Concept of Corporate Social Responsibility - Coursework Example

Corporate Responsibility Name Institution Date Corporate Responsibility Introduction Corporate Social Responsibility (CSR) is a concept that has existed in the business world for a long time and has once again become a prominent subject, occasioning a lot of debate and criticism. Some of the proponents argue that CSR benefits multiple corporations through broader and long-term operations while others contend that it is just a minimum obligation that organizations have to meet. On the hand, the critiques perspectives tend to look at CSR as a concept that not only plays a role in the business economy; but also goes beyond business profits. For example, the neoliberalist perspective argues that CSR is the fundamental policies, guidelines and codes that an organization adopts to promote productivity. In other words, this perspective gets initiated and fully driven by the corporation itself. However, this same perspective has driven neoliberal commenters into criticizing CSR as a mere intrusion and restriction of a business’s objectives and primary purpose. Looking at the radical political, economic view of CSR, critiques insists that CSR are policies that corporations frequently design; for the purposes of deflecting from stringent external regulations and the control of corporate powers or behaviors. By doing so, they get to disguise and legitimize destructive social and environmental activities that constitute their operations (Mullerat, 2010). This study critically analyzes and discusses the various perspectives on CSR based on previous studies and current CSR practices in the business world. The Neoliberal Perspective on CSR Among those who view CSR from a neoliberal perspective, debate questions frequently emerge as to whether CSR constitutes of legitimate activity that corporate business institutions and organizations should engage. According to Henderson (2001) examination of CSR based on a neoliberal critique he argues that despite others view on CSR as harmless its adoption directly threatens the prosperity levels in both poor and rich countries. He asserts that the activities constituting CSR are likely to undermine the market economy by reducing the competitive and economic freedom of so many corporations. Henderson criticizes the pressure on corporations to use CSR not just for profit but for corporate citizenship; through working with other stakeholders to further other goals. Similarly, another author argued that it is a much wiser decision for corporations to operate strategically that get influenced into investing in CSR (Salazar, 2006). On the contrary, neoliberal economists have argued in writing that there exist more strategic reasons pertaining to why corporations can adopt the CSR approach in their operations (Friedman, 1970). They also have concurred with Milton Friedman’s altruistic perspective that CSR does not exist as a legitimate business role, but it is entirely immoral. Additionally they reiterate on this argument by stating that despite the critic mentioned above, strategic CSR is beneficial both to the business and society as a whole. CSR can only benefit a business if the activities constituting it, were undertaken at the right time. For example, adopt CSR activities at a prime time when it is definite that they can add value to the firm. The benefits acquired from CSR based on the neoliberal perspective point towards the question of ethics in business. According to Gallagher (2005) a business can only gain strategic advantages from CSR through abiding by the stipulated business ethics. He points out that the scandals linked to companies such as Enron and others directly emanate from not following the business ethics in CSR adoption. The Neo-Keynesian Perspective This view of CSR uses an angled definition which recognizes the stake holder’s role in a corporation. In this view, the proponents define CSR as an approach undertaken voluntarily and independently by corporations; which implies no external regulation or influence by the state or stakeholders. This discourse widely differs from the neoliberal perspective because it recognizes the impact of corporate behavior such as market failure and deliberate strategies among others. Secondly, it is because its analysis inclines towards revealing the positive role of the government in the regulation and development of CSR (Fox, 2006). As an example to rectify this approach, the European Union’s CSR promotion framework strives to integrate the environmental and social concerns related to CSR in their business operations. The company also continues to show effort towards voluntarily interacting with their stakeholders. The Radical Political Economy Perspective In this approach, the proponents take a more critical approach to CSR. According to O’Dwyer, (2003) corporations tend to possess a lot of power that the public views as being selfish; aimed at developing their self-interest and in so doing infringes on the society and the environment. According to political analysts, in this perspective of CSR, the corporations are focused on self-regulated policies so that they can deflect away from the external regulations