Benefits Of Social Responsibility In Corporations - Assignment Example

Heading: Benefits of CSR Your name: Course name: Professors’ name: Date Introduction Communication regarding corporate socially and ethical responsible programs are possible to cause strong and always positive responses among stakeholders. With the fast growing competition in the corporate world, various firms are striving to find and implement strategies that can differentiate their practices and activities. One of these approaches is corporate social responsibility, which is known to be highly beneficial to the businesses, environment, and the community at large. This paper intends to explore some of the benefits of the corporate social responsibility to business organizations, community, as well as the environment. Definition of Corporate Social Responsibility In spite of growing significance of corporate responsibility, there is a debate regarding the meaning of the phrase, as there are various names used to imply the same including Corporate Citizenship, Corporate Social Responsibility (CSR), Corporate Accountability, and Global Citizenship. Whereas some people can argue about the differences among these terms, about the center they all mean the same principle that an organization is responsible for the provision of more advantages than simply profits to its shareholders (Economist Intelligence Unit 2005). It has a duty of treating its workers will, developing appropriate corporate governance, maintaining environment, supporting philanthropy, promoting fair trade, promoting human rights, and respecting cultural diversities among others. All these roles are aimed to create a positive effect in the cultures, communities, environmental, and societies in which firms operate. Besides, Economist Intelligence Unit (2005) indicates that these efforts must also be beneficial to a firm’s different stakeholders who give all or some of the employees, consumers, executives, investors, vendors, lenders, non-executives, executives, suppliers, charities, foundations, NGOs, religious groups, local communities, and cultural organizations. According to the ASOCIO Policy Paper (2004), CSR has becoming more vital to firms both nationally, and internationally. As globalization grows and big companies function as world providers, the organizations have increasingly realized the benefits of giving CSR programs in their different places. Therefore, CSR activities are presently in progress across the world. Furthermore, ASOCIO Policy Paper (2004) suggests that some of the drivers of the increasing CSR include social investment, enlightened self-interest, trust, and transparency, increased public expectations of organizations. CSR has numerous benefits towards the organization, environment, as well as the community. Benefits of social responsibility corporations According to Hohnen (2007), there are numerous benefits of CSR towards a business. To begin with, CSR helps in ensuring better management and anticipation of an ever-growing range of risk. The effective management of governance, social, legal, environmental, economic among other risks in a more multifaceted market environment, with larger stakeholder and oversight inspection of firm activities. A company benefits from CSR by improving the anticipation and management of risks. This is possible through consideration of parties’ interests concerned about the corporate effect. Secondly, Ma (2012) asserts that CSR is also crucial to the business growth, as it enhances its reputation management. This implies that firms that are involved in social responsibility benefit by gaining a strong and positive reputation in the society. This is because institutions and communities tend to associate with organizations that care about their welfare by offering any form of support. Moreover, those firms with high performance as regard corporate social responsibility tend to build their reputation. On the contrary, those organizations that perform poorly ma damage their brand and the value of the company upon exposure. Brand equity, or reputation is realized in values like credibility, trust, quality, reliability, and consistency. In fact, organizations that lack direct retail exposure via brands, their brand equity for handling CSR matters as a bad and good partner of supply chain, may be essential to the business growth. Thirdly, Bueble (2009) maintain that CSR is vital to every corporation, as it helps in the enhancement of cost savings and operational efficiencies. Particularly, these flow from enhanced efficiencies that are recognized via a logical style of management, which include continued improvement. Another benefit of social responsibility in businesses is that it improves their capacity for recruitment, development, and retention of staff. This may be a direct outcome of pride in a firm’s practices and products, or of initiating advanced human resources practices like policies that family-friendly. In addition, this can also be indirect outcomes of activities and programs, which are essential in enhancing the employee loyalty and morale. It is worth noting that workers are not just forefront generators of ideas necessary in the improvement of performance. On the contrary, they are campaigners of a corporation for which they work (Keinert 2008). As per Filizöza & Fine (2011), social responsibility of businesses is also highly beneficial in that it boosts a company’s competitiveness, innovation, and market positioning. CSR concerns more about avoidance of