Concept of Corporate Social Responsibility - Literature review Example

Name Professor Course Date Corporate Social Responsibility Introduction The business world is faced with the conception of corporate social responsibility in all aspects of business undertakings. In an ample hotchpotch of issues, corporations are motivated to act in a socially responsible manner. Corporate businesses centre on the interest of society through taking responsibility for the effect of their actions on employees, shareholders, communities and customers in all facets of their operations. Corporate social responsibility entails the voluntary actions carried out by an organisation to function in an environmentally, socially and economically sustainable manner. Corporate social responsibility help firms to succeed via inspiring social license and shared value. The idea of corporate social responsibility has a varied and long history, and its application in businesses surfaced in the twentieth century. The Concept and Definition of CSR The idea of corporate social responsibility indicates the general conviction held by people that modern businesses hold responsibilities to the society that surpasses their obligations to investors and stakeholders in an organisation. The responsibility to investors is to create profits for company owners besides maximising long-term wealth of a firm’s shareholders. Other societal stakeholders’ that businesses are responsible for include employees, customers, government, the natural environment and the community as whole. The concept of corporate social responsibility is applicable to all types of organisations. Carroll (1999) asserts that a socially responsible firm is the one whose managerial staffs correspond to a multiplicity of interests (273). As opposed to operating exclusively for increased profits for stakeholders, a socially responsible firm considers its suppliers, local communities, dealers, employees and the entire nation (Carroll 273). In 1950s, social responsibility was defined as the compulsions of a business person to pursue policies and decisions, and follow the actions that are favourable in terms of the values and objectives of society (Carroll 270). During this period, the social consciousness of managers implied that business people were accountable for the upshots of their activities in an area fairly bigger that highlighted in the profit and loss statements. In 1950s, business people viewed corporate socially responsibility as an aspect that hold crucial truth that must offer guidance in the future as opposed to a magic potion for all organisational social issues. The 1950s definition of corporate social responsibility is realistic because CSR promotes a revelation of a firm’s responsibility to a wide range of investors, shareholders and stakeholders. Moreover, corporate social responsibility cannot solve all the social problems a business faces, but it acts as an important guide to the future of a business (Carroll 270). Although corporations particularly, the oil industry are motivated to behave in a socially responsible manner, social problems that emerges from effects of oil drilling and production cannot be entirely resolved through corporate socially responsibility. However, CSR can offer guidance to the oil industry to try to prevent incidences of oil spill, blowouts that greatly affects animals, people and the natural environment. The 1960s offered a notable development in formalizing the meaning of corporate social responsibility. Corporate social responsibility was defined as actions and decisions of business people taken for purpose that partially surpasses the direct technical or economic interests of a firm (Carroll 271). With respect to this definition, it is argued that social responsibility is an ill-defined concept, but a concept that could be viewed from a managerial perspective. This is because some socially accountable business choices are justifiable through a complicated and long procedure of reasoning. Corporate social responsibility instigates long-run economic advantages to a firm, hence paying the firm back for being socially responsible. In this regard, corporate social responsibility is linked to the power of a business. The relationship between corporate social responsibility and business power is practical and is evident in the modern business world. For instance, companies like Wal-Mart utilise corporate social responsibility as a means of attaining competitive advantage over their competitors. This is because corporate social responsibility allows the company to position its brands. The major significance of corporate social responsibility is in the shared value that a firm hold with society. The major premise of the link between CSR and business power is the reality that businesses carry out their functions in societies and these societies need these business, hence a mutual benefit between society and businesses. Businesses such as Wal-Mart use corporate social responsibility as a way to obtain competitive advantage or as a means of preventing competitive disadvantage. While corporate social responsibly serves the interests of a given company, it also serves the interest of the customers, shareholders, employees and the society as a whole. The definition by Davis advocated for a more expansive comprehension of corporate social responsibility, and he suggested that social accountability of business people require to be proportionate to their social power (Carroll 271). Lack of social responsibility instigates steady erosion of social power on a business. Davis asserts that corporate social responsibility creates social goods whose effects must be recognised within the entire social system (Carroll 271). Social responsibility implies that business owners should oversee the economic system operations that satisfy the public expectations. Economic means of production must be utilised in a way that distribution