Synthesis of CSR Research Material - Coursework Example

SYNTHESIS OF CSR RESEARCH MATERIAL by Corporate social responsibility, CSR has an important aspect in the current world because it links an organization to its customers and potential customers in the outside world. It is an important aspect that all organizations want to incorporate in their management initiatives to ensure that they stay close to their customers. This paper is a synthesis of the research material, which clearly explains the main principles of corporate social responsibility (CSR), and discusses how CSR activities might influence customers. CSR has not been an easy thing to do both for large and small corporations because not all organizations can claim to understand what exactly CSR entails. Sarbutts (2003) poses one important question in relation to CSR. He asks, “If major corporations struggle to define and place a value on reputation and reputational risk, what hope is there for small- and medium-sized enterprises (SMEs)? (Sarbutts, 2003:340). This is an important question because it compares large corporations to small companies with respect to how they establish and maintain their reputation and also how CSR is important to this issue. The author also asks another significant question, which is, “Is corporate social responsibility (CSR), in as much as it is a voluntary activity, ‘good value’ for SMEs and is cost versus benefit the only way to evaluate CSR? (Sarbutt, 2003:340). This question is important because it reflects a principle of CSR, which is mostly put on issues of cost versus benefit. Most companies especially large corporations put much funds into activities of CSR to establish and maintain their reputation among customers and potential customers. However, small companies popularly known as medium-sized enterprises (SMEs) do not have many funds to spend on CSR activities but also struggle to implement certain CSR initiatives to ensure that they stay close to customers. Therefore, it is important then to ask whether cost versus benefit is the only way to evaluate CSR. Even though CSR initiatives have been popularly used by companies in today’s business, there has been an absence of a proper definition for CSR. Most companies just assume that CSR is all about maintaining the organization’s reputation. As Sarbutt (2003) observes, organizations have placed much emphasis on reputation as an aspect of corporate governance. The best definition that has been provided is that CSR is “it is a strategic tool to create business opportunities, mitigate threats and manage reputational risk (Sarbutt, 2003:342). However, this definition is in itself insufficient because it signifies that it is an aspect of balancing between reputation, costs and avoidance of risks. Farache & Perks (2010) add to the discussion by stating that companies are pressurized by their stakeholders to engage is CSR activities which involves communicating this activities and efforts to an alert, influential and differentiated audience (Farache & Perks, 2010:235). Despite the emphasis on CSR initiatives, it has remained as an area with little academic interest because most research has focused disclosure through corporate reports and websites which do not offer much information, for instance with respect to CSR advertisements that has increased over the past couple of years. In agreement with Sarbutt (2003), Farache & Perks (2010) emphasize that CSR mainly serves to inform on an organization’s commitment to environmental issues, community relations and the future. CSR does not promote any specific product but the reputation of an organization. Farache & Perks (2010) state, “Legitimacy theory states that organisations can only secure their existence if they are perceived as operating within the values and norms of the society” (Farache & Perks, 2010:236). The authors agree that societal perception of organizations is important for their survival in the market place. It is therefore assumed that if organizations do not undertake measures to inform the public on their products and services, then it becomes difficult for the organizations to survive. In this respect, therefore, CSR advertisements functions as an aspect that enables companies to establish and maintain their reputation in the society. CSR is not an aspect that informs the public essentially on inner information about an organization but only on the issues that relate the organization with the customer. Ditlev-Simonsen & Wenstøp (2013) state, “the media’s focus on corporate social responsibility (CSR) has boomed since the turn of the century, reflecting increasing expectations of corporations addressing their societal responsibility (Ditlev-Simonsen & Wenstøp, 2013:137). However, it is important to note that organizations do not include issues such as financial reporting in their CSR advertisements and activities. Organizations do not include these issues because to them, issues such as financial reporting are not important to the customers and would not be as important in developing a good reputation with customers. Corporate stakeholders that include employees, NGOs customers and governments are important drivers for CSR engagement. There is not much information on these groups as drivers of CSR engagement because studies on CSR issues do not show how they are important but centre on issues that deal with how CSR