Four Dimensions of Social Responsibility - Essay Example

Four Dimensions of Social Responsibility and Their Impacts on Marketing Decisions Introduction Corporate social responsibility (CSR) comprises of a set of moral, social and ethical obligations which a corporation has towards its consumers, and the society as a whole. There are various definitions that explain this concept. One such definition tells us that CSR is “a commitment to improve community well-being through discretionary business practices and contribution of corporate resources” (Kotler and Lee, 2005). In another definition Watts and Holme defines CSR as “the continuing commitment by business to behaving ethically and contributing to economic development while improving the quality of life of the work force and their family as well as the community and society at large” (cited in Sims, 2003). Again, Wartick and Cochran frames CSR as “a business organization’s configuration of principles of social responsibility, processes of social responsiveness, and policies, programs, and observable outcomes as they relate to the firm’s societal relationships”(Wartick and Cochran, 1985). CSR is however the most aptly defined by the World Business Council as “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” (Holme and Watts, The World Business Council for Sustainable Development). One idea comes out very clearly from the above definitions, and that is, CSR is a duty to be performed by corporations towards all its stakeholders, and not simply the shareholders. CSR can be divided into 4 basic dimensions. These are Economic dimensions, where there is a responsibility of the corporation towards its owners, to earn profits. Legal dimensions, where the responsibility lies in abiding by a country’s (from where it is operating), set laws and following the correct legal procedures. Ethical dimensions, where the corporation does fair and conscientious work, and not just aiming blindly towards profit making. Philanthropic dimension where one assumes responsibility for the general goodwill, and the welfare of the society at large. This article will examine the four dimensions of CSR closely, and will also analyse the impact that these dimensions may have on the marketing decisions of a business corporation. Body The four afore-mentioned dimensions form the pyramid of social responsibilities, and are referred to as the Carroll’s CSR pyramid. As Carroll himself frames it “corporate social responsibility involves the conduct of a business so that it is economically profitable, law abiding, ethical and socially supportive. To be socially responsible then means that profitability and obedience to the law are foremost conditions when discussing the firm’s ethics and the extent to which it supports the society in which it exists with contributions of money, time and talent” (Carroll, 1983, p.608). At the very base is the economic dimension that forms the foundation for all the other aspects. Next, above the economic dimension, comes the legal aspect, where the mantra is to follow and play strictly by the rules of the game. The law clearly demarcates what is right and what is wrong, and the legal dimension simply asks one to follow the rules. Above this, comes the ethical dimension, which demands that corporation be just and play fair, and also avoid doing activities that may prove to be harmful to the community. The uppermost block comprises of the philanthropic dimensions, where the corporation works towards the general goodwill of the society, and tries to improve the quality of life and confer resources, to help the community as a whole. The first two blocks of the pyramid are well known, and have been long in practice. It is the last two that have come into the limelight only recently and have gained importance amongst the corporations in the last few decades. Economic dimension of CSR works with the simple theory of making profit for the company. This is the fundamental and age old theory, where all marketing strategies are focussed on making money and this dimension is especially important, because if there is no profit made then definitely all talks of social responsibilities just come to a grinding halt, while philanthropic dimensions do not come into the perspective at all. Legal dimensions are also maintained by the corporations to be equally important as the economic ones, and are necessary to remain on the right side of the law, and keep good relations with the highly placed government officials, and also to maintain their reputation. Ethical dimensions are diverse in nature and depend on the country from which that corporation is operating. “Marketing ethics relates to issues such as honesty and fairness, conflicts of interest, discrimination, privacy, and fraud” (Ferrell, nature and scope of marketing ethics). There must be reconciliation in the ethical norms of both the home and host country of the corporation, so as to maintain a balance; however it is always best to have a standardised form of ethical values applicable uniformly in all the countries where the corporation is located. This practice is known in the corporate world as ‘Moral Universalism’ and has its support from the UN Global Compact. The philanthropic dimension “reflects global society’s expectations that business will engage in social activities that are neither mandated by law nor generally expected of business in an ethical sense. Philanthropy today is more often than not strategic in nature, with businesses expected to play an active role in global corporate citizenship” (Luo, 2007). Impact of CSR on the marketing strategy of a corporation: Contrary to the old and once popular myth, it is now widely acknowledged amongst business heads and management gurus, that it is indeed possible for corporations to do business in such a manner that turns out to be beneficial for all those involved, starting with the shareholders, the owners, the stakeholders, and also for the community. Maintaining the ethical dimensions within business measures is vital, if the corporation wishes to do long term business, and CSR adds to the overall good image of it. Social responsibilities give a large number of contingencies to the corporation to work for the benefit of the community and also shine in the process. If they are not so willing initially, then government legislations can force them to take the CSR more seriously. Both the government through its legislations, and the consumers through their power to stop buying products, can force a corporation to take more interest in the field of CSR. It has often been said that the marketing