Table of Contents
Table of Contents
1.1 Background of the Study
1.2 Problem Statement
1.3 Justification and Purpose of the Study
1.4 Key Research Questions
1.5 Research Objectives
2.1 The concept of CSR
2.2 Theories of Corporate Social Responsibility
2.3 Corporate Social Responsibility commitments
2.4 Establishing and managing social responsibility programs
2.5 Corporate Social Responsibility Reporting and Disclosure
2.6 Benefits of Corporate Social Responsibility
2.7 Effect of CSR on Sustainable Business
CONCEPTUAL FRAMEWORK AND METHODOLOGY
3.1 Conceptual Framework
3.2 Research Design
3.3 Study Area
3.5 Sampling Procedure
3.6 Data Collection Methods and Instruments
3.7 Research Procedure
3.9 Data Processing, analysis and Reporting
3.10 Ethical consideration
3.11 Challenges to the study
DATA ANALYSIS, FINDINGS AND DISCUSSION
4.1 Background Information on the Respondents
4.2 Knowledge about Corporate Social Responsibility
4.3 Involvement of Staff in CSR
4.4 Benefits of CSR to URA
4.5 Business Sustainability URA
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.1 Summary of Findings
This thesis would not have been possible without the guidance and support I received from the following people. I shall remain eternally indebted to them:
- My thesis supervisor, Professor Joseph Mumba of ESAMI whose guidance and quick responses enabled me complete this project on time
- The management and staff of Uganda Revenue Authority who took time out of their busy schedules to respond to my questionnaires
- My family and friends who have had to put up with constant absences on my part due to pressure to complete school assignments.
Idedicate this thesis to my dear mother, Mrs. Erine Lilly Oguta whose moral support has been a pillar of strength and encouragement.
“Thank you for being a constant source of inspiration. May God continue to bless you abundantly,”
List of tables and diagrams
Table 3.1: Sample of Respondents
Figure 4.1: Distribution of Respondents by Age
Figure 4.2: Distribution of Respondents by Gender
Figure 4.3: Distribution of Respondents by Duration of stay in the organization
Figure 4.4: Distribution of Respondents by Education
Table 4.1: Knowledge about CSR (%, n=62)
Table 4.2: Practice of CSR (%, n=62)
Table 4.3: Involvement of Staff in CSR (%, n=62)
Table 4.4: Benefits URA gets from CSR (%, n=62)
Table 4.5: Business Sustainability due to CSR (%, n=62)
The study investigated the Effect of Corporate Social Responsibility on Sustainable Business in Uganda taking a case of the Uganda Revenue Authority. It is derived from the fact that many organizations are seeking better ways of increasing their efficiency and effectiveness in order to remain competitive. Various ways have been advanced and one that is steadily gaining popularity today is Corporate Social Responsibility (CSR)
The objectives of the study included; to examine the contribution of CSR initiatives on overall business sustainability, to establish whether staff of URA have knowledge about CSR and whether URA derives benefits from CSR. Data was collected from a sample of 62 randomly selected respondents using a structured questionnaire and by in-depth key informant interviews; all in Kampala. Their views were also used as a basis for soliciting recommendations on the best ways of improving CSR not only in URA but also other corporations.
The findings revealed that staff of URA are knowledgeable and are involved in CSR activities, URA has a CSR policy and derives benefits from CSR. As regards the relationship between CSR and business sustainability, the results indicated that; staff know the meaning of CSR, URA has staff development initiatives, URA has skilled and knowledgeable employees, staff are periodically re-trained in their jobs, institutional processes at URA are constantly being improved, URA sensitizes on topics related to sustainability to staff, URA encourages energy conservation practices, has a waste reduction and management program and encourages green purchasing and practices, URA's strategic objectives incorporate sustainability issues and URA partners with other institutions to engage in sustainable development projects.
Subsequently, the study recommended that increase in publicity and attention towards CSR will most likely continue and that there is need for URA to protect its reputation; URA should consider CSR practices and outcomes just as any other decision factor when designing business processes and evaluating performance; there is a need for reviewing the existing accounting system with the objective of determining how CSR costs are presently accounted for and disclosed, given that the costs are attributed to products by way of arbitrary allocations and at times by some form of activity based costing.
