Role of Corporate Social Responsibility, Its Benefits, and Shortcomings for Business - Essay Example

Running Head: Role of Corporate Social Responsibility Student’s Name: Instructor: Course Code and Name: Institution: Date the Assignment is due: Question: Is corporate social responsibility good for business? If so, how do we ensure staff buy-in? Introduction to Corporate Social Responsibility There are instances that the operations of a business entity are in conflict with the public interest good. Some operations are harmful to the environment, delimiting to consumers, endangering to employees and destructive of the social economic status of a region. Mining for instance has a bearing in all these evils. A company cannot remain oblivious to its impact to the environment, employees and community in which and with which it thrives. It is human to expect that such a company would voluntarily commit to neutralize or compensate for some of these adverse effects by taking responsibility of its core business activities (Bansal, 2006). That argument is the basis on which the concept of corporate social responsibility is founded. The term corporate social responsibility (CSR) originated in the 1970’s to refer to corporate self-regulation that is integrated into normal business practices of an organization. According to Bansal (2006), businesses usually formulate a CSR policy to function as a self-regulating mechanism that helps them monitor their business operations and ensure their adherence to ethical standards, law and international codes of practice. In most instances, businesses embrace CRS as a way or reducing the impact of their core business activities on consumers, the environment, employees, stakeholders, communities and all other public spheres with which they come into contact with. Bansal, Maurer & Slawinski (2008) identify another angle of corporate social responsibility is where businesses assume a proactive role in promoting public interests that encouraging the community to grow and develop. In most developing societies, companies engage in poverty eradication initiatives for instance to help stimulate regional development. Businesses can also voluntarily start eliminating some of their business practices that have been known to harm the environment or public spheres whether or not the said activities are legal. Experts agree that the essence of CRS is in the deliberate inclusion and advocacy of public interest matters as part of their in-built corporate decision making processes. In this regard, experts have formulated a term, ‘Triple bottom line’ to refer to the responsible interaction of a business with People, profits and the Planet (Bansal, Maurer & Slawinski, 2008). Yet despite the obvious relevance of CRS policy in businesses, many organizations still do not concur to the need of CRS. Many institutions still do not take responsibility of the actions and counter effects of these activities on the environment, community, employees and stakeholders. The argument is usually that, CRS is not an investment but expenditure to be avoided if possible. After all, opponents argue, businesses are not in the business to give out their profits but to increase them. What such criticism omits is a consideration of the strong business opportunity afforded by CSR. As this paper will detail, CRS is good for business since it is an intangible investment into the future and one that benefits the business more than the community, employees or stake holders at the ultimate analysis. The paper debates on the arguments for and against CRS as a business engagement and then concludes on the pertinent role of CRS in the 21st Century competitive market. Before taking a concluding stance, the paper details how corporations can engage their staff into the CRS mentality. Contemporary Approaches to Corporate Social Responsibility Corporate social responsibility in most cases is concerned with assuming ethical accountability of how a business operates. It helps to ensure that a business entity conducts its activities in an ethical manner as judged from the environmental, social and economic impacts of their business operations (Saether & Aguilera, 2008). Towards this end, modern businesses have incorporated CRS into their modus operendi in one or more of the four available namely, partnership with the local communities in developmental and conservation initiatives, committing to socially responsible investments (SRI’s), building mutually beneficial relationships with their customers and employees and finally, in initiating environmental sustainability and protection measures (Saether & Aguilera, 2008). This has given rise to some four models of CSR where global corporate social responsibility has been conceived to encompass corporate philanthropy, corporate partnerships, corporate participation in social issues of the communities they thrive in and lastly, initiation of strategic business activities that safeguard