-benefits of CSR initiatives can be examined using a resource-based view (RBV). According to Barney "Formulation of the RBV, sustainable competitive advantage requires that resources be rare (R), valuable (V), inimitable (I) and non-substitutable (S)." An organization introducing a CSR-based strategy can only sustain proper returns on their investment if their CSR-based strategy could not be copied. However, should competitors mimic such a strategy, which might increase overall social benefits. Firms that choose CSR for strategic financial gain are also acting responsibly. RBV assumes that firms are entities of heterogeneous resources and capabilities that are imperfectly mobile across firms. This imperfection in mobility can produce competitive advantages for companies that acquire immobile resources. McWilliams and Siegel (2001) examined CSR activities and attributed as a differentiation strategy. They came to the conclusion that managers can determine the appropriate level of investment in CSR by carrying out cost-benefit analysis, in the same way, that they analyze other investments. Reinhardt (1998) found that a firm engaging in a CSR-based strategy could only sustain an abnormal return if it could stop competitors from imitating its strategy. Conclusion The companies are highly motivated in actively and purposefully assuming corporate social responsibility. The voluntary commitment to CSR is very diverse and appropriately tailored to the particular culture. Entrepreneurial commitment benefits both society and companies. However, room for maneuver is required for self-imposed responsibility. The creative and innovative contributions of companies towards solving social problems and challenges should be recognized and supported by legal bodies, but in no way should they be standardized by legal regulations or even counteracted. The advantage that stems from social responsibility can be seen through the direct influence of its resources, causing an improvement in reputation and image, the retention of exceptional people. Others include the employee motivation, aggregate value, better economic performance provided by social responsibility aligned with corporate strategy, innovative and efficient projects. Some more advantages include better environmental performance, better social performance and improvement in corporate governance. Such elements are intangible resources; they are rare, irreplaceable, inimitable and valuable. Finally, CSR strategies resolve the existing tension between social objectives and profitability, as society and shareholders have expectations of both, and the results should be positive. Thus, it is important for companies to take into account the strategic actions of social responsibility, which can bring good results in both economic, as well as social terms. This will resolve the issue of the social objective of the organization and of the general society that they are serving. References Abbott, W.F. & Monsen, R.J., 1979. On the Measurement Corporate Social Responsibility: Self-Reported Disclosures as a Method of Measuring Corporate Social Involvement. Academy of Management Journal, 22, pp.501–515. Branco, M.C. & Rodrigues, L.L., 2006. Corporate social responsibility and resource-based perspectives. Journal of Business Ethics, 69, pp.111–132. Carroll, A.B., 1999. Corporate Social Responsibility, Evolution of a Definitional Construct. Business & Society, 38, pp.268–295. Fitch, H.G., 1976. Achieving Corporate Social Responsibility. Academy of Management Review, 1, pp.38–46. Jones, T., 1980. Corporate social responsibility revisited, redefined. California Management Review, 22, pp.59–67. Available at: Http://scholar.google.com/scholar?hl=en&btnG=Search&q=intitle:Corporate+Social+Responsibility+Revisited,+Redefined#0\nhttp://scholar.google.com/scholar?hl=en&btnG=Search&q=intitle:Corporate+social+responsibility+revisited,+redefined#0. Márquez, A. & Fombrun, C.J., 2005. 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