Corporate Social Responsibility That is Practising in Self Regulation - Research Paper Example

Introduction Corporate social responsibility (CSR) is a practice whereby companies engage in self regulation to enhance observance of the law, maintain moral standards as well as what is expected of them internationally. Through it, companies take care of their negative impacts on the environment, the end users, the communities within which they operate and from which the labor force is drawn, stakeholders of the company as well as the general public. The managers usually focus on the improvement of public amenities to enhance development and also to help communities to cope with hindrances to better livelihoods such as diseases, natural disasters and environmental degradation among other issues. In general, the focus is usually to improve the public’s standards of living. The communal interests are incorporated in the business decision making process. “Corporations are now expected to deliver the good, not just the goods; to pursue values, not just value, and to help make the world a better place” (Bakan, 2004). However, critics of CSR argue that the ultimate goal of companies is to make profits from their capital outlay. It would be wrong to assume that a company can be established with the mission of helping the public to overcome the problems that they face in their day to day lives. This paper defines various concepts associated with corporate social responsibility. It identifies relevant issues, analyzes recent developments as well as an evaluation of arguments and finally, it presents and explains a personal opinion concerning CSR. Issues and Concepts Associated with Corporate Social Responsibility CSR is faced with various issues concerned with the manner in which organizations operate to accomplish business strategies aimed at boosting profitability while on the other hand maintaining ethical principles for the sake of the public. In essence every business venture is usually intended to make profit, and as William (2010) argues, the business strategies are developed to help an organization to counter the factors that might hinder its profitability. The reaction of the public to the externalities emanating from the business operations is one factor that may hamper the realization of organizational objectives. Engaging in CSR is one of the tools applied by companies to ensure that its own externalities are viewed positively by the public. For example, large petroleum industries are the major contributors of the green house gases emitted in to the atmosphere, which contributes to degradation of the ozone layer and eventual global warming. The petroleum companies usually engage in environmental conservation activities to conceal their contribution to pollution. An example of such involvement is through the IPIECA kit that is used by the petroleum industry to show the concern of companies in environment and human rights issues. Total is one of the oil companies that engage in protection of human rights through activities. It also operates only in the countries that adhere to the rules and regulations of the French EU and the UN to promote the desired code of conduct (Vaaland & Heide, 2008). In other words, such interventions draw the public focus from the impact of the organizations’ activities on the environment to the benefits from the companies CSR activities. Promoting human rights protection can not cover the damage caused to the environment. However, in reality the people’s attention is easily drawn to the immediate benefits than the long term impacts of environmental degradation. Governments tend to appreciate the funds obtained from companies to support their policy objectives thereby forgetting the problems that the people are exposed to (Visser et al 2008). In most cases, CSR is used by organizations as a tool for awareness creation as well as a marketing strategy. For example, Starbucks is one of the organizations that are popular among communities for their efforts to promote the livelihoods of the public especially in the coffee growing regions. Involvement of the company in tree planting activities with communities to promote environmental conservation, while on the other hand the people benefit from the payment of the seedlings grown for planting on their farms. However, the company mainly deals with coffee growing communities. It also supports wildlife conservation in the poor coffee producing countries as well as educating farmers on better methods of coffee production. In essence, if the CSR strategy was meant to benefit the general public without other attached benefits to the company, the activities could have been distributed even in the non-coffee growing communities and regions. The company also supports education and community development activities in the regions where its coffee is consumed (Clark, 2007). This is one of the marketing and awareness creation strategy even though the management insists that it is solely meant for the public good. CSR is also applied by many companies to attract the government’s favor and to show how different an organization is from similar organizations. For example, government regulations for environmental protection are usually not observed by many companies in a particular industry. A firm may be exempted from penalties and embargos among other measures that may be undertaken to deal with law breakers if it demonstrates efforts for CSR. The concept in such a situation is for the company to demonstrate that it adheres to the laws governing organizational operations in a particular region. Moreover, the management may be focused on maintaining the relationship with the government to continue enjoying the goodwill that supports award of public contracts. Grace & Cohen (2005) argue that CSR has been used by multinational companies for many years to protect them from government tariffs arguing that their operations are significant in the improvements of livelihoods and the citizens’ standards of living. A corporation needs to be answerable to its shareholders and not any other groups of people or entities who have not sacrificed their resources to establish the company. Managers need to be careful regarding engagement in CSR. It does not sound reasonable for the shareholders to contribute funds to be used for serving the interests of the general public. This would go against the economic principles of engaging in business for entrepreneurs. However, if for a business to survive it has to integrate the interests of the public in its strategy making process, the