The Conception of Corporate Social Accountability - Coursework Example

Introduction

The conception of corporate social accountability has become common in many corporations globally. Despite being common, CSR has been attracting a lot of debate from researchers, businesses and the society concerning its definition and implementation (Smith, 2011, p.5). The stakeholder theory highlights that the aim of the firm is in aiding the needs and interests of the society beyond creating the economic value of shareholders (Jamali, 2008, p.5). Carroll went beyond and came up with Carroll’s pyramid of CSR that demonstrates the four broad roles of corporations namely, economic, legal, moral and the philanthropic roles (Carroll, 2016, p.4). The triple bottom line framework went beyond the shareholder value and return on security and incorporated the aspects of the environs and society in the organization (Slaper and Hall, 2011, p.1).

The 3C-SR model assesses the CSR of a company by use of variables namely, constancy, commitment, and association. It fills the gap that exists in CSR description and strategies (Doherty & Thompson, 2006, p.391). The ethical perspective towards CSR stresses the point that a company should have an accountability to its stakeholders not merely with the overall aim of making a profit rather with the goal of making the society better (Sepahvand, 2009, p.17). This paper, therefore, disagrees with the Friedman theory that views companies as profit focused with the major objective of exploiting profits and argues that although corporations should make profits while paying attention to the welfare of the community.

Defining CSR

The term CSR attracts a myriad of definitions. According to the United Nations Industrial Development Organization (2016, p.1), CSR refers to the concept where organizations incorporate environment and society worries in their maneuvers and relations with shareholders and stakeholders. CSR remains a way where the company strikes a balance between the imperatives of the society, environment, and economy bearing in mind the anticipations of its interested parties. Mullerat, (2010, p.1) defines CSR as a concept where businesses voluntarily incorporate the concerns of the community and environment in their operations and relations with their shareholders. CSR does not only include the activities that a corporation performs to utilize its gains to allow social and environmental growth; rather it incorporates the methods it applies to earn profits including ensuring transparency to different stakeholders and having socially responsible investments (EY,2013,p.10).

Overview of CSR

The perception of CSR has become very common in the world today. Since the beginning of the 21st century, the world has welcomed the private sector’s social mindfulness. The community has also grown to expect the same from profit-making firms, as they are aware of the impacts these businesses have on their environment. The idea of CSR dates back to the industrial revolution where the early businesspersons offered goods to the local community and their employees. During this period, entrepreneurs and merchants displayed CSR as philanthropy and protectiveness (Lituchy, Punnett, & Puplampu, 2013, p.92). According to Bowen (1953,p.4), the focus of CSR then was not based on social accountabilities of companies but rather businesspersons were required to follow policies and make decisions that favor the values and intentions of the society. It was these anticipations of entrepreneurs to show their responsibilities to the community that played a vital role in the upsurge of CSR (Carroll, 1999, p.279).

Evaluation of the statement using the stakeholder theory

Stakeholder theory reveals that the success of firms is dependent on the interested parties and show that the parties concerned have an interest in the company (Saylor, 2013, p.2). Protagonists of the stakeholder theory support the idea of giving to meet the anticipations of the society. On the contrary, supporters of the shareholder's theory argue that businesses should abide by the law and capitalize on maximizing the wealth of the shareholders (Cheers, 2011, p. 8). According to Kotler and Maon (2016, p.6), the only way that corporate social obligation can succeed is if it is comprehended and accomplished as an altercation and collaboration among a corporation and its stakeholders. Stakeholder theory asserts that companies have the responsibility to meet not only the requirements of the shareholders but also the necessities of the stakeholders (Brusseau, 2016, p.1).

Companies and their stakeholders have become much aware of the need for socially responsible behavior and the benefits that accrue. The way a company performs towards the society and its effects on the environment has grown to be a critical aspect of measuring its performance and its ability to proceed with its operations efficiently (TuvRheinland, 2012, p.1). Many companies have embraced the concept of CSR. For instance, Toyota Company has an environmental commitment on the impacts of exhaust emissions and its manufacturing processes. Its environmental commitment concentrates on developing a technology that improves its products and practices to ensure they are cleaner and more efficient which will make the company more competitive.