risks, as well as taking advantage of opportunities. In order to attain rich ideas for new processes, markets, as well as products, it is imperative to draw feedback from different stakeholders. When a company participates in community activities, it tends to interact with various people with different ideas, which are crucial in the developing of competitive advantages. For instance, a business organization can achieve a certification for social and environmental standards to enable it supply products to certain retailers. Successful businesses have always been attributed to alertness to trends and innovation, as well responding to the existing markets (Hohnen 2007). In addition, Kolstad (2007) assert that corporate social responsibility is advantageous to a business in that it improves the ability to attract and create efficient and effective supply chain associations. A company is susceptible to the weakest connection in its supply chain. It is worth noting that like-minded firms may create profitable lasting business links through the improvement of their standards, and thus decreasing the probability of risks. Bigger companies may motivate the smaller ones with whom they conduct business in order to enforce a corporate social responsibility approach. For instance, certain bulk apparel retailers expect that their supplies are compliant with the employee standards and codes. Many firms have also benefited from engaging in corporate social responsibility through advanced capacity to handle issues of change. This implies that firms that apply social corporate responsibility approach in their operations tend to readily embrace, and cope with change matters. In fact, firms that are always in regular dialogue and interaction with its stakeholders are most likely to expect and react to environmental, regulatory, social, and economic changes that may happen. Progressively, corporations tend to employ CSR as a detecting machine for effective sensing of any market trend. As a result, the firms can adjust their operations and strategies in order to meet these emerging trends (Ma 2012). More so, corporate social responsibility is advantageous to a company because it offers it a strong social license in order to function in the community. This means that enhanced stakeholder and citizen understanding of the company and its activities and objectives facilitates advanced stakeholder associations. As a result, this can develop into stronger and persistent private, public, and civil society coalitions. Therefore, corporate social responsibility helps company to build social capital, which is crucial in the realization of its objectives. In addition, Hohnen (2007) indicates that CSR is necessary in every corporation that desire to be successful in the society. Many firms including financial institutions are progressively integrating environmental and social criteria into their evaluation of projects. Besides, when investors are making business decisions regarding the companies to invest their money, they tend to consider any signs of successful corporate social responsibility management. This implies that many investors prefer investing in organizations that have an efficient CSR management. In fact, business plans that integrate appropriate CSR approach is always considered a proxy for an effective management. Many firms have also benefited from applying the corporate social responsibility in their operations, as the strategy has been instrumental in ensuring improved associations with regulators. In various jurisdictions, governments have accelerated processes of approval for companies that have conducted environmental and social activities apart from the ones needed by regulation. In certain countries, governments utilize or consider utilizing corporate social responsibility indicators when deciding on export, or procurement support contracts. The governments engage in this, as they have realized that without an improved business sector involvement, government sustainability objectives may be hard to achieve (Beckmann 2007). Additionally, corporate social responsibility is beneficial to a business organization, as it acts a channel for responsible utilization. Altering unsustainable patterns of utilization is broadly seen as a significant motivator to attaining sustainable growth. Firms have a main responsibility in ensuring sustainable utilization lifestyles and patterns via the services and goods they offer and the manner in which they give them. Responsible utilization is not solely concerning changing customer preferences. This implies that the goods supplied in the market, relationships to customer rights and sustainability matters, as well the way in which dictatorial authorities mediate the association between consumers and producers (Lin, Yang, & Liou 2009). Furthermore, a two-year examination by the World Business Council for Sustainable Development has drawn several conclusions about the benefits of the CRS to firms. The first, the study indicates that a logical corporate social responsibility approach based on sound values, integrity, as well as lasting strategy, provides clear business advantages to firms and enables the business to make a constructive involvement to the society. Second, the investigation demonstrates that a CSR approach offers business firms with a chance to prove their human face. The study also indicates that the CSR approach needs involvement in open discussion and constructive partnerships with governments at different degrees, intergovernmental