The Role Of Corporate Social Responsibility In The Modern Organisation - Case Study Example

ROLE OF CORPORATE SOCIAL RESPONSIBILITY IN MODERN ORGANIZATIONS by Course Professor Institution City and state Date Role of Corporate Social Responsibility in Modern Organizations Introduction The external business environment has had a significant impact on the internal operations and the decision-making process in contemporary organizations. As companies expand operations and strive to gain better consumer loyalty, participation in activities that promote social welfare has become a new approach to connect with society. It is this devotion of time as well as financial resources to foster environmental and social change that has become a key defining feature of corporate social responsibility (CSR). This review will, therefore, provide an in-depth analysis of the effects of CSR to firms and the society. The paper will embark on a managerial perspective on the role of organizational leadership in ensuring that the objectives of CSR are met in the most effective manner. Finally, a critical evaluation of the various arguments that support and object the importance of CSR will be raised. Definitions of Corporate Social Responsibility The last half of the 20th century was characterized by involvement of businesses in community development. Over time, corporations began assuming more responsibilities in the development of society and adopted more creative approaches to their philanthropic causes (K. Wilburn & R. Wilburn 2014). Consequently, scholars began to take a more critical analysis of the new concept of CSR and how it impacted organizational performance, competition, and the ability of firms to access new markets. Since then, varying definitions of CSR have been brought forward by different authors. Bowen (1953) opined CSR to be the duty of those in business to engage in sound decision-making policies and best practices that would ultimately reflect societal values and objectives. It is not surprising to note that Bowen’s scope on CSR was quite limited to the top-management, an observation that can be vindicated by understanding the leadership styles that were in use at the time. Whetten et al (2002) provides a different viewpoint on CSR by arguing that organizational stakeholders are expected by the society to voluntarily act in a manner that promotes the welfare of the community. This is a much broader view, and although it fails to articulate who in particular should facilitate this action, it provides insights into CSR as it is known today. Frederick (1998) defined CSR to be a deliberate effort by the organization to ascertain that human and economic resources are utilized for the interest of society as opposed to meeting the needs of firms and private persons. Frederick’s fundamental definition captures an aspect of CSR that is quite elusive in other authors. By introducing the concept of who should be the beneficiaries of these initiatives, this definition brings out the idea of philanthropy (Windsor 2013). However, due to the increased competition and the changing business dynamics in modern times, it would be erroneous to suggest that organizations embark on CSR without the long-term goal of expanding their client-base. Carroll and Buchholtz (2003) share similar sentiments with Fredericks definition by maintaining that CSR involves the firm’s responsibility to meet societal expectations with regards to ethical, economic, and legal cooperation in additional to their core business of profit maximization. Perhaps this is the most comprehensive definition as it addresses CSR as it is commonly presented in most contemporary organizations. Ultimately, the goal of CSR is to meet societal needs by going beyond the confines of what the organization is obliged to economically or legally undertake (Wolf, Issa, & Thiel 2015). Moreover, other business practices such as positive customer and investor relations, looking out for the welfare of the employees, and promoting humanitarian causes are also encompassed in the scope of CSR. Organizations and Social Responsibility At an organizational level, different corporations have varying definitions of CSR and opinions on the most appropriate criteria to address this practice. While social responsibility is tied to the organizational mission and vision, the quality of management also plays a key role in impacting the success of CSR initiatives. Moreover, CSR is integrated to the day-to-day operations of the business in its respective industry. With this understanding, it is expected that a company’s CSR initiatives should be reflective of the industry in which it operates For instance, in the car manufacturing industry, one of the leading brands, Toyota has a CSR policy that is defined as the creation of sustainable environmental management practices that guarantee provision of quality and innovative services and products. In this regard, Toyota has been at the forefront in championing for the adoption of low-carbon fuel emissions through initiatives that enlighten the public on the benefits of eco-friendly fuels (Tench 2014). On the other hand, Volkswagen shares the idea of developing sustainable growth through maximizing employee and shareholder value. Moreover, this company upholds a solution-based approach to CSR whereby it defines this