Friedman believes that business function has no room for social responsibility. Stakeholder theory, on the other hand, rotates around humans and ethics. Since companies are comprised of individuals who have humanistic and realistic viewpoints, they are much aware that the effects of deteriorating environment and thus should be in the forefront in destabilizing a company with wrong motives. According to Pfarrere (2014, p.7) producing stable and continuous profits should be results of properly managing a corporation, which is achievable by the application of stakeholder model. The stakeholder notion identifies that a company has the capability of making profit by creating a strong reputation amongst interested parties and by meeting the needs and interests of the community (Pfarrere, 2014, p.7)

Evaluation of the statement using the Carroll’s theory

Just like the Friedman’s argument, Carroll’s stakeholder approach view the commercial side of a company as a key beneficial asset for the society. However, Carroll went beyond and came up with Carroll’s pyramid of CSR that demonstrates the four broad roles namely, economic role, legal role, ethical role and the philanthropic role (Carroll, 2016, p.5). Carroll argues that these four elements should not be isolated rather view them as a whole. The triple bottom line framework went ahead of the ancient profit measures. Similarly, it went beyond the shareholder value and return on venture and incorporated the aspects of the surroundings and society in the organization (Slaper and Hall, 2011, p.1).

A company that is acting inside the ethical viewpoint should reflect past its yield goal line and build an environment where revenue gained improves the future better. By following the moral perspective, the company's benefit would increase the profit of the entire community, and therefore the short-range purpose must not dispute its continuing objective of becoming a part of the community (Joachimsson and Sepahvand, 2009, p.17). Carroll exhibits CSR using features of the economy, law, ethics, and philanthropy. This concept is very accustomed as it contains the real features of CSR. Contrasting the Friedman’s shareholders model, this approach distinguishes the fact that companies have accountabilities to the society. Just like the shareholder's approach, this theory agrees that business role is producing goods or services and earning a profit while putting economic benefits in the forefront as they create a good base for the firm. Nevertheless, to oppose the statement, legal, ethical and philanthropic roles of the business are also important to the company.

This theory is aware that governments require businesses to operate within the framework of law as this reveals how a company is socially responsible. The legitimate role of the firm is good as failure leads to legal penalties. This theory encompasses the aspect of enterprises being sensitive to the society by respecting the norms and standards and anticipations of the employees’ community and the stakeholder. Incorporating social aspect in CSR improves the adoption of office attitudes and habits that may boost corporate performance (Gond et.al 2010, p. 47).

Additionally, when businesses are successful, they maintain their employees, which in turn lead to economic, and community success (Pacific Continental, 2016, p.5). Again, failure to act ethically means company loses its workforce and clients and thus reduces profitability. However, according to Visser (2011, p.111), the legal perspective of Carroll’s theory is rather controversial when applying the explanation of CSR as a voluntary initiative. Hence, legal compliance that is optional is what good CSR is all about. Finally, failure to show philanthropy towards the society and the environment leads to negative impacts like poor reputation and brand damage. Under these conditions of law, ethics, and philanthropy, the business can strive and maintain its bottom line (Claydon, 2011, p.409).

According to D’Amato, Henderson, and Florence (2009, p.13), CSR can link business operations with the values in the society. This shows that behaving ethically is a necessity for achieving the strategic goal of CSR. The ethical behavior of company acts as a mirror through which shareholders and interested parties view the culture of an organization. This statement again reveals that ethical practices and culture are important in the identity of business. These responsibilities force companies to adhere to what society deems right and fair even if the law does not compel the businesses to do so. Unlike the shareholder's theory, Carroll advocates on the idea of firms using what they have at their discretion to better the lives of the general community. Trade-Offs and tensions are inevitable when companies try to operate on the line of meeting the legal, ethical, economic and philanthropic responsibilities (Carroll 2016, p.1). However, Carroll argues the manner in which firm balances these responsibilities play a fundamental role in defining CSR reputation and coordination. Nevertheless, an essential element of CSR is employing business practices that aid in ensuring that the firm has long-term success of the company.

Evaluation of the statement using the TBL approach

In some instances, CSR demonstrates a strategy a company can apply for profit maximization and can have a positive effect on profit rising or reducing costs. Similarly, a firm can earn direct economic gains by improving its environmental practices (Osterman, 2014, p.11). Unlike the Friedman, that focuses on profitability alone; this theory focuses on sustainability. It calls for companies to measure its operations by economic, social and environmental sustainability. Researchers have not discovered and integrated the relationship between these elements of TBL theory. However, literature points out on the need for managers to incorporate the elements of TBL in their businesses to achieve its CSR.