shareholders have no option but to allow the managers to engage the business in corporate social responsibility. Bansal & Roth (2000) argue that integrating CSR strategies for the benefit of employees is significant in preventing high turnover, which helps an organization to maintain experienced employees for maximum profitability. They tend to appreciate the fact that apart from the salary gains, the organization recognizes their contribution to the realization of the strategic objectives through improvement of their welfare. Recent Developments in Corporate Social Responsibility In recent years, CSR has become a widely accepted practice in business operations. The organizations that do not engage in the practice are usually viewed as having abandoned a major obligation. Environmental conservation is one of the most prominent issues in CSR. This is because virtually every organization has a negative impact on the environment either through the pollution from production systems or the green house gases emitted during distribution of products. Bulkeley (2001) observes that the recent developments in CSR are due to the enlightenment of the general public regarding the environment as well as their human rights. This is true especially considering the fact that the public had remained ignorant on many issues affecting them for many decades. For example, global warming is an issue that has occurred gradually without raising alarm in spite of many knowledgeable individuals having the understanding that environmental pollution could lead to such situations. When disasters began to strike, such as draught and floods, the public has suddenly become aware that industries have an obligation to clean the environment that they have polluted for many years. Tree planting is one of the major activities in the current CSR strategies of many organizations. Disasters are striking communities at a high rate and organizations are demonstrating their concern through CSR whereby they provide humanitarian relief. For example, Censky (2010) observes that “more than 350 companies have made contributions to help Haiti recover from the earthquake”. Globalization of industries acts as a major driver towards CSR as companies tend to make their global presence known. In such disasters that are transmitted through the global media, people become aware of a particular company when they view it represented in the rescue team. Other opportunities for CSR arise when governments call for well wishers to assist famine stricken communities, thereby presenting the companies with a significant awareness creation and marketing opportunity. Governments are also offering subsidies to the organizations that demonstrate strong CSR strategies. Arguments for and Against Corporate Social Responsibility There are various arguments for and against CSR that are based on the benefits for the organization as well as the community. The most significant benefit for the organization is enhancement of financial performance through employee satisfaction as well as the reduction in the costs of operation through government subsidies. Inventiveness is maintained as the organization is able to retain a skilled and diverse workforce (Grace & Cohen, 2005). The organization gains reputation thereby strengthening its brand equity, which increases competitiveness. The consumers tend to maintain loyalty to the brand hence improved profitability. CSR improves accessibility to capital. On the other hand, the communities benefit from the contributions made towards improvement of their livelihoods as well as the environment. The public also benefits from the organization’s contribution to health and educational support among other programs. The products that they consume are safe and of standard quality (Hopkins, 2003). On the other hand, offering mandatory assistance to the public may not yield the expected results of CSR. This means that since organizations are compelled to support community projects for them to remain supportive in terms of raw materials, market for the finished products, and also to withstand the negative externalities from the company, they tend to maximize their production capacity to cover the costs incurred in CSR (Bansal & Roth, 2000). An example of a CSR strategy whereby the company has to maximize production to offset the expenditure incurred in CSR is when a company spends extra costs on an employees’ security plan such as the security and human rights program for the employees of Total Oil Company. The shareholders may not be interested in security than the outcome of the plan. The employees are motivated to work harder and the managers ensure that they utilize their potential to the maximum. Critics of CSR view such a strategy as an organizational gimmick and not social responsibility. In conclusion, I am of the opinion that CSR is a significant practice that needs to continue since the organization as well as the public benefit from it. Even though it may be a gimmick, what the people have acquired from the practice can not be taken from them. Moreover, the products developed by organizations are used by the public mainly to improve the quality of life and for the organizations to continue producing; they have to make profits, which can only be accomplished through promotion strategies such as CRS. The recent developments will eventually lead to a situation whereby all companies engage in CSR for them to maintain a substantial customer base. References Bakan, J. (2004). The Corporation, Constable & Robinson. Bulkeley, H. (2001). “Governing Climate Change: The Politics and Risk Society”. Transactions of the Institute of British Geographers, Vol.26, 4, pp. 430–447. Bansal, P., & Roth, R. (2000). “Why Companies go Green: A model of Ecological Responsiveness”. The Academy of Management Journal, Vol. 43, 4, pp. 717–736. Censky, A. 2010. Haiti’s Top Corporate Donors, CNN Money, viewed on 5th Feb 2010 at Clark, T. (2007). Starbucked, Sceptre. Grace, D., & Cohen, S. (2005). Business Ethics: Australian Problems and Cases, Oxford University Press. Hopkins, M. (2003). The Planetary Bargain: Corporate Social Responsibility Matters, Earthscan Vaaland, T. I. & Heide, M. 2008. “Managing corporate social responsibility: lessons from the oil industry”. International Journal of Corporate Communications, Vol. 13, 2 pp 212-225 Visser, W., Matten, D. Pohl, M. & Tolhurst, N. (2008). The A to Z of Corporate Social Responsibility, Wiley William, S. (2010). How to Govern Corporations so they Serve the Public Good: a Theory of Corporate Governance Emergence, New York: Edwin Mellen Read More