responsibility as the ability to provide timely and relevant solutions social-economic problems. In the medical devices industry, leading corporations such as General Electric and Johnson and Johnson have made tremendous contributions through their CSR initiatives. General Electric has for the past 50 years stuck to its CSR strategy of bolstering communication and engagement of stakeholders with diverse groups on causes relating to community development projects and safeguarding human rights (Wolf, Issa, & Thiel 2015). Johnson and Johnson has defined its CSR largely through calling for an ethical business environment where fairness, respect, trustworthiness, and honesty are incorporated into the key organizational responsibilities. Other notable firms that have made significant contributions to fostering CSR include Tom’s shoes, a company that has gained repute due to their policy of donating a pair of shoes to the needy for every purchase. Starbucks has also been known for their insistence on providing consumers with quality coffee through ensuring that the environmental, economic, and social factors surrounding the production and processing of the coffee are up to the company’s acceptable standards of sustainability. Ben and Jerry’s, a company that deals with production of milk-based products has cemented its CSR to provide quality products through coming up with a sustainability program that sees to it that farmers have access affordable fodder for their cows. The company has also participated in several campaigns such as the Better Dairy campaign in Europe that was meant to promote awareness on the need for farmers to ensure better welfare for their livestock. Undoubtedly, the level of CSR performance affects the long-term reputation of organizations. In corporations where the social responsibility is clearly stated and adhered to, there is an overall satisfaction among employees, customers, and other key stakeholders (Lindgreen & Swaen 2010, p. 2). Additionally, CSR is one of the most effective ways for firms in the modern business environment to build a lasting corporate identity. Role of Management in Delivering an Organization’s CSR As companies globally strive to meet the conflicting and diverse needs of their multiple stakeholders, it is becoming increasingly clear that a more holistic approach needs to be adopted in corporate social responsibility (Isaksson, Kiessling & Harvey 2014, p.65). To begin with, a successful CSR requires that the management have well-defined values and mission. Therefore, as organizational management work to ensure that the CSR is well integrated in the organization, one of the most important roles that they should articulate is defining the strategic intent of the CSR. By strategically engaging in CSR, corporations are able to mitigate risks associated with environmental and social performance. For example, a policy that endorses equal employment opportunities will reduce employee turnover and its associated costs. In addition to risk mitigation, having a strategy in the discourse of CSR serves to gain the organization competitive advantage (Patil & Bhakkad 2014). This is achieved through encouraging an ethical and transparent way of doing business that, ultimately, ameliorates supplier, customer, and employee relations within the organization. Further, the management has the responsibility of training and instilling competency in new and existing employees so that they become fully oriented to the core CSR goals and values of the organization. Essentially, the CSR experience is not limited to the external business environment, and as such, training and motivating employees on how to align their career-goals to the company’s CSR objectives is equally important if the organization is to maintain a positive brand image (Idowu & Leal 2008, p. 49). The management is also tasked with the responsibility of ensuring that win-win outcomes are consistently achieved in negotiations between the different stakeholders in the organization. According to Kemper et al (2013), it is the principal duty of the management to see to it that and social challenge in the business environment is effectively turned into an opportunity for productive economic benefit. By embracing a win-win ideology within the social-economic environment, the management positions itself strategically in creating sustainable value for the organization. To better understand the role of management in delivering the organization’s CSR, it is important to analyze the major theories that form the basis of effective CSR management. According to Gonzalez-Perez and Leonard (2013), the integrative theories assert that a corporation is obliged to give audience to any individual or group whose lives are affected by the actions of the firm. Invariably there lacks any legal framework to justify the authenticity or rights of these groups with respect to most corporations. It is, therefore, the responsibility of the management to put checks to operations of the business in order to allow a cordial social and working environment is maintained. Closely resembling the integrative theories are the ethical theories that hold that organizations have the moral obligation to act in an ethically correct manner when interacting with the society. Consequently, the management should have clearly defined ethical