organizations, and non-governmental firms, other aspects of civil society and, neighboring communities (Hohnen 2007). The same research also demonstrates that companies that implement a CSR approach ought to recognize and respect cultural and local differences whilst upholding consistent and high international policies and standards. It also indicates that being responsive to local diversities implies taking particular initiatives. There is an intimate relationship between the law and CSR. The instrument that governments employ in handling a firm’s environmental, social, and economic effects is the law. Most of the countries have a broad range of laws, whether at state, national, or local government levels, in relation to workers, consumers, environmental protection and human rights, health and safety, bribery and corruption, taxation and corporate governance (Keinert 2008). A business CSR should start by ensuring complete fulfillment of those laws. Regardless of a good CSR policy, non-compliance with the law will degrade other positive efforts. The CSR activities of organizations may be considered a practical technique of handling possibly challenging conduct prior to it draws lawful attention. One of the legal aspects of CSR entails the law and performance reporting. In several jurisdictions, there are regulations in place requiring firms in certain sectors to release openly certain of their activities and practices. For instance, the UK Companies Act 2006 needs a publicly-listed firms to state on certain issues where they are essential to understanding the firm’s business. These include environmental issues, organization workers, community and social issues, and risks via firm supply chains. The same regulations are operational in France and all over the EU. Another legal importance of CSR to companies involves corporate disclosure and governance. Morsingand & Schultz (2006) assert that environmental and social issues are progressively being considered as central constituents of the business governance agenda. Several countries offering securities are needed to openly release their businesses governance activities and observe the local instructions on the subject. In addition, corporate social responsibility has legal benefits to the companies using the approach. Here, CSR is important, as it helps business organizations to avoid bribery by adopting accountable practices wherever they function. Furthermore, Hohnen (2007) argues that adoption of corporate social responsibility by business organizations is vital as enables them to know the conditions under various jurisdictions. It is vital to beware of the distinct legal conditions of various countries by business that intends to expand their operations globally. In UK, the law expects pension fund trustees to issue a statement on their venture reports on the degree to which their venture strategies handle ethical, social, and environmental matters. European countries legislation needs firms to report on their environmental and social performance. On the other hand, various organizations in the US have been prosecuted in the Alien Tort Claims Act that raises the probability that a company liability could be created through international civil legal action. Additionally, the US imperatively modified its business governance laws in present years, specifically, passing the Sarbanes-Oxley Act in 2002, which develops more stringent standards for all the public corporation boards, management, as well as public accounting businesses. Furthermore, the UN, there was an appointment of a Special Representative on Business and Human Rights to the Secretary-General, in 2005.This body is required to recognize standards of business liability and accountability, improve recognition and understanding of the standards, as well as offer suggestions on the UN’s future work concerning human rights and business issues. Pohle & Hittner (2008) say that the corporate social responsibility is essential in businesses, as it ensures that there is a sustainable growth. Many studies argue that firms can perform well through good practices. Popular corporations have already demonstrated that they can differentiate their reputations and brands, as well as their services and products. The firms indicate that this is achievable through taking responsibility for the welfare of the environmental and societies in which they function. These companies are implementing the CSR in a way that causes substantial returns to their business activities. Pohle & Hittner (2008) further say that their survey on 250 corporate leaders globally do not waste time interpreting the suggestions and working on them. In fact, when the firms talk about CSR openly, they seem to explain it based on philanthropy. Nevertheless, the survey indicates that firms have really adopted a strategic perspective, as 68% of them are currently using the CSR approach as a chance and a platform for development. The discussions with business leaders indicated that business leaders are beginning to view CSR as a sustainable development strategy. It is also worth noting that the adoption of CSR is influential, since it helps in enhancing work diversity. Diversity is achieved through the companies’ interaction with different communities, societies, and cultures. CSR is vital in ensuring that a company’s workforce is demographically varied in a manner that shows the communities in which they function. Moreover, it helps in creating a comprehensive culture that acknowledges and