Growth of Corporate Social Responsibility Programs - Essay Example

Corporate Social Responsibility Affiliation Corporate Social Responsibility refers to the actions companies manage their businesses in order to influence a positive impact on the society through environmental, social and economic activities. Over the past three decades, the government, employees and major competitors in the business industry have increased pressure for new and emerging companies to participate and play a role in corporate social responsibility with reference to issues such as climate change, obesity, human rights etc. This pressure has caused a majority of the companies in the United States to adopt and participate in corporate social responsibility or sustainability initiatives and addressing such issues. According to Calabrese, Costa, Menichini, Rosati & Sanfelice (2013), it is evident that a corporation can be much better in the business world by doing good deeds for the community. This is because most organizations participate in corporate social responsibility in such a way that it generates more income for their business by either marketing the company or by branding their company with a certain initiative as reputations concerning the company and the products advertised by word of mouth by the community that is positively affected by the actions (Mattila & Hanks, 2012). Over the years, participation in corporate social responsibility programs has been perceived as a means of gaining competitive advantage over competitors due to the influence it has on the public. Although it has proven difficult to gather data that justifies strategic investments in corporate social responsibility programs, many companies continue to create real value through their social, environmental and governance initiatives through decreased production costs, increased sales and/or reduced risks impacting the business positively. According to a recent McKinsey survey, majority of the companies that participated in the survey agreed to having corporate social responsibly programs that are an enormous boost to their businesses based on the financial value of the companies in terms of market exploitation, capital investment returns, quality and risk of management. Moreover, companies experienced a reduced risk of boycotts, higher retention rates, better regulatory settlements, increased sales and better brand differentiation that increased their success rates by up to 40%. According to this report any company that participates in any corporate social responsibility initiative should reconsider re-examining the initiative if no benefit is achieved from them (The Social Responsibility Research Network, 2011). Corporate social responsibility programs according to Hidayati (2011), Hu & Fatima Wang (2008) and Poglianich & Antonek (2009) influence the success and growth of businesses in diverse ways depending on the type of business. Research carried out by Hu & Fatima Wang (2008) showed that growth in five prominent areas was experienced after companies initiated corporate social responsibility programs. New Markets: According to the report, IBM has continuously used social, environmental and governance initiatives (CSR initiatives) to establish its manifestation in new markets in the United States and globally. For example, IBMs small and medium enterprise toolkit has been used to promote local stakeholders and non-governmental organizations in and out of the US by providing free web-based resources that support business management techniques to help the small and medium enterprises achieve their full potential. According to Hu & Fatima Wang (2008), IBM has benefited from this initiative by gaining reputation and enhanced relationships with the new markets while still maintaining communication and building a relationship with potential companies that might turn out to be IBMs future customers. New products. The report showed that IBMs initiative to venture into green data center products has increased its reputations and market share by attracting environmentalists to use their new products hence increased sales while still maintaining its environmental initiative. This has helped the company grow as most environmentalists promote the IBM brand based on its environmental considerations. IBM has also ventured into partnerships with organizations such as Nature Conservancy to develop new methods and techniques for handling environmental problems such as improving water quality levels. Participation in corporate social responsibility programs increases the market share and influence of companies to new customers as Telefónica and Coca-Cola have shown. According to Poglianich & Antonek (2009), the participation of companies in environmental, social and governance programs increased their marketability and hence they have a higher chance of attaining new customers, as the community will feel obliged to participate in the companys initiatives indirectly by buying goods and services from them. For example, Coca-Cola has over the years promoted environmentally friendly products and has been distributing eco-friendly coolers and vending machines that are energy efficient. This has promoted their popularity in major food outlets as business owners incur fewer electricity costs (Raman, 2007). Many companies generate significant returns on capital from their corporate social responsibility initiatives through workforce efficiency and operational efficiency. Workforce efficiency refers to the amount of goods and services an employee can produce in a given time frame. The workforce of a company can be improved as exhibited by the Best Buy, who undertook an initiative to reduce employee turnover in women in 2006. According to (source7), WoLF (Womens Leadership Forum) was developed to enhance female workforce efficiency in the chain stores by fostering innovation and creativity among the workers. WoLF was successful as Best Buy experienced an influx of women customers without affecting the male customers in the stores and by 2008 women turnover in the store had reduced by 8%. By decreasing the turnover, the returns on capital increased since the company spent less on recruiting new staff. Operational efficiency refers to the capability of a company to deliver products and services to