Recession and Corporate Social Responsibility - Essay Example

Recession and Corporate Social Responsibility Student’s Name: Instructor’s Name: Course Code: Date of Submission: Introduction Corporate social responsibility (CSR) is one of the most discussed topics in organizations. CSR not only applies in the commercial sector but also in other sectors of the economy such as the government, the public sector and the private organizations including nongovernmental ones as well as other globally recognized organizations such as World Health Organization (WHO), the International Labor Organization (ILO) and the United Nations. CSR in many organizations is seen as the best approach in the contemporary society of management since it helps create competitive advantage above the competitors by ensuring that the available scarce resources are well used to enhance the productivity and the performance of the business (Robins 2008). However, good organizational competencies such as good communication and management and organizational culture are important. More important, CSR is becoming into picture more than ever before more especially during this error of economic recession. With the economic recession, the business environment is a degrading one and that survival rate has continued to be on the decline. With increased economic recession, pressure has mounted on various sectors to lower prices something that has deterred the transacting business more especially on the area of receivables. This has led to increased into the cost of doing business (Fernández and Souto 2009). The idea behind this article is to critically discuss the impact of this economic recession on Corporate Social Responsibility. Impact of economic recession on CSR Corporate Social Responsibility is founded on three main aspects which are known to give the company a competitive advantage and which include economic, social and environmental responsibilities. Despite the role CSR plays to the business, it is seen as a cost activity to the business and that to be effective in CSR strategy, reasonable amount of resources in terms of human resources and financial resources have to be invested (Robins 2008). Now the emerging question is, “how can organizations be able to sustain CSR activities amid unstable economic environment where businesses have continued to fair very poorly?” At the core of CSR is to work towards respecting and upholding human rights at workplace by ensuring that decent working conditions are created, the environment especially the value chain in which the business operates and the enhanced productivity and performance of the business. However, the provision and implementation of CSR services is depended on the overall performance of the business and the state of the economy globally. Since its becoming increasingly difficult for the businesses to uphold human rights in a very harsh environment, it’s becoming very critical for organizations to think beyond the current state and plan for future endeavors (Crane et al 2008). Further, it’s becoming very important for business to recognize the benefits attached with venturing into those foreign markets that are free from economic globalization. With the advancement in technology, the strategy in many organizations has continued to working on and developing new technologies to help improve their performance at par irrespective of the tough economic times. With the emerging global economic recession its becoming even clearer that economic stability in the world over is far from realization (European Commission 2009). This is speculation is on the rise and businesses are looking for quick opportunities something has continued to impact negatively on the performance of the global market. Therefore, to achieve stability and sustained growth and development of many businesses, various stakeholders including governments are becoming very cautious to their business dealings (Fernández and Souto 2009). With the economic crisis of 2008, the global economy was at stake and the question that was being posed is, “what is the way of Corporate Social Responsibility?” It emerged that everything was not going the right direction and that great impact was expected to CSR but nobody new how to deal with. Some management have seen the current recession as a situation that is forcing many of the companies to withdraw from CSR since it’s seen as a burden to many of them. However, according to some scholars and researchers such as Robins 2008, Calvo 2010 and Kovoor-Misra 2009, see global economic recession should be seen as a challenge to many organizations to work on strengthening the CSR and in order to incorporate those strategies that will help organizations overcome threats posed by global economic recessions. Research has shown that global recession impacts directly on many of the organizations and more especially in terms of financial performance. Many of the businesses have been witnessed working on measures to cut down on their expenditures and more especially those that are related to social responsible activities. Consequently, reviewing of some of the projects related to CSR has been dropped by many companies with intention of to bring down the cost of operations (Pohl & Tolhurst 2010). On the same line, many of the projects that are considered to bear very minimal marginal interest to the companies, have been dropped or declined with only CSR activities associated with direct voting of funds and donations left. However, much of the impact of economic recession has been felt on social rather than on environmental aspects. For instance downsizing, retrenchment and expenditure cut down on employee development has been very common. This is to imply social corporate strategy has changed and that the most affected area is the social aspect (Crane et al 2008). Finally, with the occurrence of global economical recessions, CSR has now come to understand that understanding and having a view on global trends and their impacts is an important strategy. This is because it will be easy to deal with problems related to global recession and at the same promote those projects that are associated with positive touch in the society. However, most important with CSR is that many companies have come to understand that doing proper communication with all stakeholders is a very important strategy in ensuring that genuine trust and relationships are built rather than trying to create an artificial image of a company that is perceived to be generous (McWilliams & Siegel 2001). Conclusion The objective of this article was to critically discuss the impact of economic recession to Corporate Social Responsibility. It has been found out CSR is a very important aspect in organization. This is because it entails addressing important aspects related to social, economical and environmental activities. CSR is used as a strategy to a competitive advantage for the organization. However, with association of the cost element, global economic recession has had a very serious impact to many organizations. In general, economic recession has forced many organizations to reconsider their CSR strategies in order to better deal with recession through enacting future elaborate plans. References Calvo SG 2010, “The Global Financial Crisis of 2008: A View from the Social Sectors, Calvo United Nations Development Programme”. Human Development Reports Research Paper. Available at: http://hdr.undp.org/en/reports/global/hdr2010/papers/HDRP_2010_18.pdf Crane, A., Matten, D & Spence, L 2008, Corporate social responsibility – readings and cases in global context, New York, NY, Routledge. European Commission 2009, Economic Crisis in Europe: Causes, Consequences and Responses, EUROPEAN ECONOMY 7, Luxembourg. Fernández B and Souto F 2009, “Crisis and Corporate Social Responsibility: Threat or Opportunity?” International Journal of Economic Sciences and Applied Research 2, p. 36-50. Kovoor-Misra, S 2009, Understanding perceived organizational identity during crisis and change: A threat/opportunity framework. Journal of Organizational Change Management, 22(5), p. 494-510. McWilliams A & Siegel D 2001, Corporate social responsibility: A theory of the firm perspective. Academy of Management Review, 26(1), p. 117-127. Pohl M & Tolhurst N 2010, Responsible business: how to manage a CSR strategy successfully. London, England, Wiley. Robins F 2008, Why corporate social responsibility should be popularised but not imposed. Journal of Corporate Governance, 8(3), p. 330-341. Read More