The Influence of Shareholders on Corporate Social Responsibility - Term Paper Example

CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility Introduction Corporate Social Responsibility (CSR) is a concept that has evolved over the years to become a formidable element in strategic planning and management in contemporary organizations. It is a management concept that encourages businesses and organizations to partake in creating stronger and sustainable communities (Goodman, Louche, Cranenburgh, & Arenas, 2014, p. 199). The term refers to the efforts of organizations that aim at contributing towards creating sustainable communities and environments. Essentially, companies are expected to give back to the communities where they operate because of the benefits they also derive from the local communities. CSR is also known as Corporate Conscience or corporate citizenship. It basically refers to the responsibilities that companies have to the locals within the communities they operate. Companies incur short term costs by engaging in CSR activities with no guarantee of immediate financial benefits. Nevertheless, CSR promotes positive environmental and social changes in the society, which lays a good foundation for further business activities for the businesses. Another significant component of CSR policies is the self-regulation mechanism. CSR grants companies the freedom to regulate themselves in terms of monitoring their business activities to ensure they comply with the legal framework in place as well as adhering to accepted ethical standards and international norms for doing business. However, some CSR models allow firms to go beyond the regulatory frameworks by engaging in actions that promote social good in the community (Glac, 2014, p. 66). Essentially, the main objectives of CSR are embracing responsibility for corporate actions and encouraging organizations to create a positive impact on the environment and various stakeholders in the business activities such as consumers, investors, local communities, and employees. CSR is the commitment that companies have in creating policies that integrate their responsible business operations with responsible practices, as well as timely reporting on the progress made towards implementing the outlined CSR policies. Initially, CSR strategies only focused on philanthropy as the main means of relating with the community (Hiller, 2013, p. 299)). However, the expansion of the concept of CSRS over the years has led to broadening of the scope of corporate responsibility to include commitments to improving the quality of lives of the community as well as other key stakeholders in the company, and contributing towards a sustainable environment. As such, the broader concept of CSR covers various strategic areas in organizational leadership and management, including governance and ethics, recruitment policies, energy and environmental impact, opportunity and training, and responsible supply chain management and purchasing policies (Hack, Kenyon, & Wood, 2014, p. 47). The concept of sustainability is also a major concern in developing CSR policies. Specifically, CSR focuses on ensuring economic, environmental, and social sustainability. Originally, the concept of sustainability in relation to CSR was only viewed in terms of preserving the limited resources on earth for posterity. However, the concept has also evolved to mean all processes and activities that aim at meeting the needs of present while not compromising on the ability of the future generations to enjoy similar needs (Jizi, Salama, Dixon, & Stratling, 2014, p. 610). Therefore, sustainability calls for organizations to create a good working environment for its employees as well as addressing all the concerns of the stakeholders, while also developing strategies that minimize depletion of resources in the community. Is Corporate Social Responsibility Just Public Relations? Despite CSR being such an important tool in strategic management as well as in enhancing relations between businesses and local communities, there have been numerous concerns about the motives behind CSR strategies. There is a growing opinion that companies only use CSR as one of their public relations exercise to create a good image for their brands and in turn earn more profits. This in itself is against the core values of CSR, which call for a win- win situation between the companies and the locals (Becker-Olsen, Taylor, Hill, & Yalcinkaya, 2011, p. 33). A win-win situation implies that the company will be able to make normal profits while the society benefits from the companies programs. However, current CSR strategies only focus on earning businesses profits while partaking in unsustainable social programs in the community. Therefore, while the companies continue to make profits, the society does not benefit as much. Recent studies about CSR indicate that the use of CSR in modern organizations has some ulterior motives beyond the usual objectives of strengthening and empowering the community. For instance, one study revealed that most decision makers in companies today favor CSR as one of the strategies for branding and employee benefits. For instance, the concept of philanthropy has been misused in CSR. Most companies embrace philanthropy by making huge donations to charities in the name of pursuing CSR activities. However, by giving out huge chunks of shareholder’ money, the management often expect to get back huge profits from the same in order to cover up for the funds given away (Becker-Olsen, Taylor, Hill, & Yalcinkaya, 2011, p.40). This may happen trough requesting for reduced taxes. Similarly, the company may want to increase its image and brand by associating themselves with a good course and thereby win more hearts in terms of clients from the community to boost their sales and profitability. In this instance, therefore, CSR is used as a cheap vehicle for the company to advertise itself and its services in the community instead of aiming at improving the community. Some organizations engage in CSR to counter growing pressure from the community and activists over the organization’s activities. CSR often aims at diverting the attention of the public from real issues in the organization to some acts of philanthropy. More specifically, CSR is used as a public relations tool to help the organizations avoid regulation, access new markets, gain legitimacy, and move towards privatization of public functions of organizations. Consequently, CSR helps organizations to provide ineffective market based solutions in an attempt to improve the environmental and social crises in the community (Connaughton, Leon, & Herbert, 2014, p. 557). This eventually deflects the blame that organizations face in depleting the community of its resources, and shift the blame to the consumers through engaging them in ineffective CSR activities. Consequently, organizations use CSR only to protect their interests while on the other hand hampering any significant efforts for finding sustainable solutions for societal problems. CSR as a Public relations Image/Branding tool One of the ways in which CSR is used as a strategy for public relations is by appealing to the masses. CSR is a major selling point of the company’s operations and one of the ways of strengthening the company’s brand and image (Preuss, & Perschke, 2010, p. 537). CSR enables the company to appeal to the desires and consciences of individuals in the society and build a strong connection with the community thereby enhancing customer loyalty. By being involved in charity, the organization is able to add significant weight to its brand message