Social Responsibility and Financial Performance - Essay Example

Social activists argue that the engagement of business in social activities of improvement is clearly moral and civic value and should be carried out without the incentive of any financial gain in mind. Efforts are being made to correlate social responsible corporate actions with financial performance. Social responsibility is approached as a continuum with five distinct levels: illegal and irresponsible companies, complaint companies, fragmented companies, Strategic and social advocacy. The author concludes it does pay to be good but only in limited contexts.

Unit of Analysis: Businesses, Ultimate Objective: To signify the correlation of social responsibility and financial performance of businesses, Source of Motivation: Socially responsible companies have been in business for long terms now. Businesses with strong cultures seem to have been better off than businesses with weaker cultures. The focus of Attention: the focus herein has been the evaluation and analysis of the Correlation between social responsibility and financial performance. Based on reading the article, the author has presented various distinct views of groups of individuals, who have in one way or the other tried to prove the correlation between social responsibility and financial performance.

 stand that they do not discourage the involvement of business in social welfare activities but believe that they should be carried out only if there are any financial gains insight. Social Activists views are the fact that they perceive social responsibility is a moral value. The author defines levels of Social responsibility continuum, used as a model. Five distinct levels have been brought into our views. Hence the author deducing the following conclusions: The companies at level 1, not profitable at all in the long run (illegal), for level 2 (Complaint) companies compliance with legal mandates is simply a necessary condition for existence, for level 3 (Fragmented) companies act responsibly beyond complying with the law, Level 4 (Strategic) is the strongest link between the CSR and financial performance, at level 5 ( social advocacy ) is on social change rather than on profits.

Furthermore, at least two types of HR activities seem to be important contributors to profits. According to the author, the short answer to this is that Yes it does pay to be good but under limited constraints. One other very vital issue to be noted here is that there is no evidence that companies who engage in social welfare or development without any financial gains in return face any negativity in profits. Like Wise, there seems to be no evidence that suggests that businesses who do not engage in any activity other than making profits or increasing shareholder value are in any financial gains.