managers face dilemma when there is a conflict in their strategies, between ethics to be maintained (ethical dimensions) and profits (economic dimension) to be made, and it is also true that some managers will value social responsibility more than the others. Sometimes dilemmas may rise owing to personal ethical beliefs that clash with the values of the organisation, as for example, for those working in the tobacco and alcohol marketing sector. It has also been seen that some organisations tend to promote social responsibilities more than others, claiming that being ethical helps in doing better business and it always pays off to be a ‘good corporate citizen’. Here it is necessary to take a look at what benefits come with being a so called ‘good corporate citizen’. The company would get that desired ‘shine’, or an elevated image that would be identified with its name and logo, and serve as a brand image. A good brand image would in turn lead to a good market share, resulting in no dearth of investors. As Eisenhardt and Martin (2000), tells us that CSR is slowly emerging as a marketing strategy that is dynamic in nature and gives an added advantage to a corporation in the competitive market. Existing employees would be easier to retain and with a good brand image acquiring new employees would not be much of a problem. Here Ferrell and Pride give us some numbers that represents the manner in which consumers perceive companies and their CSRs. In US “73 percent of consumers say they would boycott the products of a socially irresponsible company, and 90 percent would consider switching to a competitor’s products” (Pride and Ferrell, 2008, 104). So the pressure in recent times is also more on the corporations to be ‘good corporate citizens’. A CSR corporate would generally plan its marketing based on the theory of sustainable development and also on strong and able corporate governance. As per this theory, a corporate must acknowledge the fact that their activities have a large effect on the society, and if that impact is good, then that positive development in turn provides the company with better business scopes and greater economic returns. So a successful marketing strategy would be to first aim at making profits, keeping the economic dimensions in mind, so as to be able to serve the community better, later on. It would include very clearly, the social responsibilities into its day to day marketing strategies, to maximise the positive effects on the community as a whole, and remove the negative ones. Another important strategy would to be to go out and get involved in some mission that is not related to the company in any way, even if it means not doing profit in that section. Success derived from marketing strategies that are based on strong marketing ethics, good cooperation amongst the marketing members, and good social values, helps in the long run, and often supports corporations to survive even in adverse market conditions. Legal dimensions are especially important while chalking out marketing strategies. When a plan is drawn that deviates from the standard ethical norms, one has to keep the legal dimension in perspective, or else it may result in customer dissatisfaction and lawsuits leading to long drawn legal wars and huge financial losses. Such probable problems that may arise from a change in marketing plan should be kept in mind, and dealt at the strategy table itself, not when the contingency rises and law suits follow. So it is important that the marketing manager is well aware of the legal and ethical dimensions, and the standard ethical norms practiced in the corporation and the host country. So “marketing decisions based on ethical considerations foster mutual trusts in marketing relationships” (Pride and Ferrell, 2008, 105). Philanthropic dimensions go beyond ethical dimensions, and may not be a part of the marketing strategy. However this dimension aims for the ‘Greater Good’ and promotes human and social welfare as a whole. “Many firms use cause– related marketing, the practice of linking products to a social cause on an on-going or short-term basis. Strategic philanthropy is the synergistic use of organisational core competencies and resources to address key stakeholders interties and achieve both organizational and social benefits”(Pride and Ferrell, 2008, 117). Conclusion From the above discourse it is clear that CSR is an important aspect in the modern context, which all corporations must aim to incorporate in their long term itineraries, and in their daily marketing strategies, if they wish to compete and survive in the modern day market. Corporations should integrate CSR in their marketing plans voluntarily, instead of forcing the governments to draw up legislations to force it down on them. CSRs involve working for the benefit of the entire community and society, and this is something which must be made a part of the intrinsic values of a company, and thus can come from within, and not be forced from outside. CSRs that bring about positive changes help a corporation to run its business successfully and stay in the market for many years to come. As Kurtz, MacKenzie and Snow commented “ethics and social responsibility must underlie everything that marketers do in the 21st century- those who find ways to ‘do well by doing good’ will succeed” (Kurtz, MacKenzie and Snow, 2009) References Carroll, A. B. (1983). Corporate social responsibility: Will industry respond to cut- backs in social program funding? Vital Speeches of the Day, 49, p. 604-608. Eisenhardt, M, and Martin, A. (2000). Dynamic capabilities: what are they? Strategic Management Journal 21 (10/11), 1105-1121. Ferrell, O. (n.d.). Nature and Scope of Marketing Ethics. Retrieved from http://prideferrell.net/Resources_files/MarketingEthics.doc. Holme, L, and Watts, R. (2000) CSR Making Good Business Sense. The World Business Council for Sustainable Development Publications. Retrieved from http://www.mallenbaker.net/csr/definition.php Kotler, P, and Lee, N. (2005). Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. New Jersey: John Wiley and Sons, Inc., 3. Kurtz, D, MacKenzie, H, and Snow, K. (2009). Contemporary Marketing. Ontario: Cengage Learning, 115. Luo, Y. (2007). Global dimensions of corporate governance. Oxford: Wiley-Blackwell, 205. Pride, W, and Ferrell, O. (2008). Marketing. Mason: Cengage Learning. Sims, R. (2003). Ethics and Corporate Social Responsibility: Why Giants Fall. Westport: Praeger Publishers. 43. Wartick, L, and Cochram, L. (1985). The evolution of the corporate social performance model. Academy of Management Review, 10, 758-769. Read More