consumers in the most cost-effective way possible while maintaining the quality of the goods and services. Corporate social responsibility programs can aid a company in achieving substantial savings by enhancing the companys operational efficiency. This can be achieved by meeting environmental goals such as reducing energy costs, reducing input costs and improving processes. By so doing the returns on capital are enhanced considerably. For example, Google has over the years promoted the need for energy conservation, which has paid off based on their report that by using energy efficient light bulbs and minimizing use of electricity the energy costs have reduced by 50% (El-Garaihy, Mobarak & Albahussain, 2014). Risk management can be enhanced by participating in corporate social responsibility programs as exhibited by Verizon Wireless. Companies often perceive social responsibility programs as potential risks in cases such as regulation problems and gaining public support for legal issues. However, currently companies have mitigated on such risks by taking strong stands on certain issues such as corruption, fraud, and data security. This can be done by taking a proactive role in the management of social, environmental and governance risks. Since regulatory policies shape the structure and conduct of most organizations, having a strong reputation and ethical considerations increased the relationship between the stakeholders and the regulatory board members due to their social responsibility initiatives. For example, Verizon Wireless actively manages its relationship with major stakeholders to establish strong bonds and relationships with policy makers thus aiding in the formulation of policies that will aid the development and growth of the company (Poglianich & Antonek, 2009). Small companies that participate in corporate social responsibility programs according to Martinuzzi & Krumay (2013) have a greater chance of improving their stability since stability ensures that the long-terms goals and revenue growth are maintained throughout hence the chances of getting losses are minimized. Companies can achieve stability through corporate social responsibility initiates as they promote key stability factors as discussed. Customer Retention is vital in promoting a companys stability and since consumers generally have a need to identify with certain brands due to their reputation and relations to their personal interests, the involvement of a company in corporate social responsibility programs increased the need for consumers to want to identify with the company by the good deeds that they are doing for the community. As the company participates in environmental, social and governance programs, its customers perceive value of its deeds in its products hence customers become loyal to the company is an attempt to support the initiatives indirectly thus a stable and loyal customer database grows (Hunnicutt, 2009). Capital is vital in funding a company to venture into new markets and products. Therefore, capital is required to maintain stability of a company hence the participations of a company in environmental , social and governance programs will promote its viability as an investment opportunity to investors since majority of the investors examine a companys ethical and social standards before deciding on whether to invest in them. Therefore having an aspect of social responsibility will woo investors it the company hence accessing funds to expand the business. Stable cash flow is enhance when a company is involved in social responsibility programs because ethical and socially responsible companies are more likely to avoid the cost of litigation in terms of fines and penalties and other problems that could have a negative effect on the company’s cash position by maintaining regulatory compliance and maintaining customer and employees rights. By ensuring a stable cash flow, the growth of the company is maintained (Hunnicutt, 2009). Participation in corporate social responsibility programs ensures that the reputation and image of the company are maintained, and its ethical considerations promote its popularity in the business world as exhibited by companies who participate in the Go Green Program. Consumers due to their environmental considerations prefer their products. It also promotes employee retention and recruitment as most employees consider identifying with reputable companies. In conclusion, corporate social responsibility programs are in the increase in the United States since more and more companies continue to realize the value of participating in them. Not only do they help the community in achieving certain stands but they also promote their own development in terms of increased market share, new customer influence, reputation build up, accessing funds, receiving investors and maintaining a steady cash flow. The investment of a company in corporate social responsibility programs also impacts its credibility as a beneficial organization in the society hence it is more likely to be promoted to consumers for being ethical, environmental and socially acceptable. References Calabrese, A., Costa, R., Menichini, T., Rosati, F., & Sanfelice, G. (2013). Turning Corporate Social Responsibility-driven Opportunities in Competitive Advantages: a Two-dimensional Model. Knowledge And Process Management, 20(1), 50-58. doi:10.1002/kpm.1401 El-Garaihy, W., Mobarak, A., & Albahussain, S. (2014). Measuring the Impact of Corporate Social Responsibility Practices on Competitive Advantage: A Mediation Role of Reputation and Customer Satisfaction. IJBM, 9(5). doi:10.5539/ijbm.v9n5p109 Hidayati, N. (2011). Pattern of corporate social responsibility programs: a case study. Social Responsibility Journal, 7(1), 104-117. doi:10.1108/17471111111114576 Hu, Y., & Fatima Wang, C. (2008). Collectivism, Corporate Social Responsibility, and Resource Advantages in Retailing. Journal Of Business Ethics, 86(1), 1-13. doi:10.1007/s10551-008-9789-x Hunnicutt, S. (2009). Corporate social responsibility. Detroit, MI: Greenhaven Press. Martinuzzi, A., & Krumay, B. (2013). The Good, the Bad, and the Successful – How Corporate Social Responsibility Leads to Competitive Advantage and Organizational Transformation. 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