This study was undertaken to examine the Effect of Corporate Social Responsibility on Sustainable Business in Uganda. It is important because many organizations including URA are seeking better and innovative ways of increasing their efficiency and effectiveness in order to remain competitive in today's business environment. This chapter presents the background to the problem, statement of the problem, purpose of the study, research objectives, research questions, scope of the study, significance of the study, key definitions and the conceptual framework.
1.1 Background of the Study
Many organizations are seeking better and innovative ways of increasing their efficiency and effectiveness in order to remain competitive in today's business environment. Over the years, various ways have been advanced and one that is steadily gaining popularity today is Corporate Social Responsibility (CSR).
Uganda Revenue Authority (URA) was set up on September 5, 1991 by the Uganda Revenue Authority Statute No. 6 of 1991 as a central body for the assessment and collection of specified tax revenue, to administer and enforce the laws relating to such revenue and to account for all the revenue to which those laws apply.
Since its set up, URA was for long pegged with issues of corruption, long and often redundant procedures, rude and inefficient staff, among others. Its revenue collections and corporate image inevitably suffered as a result. In 2005, the organization underwent a major restructuring exercise that saw the rebirth of URA in a number of ways. The institution has since been trying to modernize its processes to become more eficient, motivate its staff, and ultimately improve its corporate image.
In order to gain increased public appreciation of its operations and encourage tax compliance, URA embarked on a corporate social responsibility campaign that saw it take into consideration; societal needs and give back in a number of ways. Gradually, its image improved as people/tax payers began to see the institution not only as a tax collector but as a responsible corporate citizen.
While it is a known fact that traditionally business organizations existed principally for economic or financial profit, it has become increasing important for them to engage in activities that not only improve their corporate image but also contribute to the societies within which they operate. This is where concept of Corporate Social Responsibility comes in.
Businesses worldwide are increasingly adopting the ‘Triple Bottom Line' framework in order to survive and be competitive. This framework dictates that the business should not only look out for profit (Economic/financial) but also cater for the needs of people in their surroundings (Social) and their impact on the planet (Environmental)
Edwards (2005) states that at its narrowest, the term triple bottom line is used as a framework for measuring and reporting corporate performance against economic, social and environmental parameters. He argues that at its broadest, the term is used to capture the whole set of values, issues and processes that companies must address in order to minimize economic, social and environmental value.
Holme and Watts (2000) defined CSR as the continuing commitment by businesses 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. It is generally aimed at producing an overall positive impact on society as it involves a business giving back to society.
Business sustainability on the other hand requires firms to adhere to the principles of sustainable development. According to the World Council for Economic Development (WCED), sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
Lemons (2010) defined sustainability in three parts; the first part involves sustainability in the industry; the second part deals with sustainability of the environment, and the third part establishes the social sustainability. He further explains it as the achievement of top-line growth and bottom-line results for the long term; the responsibility to use methods; system and materials that won't deplete or harm natural cycles, and an obligation to uphold the social contract with the society in which they operate.
Essentially, Lemon argues, the focus should not solely be on maximizing revenue alone but should do what is best for all of the people involved; employees, the population, and future generations. He argues that the mindset of executives will also have to change because in the short-term it may cost them more to do the right thing.
1.2 Problem Statement
A socially responsible company should supersede its main objective of maximizing its shareholders' wealth. It extends its mandate by undertaking social and environmental activities in society within which it carries out its operations through initiatives such as environment conservation, improving the quality of life of its employees and society in general and also being transparent in its business operations. More stakeholders are being drawn towards socially responsible companies because of these initiatives.
As organizations struggle to remain competitive within their respective industries while at the same time addressing their long term corporate objectives, they need to be able to incorporate certain values and initiatives of corporate social responsibility into their strategic objectives if they are to further gain competitive advantage. A lot of debate has gone on about whether a company's social image contributes to its attainment of corporate objectives.
The major organizational restructuring that URA underwent in 2005 was for the ultimate intention of improving business sustainability. A lot of emphasis was placed on the structural interventions and not enough on supportive social interventions like CSR initiatives. However, there is study linking CSR's effect to sustainable business' operations and performance leaving this area plausible for research. The study therefore sought to establish whether CSR has an effect on business operations and performance.
