Concept of Corporate Social Responsibility - Coursework Example

CORPORATE SOCIAL RESPONSIBILITY Name Course Tutor Date Introduction Corporate social Review abbreviated as CSR has received a widespread cognition and debates in the global economy (Servaes & Tamayo, 2013). Globalization has made managers of various organizations to rethink and reorganize their CSR paths. Corporate social responsibility is essential in the business world following the advantages it confers to the parties involved (Servaes & Tamayo, 2013). The notion of CSR has long been linked with the philanthropy of the corporate. However, as the world globalizes further this has changed and there is now the contemporary view of CSR that is majorly based on multinational corporations. CSR have been linked to the firm value, the success of organizations and competitive advantages of organizations in most literature (Servaes & Tamayo, 2013). There are instances where CSR has also assisted in marketing the products of organizations because the public is aware of their product quality through CSR. This essay will expound on the concept of corporate social responsibility to give a better understanding as well as examine the two views of CSR. The essay first looks at the classical view and then the socioeconomic views on CSR and then gives relevant examples to support the ideas presented before concluding. Concept of Corporate Social Responsibility Corporate social responsibility can be defined in a number of ways. Saeed & Arshad (2012) define CSR as situations where an organization goes beyond the compliance alone through engaging in actions that apparently transition the social good, beyond the goals and interests of the organizations as well as what is legally permissible for the organizations. CSR shelters three core activities that are economic prosperity and growth, social progress and ecological balance all in one plate (Saeed & Arshad, 2012). The discourse of CSR is slowly expanding and with it comes the need of meeting the stakeholder’s needs in the society, meeting social needs and profit maximization (Brammer, Jackson, & Matten, 2012). CSR is adaptable across organization being that it has the characteristic of value creation and instituting competitive advantage on firms that practice it. There are very many dimensions of CSR. First, economically CSR enables organizations to make a good return on investments for the shareholders and the owners, creates jobs and institutes business development (Saeed & Arshad, 2012). Second is the legal dimension where CSR also has legal responsibility. The business organizations are likely to comply with the regulations and legislations that govern business. CSR also has ethical dimension that governs what is right from what is wrong for the organizational practices. The humanitarian ground is the key base of this dimension (Brammer et al., 2012). Lastly, CSR also has the voluntary dimension that ensures that organizations have wide scope of discretionary behaviors through engaging in activities that positively contribute to the welfare of the society. CSR also ensures that organizations are at the forefront in protection of human rights when dealing with the employees through creation of safe work environments (Brammer et al., 2012). Additionally, the organizations are also able to ensure fairness in all HRM practices such as recruitment, selection, training, and development (Saeed & Arshad, 2012). Lastly, CSR also has the capacity of making the organizations reduce the environmental degradation when extracting resources. Ben and Jerry’s use fair trade ingredients and has a dairy farm in the state of Vermont for stability (Saeed & Arshad, 2012). Most companies also participate in community based programs that help raise the living standards of the communities from the areas where they extract resources. Two Views on CSR There are two contrasting views that have been eminent in the public-policy domains as well as the academic domain on CSR. The classical view takes the standpoint that is against making CSR the priority of business yet the socioeconomic view advocates for it. Classical View of CSR The classical view restricts the management’s responsibility to running the business to maximize profits and share value (Jamali & Sidani, 2008). In this view the much focus is placed on the single bottom line of performance of the organization financially. In other words it takes the idea of business means business (Jamali & Sidani, 2008). Some of the arguments against CSR are that it could lead to reduction of profits, increased business costs, dilution of the purpose of business, and giving the business too much social might. In this view the resources are maximized and activities that are designed to make profits adopted so long as the business stays ahead of the competitors (Jamali & Sidani, 2008). However, it is worth noting that fraud and deception are out of the box when doing this since the organizations engage in free and overt competition. The interest of the shareholders is placed first thus the managers have to strive to increase the fiscal returns. The costly socially responsible actions are ditched because they are likely to reduce the profits of the business. There have been many arguments against this classical view following the complexity of business environments, firms, and the society in general (Jamali & Sidani, 2008). Classical theorists hold the opinion that the shareholders shall benefit since they are assured on returns on investments. Secondly, the consumers are also beneficiaries as they are able to enjoy