future interests of the business and their stakeholders. Some typical corporate philanthropy activities include volunteering, social investments, fund raising events, donated advertising, cause-related marketing etc. Most of the companies will select specific corporate philanthropic activities that rhyme with their core business expertise such as Microsoft giving IT aid to schools. In corporate partnerships, companies usually generate public awareness and forge partnerships with sectors of the society such as federal and civic governments to initiate social developments. Arguments against Corporate Social Responsibility There has been a significant school of critics against the concept of CSR. Most of these critics regard the CSR initiatives as hypocritical and insincere. When companies like British American Tobacco, Shell, BP, McDonald’s and the like initiate CRS programs, critics rise up to say that these programs are hypocritical and insincere (Saether and Aguilera, 2008). The critics will ask question such as, how can BAT be committed to a cancer fund? How can Shell be committed to environmental conservation? How can McDonald’s be sincere when initiating an anti-obesity campaign in American colleges? The ethical mandate of CRS sometimes does conflict with the core business activities. But when an organization initiates such CRS programs, it is indicative of their concern and sense of responsibility to the community in which they thrive (Callan & Thomas, 2009). Whether or not such programs are sincere or not, the bottom line is that they contribute to the good of the community. The fundamental purpose of such initiatives is held as questionable given the profit-making nature of businesses. Some critics have argued that CSR usually distracts the company from its fundamental economic role (Callan & Thomas, 2009). Others argue that CRS pre-empts the government role of a corporation’s watchdog. The nature of business it has been argued, only facilitates the maximization of returns in all legal means. There is never an allowance for a business to consider who is losing out in their profitable venture as long as the shareholders are enjoying huge profits. Free enterprises in a capitalist market cannot be negatively held responsible for making profits on their investments (Callan & Thomas, 2009). Again, these criticisms overlook the business potential of CRS. CSR programs can and do significantly improve the long-term corporate profitability since it attains in corporate image, brand loyalty and social acceptance (Kytle & Ruggie, 2005). When reports of CRS programs are being distributed via mass media, which is a positive, free channel of advertisement for the company. CRS also reduces risks and inefficiency of the business operations since the employees become more accountable in their responsibilities (Kytle & Ruggie, 2005). Finally, the CRS programs usually enhance the brand reputation gives employees a boost in motivation and prestige since they perceive themselves as important to the society. The society will also form a very reliable human resource base since most people would wish to pursue a career with such a caring company. The critics of CRS therefore, are mostly wrongly short sighted in focus and only concerned about partial elements of corporate responsibility. Benefits of Corporate Social Responsibility Corporate social responsibility must not be seen as doing a good/right thing. CRS is concerned in behaving responsibly like every society member should (Flavelle, 2009). When such mentality is inculcated in the normal business operations, there accrues a host of benefits for the business which are more like the harvest of being responsible. The benefits start with building a very positive reputation that sets your business apart. Your publics take pride in your responsible practices. Mohr & Webb (2005) says that customers are particularly fond of companies, which show care, concern and responsibility of the community and other stakeholders. CRS also helps in reducing resource wastage. When a company reduces its resource utility, optimizes waste and emission control and amplifies its sustainable practices, the beneficiary is not only the environment but also the business since it’s is a means of cost saving and improving operational efficiency. CRS is one of the most effective ways of ensuring that a company complies with all regulatory requirements within its jurisdiction. When the company is in the good books of local authorities, doing business becomes easier and a host of opportunities and partnerships are created. With a good reputation, it becomes easier for accompany to recruit skilled and experienced employees from the community, the employee’s conversion rate is lower since all employees are motivated. The costs of recruitment, training and development of the work force reduce when the conversion rate is low. Again, motivated employees are more productive since they take