standards that should form part of the organization’s mission and vision and should ensure that employees abide by these principles (Simpson & Taylor 2013). Moreover, the instrumental theories claim that the real motivation behind engagement of organizations in CSR is for attainment of economic success. Inasmuch as this theory appears to deviate from the core purpose of CSR, it the role of the management to ensure that a delicate balance is struck between engaging in social responsibility and maintaining profitability. Ways that an Organization can take up Corporate Social Responsibility There are numerous ways through which an organization can positively contribute to making the goal of CSR a success. Depending on the industry under which an organization falls, there are a variety of causes that the firm can embark on in its endeavor to address issues in the business environment. First, the organization should steer clear from Corporate Social Irresponsible (CSI) conduct. Inasmuch as CSI increases the wealth of shareholders, regime theories intimate that inevitably, institutionalization eventually makes CSI unsustainable (Murphy & Schlegelmilch 2013). Therefore, an organization that adopts the principles of international regime theory is better placed to enjoy better cooperation with the stakeholders in achieving a socially responsible organization Additionally, an organization can take up CSR through addressing the environmental issues that emanate from the operations of the corporation (Fallon 2014). In this regard, sound policies and procedures such as having proper mechanisms for disposing industrial effluents and desisting from land degradation and dereliction would prove instrumental in curbing the deterioration of the natural environment (Crowther & Aras 2010). Further, engaging in mindful and responsible marketing and advertising strategies should be exercised if an organization is to act in a socially responsible manner. With the high number of legal suits where consumers claim they made purchases based on misleading consumer advertisements, there is need for organizations to exercise prudence when promoting their products in the market. The impact of technology on society cannot be ignored. As firms become highly digitalized, ethical issues surrounding the privacy and safeguarding of sensitive consumer information have to be dealt with (Zgheib 2015). Thus, corporations have the responsibility of creating awareness to consumers to be cautious in the way in which they handle sensitive personal information. Arguments For and Against CSR The following are the arguments for CSR: 1. Increased participation of organizations in social responsibilities lower government intervention and, ultimately, increases the future prospects of the business being an ongoing concern (Barnett 2015). 2. Considering that most of the large corporations such as the Fortune 500 companies have the huge financial resources, it is only fair that they should allocate some funds to alleviate social challenges 3. Statistically, industrialization has been the greatest contributor to the environmental and social-economic issues in the contemporary society. It is, therefore, appropriate if these industries can embark on initiatives to solve these challenges (Carroll & Shabana 2010). Certainly, there are challenges associated with CSR. Even as organizations strive to create an enabling business environment that meets the needs of all stake holders, there bound be loopholes in this approach. The following are the arguments against CSR. 1. Corporations that become so engaged in CSR initiatives run the risk of being at a competitive disadvantage since they incur expenses in this pursuit. 2. Invariably, the corporations that have the financial capability of dealing with social issues lack the technical expertise and human resource of dealing with such challenges (Wolf, Issa, & Thiel 2015). 3. It is not in the best interests of the shareholders for an organization to spend shareholders’ money on initiatives that lack economic feasibility. Conclusion Corporate social responsibility has evolved dramatically over the last half decade. The issues facing CSR have slowly advanced from environmental to global and now to technological challenges. Similarly, the role of management and approach to societal issues has been gradually changing to suit the dynamic needs in the business environment. It is the realization that inaction cannot bring economic and social development that has kept corporations actively involved in CSR initiatives. Therefore, even with the seemingly convincing arguments against the rationale behind CSR, this practice remains critical to the long-term success of companies as well as contributing to a better society. References Barnett, T 2015, Corporate social responsibility - organization, levels, definition, model, type, company, business, History. Available from: [31 May 2015] Carroll, A., & Shabana, K 2010, ‘The business case for corporate social responsibility: A review of concepts, research and practice’, International Journal of Management Reviews, vol. 12, no. 1, pp. 85-105. Crowther, D., & Aras, G 2010, A handbook of corporate governance and social responsibility. Gower, England. Fallon, N 2014, What is corporate social responsibility? 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