low prices. Thirdly, the employees of such organizations inclined to this view will enjoy better wages, more jobs and sharing of organizational profits in a plethora of ways (Jamali & Sidani, 2008). Lastly, the society also benefits as the success of the workers would mean that they pay taxes that are used for social developments (Jamali & Sidani, 2008). A classical example of this is when Ford had its own Sheep farm so as to obtain wool for some of the sits in the vehicles it manufactures. Socioeconomic View of CSR The Socioeconomic view of CSR maintains that the management of any organization should be concerned for the expanded social welfare and not just the corporate profits alone (Kitzmueller & Shimshack, 2012). This view represents the broad stakeholder view that lays much emphasis on the expanded triple bottom line and not just financial performance as does the classical view. The focus here is the stakeholder returns as well as the social and environmental performance of organizations (Kitzmueller & Shimshack, 2012). The argument here is that in the long run CSR will add business profits, improve the reputation of the business and its image, and help escape the government regulations (Servaes & Tamayo, 2013). Since the business has widespread resources with the capability to confer it with greater social impact, the managers have a primary mandate of ensuring that they fulfill all the ethical obligation that drive the organization to socially responsible ways. Corporate social responsibility has been linked with corporate financial performance being that it incorporates practice as well as policies. When organizations have CSR in place they are not only taking care of the repercussions of their practices but also taking care of them altogether (Kitzmueller & Shimshack, 2012). In this view there is a balance between responsibility and social power these businesses organizations are able to leverage on both sides compared to the classical view where only the financial power is achieved (Servaes & Tamayo, 2013). This view is narrow in that the business will continue to maximize its profits while also trying to meet social demands that also bring in some benefits (Kitzmueller & Shimshack, 2012). Tom’s Shoes donates a pair of shoes to be given to children who need shoes, per every purchase made by the customers. Xerox a worldwide known printing firm has multiple programs that are aimed at generating funds that support programs for social responsibility (Kitzmueller & Shimshack, 2012). The multinational corporation has initiated a number of community involvement programs that encourage the employees to be involved in the development of communities (Kitzmueller & Shimshack, 2012). This has helped it perform better in the market as well as have a committed workforce (Servaes & Tamayo, 2013). Lastly, Google the search giant also has initiatives that are directed towards corporate citizenship. Through Google green the corporation has been able to champion for efficient usage of resources and has also supported the exploitation of renewable sources of power (Kitzmueller & Shimshack, 2012). The data centers of the corporation in different parts of the world have reduced their power needs. Jamali & Sidani (2008) conclude that saved costs in organizations, are then directed to the development of the communities all over the world. This has actually placed the organization on the map of successful MNCs that applies CSR. Conclusion Globalization which is the integration as well as interaction among people, organizations and governments through international trade, investments and information technology, has changed the face of organizations. Most importantly, the view of CSR has been applied at different scales in most multinational corporations. This has been done to gain competitive advantage, improve performance and establish links with the society that forms the market. As can be seen in the paper, the classical view has the stand point that outdoes the importance of CSR and champions for the profitability of organizations and nothing else. On the other hand, the socioeconomic view of CSR champions for CSR that in turn comes with the same benefits proposed by classical theorists. The concept has four major perspectives as can be seen in the paper. These include the economic, legal, voluntary, and ethical dimension as well as others as discussed in the paper. Globalized organizations should therefore embrace CSR being that there are benefits that come alongside it despite the costs that the organizations have to spend. Bibliography Brammer, S., Jackson, G., & Matten, D. 2012, “Corporate Social Responsibility and institutional theory: new perspectives on private governance”. Socio-Economic Review, 10(2), 3-28. doi:10.1093/ser/mwr030 Jamali, D., & Sidani, Y. 2008, “Classical vs. Modern Managerial CSR Perspectives: Insights from Lebanese Context and Cross-Cultural Implications”. Business and Society Review, 113(3), 329–346. Kitzmueller, M., & Shimshack, J. 2012, “Economic Perspectives on Corporate Social Responsibility”. Journal of Economic Literature, 50(1), 51–84. doi:10.1257/jel.50.1.51 Saeed, M. M., & Arshad, F. 2012, “Corporate social responsibility as a source of competitive advantage: The mediating role of social capital and reputational capital”. Journal of Database Marketing & Customer Strategy Management, 19(4), 219 – 232. doi:10.1057/dbm.2012.19 Servaes, H., & Tamayo, A. 2013, “The Impact of Corporate Social Responsibility on Firm Value: The Role of Customer Awareness”. Journal of Management science, 59(5), 1045–1061. Read More