Aspects Associated with Corporate Social Responsibility - Term Paper Example

An Analysis on the Various Approaches to CSR (Name) (Institution Affiliation) (Tutor’s Name) (Date) Word Count: 2,195. 1.0 Introduction Seemingly, almost all business entities in the world are engaging in Corporate Social Responsibility (CSR) practices today. These organizations are making efforts to depict how committed they are to the communities around them beyond their typical business objectives. With a cursory glance at websites belonging to large organization such as British Petroleum and Shell, one would not fail to notice the enormous amount of resources and attention put into initiatives related to corporate social responsibility. Notably, CSR has become a fundamental marketing and branding reference point for most medium size and large organizations (Prahalad & Porter, 2003). However, the practice of corporate social responsibility has attracted much debate. Accordingly, proponents of CSR maintain that corporations are bound to benefit from it, as it associated with establishing a good reputation. On the other hand, opponents of CSR initiatives believe that it disorients corporations from their economic roles in the business environment. As such, this paper aims at delineating the main purpose of CSR as well as the ethical or social responsibilities corporations have to their publics. To achieve this, the paper will analyze the various approaches as well as concepts related to the corporate social responsibility. 2.0 Classical Arguments behind the CSR Concept One of the first arguments against the conception of corporate social responsibility dates back to the era of the classical economic argument, which was articulated mostly by Milton Freidman (1970). According to the classical economic argument, the organization’s top management is charged with one mandate: maximizing the profits of the business owner or the associated shareholders. As Friedman (1970) puts it, social issues are not the concern of the company owners and their employees. Problems related to social issues should be addressed by the unfettered mechanisms that are experienced in the free market system (Friedman, 1970). He further contends that just because the free markets have failed to address the social issues, does not mean that businesses should take responsibility; the obligation lies squarely with the legislation and government. The second classical economic argument, which objects corporate social responsibility, holds that firms are not equipped to resolve social issues that the community is always facing (Davis, 1973). Furthermore, Davis (1973) points out that the management is oriented towards operations and finance and do not have the required expertise, more so social skills, to come up with socially-based decisions. Another objection under the classic economic argument by Hayek, (1969) posits that corporate social responsibility dilutes corporations’ key purpose. It is argued that corporate social responsibility puts the organization into the fields of endeavor, which is not related to its “proper objective” (Hayek, 1969). Other opponents of the CSR concept point out that a business already has the necessary power; thus there is no need to wield it with additional social power. Accordingly, a company can use its employees and marketing strengths in order to increase its market share. However, one should note that, though some people still hold these arguments, they were made decades ago, and most of them are outdated as the business world is ever-changing. Conversely, classical arguments in favor of corporate social responsibility concept posit that CSR has long-term benefits for the organization. According to this classical perspective, businesses have to take actions now if they are to have a healthy climate in which they can operate in the future. The actions they take now ensure a long-term viability. Furthermore, the classic argument that favors CSR holds that, through engaging in CSR the organization can ‘ward off’ the regulations set by the government. This implies that the government’s future intervention can always be forestalled such that the business can often fulfill the society’s expectations through aligning their policies with government initiatives. Moreover, proponents of the CSR concept believe that businesses have the resources and as such, they should be left to “try” (Carroll, 2000). Accordingly, many other bodies have attempted to solve the social issues but have failed as such; organization should be left to try as they have the reservoir of functional expert and management talent. Proponents of CSR also believe that being proactive is the alternative to reacting. In effect, businesses have often exemplified the act of anticipating, strategizing as well as initiating. Therefore, it implies that organizations are more practical and less costly when it comes to addressing social issues. This is uncommon of other agencies charged with solving social problems as they simply react to social problems (Carroll, 2000). Last but not least, it has been contended that organizations often take part in CSR activities as they believe that the society strongly buttress them. Nowadays the public holds that despite their economic purposes of making profits, corporations are responsible to their employees, communities and the environment (Bernstein, 2000). Though these arguments have been in existence for decades, they still present the real situation revolving around the concept of CSR. 3.0 Various aspects associated with CRS Before 1950, companies’ success depended solely on the “single-bottom line”, sometimes referred to financial bottom line. However, as years went by, the business environment also changed as the consumers’ attention heightened thus forcing corporation to express value creation (Friedman, 1970). On the other hand, governments started raising concerns over the environmental problems such as the climate change that was being caused by firms. Accordingly, in the early 1990s, corporations saw the need to run their operation based on the triple bottom line concept, an approach invented by John Elington (Bowie, 1991). The new approach focuses on three distinct parameters: planet, people as well as profit. The “planet” aspect is associated with sustainability while the “people” aspect is related to organizations concentrating more on social responsibility. The “profit” element refers to the organization’s economic objective (Jonker & Witte, 2006). As Jonker and Witte (2006) put it, the “triple bottom line” balances the social, economic and environmental aspects from a microeconomic standpoint. This view is strongly buttressed by Carter and Roger (2008), who point out that the “triple bottom line” concept guarantees for the sustainability of both the society and organizations. Later in the 21st century, a fourth bottom line was introduced: the philanthropy factor, thus the emergence of quadruple bottom line. Here, the Juholin, (2003) points out that due to the social as well as ethical aspects associated with the running of a corporation, firms have to factor in the philanthropy aspect. Juholin, (2003) posits that organizations are built in a society where challenges are the order of the day and as such. Thus, it would be unethical for a business, which makes profits at the end of every fiscal year to ignore challenges, such as lack of proper schools, health facilities and even hunger. Through philanthropy, the corporations try to make sure that there is sustainable development in the society, which enables the people to meet their basic need thus pursuing their lives with happiness and satisfaction. Thus, as much