1.3 Justification and Purpose of the Study
1. The study will add knowledge to the existing body of research literature relating to Corporate Social Responsibility and Sustainable Business in Uganda and other similar developing economies in Africa. It is also anticipated that a number of stakeholders will use results from this study to further their knowledge and understanding of Corporate Social Responsibility and how it affects the business performance of a socially responsible entity
2. The findings of the study will contribute to the knowledge and importance of CSR interventions in URA
3. It will lead to more financial considerations for CSR initiatives to be done that will promote organization effectiveness.
4. The findings and the recommendations may be used to formulate strategies for other organizations that have not yet adopted CSR into their strategic corporate goals.
5. The general public will be informed of the various approaches in which an entity can undertake social and environmental activities aimed at improving on the quality of life in the community, workplace, market place and generally giving back to society. This will lead to increased human benefit and satisfaction through quality services and goods.
1.4 Key Research Questions
The study sought to answer the following research questions:
1. Do the staff of URA have knowledge of CSR?
2. Are there benefits of CSR?
3. What has been the impact of CSR initiatives on overall business sustainability?
1.5 Research Objectives
The objectives of the study were to;
1. To establish whether staff of URA have knowledge about CSR.
2. To establish whether URA derives benefits from CSR
3. To examine the contribution of CSR initiatives on overall business sustainability.
Corporate Social Responsibility
A major problem with the conceptualization of CSR is that there is no single, agreed upon definition. Although there is growing academic research on CSR, this has rather contributed to the extension of the array of definitions (Blowfield et al., 2008) and to an even greater variety of approaches to CSR (Melé, 2008). This is a rather puzzling phenomenon as Crane et al. acknowledge; “For a subject that has been studied for so long, it is unusual to discover that researchers still do not share a common definition or set of core principles [...].”(2008,) Nevertheless, despite the degree of ambiguity, CSR has become a major area of research and agrees upon certain aspects of what CSR means (Crane et al., 2008). An online study by Dahlsrud (2008) shows that the most frequent used definitions of CSR come from the European Commission in its 2002 Communication on CSR:
“A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (European Commission, 2002)
and the World Bank working definition:
“Corporate Social Responsibility is the commitment of business to contribute to sustainable economic development - working with employees, their families, the local community and society at large to improve the quality of life, in ways that are both good for the business and good for development,” (Dahlsrud, 2008)
Taken from these most commonly used definitions, CSR presupposes businesses to commit to obligations that go beyond profit-making, including interests of the social, cultural and environmental spheres businesses operate in (Idemudia, 2011; Dobers et al, 2009). However, while there is agreement about what CSR means, there are also opposing views that are at odds. The major divergence between the above definitions is the notion of “voluntary responsibility”. While the definition of the European Commission limits CSR to voluntary business activities, the latter considers also regulatory approaches as CSR. A main argument to treat only policies and behaviors that go beyond legislative compliance as CSR is based on the opinion that economic and legal responsibilities are the baseline of any business activity (Halme et al., 2009) as also claimed by the renowned scholar Caroll, known as “one of the most prestigious scholars in [CSR] discipline” (Garriga and Melé, 2004). He argues that corporations who break the law will face legislative enforcement, and businesses that are unprofitable will normally cease to exist (Caroll, 1996). Nevertheless, interpretations of CSR differ vastly in this point.
Fox (2004) points towards problems conflicting conceptualizations can cause, in particular for CSR in international development. He explains that this dividing line is counterproductive, since CSR practice is often embedded in legal and regulatory mechanisms, particularly so when “legal minima” (often unenforced in developing countries) are considered a baseline for good practice (Fox, 2004, p.30).
Socially responsible behavior that adheres to legislation, he argues, should be considered CSR as it contributes to the eradication of socially irresponsible behavior, encouraging responsible conduct. Hence, corporations' overall contribution to sustainable development, as acknowledged in the World Bank definition of CSR, ought to be considered CSR.
In this chapter, literature related to the Effect of Corporate Social Responsibility on Sustainable Business in Uganda was reviewed. The purpose of the review was to identify gaps that would be filled by the proposed study. In the first section of the chapter, an overview of the corporate social responsibility was given. Thereafter, the review was divided into two main sections, namely, theories of corporate social responsibility and CSR responsibilities and benefits of CSR. In the last section, conclusions are derived from the literature review.