to the local community, enabling g it to access a bigger market (Jones & Felps, 2013, p. 222). Similarly, CSR provides a great avenue for advertising through word of mouth and other guerilla marketing techniques in the community that come in the name of CSR. CSR also helps to paint a perfect picture of the organization and its activities regardless of the company’s failures in the past. For instance, organizations engulfed in acts of corruption and unethical business can engage in CSR to boost their image among the locals, thereby green washing their image among the community. According to (Benn, Todd, & Pendleton, 2010 pp. 411), CSR is used by organizations as one way of claiming substantial progress in their activities, even without verifiable evidence for the same. One major example to illustrate how companies use CSR as a PR tool is the case filed against Nike Company in the US. In 2002, the company engaged in a misleading public relations campaign in the community through its CSR strategy. Activist Marc Kasky sued the company for the failure of its CSR activities in the community due to the misleading information used in promoting the company’s image. On the other hand, Nike argued that it was within its right to exercise provisions of the first amendment in relation to free speech when making its commercial messages. However, the court ruled that the company was not covered by the amendment and that it was in just for using misleading information to make itself in the community (Lanis, & Richardson, 2015, p. 450). This case can only be looked at in terms of how companies use their CSR activities as public relations strategies. CSR as a Strategy for Avoiding Regulation CSR is also used by companies as one strategy for enhancing their image and thereby escape being punished for their misgivings. In most cases, CSR is often a company’s reaction to growing mistrust in the public amidst calls for more regulation in the industry (Bingham, & Walters, 2013 pp. 616). Most company managers resist attempts for regulating their businesses for the reason that regulation innovation. They also point out that it is not practical to regulate ethics as well as stating the need to have competitive advantage in CSR in order to make it justifiable for businesses. However, by resisting attempts for regulation, these organizations are only holding the government at ransom on the basis that regulating how they conduct their CSR will discourage them from investing in the local communities (Bottom, 2009, p. 261). As it stands, CRS is a neglected area the regulatory framework since each organization is left to device its own strategies and methods for engaging with the community (Tschopp, & Nastanski, 2014, p. 150). However, this grey area in law makes it difficult for ensuring accountability for the businesses. Many scholars are of the opinion that there is need to establish the minimum requirements for organizations to meet when engaging with the communities they work with to ensure every CSR strategy is sustainable (Koe Hwee Nga, & Shamuganathan, 2010, p. 273). The rules need to focus on how organizations ought to be structured, the impacts they are expected to have in the community in terms of social and environmental effects, as well as how organizations engage with their stakeholders like the employees and shareholders. The extent to which Corporate Social Responsibility evolved beyond Personal Responsibility Since its emergence, CSR has developed into a formidable strategy for organizations in enhancing their reputations, strengthening their brands, and gaining competitive advantage. Initially, CSR activities only focused on helping the community, enriching the capacity of the locals to use available resources efficiently, and ensuring sustainability in terms of managing environmental and social issues in the society (Pérez, & Rodríguez del Bosque, 2013, p. 267). Contemporary organizations use CSR as one of the ways of improving their overall functionality, boosting the sales, earning more profits and gaining competitive advantage. Businesses today face a lot of challenges including dealing with organizational change, globalization, technological advancements, and changes in regulations. As such, organizations may find themselves failing to meet their goals, creating a bad reputation culminating in decreased profitability. CSR provides an avenue for these organizations to overcome such challenges and regain their reputation buy building stronger brands in the community. For instance, organizations can invest in the community through charity activities, and initiating social and environmental programs that unite the community (Celma, Martínez-Garcia, & Coenders, 2014, p. 87). These kinds of community engagements bring the organization closer to the people, forming s strong relationship that can culminate in strong customer loyalty in the community. As such, CSR can be used as public relations exercise to help create a god brand I the community. Through the philanthropic acts of the organization, the company is likely to entrench itself to the locals, strengthen its market and enforce its brand superiority. Furthermore, CSR is looked at as a strategy for enriching a company’s reputation. In circumstances where an organization faces turbulent times such as public scandals, investment in the community activities always seems as the main strategy for mending the relationship with the public (Gautier, & Pache, 2015, p. 351). The public seems to have a soft heart for companies that invest in creating a better society by investing in the community and engaging in numerous philanthropic acts. Similarly, CSR is one way of gaining competitive advantage. In this day and age, it is important for businesses to get involved in community activities. Businesses that neglect CSR often tend to be alienated from the community, and find it difficult to grow and expand. Some businesses initiate CSR programs that end up as failures and corrupt means of marketing themselves by taking advantage of the community (Szondi, 2010 pp. 333). However, the organizations that have elaborate strategies for CSR always benefit bin terms of having a strong competitive advantage. This is because CSR brings an organization closer to the people, strengthens the company’s brands and ensures customer loyalty. Eventually, the CSR strategy helps the organizations to gain significant market shares coupled up with increased profitability in the long run. Conclusion Cooperate social responsibility plays a vital role in the business environment by ensuring that firms give back to the society to ensure sustainability. As such, businesses express their corporate citizenship in their communities through various activities and strategies including pollution and waste management processes, contributing to enrichment of the society through social programs such as education, health and sports (Goodman, Louche, Cranenburgh, & Arenas, 2014, p. 201). However, in the present day, cooperate social responsibility has come to be viewed as a public relation strategy where companies only engage in these activities to create a god name for themselves while the society does not benefit much. Bibliography Becker-Olsen, K. L., Taylor, C. R., Hill, R. P., & Yalcinkaya, G. 2011. A Cross-Cultural Examination of Corporate Social Responsibility Marketing Communications in Mexico and the United States: Strategies for Global Brands. Journal Of International Marketing, 19(2), 30-44. Benn, S., Todd, L., & Pendleton, J. 2010. Public Relations Leadership in Corporate Social Responsibility. 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