appreciates workers’ diverse and different cultures. CSR is also advantageous in a company, since it positions it to achieve the needs of partner population and customer (Torres, Bijmolt, Tribó, & Verhoef, 2012). Regarding the benefits of corporate social responsibility to the community, communities gain many advantages from a company that adopts CSR approach of operation. Firstly, companies adopting CSR are beneficial to the community, as well as the public at large by introducing charitable contributions. Some of these contributions include schools, children homes, hospitals, and churches. Through CSR strategy, organizations sponsor various activities in the aforementioned charitable institutions. Some institutions also take part in environmental conservation by facilitating clean up and tree planting activities. Others can organize sporting competitions to raise funds for running a specific health or environmental program. These activities are influential in facilitating the growth and development of the community (Bueble 2009). Still on community and public benefits of CSR, Bueble (2009) says that firms that adopt the strategy are vital in ensuring worker volunteer programs. This implies that through CSR, organizational employees volunteer to conduct certain activities to the society, such as clean up, tree planting, and construction activities. These activities are crucial in mobilizing the community members to participate towards the creation of a safe and healthy environment. It also cuts on costs that the community or public would have incurred in carrying out those activities on their own. More so, social responsibility in firms is beneficial to communities, as it ensures business involvement in community employment, education, and homelessness plans. Here, community that interacts with a company through social responsibility strategy benefits by having its members employed by the company. Moreover, the community tends to gain certain ideas through community education. These ideas are vital in enhancing the community’s sustainable growth (Keinert 2008). For instance, certain companies educate the public in which they function on money matters, investments, and farming. Additionally, CSR strategy benefits many communities and the public by ensuring product quality, and safety. This is because companies tend to standardize quality and price of its services and products to their immediate communities. This is brought about by competition among companies, which forces them enhance the quality of the products and services. To the community, this is important because they enjoy quality and lowly priced goods and services. In terms of environmental benefits, CSR helps in ensuring higher material recyclability. Moreover, it enables enhanced product functionality and durability, and improved utilization of renewable resources. Furthermore, incorporation of environmental management techniques in business plans, which include costing and lifecycle assessment, eco-labeling, and environmental management measures (Torres, Bijmolt, Tribó, & Verhoef, 2012). Gaps in literature review Based on the above literature review, there is a need for more research on the following areas: Factors that motivate business firms to engage in corporate social responsibility Ways of effectively evaluating the impact of corporate social responsibility by firms More benefits of corporate social responsibility to the community and public at large More benefits of adopting corporate social responsibility to the environment Legal implications of engaging in corporate social responsibility by corporations Conclusion Without doubt, adoption of corporate social responsibility strategy by business organizations is beneficial to the businesses, community, and the environment. The strategy is beneficial to the business firms in ensuring better management and anticipation of an ever-growing range of risk; enhanced reputation management; and improved capacity of recruiting, developing, retaining staff. Moreover, social responsibility in firms helps in enhancing the innovation, market positioning, and competitiveness. Corporations also benefit from CSR through by boosting their cost saving and operational efficiencies. Additionally, the strategy provides the businesses that adopt it to have an improved ability to handle change. It also gives a business a stronger social license to operate function in the community. Furthermore, it allows it capital accessibility, enhanced relationships with regulators, as well as a catalyst for appropriate consumption. Regarding the association between law and CSR, the latter helps firms to avoid bribery, ensure business disclosure and governance, conditions in different jurisdictions, and performance reporting. CSR strategy also benefits the community through charitable contributions, worker voluntary programs, product quality, and safety, as well as business involvement in community employment, education, and homelessness programs. Regarding the environment benefits, CSR enables better material recyclability, utilization of renewable sources, enhanced product functionality, and durability, as well as incorporation of environmental management techniques in business policies. References ASOCIO Policy Paper, 2004, Corporate Social Responsibility. Pp. 1-6. http://www.asocio.org/policy/Corporate%20Social%20Responsibility.pdf Beckmann, SC 2007, Consumers and Corporate Social Responsibility: Matching the Unmatchable? 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