and state control of corporate behavior. And in so doing they go on legitimizing and hiding environmentally destructive activities among their corporate activities. For example in 2008, the Dutch energy giant Shell misled the public to think that their CSR activities in Canada were advocating a profitable and sustainable future. On the contrary, the truth is that; they were trying to legitimize their oil sands project. The project had a problem with environmental compatibility for a sustainable future, but since they had publicly campaigned through various CSR activities they managed to sail through unquestioned. Recent debates on this issue have raised questions about the nature of corporate stake holder’s relationships. Looking at the current corporations using CSR the community stands out as the major stakeholder; thereby probing further questions about the nature of corporate-community relationships (Almaric & Hauser, 2005). The Friedman neoliberal perspective of merely being responsible does not qualify here as corporations need to recognize the overall importance of the community, its employees and other stakeholders; for a long-term success in it’s economic. Organizations and corporations have repeatedly supported their CSR activities as an honor for the bottom line of the business; the people, philanthropy, the planet and profits. The underlying question that emerges from the comparison of the perspectives mentioned above involves determining whether CSR supports the bottom line. This issue has become one of the most commonly debated topics among neoliberal and neo-Keynesian analysts as they look for reasons to prove if CSR benefits or costs the bottom line of any corporation. So far, no one has examined the cost implications that CSR activities imposes on business. However, according to different authors, investigating CSR’s sustainability against financial performance; CSR has performed better in highly sustainable portfolios than lower ones (Miromoto, Ash & Hope, 2005). Other commentators are more focused in finding out how CSR can add value to a business. Following this inquiry, they argue that various conditions can lead to a corporation’s added value, for example, unmatched competitions coupled with CSR activities can positively contribute to added value. According to Fittipaldi (2005) there exists overwhelming evidence every day that CSR has a positive impact; meet the bottom line. He asserts that currently companies are reporting experiencing the positive returns of CSR, and additional studies report the same as well. For example, Dow Jones experienced a higher return rate of an estimated 36% way above the previous three years index it ever recorded. This evidence points directly to the benefits of CSR and the real proof that it supports the business bottom line, (Rushton, 2002) Key Findings According to Coghill et al. (2005) there exist three most viable CSR drivers. The first describes CSR as just a business strategy, aimed towards protecting the stakeholders and promoting innovations that benefit corporations’ interests. Secondly, as a policy that upholds the moral and ethical values of a business corporation and lastly as a key tool for attaining social sustainability. In the neoliberal view, it is evident in opposing arguments that even companies that benefit from CSR at the economic level still face political, social, technological and other external environmental challenges. However, if corporations only focus on this perspective they will end up vulnerable to the government and public's opinion; hence the importance of CSR governance at the corporate level. Therefore, we can conclude that the neoliberal perspective puts a lot of emphasis on the benefits of CSR that in part constitute of strategies of risk management and, on the other hand, strategies of added advantage. Based on this perspective companies can only benefit from CSR by adopting the following arguments (Poritt, 2005); Human Resource: CSR adoption in employee recruitment and retention can be good for the competitive market as well as a motivation factor among the staff members. Brand Identification: Most of the companies in the current market practice CSR using this argument; which strives to separate them from competition in crowded markets. This argument focuses on the X –factor principle. For example, the major brands like The Body Shop use ethical values as their X-factor. Risk Management: This is a central strategy in managing a business. Reputations matter and scandals can ruin that; therefore businesses face the need to regulate events that promote unwanted attention. For example, from recent breaches in customer data, companies like Neiman Marcus and Target learn the importance of risk management. For them, risk management entails keeping the customers’ data safe. Diverting Attention: Companies that have prevailing problems linked to their business activities have repeatedly engaged in high-profile CSR programs. This way, they get to divert the negative attention from themselves. For example, the British American Tobacco Company has been implementing this strategy by taking part in health initiatives and campaigns. License to Operate: To avoid interference