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The World Business Council for Sustainable Development proposes a definition for CSR which is " CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large". Reference (this definition was developed in 1998 for the first WBCSD CSR dialogue in The Netherlands.)
There has been an increasing role of CSR in the community these days. This is because of the impact of globalization, where the effects of actions on the other side of the world are being debated in the press. There is also increasing attention from investors through the rise of socially responsible investment or SRI. Investment in ethical funds was given a boost when pension funds were obliged to state whether they took into account social and environmental impacts. The reason behind such an investment is that firms that closely manage their social and environmental conditions are subject to less risk, are possibly better managed and thus will also turn out as better investment, as well as satisfying a principled standard.
To promote CSR it is necessary to enter into a trust based relationship with stakeholders. In such an environment the firm will need to think of themselves as being part of a network in which value is created and where co-operation is more vital. The scheme of CSR basically is about moving away from a business focused approach towards a one that explores the impact and value on society which then further has impacts on the business. And thus if a business recognizes that it is a part of society and its aim is to create value in the society it will be able to consider the value that is created both for the firm and for society. Business and society have an impact on each other.
With the increasing focus on CSR, comes another scheme better recognized as Corporate Social Performance (also known as CSP) and which also enables to calculate and view the performance of business in the social ambit. The social performance needs to be handled and organized properly to get rid of other liabilities and to make the business move on the road to progress. CSP is not only a moral value but also helps the organization financially. CSP is highly correlated with the financial performance. It is connected and related with accounting return procedures rather than market return procedures. The reason of effectiveness of CSP seems to be due to status effects between a huge number of stakeholder groups, and not because of the organizational learning effects. In order to make CSP profitable and able to pay the full amount of a bill, debt or other financial obligations top administration must plan it with a tactical vision that is communicated all through the organization. To make a successful CSP policy, it should be kept in view that it must contain both "soft" and "hard" topics (soft topics like managerial trends and employee values and hard topics like social policies, programs and managerial structures.) Reference
Each of us can probably name more than ten cases in which unprincipled organizational performance had created serious consequences for organizational efficiency, both during and after the managerial "ethics crisis." Until now, however, a small number of efforts have been made to standardize the way that we think about organizational principles and social responsibility, greatly lessen the financial per
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This study addresses ethics and corporate social responsibility practices and issues, while focusing on several case studies like Scandal and Nestles Companies. Most people believe that corporate governance is primarily concerned with the societal obligations of business; however, they are not interested in understanding the scope and nature of these obligations.
Mc Williams and Siegel (2001) pointed out that various factors like firm’s size, diversification, R&D and market conditions can influence Corporate Social Responsibility. They also concluded that if these factors are considered, the corporate social activities will promote or hinder financial performance.
Acknowledgements The author is especially grateful to (mentor/advisor’s name) for all the patience and guidance displayed for the duration of the this research. Abstract In the aftermath of the breakdown of Communist Europe, a majority of Central and Eastern Europe are currently characterized as transition states as they transition from socialist states to market-based economies (Centeno 1994, 125).
The impact of society on business and vice versa is becoming increasingly propagated each year. A firm’s consumers, products, markets, equipment, productivity and public image are all directly influenced by the social policies of a firm. A firm’s social policy must be incorporated into all strategic-management activities and most importantly in the development of mission statement.
It is estimated that in 2009, the total financial assets managed by institutional investors worldwide exceeds US$ 53 trillion, of which US$ 22 trillion of which is in equities. The implication is that company oversight, as well as the entire corporate governance system, will depend on the degree to which institutional investors make informed use of their shareholder rights and effectively exercise their roles as corporate owners.1 The role of institutional investors as overseers of corporate health and regulatory compliance has been drawn into sharper focus as a result of the financial crisis in 2008.
Without proper corporate governance, then there is a risk that investors as well as other stake holders might end up losing confidence in them (Bassen 2005, p.246). There is often the risk that with bad corporate governance, there might not be enough control within corporations to prevent financial crises like the current global financial crisis.
Thus a firm with high levels of CSP bears high preference from customers and investors as well.
Corporate social responsibility (CSR) is the business practice conducted by a firm to ensure that its profit
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