2.1 The concept of CSR
There is no commonly accepted definition of CSR as over the years various scholars have come up with their own understanding of the term. In fact, other terms like Corporate Accountability, Corporate Citizenship, Corporate Environmental and Social Responsibility, Corporate Ethics, Corporate Responsibility, Corporate Social Responsibility, Corporate Sensibility, Ethical Compliance, Good (Corporate) Governance, Organizational Responsibility, Sustainable Development and Triple-Bottom Line have often been used interchangeably with CSR.
Although there are several contested notions of what CSR should be and how it should work, there is some agreement upon what it broadly entails. The heart and the generally accepted principle of CSR lies in the idea of being responsible towards the improvement and effectiveness of both firm and the society.
McWilliams & Siegel (2001) define CSR as "actions that appear to further some social good, beyond the interests of the firm and that which is required by law" This however can somewhat be misinterpreted in that the firm takes on CSR only to ‘appear' to do good and not actually do good regardless of image.
It has been said that the idea of CSR is not necessarily to give the businesses their own set of strategies but to help the leaders remember that the society receives the various influences or impacts coming from their operation.
Elkington (1998) goes more into detail when arguing that companies should not only focus on enhancing its value through maximizing profit and outcome but concentrate on environmental and social issues equally.
D'Amato, Henderson et al (2009) state that it is no longer acceptable for a corporation to experience economic prosperity in isolation from those agents impacted by its actions. A firm must focus its attention on both increasing its bottom line and being a good corporate citizen.
As CSR has steadily become a global trend, companies have been forced to reshape their frameworks, rules, and business models in order to meet their financial obligations and also be socially responsible. D'Amato, Henderson et al (2009) argue that to understand and enhance current efforts, the most socially responsible organizations continue to revise their short- and long-term agendas, to stay ahead of rapidly changing challenges.
A Scholary Paper (Seminar) on ‘ Corporate social responsibility standard - Pros and Cons' (2007) accessed on the internet agrees with D'Amato, Henderson et al and describes CSR as the actions of organizations and especially corporations which contribute to the good of their stakeholders that are its employees, customers, shareholders, the environment and the society as a whole.
It further argues that the upcoming belief that corporations have a greater responsibility to civil society than merely generating profits has put pressure on them to integrate social and environmental considerations into their business models and this has led to businesses rethinking their strategies to meet the rising values, interests and expectations of society.
Fonteneau (2003) states that Corporate social responsibility consists in the companies themselves defining, unilaterally and voluntarily, social and environmental policies by means of alternative instruments that are neither collective agreements nor legislation, and offering, in pursuit of these aims, partnerships to multiple actors.
Van Marrewijk & Verre (2003) also state that organizations are being asked to apply sustainability principles to the ways in which they conduct their business. Sustainability, they argue, refers to an organization's activities, typically considered voluntary, that demonstrate the inclusion of social and environmental concerns in business operations and in interactions with stakeholders
2.2 Theories of Corporate Social Responsibility
Different organisations have formed different definitions of CSR, although there is considerable common ground between them. Today corporate leaders face a dynamic and challenging task in attempting to apply societal ethical standards to responsible business practice (Morimoto et al.
2005) . Nowadays corporate social responsibility is an integral part of the business vocabulary and is regarded as a crucially important issue in management (Cornelius et al. 2008; Humphreys and Brown 2008).
Hillman and Keim (2001) suggested that, when assessing the returns on CSR, it was critical to discriminate between stakeholder management CSR and social CSR. This is consistent with Baron's (2001) distinction between altruistic and strategic CSR. More specifically, the authors concluded that whereas stakeholder oriented CSR was positively correlated with financial performance, social CSR was not.
The tendency to invest in companies that practice and report CSR is increasing (Sleeper et al.
2006) . Corporate social responsibility forces a repositioning of strategies from being profit driven organisations to organisations that are interested in the company's influence on social and environmental aspects (Quaak et al. 2007).
According to Alas and Tafel (2008), research about corporate social responsibility could be divided into three categories: structural research (van Marrewijk 2003; Wilenius 2005), normative research (Gatewood and Carroll 1981) and developmental research (Carroll 1991, Hoffman 1997, Schwartz and Carroll 2003, Reidenbach and Robin 1991). From the structural viewpoint, corporate social responsibility covers three dimensions of corporate action: economic performance, social accountability and environmental management. From the normative viewpoint, different levels of social responsibility, based on the criteria of the extent to which a company meets the social expectations of the society, could be differentiated. From the developmental viewpoint Carroll's (1999) CSR model identifies four components: economic, legal, ethical and voluntary (discretionary). The economic aspect is concerned with the economic performance of the company, while the other three categories - legal, ethical, and discretionary - address the societal aspects of CSR.
