Corporate Social Responsibility - Essay Example

?Corporate Social Responsibility Introduction The key policies and issues of Corporate Social Responsibility (CSR) are to treat all employees with equality and fairness, operate ethically within the systems and also with integrity. The concept teaches the managers to respect the basic human rights, sustain in the environment for future generations (Aras, Aybars and Kutlu, 2010). There is very little information on how corporate decision makers can reconcile differences between the public and private interest goals. There are no singular limitations of CSR concept which act in the favour of aligning the personal and business goals (Tapang and Bessong, 2012). There are various potential conflicts in the method of preparing documents and construction of strong approach and business activities. Corporate Responsibility is just a relative approach and has an objective basis, which is also known as unsustainable development methodology (Aras, Aybars and Kutlu, 2010). It is also considered as a radical managerial approach. The various other CSR theories help in development of continuums with the focus on integration of business activities with community activities. Organizations have developed several measures for dealing with the strategic societal, environmental and community needs which have led to the incurring of huge amount of expenditure in the organizations. Small and medium enterprises do not have the necessary resources for developing or implementing the CSR tools and approaches (Burger, 2011). When a company wants to improve its social performance, it divulges itself through social activities like providing charitable donations, organizing charitable associations and sponsoring activities. The study will deal with the concepts of CSR and its role in financial crisis along with its future prospects. The author of the study will also highlight the relevance of CSR and the guidelines for implementing CSR techniques developed by leading associations. Finally, the study will also incorporate the various legal requirements, regulations and guidelines related to the CSR concept. Evolution & History of Corporate Social Responsibility Corporate Social Responsibility (CSR) is regarded as a technique which helps the organization in its evaluation of the business activities and its impact on the society and environment through ethical and transparent decision making (WBSCD, 2013). CSR has evolved as a challenge for the entire business and academic community as it involves a time consuming systematic approach and also a thorough knowledge of the existing sustainable issues (Chen, 2011). From the academic perspective, it has become one of the most relevant and purposeful research topics which have provided relevance to the functioning of the organizations (Chen, 2011). In the academic perspective, it has moved on to an overall new organizational level which already includes the impact on the organizational outcome. Theorist Carroll (1960, cited by Chen, 2011) has laid emphasis on the theoretical orientation of the normative and performance oriented ethics which have the ability to increase the organizational outcome. This in turn have a positive impact on the exiting business systems. The evolution of CSR concept has been associated with the inception of the subject of organizational behaviour. In 1919, the shareholders of Ford had decided to grant the request of the Dodge brothers for maximum dividends. This decision was made by the director of the company, Mr. Henry Ford whose main intention was to reinvest the accumulated gains of the company on plant expansion. He stated that one of the major objectives of Ford was to cater to the betterment of community development. William Clay Ford Jr had tried his best to convince the existing shareholders regarding the organization’s contribution towards the welfare of the entire society and community. Theorist Bowen (1980, cited by Chen, 2011) had regarded that organizations are vital fulcrum of power and the actions of the organization impact the society in a direct or indirect manner. Although, he had advocated that social responsibility is not a panacea for the social problems in business organizations but had asserted that it helps to improve the existing business policies. In the year 1954, Peter Drucker had included the concepts of social responsibility with the emphasis on areas where the corporate managers acted as public trustee, balancing claims to corporate resources and acceptance of philanthropy as manifestation of organizational support for good causes. During the tenure of 1960 to 1980, the concept of CSR expanded dramatically and helped in solving complexities in the business responsibility. It was regarded that the concept had created a public awareness regarding the economic development by narrowing the personal interests of the shareholders. However, certain theorists regarded that the concept was only applicable to the free society which denied the principle of maximization. As per Heald (1979, cited by Chen, 2011), the business practices have helped in the categorization of social responsibility concept into various dimensions which have in turn increased the organizational