Corporate Social Responsibility and Sustainable Business - Literature review Example

Corporate Social Responsibility and Sustainable Business 04102 Table of Contents Table of Contents 2 Introduction 3 Corporate Social Responsibility, Sustainable Business and profit generation 3 Carrolls CSR pyramid: 5 Stakeholder’s theory: 7 Triple Bottom Line: 9 Conclusion 10 Reference list: 12 Introduction Globalised economy is facing increasing challenge of competition, financial crisis, changing customer’s behaviours and environmental sustainability. Organisations are developing different type of strategies in terms of achieving the growth and sustainability international market. Organisations are introducing value addition strategies for their customers and other stakeholders (Aluchna, 2008). Corporate social responsibilities are one of major used business strategies, which will help them in meeting the growth and sustainability. CSR is aiming to increase the welfare of society, stakeholders and the environment. In the current study the statement, "The only viable future for business is to become a sustainable business in a sustainable society" will be critically evaluated. In addition, the study will also outline that the corporate social responsibilities are increasingly used by the organisations for developing profitability and gaining more market share (Ahmad, 2012). In the current study, various CSR and sustainability related theories are critically evaluated to outline the connection of CSR with the profitability. Carrolls CSR pyramid, Stakeholders theory, and Triple Bottom Line theories are used to contrast the CSR strategies in terms of profitability. Corporate Social Responsibility, Sustainable Business and profit generation Azmat and Zutshi (2012) opined that the globalised segment, the implications of CSR are rapid in terms of obtaining growth and suitability of any organisation. Corporate social responsibilities will impact on operational polices and social affects. Jahdi (2014) observed that the firm are using the CSR strategies in terms of attracting potential customers and increasing the company profits. Major global companies are using CSR strategies to attract the stakeholders. Moreover, managers of the firm are using the CSR strategies as a part of increasing profitability (Alhaddi, 2015). Business executives consider that CSR policies can develop revenue generations. Corporate social responsibilities endorse the company position in the open market. This policy will attract the potential customers resulting increased sales, these policies will increase loyalty among the employees and increase the talent acquisition. Skilful and experienced people will be attracted to the global firms. CSR strategies are looking for the sustainability issues in the operations so firms are able to operate in lower costs. Bohmholdt (2014) argued that CSR provides value added advantage to the different public companies. In the globalised world, firms are listed in the FTSE4Good and Dow Jones Sustainability Indexes to express their social responsibility. International retail and manufacturing firms are using sustainable investment funds for developing their operations. These indexes also increase attraction among the international investors, and equity stock price of the firms. Shareholders will be more satisfied if they receive more dividends. Gradually, shareholders will invest more funds in socially responsible firms. According to BubnaLitic (2009), the socially responsible firms to provide welfare provisions to the employees promote corporate citizenship. The term is providing detailed overview on the various factors of orienting the stakeholders. Global firms are facing the challenge of competition, stakeholders support and sustainable policies for developing environment. Several policies will help the management or the administrators to work more ethically. Some of the policies will help them in increasing the loyalty among the stakeholder. Moreover, loyal stakeholders are helping firms in increasing their profits also (Churchill, 2013). Engaging employees Cots (2011) defined employee engagement as one of the most vital strategies of corporate social responsibilities. Engaging the employees in the operational process will create powerful influence on the operational process. Employee engagement will provide the company with the role sustainability, which is crucial for the motivating employees. Motivated and appraised employees will be more loyal to the firms. These policies are helping firms and organisations to increase their products quality. Tangible organisational benefits CSR polices are providing concrete commercial reimbursement for the internal stakeholders. Internal stakeholders are mainly the employees, management and trade unions. Thus, corporate social responsibility strategies are helping the firms to create beneficiary goals (Cragg, Schwartz and Weitzner, 2009). Designed working policy: Firms are redesigning their operational policies as per the CSR strategies and the sustainability issues. Globalised firms prefer to meet the sustainability issues or criteria for developing higher customer and stakeholder support. This policy will create more effective loyalty build up among the customers. CSR initiatives are maintained by these firms in the operational process in order to meet the sustainability issues. In the operational process, global firms like Nike, Adidas, and Wal-Mart are adopting