from the government businesses pay their taxes and observe regulations. But another alternative to CSR would be to participate voluntarily in environmental health and safety initiatives; that show the public how serious they are about health. Based on hypotheses, the FTSE companies among other companies like Telecoms continue to utilize the stakeholder theory and CSR perspectives to add value to their companies. For example, they have devised a way of recognizing and prioritizing the needs of their stakeholders through linking social outcomes and CSR programs. However, the existing evidence still points out that a vast number of corporations have not considered this aspect at all, (Knox et al. 2005). Another finding involves majority of companies like British American Tobacco having disguised their activities under the voluntary CSR initiatives. The underlying problem is that they still do not meet the standards that the state expects of them in terms of social and environmental health regulations. Critique have linked CSR to the increased penetration and influence of policy making at the public level; in that large corporations are currently exhibiting increased partnerships, dialogue with the government, other corporations among other strategies. Such practices have been noted among UN agencies and their increased use of voluntary initiatives to disguise their primary purposes. A deeper insight into the CSR issue has revealed shocking activities of the Coca Cola and Mc Donald companies in their understanding of the social, economic and environmental impacts of CSR (Lantos, 2001). Additionally, a shocking revelation has emerged; in that companies and corporate organizations tend to view CSR voluntary activities with very low regard. That is why they misuse it as an alternative to evade the law and government controlled regulations (Marquez &Fombrun, 2005). Recommendations Following findings that social, economic and environmental impacts are all advantageous in growing a business which utilizes CSR, I recommend that companies and corporations take more interest in those aspects. Further analysis of the same is needed to understand how to implement those impacts in corporation’s CSR strategies. Capitalizing on the advantages mentioned above is not enough, changes in leadership and a more defined approach to integrating the stakeholder theory in business operations will go a long way in adding value to a company. Voluntary initiatives are still not enough in trying to prove the worth of some CSR activities. Instead, the state needs to lay down more strict measures and counter check every business CSR; to ensure that their activities remain in line with the expected standards. Corporate business and other organizations need to undertake further studies into the developmental nature of CSR; to understand which perspectives work towards benefiting the individual companies, the social, and the economic environment as a whole. The Corporate Social organizations, non-profit organization and other humanitarian bodies need to implement the watchdog activism program; publicly shame and identify companies involved in CSR malpractices. There is an urgent need for critical information research and public education regarding CSR. The state needs to disseminate appropriate knowledge about CSR, CSR-related malpractices, investment policies and the key developmental impacts of CSR. This move will enable the public to advocate better sound CSR practices through campaigns, policy making, and other business strategies. Through the example of Shell and Coca-Cola companies’ cases, activists can borrow a few ideas to do with litigating companies and corporations caught mal practicing on CSR. Instead of viewing CSR as corporate self-regulatory strategy and their misuse of voluntary agendas, the state can devise a new mix of both voluntary and legal approaches to the CSR problem. In conclusion, critiques, and public debates may have varying views on CSR, but the underlying point is that voluntary CSR needs to embrace the aspect of stake holder’s theory, corporate governance and corporate accountability for sustainability. The simple definition of CSR to any corporation should focus on goals that foster social, ecological and political sustainability, and still give positive rewards to the financial markets. Instead of on what makes companies socially responsible, we need to dismantle the CSR systems and build the corporate rules that merge CSR with practices that sustain both the human race and the environment. This study critically analyzes and discusses the various perspectives on CSR based on previous studies and current CSR practices in the business world. References Amalric, F.& Hauser .J (2005). ‘Economic Drivers of Corporate Responsibility Activities’. Journal of Corporate Citizenship. Issue 20:27-38. Australian Conservation Foundation (2005). Submission to the Australian Government, Parliamentary Joint Committee on Corporations and Financial Services Inquiry into Corporate Social Responsibility. Retrieved March 30, 2015 http//www.aph.gov.au/senate/committee/corporations_ctte Coghill, K, Leeora B & Doug H. (2005). 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