The firm's performance concerning social issues : Sethi (1975) stated that whereas social obligation is proscriptive in nature, social responsibility is prescriptive. Jones (1980) stated that corporate social responsibility is the notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by the law and union contract. Epstein (1987) provided a definition of CSR in his quest to relate social responsibility, responsiveness and business ethics.
According to Frederick (1960) social responsibility in the final analysis implies a public posture toward society's economic and human resources and a willingness to see that those resources are used for broad social ends and not simply for the narrowly circumscribed interests of private persons and firms. The proper social responsibility of business is to tame the dragon that is to turn a social problem into economic opportunity and economic benefit into productive capacity into human competence into well-paid jobs and into wealth (Drucker 1984).
In the 1990s, the concept of a corporate social performance stream emerged (Wood 1991). Carroll's (1999) CSR model identifies four components: economic, legal, ethical and voluntary (discretionary). The economic aspect is concerned with the economic performance of the company, while the other three categories - legal, ethical, and discretionary - address the societal aspects of CSR.
Waddock and Graves (1997) have found a positive relationship between a firm's social performance and its financial performance, whereas Wright and Ferris (1997) have found a negative relationship. Orlitzky et al. (2003) claim that there is strong empirical evidence supporting the existence of a positive link between social and financial performance.
According to Marcel van Marrewijk (2003), the concept of corporate social responsibility covers three dimensions of corporate action: economic, social and environmental management. Garriga and Mele' (2004) grouped theories of corporate social responsibility into four: instrumental, political, integral and ethical theories. In the present thesis, the author uses the structural viewpoint of corporate social responsibility (van Marrewijk 2003, Wilenius 2005) in order to evaluate the firm's performance concerning social issues .
The firm's respect for the interests of agents : stakeholder theory, popularized by Freeman (1984; 1994), essentially argues that a company's relationships with stakeholders (and treatment of the natural environment) is core to understanding how it operates and adds value as a business. Freeman (1994) argues that stakeholder language has been widely adopted in practice and is being integrated into concepts of corporate responsibility/citizenship by scholars who recognize that it is through a company's decisions, actions and impacts on stakeholders and the natural environment that a company's corporate responsibility/citizenship is manifested. Corporate social responsibility is a concept whereby companies fulfill accountability to their stakeholders by integrating social and environmental concerns in their business operations (Tanimoto and Suzuki 2005). Companies will necessarily have to take into account cultural differences when defining their CSR policies and communicating to stakeholders in different countries (Bird and Smucker 2007). In the present thesis the evaluation of the facet of CSR - the firm's respect for the interests of agents is based on Freeman's' (1984; 1994) stakeholder theory.
2.3 Corporate Social Responsibility commitments
Carroll (1991) came up with the pyramid of CSR in his book Business Horizons (1991) and suggested that there are four kinds of social responsibilities that constitute a total range of CSR business activities. These are: economic, legal, ethical and philanthropic responsibilities. Carroll further emphasized that, for CSR to be accepted by a conscientious business person, it should be framed in such a way that the entire range of business responsibilities is embraced. Carroll (1991) explains thus;
Economic Responsibilities; Historically, business organizations were created as economic entities designed to provide goods and services to societal members. The profit motive was established as the primary incentive for entrepreneurship. Before it was anything else, business organization was the basic economic unit in our society. As such, its principal role was to produce goods and services that consumers needed and wanted and to make an acceptable profit in the process. At some point the idea of the profit motive got transformed into a notion of maximum profits, and this has been an enduring value ever since. All other business responsibilities are predicated upon the economic responsibility of the firm, because without it the others become moot considerations.
A summary of some important statements characterizing economic responsibilities include; 1) It is important to perform in a manner consistent with maximizing earnings per share, 2) It is important to be committed to being as profitable as possible, 3) It is important to maintain a strong competitive position, 4) It is important to maintain a high level of operating efficiency, 5) It is important that a successful firm be defined as one that is consistently profitable.