discrimination in the operational process so that ethical process is easy (Crane, 2008). Significant job role among the employees: volunteering positions are promoted among the employees so that they are able to meet the relevant skills. They are delegated with proper jobs as per their skills. Employees will be able to meet the professional goals and they will be able to deliver more value. Effective CSR policies are also empowering workers to gain knowledge of new and innovative skills. However, this policy or corporate social responsibilities of the leading firms are also concentrating on the future profitability (Huniche and Pedersen, 2006). CSR policies are used by firms to obtain ethical sustainability in the global or regional market. Moreover, such policies are used by the firms in terms of achieving increased profitability and market share generation. Thus, it can be said that CSR does not concentrates on the ethical growth only it also influences the profitability. This argument can be stated more firmly with the help of theories or concepts like Carrolls CSR pyramid, Stakeholders theory, and Triple Bottom Line (Crane and Ruebottom, 2011). Carrolls CSR pyramid: Crowther and Capaldi (2008) stated that Carroll’s CSR Pyramid is one of the majorly used global CSR model. Carroll stated that, corporate social responsibility helps global or national business to conduct operations more ethically. Firms are developing the CSR strategies in terms of developing financial profitability, legal policy abidance, ethical operations and socially compassionate policies. Socially responsible firms are developing the profitability and ethical representation. Carroll developed CSR policy pyramid that is having different layers. This pyramid is outlining the factors like the economic responsibility, legal responsibility, ethical responsibility and philanthropic responsibility of any firms. According to Carroll, people or firms will be developing CSR strategies with the notion of increasing sustainability and profitability (Gallego, 2005). Economic responsibility in Carroll’s CSR Pyramid: Every business is having the responsibility of producing goods and services according to the customers’ demands. In the post-recessional year, demands and expectations of the customers are highly affected by pricing strategies. Therefore, firms are concentrating on the society and gather insight on customer’s expectation, power and capability of payment in terms of gaining the profit. Economic responsibilities are the major attributes of the CSR strategies of the global companies. Global firms have to maintain welfare of the shareholders, to gain further investment or financial support. Investors will be demanding reasonable return on the investments they made in the organisations. In addition, globalised firms have to maintain the welfare of the employees. CSR strategies for the employees will emphasise on the safety in the workplace and feasible payments. Providing customers with good quality products in competitive price is another economic responsibility of the firms (Hunnicutt, 2009). Legal responsibility in Carroll’s CSR Pyramid: International firms are having different type of legal responsibility. Firms have to face different type of the legal implication like pricing and quality maintenance. Microsoft and Nokia alliance faced certain legal implications as the post sales support and employee management will face certain complicacy (Nalband and Kelabi, 2014). Ethical Responsibility segment of Carroll’s CSR Pyramid: Firms have to maintain ethical actions in term of maintaining proper support to the customers and other stakeholders. Promotional activities must be truthful and trustworthy, products and service should be harmless. They must be allocating various customer oriented factors like loyalty maintenance, effective order meeting and developing crucial feedback collection (May, Cheney and Roper, 2007). Philanthropic responsibility maintenance in Carroll’s CSR Pyramid: International firms to increase the quality of life use benevolent activities. Such strategies are helping the firms to increase the attraction among the employees, local communities or the society. These stakeholders are getting motivated with the help of effective humanitarian policies. Stakeholder’s theory: Zu (2009) stated that stakeholder theory explanation would help in developing proper insight on the CSR and stakeholder responsibility of the various firms. Edward Freeman and many other business strategists described the Stakeholder orientation as the part of the corporate social responsibility. Stakeholder theory refers that firms have to maintain proper policy to meet the interest of the customers. Mainly, a firm will be having different type of stakeholders like individuals and groups. Stakeholders are the key factors of the globalised companies. Stakeholders are identified as the beneficiary of the businesses (Moriarty, 2012). Major stakeholders can be listed as: Owners of the firms are stakeholders of the company. Workers or employees of companies, customers and prospective clients are also the stakeholder of the firms. suppliers and budding seller of the company are also stakeholders. Society or the people living around operating area of the firms and who gets affected by the operational extracts. Creditors or moneylenders are also the stakeholders of the firms; these stakeholders are also inputting money to increase the potentiality