pride in their contribution to the company and to the society. The involvement and participation of a business in the community helps stimulate ideas for new products and services that aim at serving an existing market need (Maignan & Ralston, 2009). Such needs cannot be discovered when sitting in boardrooms until the company interacts with the target market. Socially responsible companies attract many financing investors since such companies have a firm reputation that would not shift suddenly were a crisis to appear (University of Edinburgh Careers Service). CRS cultivates goodwill that sustains a company even when adverse situations arise. Finally, CRS helps promote brand identity and image of an organization, where the brand is identified with certain good works benefiting the stakeholders. The wider community learns about the brand in association with good causes of CRS. Engaging Employees in Corporate Social Responsibility A CRS program cannot succeed unless the organization makes it part of the organization behavior. If fixed on the surface and employees are left out in the conception and implementation of CRS programs, the enumerated benefits of such programs become unachievable. CRS can never be conducted as management’s directive. It must be inculcated in the organization culture with stakeholders, employees and the potential employees being incorporated as part of the program. Job seekers usually judged their potential employers based on the corporate social performance of such companies. According to Bhattacharya, Sankar & Korschun (2008), socially responsible companies are regarded as the best employment opportunities since the employees have something good to identify with besides production and returns. If the employees are incorporated into the CRS program, it becomes easy to entice high-quality; highly-talented job applicants while also improving the motivation and job morale of the existing employees (Bhattacharya, Sankar & Korschun, 2008). Employees gain better self-images, self appreciation and satisfaction if they work a company reputed for being socially responsible. All it takes to recruit employees into a CRS program is for the management to suggest the willingness to conduct social responsibility initiatives and then giving the employees an opportunity to create the programs proactively and top maintain progress themselves. Appreciating and recognizing those employees who show exemplarily social responsibility also helps in nurturing a CRS culture in the organization. Conclusion A business is ethically obligated to deal with suppliers, customers, employees, communities and other publics with a responsible attitude. As Flavelle (2009) concludes, the corporation benefits in a multitude of ways when they assume a CRS perspective in their operations. If a business where to look at the broader and longer goals, CRS would qualify as an immediate need that is far more important than the short-term profits a company may be preoccupied to protect. References Bansal, T. (2006). “Best Practices in Corporate Social Responsibility”. Ivey Business Journal. Vol 6 (09) pp. 31. Also Available at . Bansal, P., Maurer, C. & Slawinski, N. (2008). “Beyond Good Intentions: Strategies For Managing Your CSR Performance”. Ivey Business Journal. Vol 9 (14) pp. 22. Also Available at . Bhattacharya, B., Sankar, S. & Korschun, D. (2008). "Using Corporate Social Responsibility to Win the War for Talent”, MIT Sloan Management Review. Vol. 49 (2), pp. 37-44. Callan, S. & Thomas, J. (2009). “Corporate financial performance and corporate social Performance: an update and reinvestigation”. Wiley InterScience. Published online at >http://www3.interscience.wiley.com/cgi-bin/fulltext/122211799/PDFSTART>. “Corporate Social Responsibility and Ethical Careers". University of Edinburgh Careers Service. Retrieved on 23rd March 2010. From Flavelle, C. (2009). “Responsibility is Good for Business”. Washington Post. Sunday, February 15 2009. Retrieved on 23rd March 2010. From . Kytle, B & Ruggie, J. (2005). "Corporate Social Responsibility as Risk Management: A Model for Multinationals". Social Responsibility Initiative Working Paper No. 10. Cambridge: John F. Kennedy School of Government, Harvard University. Also available at . Maignan, I. & Ralston, D. (2009). “Corporate Social Responsibility in Europe and the U.S.: Insights from Businesses' Self-Presentations”. Wiley InterScience. Vol. 16 (2) pp. 61 – 78. Also Available at Mohr, L. & Webb, D. (2005). “The effects of corporate social responsibility and price on consumer responses”. Journal of Consumer Affairs. Vol 39 (1) pp. 121 – 147. Also Available at http://www3.interscience.wiley.com/cgi-bin/fulltext/118645499/PDFSTART> Saether, K. & Aguilera, R. (2008). "Corporate Social Responsibility in a Comparative Perspective". in Crane, A., et al. (PDF). The Oxford Handbook of Corporate Social Responsibility. Oxford: Oxford University Press. Also available at Read More