outcome. The CSR concept totally emphasizes on the functional ability of the organization which would include the philosophical, institutional and organizational institution. It also included the quest to the betterment of the entire society and also proper construction of the organizational structure. The importance of the non-commercial activities has increased gradually and the concept of CSR has integrated finely within the business ethics concept. Environmental degradation along with illegal depletion of the resources has raised concerns worldwide and led to the development of sustainable solutions. Development of social responsibility methods, rules and policies have become increasingly important to justify their business and commercial activities. It has helped in the identification and development of the activities responsible for the improvement of the entire organizational system by implementing business ethics value and beliefs into the systems. This had brought in the employee responsiveness by the process of assisting them to cope up with the social pressure and adopt a philosophical approach for curbing down managerial actions. This approach is regarded as a permit for reducing the business impact on the human sub-conscious, community and also on the continuity development. The CSR approach is regarded as one of the most integral approach which helps in the development of a strong foundation as the moral basis for the managers to make business related decisions smoothly. The importance of CSR continues to grow worldwide in almost every kind of organizations. This is done by the development of the proposal which helps in the smooth facilitation of the relationships between the organizational members and the stakeholders. Active corporation policies would not only strengthen the image of the company but would also lead to the improvement of their ways of conducting business activities. Role of Corporate Social Responsibility in Financial Crisis & Future Prospects The heated debate among the analysts during the tenure of 2008 to 2010 had revolved around the failure of CSR to solve the complexities in the financial crisis inspite of including the legal laws like, UN Global Impact and OECD guidelines. These legal laws were unable to conduct a good business in spite of the laws and regulations formulated by the leading associations and could not eradicate the irresponsible behaviour of the entire financial sector. The leading associations had failed to prepare the legal guidelines which could have acted as a buffer to these organizations and also remove the financial complexities. During this tenure, there was seldom any responsibility banking shown on behalf of the banker and there was an emergence of insider trading and dealings which had led to a corruptive atmosphere in the financial community. The Equator principles developed by the banking community on the other hand, had prevented companies to engage in socially irresponsible activities and also involved the direct accusation of the banks. However, the financial crisis during this period had also led to the practice of maintaining social reports which incorporated the activities conducted towards community and society development. The importance of the development of social report and responsibility accounting during the financial crisis period had also increased its relevance over time. Presently, the incorporation of sustainable reporting has become mandatory in certain countries like, Australia and the United Kingdom (Galbreath, 2010). In Nigeria, the preparation of financial statements is considered instrumental in reducing the environmental hazards and wastes. CSR reporting acts as a way of preservation of environment and society (Galbreath, 2010). Although, profit maximization is one of the main objectives in the developing economy like, Nigeria, it is understood that by maintaining the environmental protection measures, the company does not reduce its chances of earning profits. The role of the CRS has become highly relevant and includes the acts of solving global problems like climate change, depletion of natural resources and pollution. The strategic importance of CSR factor had increased with the community development and involvement activities which had led to the accomplishment of the goals and objectives in a systematic manner (Halal, 2000). This is because the customer tendencies to determine the ways and methods would require the adequate guidance from the CSR charter reports and also polices that are formulated at regular intervals by leading environmental associations. It is observed with the growing levels of concern and awareness activities related to CSR, sufficient associations have been established which focused on solving deep-rooted problems and issues that act as a hindrance to the accomplishment of goals and objectives of the organizations (Hohnen and Potts, 2007). For the betterment of the future prospects of the organization, measures like, the implementation of a CSR framework needs to be incorporated. This framework would include the integration and inclusion of social, economic and environmental performance (Sen and Bhattacharya, 2001). A CSR assessment model framework needs to be