of success (Quazi and Richardson, 2012). Local and international governments are imposing different sort of regulation and taxation policies to control the trade and tariff. In addition, local and international competitors are the stakeholders to some extent. On the other hand, local supporting industries are also stakeholders of the company. Mainly, international businesses like the Tesco, ASDA, Wal-Mart and many other retail firms are developing stakeholder’s orientation strategies to increase their growth and sustainability. The firms are maintaining stakeholder’s orientation strategy in terms of increasing the future profit generation (Rakotomavo, 2012). Stakeholders Corporate social responsibility Employees Workplace environment are promoted as more employee friendly Families values are empowered by the employers Human resource management policies are more ethical and responsible Unbiased appraisal policy and remuneration structure will attract the employee loyalty towards the firm (Zabin, 2013). Communication policy is open and elastic in order to engage the employees of the firms. Employee development policies like training and other scheduling are important. Freedom of speech is promoted among the employees. Human rights are strictly maintained in the workplace for the welfare of the employees (Zu, 2009) Female employment policy is maintained highly, firms are maintaining diversity in terms of recruiting and endorsing women Physically handicapped and minority groups are also valued by global firms Global firms are adopting empowerment strategies for cultural minorities to create cultural diversity (Nalband and Kelabi, 2014) Reasonable behaviour are expected by all the employees Customers Consumers rights are empowered respectively Products and services are maintained with high quality Firms have to provide the customers with feasible, open and honest information regarding the features of the products or services. Safe and tested products and services are provided by the organisations Ethical advertising policies are promoted among the customers to increase sustainability (Quazi and Richardson, 2012) Product or service related extensive risks are mitigated to attract the customers Misleading and manipulative sales promotions are avoided by the firms in terms of controlling customers perceptions Prices are negotiated in the collective bargaining process. Society Corporation and communities are expected to hold mutual beneficiary relationships The firms in the communities require sustainable investment, where they are operating. Community development activities like educational set up development, infrastructural development and technological development policies must be adopted by the firms Community projects seeks for the employee participation in order to increase social development (Rakotomavo, 2012) Investors Firms are providing favourable return on investment to the investors Shareholders are provided with proper dividend in the financial years. Suppliers Fair-trading policies and increasing transactions will develop high-end relationship with the suppliers. Environment Sustainable development are promoted by the firms to attract the customers It is observed that, firms are adopting various CSR and stakeholder orientation strategies in terms of increasing the loyalty among them (Ramlall, 2012). Triple Bottom Line: The international firms use the triple bottom line theory or concept rapidly to maintain effective ethical strategies. This concept is aiming to make the welfare of the people, planet and profit. These three attributes are used as the measures of justifying organisational success (Scheppelmann, 2012). In the contemporary era, ethical businesses are using the societal factors and environmental factors along with the economic performance to justify their overall performance. According to Thijssens, Bollen and Hassink (2015), financial performances are the profit-oriented measures of calculating the organisational success. A firm can measure their financial performance easily and accurately rather than the other two measures. Conventional business practises were judging the difference between inflow and outflow of cash and other resources of the business. Mainly, ethical business will be providing the stakeholders with various statements cash and finances, assets, and liabilities. Profitability measures are calculating the monetary value generation of the companies for obtaining the investors returns. Moreover, businesses have to outline their net worth among the stakeholders. On the other hand, Vogel (2005) argued that triple Bottom Line concept is dealing with the people or social performance of the firms. This measure is quite complex in defining and measuring. Triple bottom line concept outlines the impact of the business operations on the internal stakeholders or the society. In the current era, firms are showing proper consideration for the employees and stoical community. Triple bottom line principles are measuring the beneficiary actions for the operational neighbourhood of various firms (TrongTuan, 2012). Mainly, such measures are used to identify any sort of demoralizing or endangered operational policies. Social factors of triple bottom line policies are concentrating on the employee exploitation and remuneration, and workplace conditions. Firms are also responsible for developing community living standards (Voiculescu and Yanacopulos, 2011). Wilde (2012) stated