exposes the organization to these groups. These groups are a secondary aspect to CSR because they are meant to receive what organizations give them in the CSR messages and advertisements. The groups considered, as the drivers of CSR are not included in the CSR initiatives because these activities do not show the real picture with respect to how they respond to such initiatives. As Ditlev-Simonsen & Wenstøp (2013) state, the main idea in promoting CSR “is that an organization’s success is dependent on how well it manages the relationship with key groups, such as customers, employees, suppliers, communities, financiers, and others that can affect the realization of its purpose (Ditlev-Simonsen & Wenstøp, 2013:139). Corporate social responsibility focuses in issues that exist between an organization and its environment and also between the organization and its stakeholders. CSR and business ethics are two broad issues. The author agrees with Ditlev-Simonsen & Wenstøp (2013) in stating that Stakeholder theory builds on several disciplines, which affect organizations including ethics, strategy, law, and theory of organization, and is vital in CSR research (Needle, 2004:296). Treating stakeholders well entails paying both employees and suppliers as agreed in terms of both time and amount. It also involves delivering on set promises and ensuring that customers get value for their money in terms of the products and services that they purchase. CSR brings up ethical issues in the business world as it defines the groups that the company is responsible for and the responsibilities that it must fulfil for its customers, employees, and suppliers. Stakeholder theory is closely related to CSR because it considers business in terms of relationships that an organization has with different groups of individuals such as customers and employees (Needle, 2004:296). Part of CSR issues entail an aspect of a legal requirement, which emphasizes that organizations must fulfil certain responsibilities. However, CSR goes beyond the legal requirement to include realms where economic and ethical responsibilities come in to the picture. The author identifies different stakeholders that an organization is responsible for including shareholders, financial institutions, employees, customers, and suppliers among others. CSR centres on issues of social responsibility, which are organized in terms of the moral argument, the business argument and strategic argument. The moral argument emphasizes that organizations are part of the society and should behave responsibly in a way that is good for all people in the society and also the fact that all businesses have social effects. The business argument centres on the fact that an ethical business is a profitable entity. Therefore, when a company acts ethically, it has a cause effect relationship to other entities such as employees, suppliers, investors and consumers. The strategic argument emphasizes that an ethical business is a good business and in this regard, CSR becomes a source of social progress because a business that applies it also uses considerable resources, insights and expertise to activities that benefit the society (Needle, 2004:306/307). CSR goes hand in hand with ethical observations because it is an aspect that represents the fact that organizations have a responsibility to fulfil in the society. CSR has generally benefited the society because mostly it serves to impress stakeholders who make up the society. Whether or not CSR serves to help organizations realize their potential is subject to questioning. This is because it centres on reputation by balancing between cost and benefit as key features used to evaluate CSR. All the authors discussed above agree that CSR shows an aspect of stakeholder theory which emphasizes on the relationship between the organization and its stakeholders. As Sarbutts (2003) states, “Looking instead at CSR as ‘insurance’, i.e. through the lens of risk and reporting on risk, has much clearer benefits thanks to abundant past experience and the predictability” (Sarbutt, 2003:346). Organizations rely on CSR for survival because it serves as an aspect that maintains a link between the organization and society. In conclusion, the synthesis of the research material clearly explains the main principles of corporate social responsibility (CSR) which are maintenance of reputation and achieving a balance between cost and benefit to reduce risks. The synthesis shows that CSR activities might influence customers by showing them that the organization is well aware of their needs and functions to fulfil these needs. However, the ultimate use of CSR by organizations is to ensure their survival in the marketplace. (Word count 1541). Reference List Ditlev-Simonsen, C D & Wenstøp, F 2013, How stakeholders view stakeholders as CSR motivators. Social Responsibility Journal, 9(1), pp 137-147. Farache F & Perks K J 2010, CSR advertisements: a legitimacy tool? Corporate Communications: An International Journal, 15 (3), pp. 235-248 Needle, D 2004, Business in context: An introduction to business and its environment. London: International Thomson Business. Sarbutts, N 2003, Can SMEs ‘do’ CSR? A practitioner’s view of the ways small- and medium-sized enterprises is able to manage reputation through corporate social responsibility. Journal of Communication Management, 7(4), pp 340–347 Read More