The Main Motivation for Corporate Social and Environmental Reporting - Essay Example

Motivation for Corporate (Social and Environmental) Reporting I totally agree with Adam’s sentiments that “the main motivation for corporate {social and environmental} reporting; is to enhance corporate image and credibility with stakeholders. This sentiment ultimately overly gives the reason as to why social corporate responsibility must always be in line with the social and political environment of the business operations. Accordingly, without the stakeholders’ partake in the business environment; any kind of business is prone to failure. Ultimately, a business must draw a difference between its corporate social responsibility and internal business operations. CSR therefore chips in the business operations as a strategic tool for achieving the set economic objectives. Moreover, CSR may dominantly act as a mere mode of an end driven wealth creation and stakeholder value estimation. A well-organised business premise must philanthropically think of a better way to capture attention of the social environment in order to make a difference in the business’ bottom line operations. In the modern contemporary corporate societies, business operations must be considerate in relation to their surrounding environments. A responsibility strategy is, therefore, needed in any business operation to boost its external environment’s motivation. Per se, business operation must put in place a viable social corporate responsibility. Maximization on the social corporate responsibility henceforth, is the only responsible way for a business to thank its stakeholders and the overall external business environment. This research paper explains the social corporate responsibility theories; a postulated by Adams- a professor at Monash University. Firstly, what is a theory? A theory is a body of knowledge that acts as a guideline to various occurrences. Through the CSR theories an overboard guideline is given to the business corporates. CRS considerably is the business corporate’s considerations as well as response mechanisms of the issues beyond simple economic, legal and technical requirement. Currently, in the business world, the legality of business operations solely relies on the corporate social responsibilities of a business premise (Friedman 121). Various theories have therefore emerged to serve as knowledge sources and guidelines to the corporate world. These theories are ultimately in line with the CRS. Theories of CSR are positive theories and ethical-normative theories. Positive CSR theories include; political, instrumental and integrative theories. Normative theories on the other hand are collectively used to serve as a conformity and compliance guideline to the firms. Positive CSR theories explain consequentially why firms participate in CSR activities. An ethical theory on the other hand explains conservatively the reasons as to why firms should undertake social corporate responsibility (Franklin et al. 145). These theories if followed to the later by any business premises therefore, the ultimate goals must be consequentially achieved without any drawbacks. Instrumental theories; these theories act as the inner core of CSR’s strategic tool for planning and management. CSR objectives are achieved ultimately through these theories guidelines. Instrumental theories are, therefore, seen as the importantly structured strategic tool to achieve a firm’s strategic objectives. In addition to economic objectives achievements, instrumental theories also ensure the betterment of corporate world. This is achieved both in the internal business environment and in external business environment (D & U 167). In CRS, instrumental theories are thus seen as a propeller of shareholder’s value maximization and wealth creation by the business corporates. The responsibility of a business premise towards, as social setting is overly the maximization of profits. Profit maximization to the Shareholders within the legal entity of a country would ensure trustworthy functional activities of a business. Managerial branch stakeholder theory diversely explains the shareholders attribute of profit maximization. Accordingly, the managerial branch stakeholder theory interlinks profit acquaintances to the satisfaction of stakeholders. The stakeholders are always right in relation to their take on the business operations; hence their wish is the business command (Garriga & Mele 148). In order to achieve a healthier external environment a business must therefore ensure it addresses uniquely and appropriately the customers’ needs. This link would lead to an increase in sales as well as increase in profit margins. Majorly, instrumental theory inclines more on the local community investment by the businesses; this is in order to attract desirable employees. Lastly, the instrumental theories aim at maximizing shareholders wealth and strategically increasing the business’ competitive advantages. The Political theories of CSR: These theories major on the generation of information on companies’ interaction. These theories’ centre of focus is on the interactional activities between companies and society. Additionally, the political theories aim at unearthing the power of companies and their overall responsibility towards the society. As political economy appears to be the supremo of all the corporate economies, it should give guidelines to the corporate societies in relation to its needs (Friedman 135). The political theories nonetheless emphasis on a responsible use of firm power in the political arena. The responsible firm power should include purely ethically based firm practises. These firm powers cordially include; corporate constitutionalism, corporate citizenship and social constructivism. CSR political theories emphatically majors on the social powers of firms and all the adverse responsibilities associated with these powers. Political theories- corporate constitutionalism: This theory