that environmental performance is mainly the welfare of planet. Ethical concerns of the manufacturing firms are concentrating on the natural environment. Triple bottom line policies are helping the firms to reduce the pollution affects, health hazardous elements and use of the renewable resources like solar energy, wind energy and tidal current. In addition, these resources are less costly and the operational cost of the firms is reduced (Wilde, 2012). Conclusion From the current study, various ideologies of the CSR are obtained by criticising the concepts like Corporate Social Responsibility, Sustainable Business and profit generation, Carrolls CSR pyramid, Stakeholder’s theory and Triple Bottom Line. These discussions are outlining that the firms are using the CSR strategies to become a sustainable business in a sustainable society. Firms are motivated to attract the customers with CSR strategies. However, it can be said that all the CSR activities are concentrating on the future profitability. Corporate social responsibilities are increasing the loyalty among customers and other stakeholders. Loyal customers will repeat their purchasing activity, which will increase profitability. On the other hand, devoted employees will stay in the organisation, which results in retaining skills and experience. Production process will be more efficient. On the contrary, stakeholders like government, investors and society will be empowering the ethical firms to get growth and sustainability. Thus, it can be said that the CSR strategies will be helping the firms to generate increased revenue in the long term. Reference list: Ahmad, J., 2012. Can a university act as a corporate social responsibility (CSR) driver? An analysis. Social Responsibility Journal, 8(1), pp.77-86. Alhaddi, H., 2015. Triple Bottom Line and Sustainability: A Literature Review. BMS, 1(2). Aluchna, M., 2008. Special issue on Corporate social responsibility in transitional economies. Social Responsibility Journal, 4(1/2). Azmat, F. and Zutshi, A., 2012. Perceptions of corporate social responsibility amongst immigrant entrepreneurs. Social Responsibility Journal, 8(1), pp.63-76. Bohmholdt, A., 2014. Evaluating the Triple Bottom Line Using Sustainable Return on Investment. Remediation, 24(4), pp.53-64. BubnaLitic, D., 2009. Spirituality and corporate social responsibility. Farnham, England: Gower. Churchill, D., 2013. Communicating social responsibility in professional American motorsports. Gainesville, Fla.: University of Florida. Cots, E., 2011. Stakeholder social capital: a new approach to stakeholder theory. Business Ethics: A European Review, 20(4), pp.328-341. Cragg, W., Schwartz, M. and Weitzner, D., 2009. Corporate social responsibility. Farnham, England: Ashgate. Crane, A. and Ruebottom, T., 2011. Stakeholder Theory and Social Identity: Rethinking Stakeholder Identification. Journal of Business Ethics, 102(S1), pp.77-87. Crane, A., 2008. The Oxford handbook of corporate social responsibility. Oxford: Oxford University Press. Crowther, D. and Capaldi, N., 2008. The Ashgate research companion to corporate social responsibility. Aldershot, England: Ashgate. Gallego, I., 2005. Situation of Corporate Social Responsibility in Spain: An Empirical Analysis. Social Responsibility Journal, 1(1/2), pp.24-37. Huniche, M. and Pedersen, E., 2006. Corporate citizenship in developing countries. Herndon, VA: Copenhagen Business School Press. Hunnicutt, S., 2009. Corporate social responsibility. Detroit, MI: Greenhaven Press. Jahdi, K., 2014. Cause-related marketing (CaRM) and corporate social responsibility (CSR). Social Responsibility Journal, 10(4), pp.674-684. May, S., Cheney, G. and Roper, J., 2007. The debate over corporate social responsibility. Oxford: Oxford University Press. Moriarty, J., 2012. The Connection Between Stakeholder Theory and Stakeholder Democracy: An Excavation and Defense. Business & Society, 53(6), pp.820-852. Nalband, N. and Kelabi, S., 2014. Redesigning Carroll CSR Pyramid Model. JOAMS, pp.236-239. Quazi, A. and Richardson, A., 2012. Sources of variation in linking corporate social responsibility and financial performance. Social Responsibility Journal, 8(2), pp.242-256. Rakotomavo, M., 2012. Corporate investment in social responsibility versus dividends?. Social Responsibility Journal, 8(2), pp.199-207. Ramlall, S., 2012. Corporate social responsibility in postapartheid South Africa. Social Responsibility Journal, 8(2), pp.270-288. Scheppelmann, R., 2012. EUCO2 80/50 Entwicklung regionaler Reduktionsstrategien durch Stakeholder-Beteiligung. Wirtschaftsdienst, 92(S1), pp.56-60. Thijssens, T., Bollen, L. and Hassink, H., 2015. Secondary Stakeholder Influence on CSR Disclosure: An Application of Stakeholder Salience Theory. Journal of Business Ethics. TrongTuan, L., 2012. Corporate social responsibility, leadership, and brand equity in healthcare service. Social Responsibility Journal, 8(3), pp.347-362. Vogel, D., 2005. The market for virtue. Washington, D.C.: Brookings Institution Press. Voiculescu, A. and Yanacopulos, H., 2011. The Business of Human Rights. London: Zed Books. Zabin, I., 2013. An Investigation of Practicing Carroll Pyramid of Corporate Social Responsibility in Developing Countries: an Example of Bangladesh Ready-made Garments. IOSR Journal of Business and Management, 12(4), pp.75-81. Zu, L., 2009. Corporate social responsibility, corporate restructuring and firms performance. Berlin: Springer. Read More