In an attempt to combine these elements Venkatraman and Nayak, (2015, p.195) conducted a study that showed that companies view the integration of economic, social and environmental as an extra burden for the management. On the other hand, TBL approach requires businesses to strike a balance between the society, environment and the economy and similarly address the anticipations of the shareholders and stakeholders. According to Business Ethics, (2016, p.1), a company’s decision to focus on profitability alone may create a short-term success but in the long-term lead to harm. In businesses, the concept of TBL is sustainable and can lead to profits in the end. By balancing the three elements means that the firm will have good relation with the stakeholders. Again, this is critical as the stakeholders are too many and it not possible for a business to meet the needs of all the interested parties and still make profits, as stakeholders are too many as they include the internal and external individuals who have a stake in the business (Cheers, 2011, p.29)

Evaluation of the statement using the 3C-SR

The 3C-SR model assesses the CSR of a company by use of variables namely, constancy, commitment, and association. It fills the gap that exists in CSR description and strategies and guides the management on how to link social organizations with the increasing number of customers who are alert ethically to accomplish social and economic goals concurrently (Mehan and Richard, 2006, p.).

CSR requires companies to integrate both social and environmental sustainable progress during their operations. Friedman views are different from the role of CSR is solely increasing the profitability of the shareholders. However, according to an Economists Intelligence Report (2008, p.5) conducted globally, the results do not agree with the Friedman’s principle of maximizing profits only as the principal aim of participating in CSR. In this survey, use of CSR as a way of increasing profits or reducing expenses received little support. On the contrary, other benefits such as to promote its brand and gain a reputation received strong support (Economists Intelligent Unit, 2008. p5).

CSR is an important tool for businesses. According to Robins, (2015, p.1) most managers believe that CSR can enhance profits. Managers have the belief that CSR can improve the stakeholder's perception of their firm in the market and turn result to high profits, stimulate its employee's loyalty and appeal better personnel to join the company (Zafar et.al.2014,p.13). Additionally, when firms have CSR activities that aim at sustainability they may reduce their costs and enhance their efficiency (Robins, 2015, p.1)

The assumptions of CSR behavior predict that businesses engage in CSR activities for them to be legitimate (Fernando and Lawrence, 2012, p.169). However, when company’s commitment to vigorous ethical standards is weak because of consistently focusing on profits, there is a likelihood of reducing its legitimacy. This is likely to happen because the internet and increase in the corporate activism are highlighting those companies without the strategic approach to corporate responsibility necessary to ensure business legitimacy in the short term. Again, companies focusing on supply chain will opt to look for contracts with the companies that have better economic returns and have equally respectful relationships.

According to the Sustainable business toolkit (2016.p.1), the problem of viewing CSR from the profitability angle is because it is very hard to find out the interconnection amongst CSR and financial performance, as financial results are not tangible, and it's very speculative. This instinctively shows that investment in CSR could improve the reputation of the brand and increase the volume of sales, but it is hard to demonstrate the causation. When looking at CSR, it is good to point on corporate social performance as a fundamental concept in measuring the company’s CSR behavior (Jieyi & Hui, 2009, p.20). A study by Doherty & Thompson (2006, p.386) revealed that 3C-SR model could guide the managers on how to link with the increasing numbers of consumers who have the ethical awareness to attain the societal and economic intentions of the company.

Conclusion

The users in the current world are socially aware, and they can differentiate between ethical and unethical business practices and are hasty in awarding those firms that are working towards making the world better (Tran, 2015, p.6). Therefore, the aim of the company should not be solely on maximizing profits; corporations need to have a purpose that exceeds profit making. They require sustainability approaches that recognize that giving back to the society can lead to moneymaking (Tata et. al 2013, p.1). Undertaking CSR offers companies benefits such as good publicity and builds a good reputation. Besides, it adds to social wellbeing and progress. Therefore for a company aims at expansion, profit cannot be the sole motive as when society thrives, business improves and expands career ride (2016, p.1).