2. Literature Review
2.1. Corporate Social Responsibility: A varied perspectives
2.2. CSR-What they can do
3.1. Case Study Analysis: Evidence
Corporate Social Responsibility is a traditional concept which has existed since before the World War II, (A.B. Caroll & K.M. Shabana). The evolution of concept theoretically relates to Abram’s (1951), who argued that companies should not only focus on profit maximisation, but also should think about its employees, customers and public at large; which was further discussed in seminal book “Social Responsibilities of Businessman” published by Howard R. Bowmen in 1953.
Corporate Social Responsibility, when simplified signifies the social responsibilities of a corporate firm. According to the International Organisation for Standardisation (ISO), CSR is described as “a balanced approach for organisations to address economic, social and environmental issues in a way that aims to benefit people, communities and society”. CSR takes major issues that include human rights, workplace and employee issues, unfair business practices, organisational governance and environmental practices into consideration. Corporate social responsibility is a conceptual where firms tries to integrate social and environmental concerns into their business and operations and in their interaction with their stakeholders on a voluntary basis which as stated by the European commission. Companies as engage business and activities, their certain objectives will be directed towards the society which is likely to improve societal image monetarily as well as non-monetarily, contradictorily not all companies engaging in CSR looks out for monetary outcomes. Organisations like NGO’s engage in CSR to improve the welfare of the society.
Companies engage in CSR not only for one particular reason, but for number of reasons; firms engage in CSR for managing their risks, compliance issues, brand building, attracting talents, building trust in the society, motivating employees, for saving resources and also for exceeding stakeholder expectations. These are the major reasons motivating corporations to engage in CSR. According to the Deloitte’s global CEO survey, most of the companies engage in CSR due to the pressure by customers on companies. According to Roberts (1992), firms consider social corporate responsibility with view of increasing access to capital and shareholder value by satisfying stakeholder’s expectations. Conversely, there can also be negative impacts for firms engaging in CSR activities, which includes increase costs and amount of money considered; which de-motivates the firms avoiding them not to engage in CSR activities. But for a fast paced business market, firms have to indulge themselves in CSR activities as it has become a diverging material for the corporation which shall further discussed in this report.
The report comprises of theoretical value of CSR as stated by the researchers, elucidating the arguments against and for with respect to corporate social responsibility. The objective of the report is to determine, what would result for the companies, if they indulge in CSR activities; where the outcomes shall be measured monetarily in terms of profit and non-monetarily in terms of brand will improvement using case studies and journal published by authors. The final section of report shall encompass the limits of CSR and the critiques in the current business environment, outlining the conclusion on the hypothesis.
2. Literature Review
As stated earlier, corporate social responsibility is one of the old and trending concepts in the era of business operations. As (Sethi, 1997), stated “CSR came into existence in late 1800’s, where corporation practiced philanthropy as well as donating funds to different kind of charity”, which signifies the conceptualisation of CSR existed even before world war II. When previous studies and researches are analysed, it provides a distinct value and definition for corporate social responsibility which are outlined below;
“Companies engage in CSR strategies to defend their reputation (pain alleviation), justify benefits over costs (the traditional business case), integrate with their broader strategies (the strategic business case and to learn, innovate and manage risks (new economy business case).
“By engaging in CSR, it urges corporations to assume certain responsibilities to society which extend beyond their economic and legal obligations”.
“The social responsibility of business encompasses the economic, legal, ethical and discretionary expectations of the society”.
(Carroll 1979, p.500, 1991)
“Corporate social responsibility encompasses not only what companies do with their profits, but also how they make them. It goes beyond the philanthropy and compliance, addressing how companies manage their economic, social and environmental impacts, as well as their relationships in all key spheres of influence: the work place, the market place, the supply chain, the community and the policy realm”.
(Harvard Business School)
“CSR is a commitment to improve community well-being through discretionary business practices and contributions of corporate resources”.
(Kotler, P. & Lee, N)
“CSR are the actions that appear to further some social good, beyond the interests of the firm that which is required by law”.
(McWilliams and Seigel)
“CSR can be defined as a principle stating that corporations should be accountable for the effects of any of their actions on their community & environment”.
(Frederick W, Post J, Davis K E)
Since the evolution of the concept CSR, there have been many changes to the definition of CSR. As some researchers argued that there is distinct definition for CSR, as it covers the wide areas of business and society and has many facets. There has been a conceptual connection with the concept CSR which are used in the literature as; corporate social responsiveness, corporate social performance, corporate governance, corporate philanthropy, corporate community involvement and many relations which are connected to corporate social responsibility.
Corporate social responsiveness is indeed closely related to corporate social responsibility, whilst corporate social responsiveness provides for practical approach rather than the normative approach. Corporate social performance is the measure of CSR strategies and policies; merely an indicator corporate social responsibility. Kotler and Lee (2005), offers the key elements, asserting that corporation should fulfil to achieve positive CSR.
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(Self- Created: Source Kotler & Lee (2005), 5 C’s of CSR)
Kotler & Lee (2005), argues that to achieve CSR, corporations must fulfil all the 5 C’s, asserting, “Conviction” refers to real improvement, “Commitment” to deliver, “Communication” refers that the company is committed to open and direct communication with all stakeholders, “Consistency” in process improvement and “Credibility” which determines the corporations ability to trust their performance which depends on their credibility of their effort.
Michael. E. Porter & Mark R Kramer (2006) elucidated that there is a direct link between the firm’s competitive advantage and Corporate social responsibility in their study, “Strategy & Society: The Link Between Competitive Advantage and CSR, A Harvard Business Review, 2006. According ( http://www.forbes.com/sites/csr/2012/02/21/six-reasons-companies-should-embrace-csr/ ), Companies engage in CSR to; innovate, save costs, brand differentiation, long-term thinking, customer engagement & employee engagement. (Mohr, 1996) differentiates CSR into two groups, one is the multidimensional definition, which is based on delineating the prime responsibility of a particular company and the other one is involved with marketing concepts of the society.
Simon Zadek (2004) in his article “The path to corporate responsibility, A Harvard Business Review, states that companies learn unique ways to tackle the challenges for responsible business practices and most of the companies passes through the five discernable stages in how they handle their corporate responsibility, which he termed as an organisational learning process.
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(Zadek S. (2004)., “The Path to Corporate Responsibility”; A Harvard Business Review,2004)
According to Zadek (2004), firms achieve CSR in a systematic way of adopting strategies at different stages as they move on the market and he also stated in the article that most of the companies engaged such a 5-step approach which also included giant companies like Nike. Hill et.al (2003), defined CSR by emphasising the fact; “there has to be some kind of obligation towards the society through committing themselves for social welfare at a large scale, without thinking about the direct benefit of the organisation”. However Idowu & Filho (2009), defined CSR is something related to the welfare of each entity of stakeholders, does not matter primary or secondary each and every one would have some effect on them along with the competitors. So it means that it is something, which will be beneficial to every aspect of stakeholders. Mallin (2009) has said that CSR has now become an area of interest , especially for the investors from the institution , who are showing a keen interest in order to live up to the expectation from their clients.