developed by the leading corporate teams along with identification of legal requirements, regulations and engagement of stakeholders in key corporate and managerial decisions (Lee and Newell, 2012). An accurate and precise corporate external framework would be developed by the managers which would act as an ethical code of conduct and help the managers to guide the employees of the organization and also improve their efficiency levels (Lee and Newell, 2012). The company can also apply the stakeholder theory which applies to entrepreneurial ability and also to multinational corporations. This will help in forming co-operative and conducive relationship among the stakeholders and the management (Manpower, 2009). Legal Regulations & Corporate Social Responsibly The government intervention is much required for the inclusion of regulations and policies which are strongly related to each other (Moir, 2001).The government included several policies for small, medium and large sized organizations to comply with certain rules and regulations. This included the inclusion of certain rules and regulations which helped in the improvement of the existing supply chain systems (Newell, 2005). Firstly, the ten principle of global impact developed by United Nation has served the purpose of a guide for the organizations in performing business activities and also incorporating anti-corruption and sustainable measures (Slaper and Hall, 2011). In June 2012, the parliamentary commission on the banking standards which was published in the reports of “Parliamentary Commission of Banking Standards: Changing banking for good” had laid emphasis on the fact that banks should have transparent accountability system for the improvement in managerial actions and decisions (Newell, 2005). The reference to the Companies Act 2006 would help the managers of the banks to ensure safety measures for achieving financial soundness of the bank as well as retaining the interests of the members. While these enactments give a basic idea to the organizational members about the measures to be taken for the betterment of the entire community, it does not cover certain aspects like, identification of drivers which help in the formulation of strategies for determining the proactive activities to be undertaken by the organizations (Nicolau, 2008). Similarly, the Global Leadership Development Program by Petrobas had focused on implementing policies for the development of a project which aimed at transforming business relationships to overcome the challenges faced by the organizations (Perez-Gladish, Faff and Benson, 2012). Conclusion There are various forms of CSR activities which help in enhancing the brand image of the company. A company’s ability to develop alternative solutions for economic and social problems will help in evaluating the impact of the business activities on the society. The costs related to the social investment activities are borne by the common people because of the increased product prices and services. By laying emphasis on specific actions, the company needs to broadly conceptualize the managerial obligations and take actions accordingly. The undertaken actions should have the ability to enhance the performance of the company. The domains of CSR approach is wide and lays emphasis on community support, diversity, innovation, employee security, job security, environment and job involvement. The CSR approach has a definite impact on product evaluation and consumption pattern. Reference List Aras, G., Aybars, A. and Kutlu, O., 2010. Managing corporate performance. International Journal of Productivity and Performance Management, 59(3), pp. 229-254. Burger, A., 2011. Shell in Nigeria: Oil, Gas, Development & Corporate Social Responsibility. Triple Pundit, [online]. Available at: < http://www.triplepundit.com/2011/07/shell-nigeria-csr-corporate-social-responsibility/ > [Accessed 01 November 2013]. Chen, C.H., 2011. The major components of corporate social responsibility. Journal of Global Responsibility, 2(1), pp. 85-89. Galbreath, J., 2010. How does corporate social responsibility benefit firms? Evidence from Australia. European Business Review, 22(4), pp. 411-431. Halal, W.E., 2000. Consumer reactions to corporate social responsibility. Strategy and Leadership, 28(2), pp. 10-16. Hohnen, P. and Potts, J., 2007. Corporate social responsibility. International Institute for Sustainable Development, pp. 01-115. Lee, C.L. and Newell, G., 2012. Influence of the corporate social responsibility factors and financial factors on REIT performance in Australia. Journal of Property Investment & Finance, 30(4), pp. 389-403. Manpower, 2009. Corporate Social Responsibility [pdf] Manpower. Available at: [Accessed 01 November 2013]. Moir, L., 2001. What do we mean by corporate social responsibility? Corporate Governance, 1(2), pp. 16-22. Newell, P., 2005. Citizenship, Accountability and Community: The Limits of the CSR Agenda [pdf] Government of UK. Available at: < http://r4d.dfid.gov.uk/PDF/Outputs/CentreOnCitizenship/internationaaffairs20pn.pdf > [Accessed 01 November 2013]. Nicolau, J.L., 2008. Corporate social responsibility. Annals of Tourism Research, 35(4), pp. 990-1006. 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