as businesses are objected to reap profits, they must take into account the expectations of the external stakeholders, environmental and the social influences on the company. Friedman, (1970) observed that organizations’ corporate social responsibility is often influenced by one significant group: the stakeholder. According to Friedman’s (1970) delineation, a stakeholder is any individual or group who affects the decisions, practices, goals, as well as the actions of the organization. Equally, Carroll (2000) define stakeholder as individuals or groups of people who depend on a firm to achieve personal goals, and on whom the corporation depends for its existence. Evidently, the aforementioned approaches indicate that there is a two-way interaction between the stakeholder and the company. This interaction is the reason businesses have to include the affairs of the society in their objectives and core values in order to have a perfect co-existence. According to Carroll, (1999), stakeholders can be categorized into two groups: primary and secondary stakeholders. The primary stakeholders comprise of the customers, firm’s owners, employees and suppliers. On the other hand, the secondary stakeholders include the society, lobbyist, media, consumers, governments as well as competitors. Stakeholders often have various expectations, wishes, and interests as far as the company’s operations and business behavior are concerned. Consequently, the firm has to look for solutions, which equilibrates and satisfies both the primary and secondary stakeholder-groups (Kotler & Lee, 2005). Socially responsible corporations often embrace practices which enhance the integration of social and environmental aspects. For example, the Nike Company, which is involved in the production of sports’ apparel and shoes, has invested immensely in its employees through various trainings and courses (Freeman, 2011). Consequently, these employees often offer significant services and products to the consumers while enhancing the relationship between the company and the society (Freeman, 2011). Furthermore, Nike ensures that its employees’ working conditions are consistently improved. Furthermore, the company encourages its workers to participate in various CSR initiatives such as the annual community sanitation. Additionally, the company also often ensures that its employees understand the relationship between the community welfare and the corporation’s profitability. 4.0 Why Businesses should be engaged in CSR Activities To answer the above question, this section will base its argument on the “instrumental approach,” which holds that companies should be involved in corporate social responsibility initiatives as it is good for business. Moreover, the approach posits that it is morally obligatory for companies to do so. In other words, the instrumental approach maintains that it is financially and ethically beneficial for businesses to engage in CSR initiatives (Frederiksen, 2010). Similarly, Wood (1991) contends that an organization should only involve itself in CRS practices if its daily operations are profit-oriented. This is because the long-term objective of carrying out CSR initiatives is to develop good reputation. In return, the good reputation leads to more sales as customers would want to be associated with a reputable organization (Wood, 1991). The instrumental perspective posits that though it is virtually ethical for businesses to initiate CSR practices in its calendar, it also has economic benefits (Friedman, 1970). Similarly Simon et al. (1972) asserts that the key idea behind CSR is “company branding.” Research indicates that most customers prefer purchasing from reputable organizations. This view is also supported by Black (2006), who is of the opinion that CSR initiatives tend to build legitimacy in the eyes of the consumers. Likewise, Singer (2003) believes that good reputation is significant vis-à-vis other fundamental stakeholders such as contract and business partners, employees and policy makers. Therefore, corporate social responsibility initiatives should be evaluated based on their propensity in order to make the corporation look good in the eyes of different stakeholders (Garriga & Mele, 2004). While the CSR concept is a sophisticated marketing tactic, the instrumental approach does not suggest that organizations should ignore the local and international legislation. The instrument perspective implies that doing “good” should not be a reason for a company to go beyond the “letter of the law” (Sacconi, 2010). Thus, proponents of the instrumental perspective hold that organizations should abide by the existing laws and regulations set by the national government as well as the international bodies such as the World Trade Organization and the United Nations. In other words, all the corporate social responsibility activities should be carried out within the confines of law. 5.0 Findings The study has found out that corporate social responsibility in the business world today has gone beyond sheer philanthropy. Evidently, organizations often engage in various CSR initiatives that aim at enhancing the firm’s reputation. For instance, businesses consider equality and affirmative actions as far as recruiting of employees is concerned; thus depicting the features of a progressive employer, who cares for everyone (Kotler & Lee, 2005). Additionally, firms often release their annual financial reports as well as availing the books of accounts online order to win the trust of the potential and existing customers. Further, firms take part in CSR activities such as publishing reports indicating the organization’s impact on the environment and employees to show that they care about people’s welfare. The study also gathers that it is important for firms to enhance the aspect of corporate culture such having regular fair trade coffee in the organization. Through this initiative, the company gets to take care of its primary stakeholder’s interests. Importantly, this study has found out that it is equally beneficial for firms to engage in a high-level of reputation and brand management. In addition, companies must capitalize on corporate sustainability in order to have a peaceful co-existence with the society. Finally, the study has found out that the purpose of businesses as far as CSR is concerned is to realize corporate sustainability. It entails engaging in practices that are sustainable for the generations to come based on economic, environmental and social dimensions. Conclusion Notably, CSR is an important aspect in any organization as it has both the ethical and financial results, in the long run. Summarily, the paper has virtually, delineated the various aspects associated with the concept of CSR as well as the classical arguments brought forth by early scholars. Further, the paper has clearly indicated the findings associated with this study based on the perspectives of CSR. Finally, the paper managed to show the social or ethical purpose of a business References Black, L.D., 2006. Corporate Social Responsibility as Capability, Journal of Corporate Citizenship, 23:25-38. Bowie, N. 1991. New directions in corporate social responsibility. Business Horizons, 34(4), 56 65. Carroll, A.B. (1999) Corporate social responsibility. Business and Society, 38, 3:268-296. Carroll, A.B. (2000) A commentary and an overview of key questions on corporate social performance measurement. Business and Society, 39, 4:466-479. Dahlsrud, A. 2006. How corporate social responsibility is defined: an analysis of 37 definitions. Corporate Social Responsibility and Environmental Management, September. 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