bases its CSR on the argument against market efficiency. The theory views the firm power as being unlimited especially towards influencing the market equilibrium. As per corporate constitutionalism theory, the firm’s price stability is not Pareto optimum. The price therefore reflects the free will of the customers in relation to the marketing mix knowledge they have. This theory henceforth sees the social responsibility as an entity of the amount of social power firms are charged with. Social contact theory deal with the obvious and implied expectations social settings considerably have in an organisation and its operations (Mullerat & Daniel 111). Lastly, political theories’-corporate citizenship overly indicates firms and citizens coming together. This is through certain involvements by the business in the community. Integrative theories of CSR: These theories dwell on how firms interrogatively integrate demands, supply as well as the concerns of the firms operations by the stakeholder and the society. A company is overly dependable on society for its growth, continuity and existence. Business firm’s liability must always be considerate of the social or stakeholders demands. An integration mechanism would therefore ensure the firms operate in agreement with the social norms and values. The social norms and values are often ethically based. For example these norms and values may include; non-pollutant emissions into the external environment and employment practices of the surrounding community (Lee & Philip 128). Integrative theories that explain the social corporate responsibility include; stakeholder theory (stakeholder management) and legitimacy theory. Interpretive theories’- legitimacy theory: this theory guides the firms in relation to structural functionalism with the norms, beliefs and rules of their respective societies. Inconsistent compliance to social norms would lead to anomies and consequential legitimacy threat to the firms. The second theory under integrative theories is the stakeholder management: This sub-theory focuses on the demands of primary stakeholders which may affect the firm’s operations in the long-run. This micro-theory of CSR is basically amorphous in explaining the best way of integrating primary stakeholders into managerial decision-making. Lastly, ethical theories (normative theories) explains the main motivation for corporate’s social and environmental reporting. A corporate world must be a respect-based entity in order to achieve all the goals of corporation. The ethical theories stress on the corporate world’s codes of conduct and overall respect to the surrounding. These theories’ focus therefore is on the right things for companies to do in order to achieve a healthier business society. The sub-braches of ethical theories of CSR include; sustainable development and ethical (normative) branch of stakeholder theory. Ethical theories’-branch of stakeholder theory (Lang & Hannah 137): This theory explains all the fair and rightful treatment of the stakeholders. Stakeholders are often the movers and shakers of the business henceforth the management should manage the organisation for the benefit of stakeholders. Secondly, ethical theories’-sustainable aims at substantiating the environmental factors in both socially and environmentally acceptable ways. This would be a better move towards ensuring of the completion of a healthier external business environment via social corporate responsibility. In conclusion, CSR reporting may also act as a motivational factor towards a socially acceptable corporate world. This is the process of passing information concerning the social and environmental effects of organisation’s activities within the social environment of the business operations. CSR reporting for companies is beneficial especially in highly competitive businesses. One of the benefits of this strategic planning and management system is that; its gives a soundly corporate governance at large. Soundly exhibited corporate governance would pave way for an ethical business operation throughout all the levels of the organisation. Secondly, CSR reporting improves the risk management decision making of an organisation. This is done through a well-coordinated management systems and performance evaluation monitoring. Thirdly, the CSR reporting companies are accurately formalised and enhanced in communication strategies with their key stakeholders. The CSR communication strategy improves the personal relations of these business corporates with the financial sector, community, customers and suppliers. Lastly, CSR reporting for companies has been largely adopted by various successful companies through a benchmarking performance. This bench marking performance is done within both the industrial internal environment and external environment across other industries. Works Cited Franklin, James R, R D. Fritz, Susan A. Longacre, William A. Morgan, and Charles A. Sternbach. The Great American Carbonate Bank: The Geology and Economic Resources of the Cambrian-Ordovician Sauk Megasequence of Laurentia. , 2012. Print. Friedman, Milton. The Counter-Revolution in Monetary Theory: First Wincott Memorial Lecture Delivered at the Senate House, Univ. of London, 16. Sept. 1970. London: Institute of Economic Affairs, 1970. Print. Garriga, Ronald G, and Mele Guskin. Planning for Innovation: A Comparative Study of the Literature on the Dissemination and Utilization of Scientific Knowledge. Ann Arbor, Mich: Univ. of Michigan, Institute for Social Research, 2009. Print. Lang, Achim, and Hannah Murphy. Business and Sustainability: Between Government Pressure and Self-Regulation. , 2014. Internet resource. Lee, Nancy, and Philip Kotler. Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. Hoboken, N.J: Wiley, 2013. Internet resource. Mullerat, Ramon, and Daniel Brennan. Corporate Social Responsibility: The Corporate Governance of the 21st Century. Alphen aan den Rijn: Kluwer Law International, 2011. Print. Read More