and production promotes total socio-economic interests. With respect to the definition of CSR by Davis, social responsibility entails a public posture towards human and economic resources of a society and the willingness to ensure that these facilities are utilised for social ends and not for circumscribed interests of private firms and persons only. Definition of CSR by McGuire (1963) indicates that the concept of social responsibility implies that a firm hold not only legal and economic obligations, but also particular responsibilities to society in which it operate (Carroll 272). This definition is realistic because the obligation of business owners is to improve and protect the welfare of society while meeting its legal and economic obligations. It is the obligation of a business to assess the impacts of its decisions on the social system. Businesses are the wealth-generating aspects in a society. However, it is essential that business managers acknowledge that they must consider the effects of their business practices and policies on society. Carroll asserts that in 1970s, corporate social responsibility was defined as the hunt for social economic goals via the elaboration of social standards prescribed in a firm’s roles (271). Carroll further asserts that business occurs within social-cultural systems that underline the prescribed means a firm adopts in reacting to certain occurrences and certain means of undertaking a firm’s affairs. From the analysis of 1970s definitions and understanding of corporate social responsibility, Carroll cites several definitions presented by different authors. One of the cited definitions is that of Harold (1971) who indicated that a socially accountable business is the one whose managers balance interests’ multiplicity (Carroll 272). A socially responsible firm does not focus on profits only, but also focuses on the wellbeing of the nation, local communities, employees and suppliers (Carroll 273). Businesses hold a moral obligation to assist other establishment in attaining social progress at all levels. Steiner (1971) indicated that firms must remain as economic establishments, but they hold responsibilities to help society attain its fundamental goals (Carroll 276). In 1973, Davis defined CSR as the consideration of and reaction to; issues that surpasses legal, technical and economic requirements (Carroll 276). The assertion by Eilbert and Parket (1973) that CSR links with good neighbourliness is feasible. This is because businesses must establish good neighbourhood with the surrounding environment for it to prosper. The neighbourliness concept is not awkward because neighbourliness demonstrates commitment of a firm to solving social problems and in maintaining favourable co-existence. The definitions presented in 1970s allude to responsibility of businesses to generate profits, obey the rule of law and surpass these activities. As a result, the social responsibility of a business consists of unrestricted, ethical, legal and economic expectations that society holds on organisations (Carroll 283). In 1980s, several studies were conducted to understand the concept of CSR. Carroll (1983) defined CRS as the conduct of a firm that allows the firm to be economically profitable, socially supportive, ethical and law abiding. From the 1980s definitions responsibility and profitability of a firm are compatible. This assertion is correct because socially responsibility firms are profitable because CSR allow firms to position their brands to society hence increased sales. As a result, corporate social responsibility entails attaining upshots from firms’ decisions regarding certain problems or issues which hold positive effects and not negative impacts on relevant corporate stakeholders. In 1990s, several observations were made leading to the conclusion that a socially responsible firm strives to make profit, be ethical, obey law and become a good corporate citizen (Carroll 289). Total CSR constitutes four types of social responsibilities which include philanthropic, economic, ethical and legal. Businesses must consider whether their activities support the public good, promote fundamental convictions of the society, or contribute to its strength, harmony and stability. Through analysis of definitions of socially responsibility present by different authors, Carroll (1999) concludes that corporate social responsibility acknowledges the close relationship amid firms and society (272). Carroll claims that top business managers must appreciate the link between the society and firms in their pursuit of their goals (272). However, as indicated by Walton, corporate social responsibility is a voluntary action and firms are not compelled to employ social responsibility in their practice (Carroll 273). Conclusion Following analysis of pertinent literature relating to CSR, Carroll provides a clear understanding of the concept of CSR and several definitions presented by different authors from 1950s to 1990s. The CSR concept holds a diverse and long history. Several authors presented their definitions, but more definitions started to proliferate in 1970s where definitions became more detailed compared to the earlier years. In 1980s original definitions were presented and in 1990s, a more clear understanding of CSR surfaced where the concept demonstrated its bright future given that it tackles and captures significant public concerns relating to the link between society and businesses. In the modern business world, corporate social responsibility has considerably become as good as organization’s efforts to appeal to a progressively more demanding customer base and shareholders. CSR is a new industry that has developed to assist organizations present, execute and monitor their business practices and activities Work Cited Carroll, Archie. “Corporate social responsibility: Evolution of a Definitional construct”. Business Society 38 (1999): 268-295 Read More