Legal Responsibilities; Society has not only sanctioned business to operate according to the profit motive; at the same time business is expected to comply with the laws and regulations promulgated by Government as the ground rules under which business must operate. As a partial fulfillment of the "social contract" between business and society, firms are expected to pursue their economic missions within the framework of the law. Legal responsibilities reflect a view of "codified ethics" in the sense that they embody basic notions of fair operations as established by the lawmakers. Legal responsibilities are appropriately seen as co-existing with economic responsibilities as fundamental precepts of the free enterprise system. A summary of some important statements characterizing legal responsibilities may be as follows; 1) It is important to perform in a manner consistent with expectations of Government and the law, 2) It is important to comply with various regulations, 3) It is important to be a law-abiding corporate citizen, 4) It is important that a successful firm be defined as one that fulfills its legal obligations, 5) It is important to provide goods and services that at least meet minimal legal requirements.
Ethical Responsibilities; Although economic and legal responsibilities embody ethical norms about fairness and justice, ethical responsibilities embrace those activities and practices that are expected or prohibited by societal members even though they are not codified into law. Ethical responsibilities embody those standards, norms, or expectations that reflect a concern for what consumers, employees, shareholders, and the community regard as fair, just, or in keeping with the respect or protection of stakeholders' moral rights.
In one sense, changing ethics or values precede the establishment of law because they become the driving force behind the very creation of laws or regulations. For example, the environmental, civil rights, and consumer movements reflect basic alterations in societal values and thus may be seen as ethical bellwethers foreshadowing and resulting in legislation. In another sense, ethical responsibilities may be seen as embracing newly emerging values and norms society expects business to meet, even though such values and norms may reflect a higher standard of performance than that currently required by law. Ethical responsibilities in this sense are often ill-defined or continually under public debate as to their legitimacy, and thus are frequently difficult for business to deal with.
The business ethics movement of the past decade has firmly established an ethical responsibility as a legitimate CSR component. A summary of some important statements characterizing ethical responsibilities may be as follows; 1) it is important to perform in a manner consistent with expectations of societal mores and ethical norms, 2) It is important to recognize and respect new or evolving ethical moral norms adopted by society, 3) It is important to prevent ethical norms from being compromised in order to achieve corporate goals, 4) It is important that good corporate citizenship be defined as doing what is expected morally or ethically, 5) It is important to recognize that corporate integrity and ethical behavior go beyond mere compliance with laws and regulations.
Philanthropic responsibilities; Philanthropy encompasses those corporate actions that are in response to society's expectation that businesses be good corporate citizens. This includes actively engaging in acts or programs to promote human welfare or goodwill. Examples of philanthropy include business contributions to financial resources or executive time, such as contributions to the arts, education, or the community.
The distinguishing feature between philanthropy and ethical responsibilities is that the former are not expected in an ethical or moral sense. Communities desire firms to contribute their money, facilities, and employee time to humanitarian programs or purposes, but they do not regard the firms as unethical if they do not provide the desired level. Therefore, philanthropy is more discretionary or voluntary on the part of businesses even though there is always the societal expectation that businesses provide it. One notable reason for making the distinction between philanthropic and ethical responsibilities is that some firms feel they are being socially responsible if they are just good citizens in the community. This distinction brings home the vital point that CSR includes philanthropic contributions but is not limited to them. In fact, it would be argued here that philanthropy is highly desired and prized but actually less important than the other three categories of social responsibility, in a sense, philanthropy is icing on the cake.
A summary of some important statements characterizing philanthropic responsibilities may be as follows; 1) It is important to perform in a manner consistent with the philanthropic and charitable expectations of society, 2) It is important to assist the fine and performing arts, 3) It is important that managers and employees participate in voluntary and charitable activities within their local communities, 4) It is important to provide assistance to private and public educational institutions, 5) It is important to assist voluntarily those projects that enhance a community's "quality of life." Economic, legal, ethical and philanthropic responsibilities can be transformed into responsibility towards customers, employees, investors, suppliers, community and the environment.
Responsibility towards customers; A company has a duty to act responsibly towards its customers or else it might ultimately lose business. This could be through providing goods and services hallmarked by integrity, quality and care. Customer rights like rights to safe products, rights to all relevant information about the product should be left to prevail. Ethical advertising should also be put into consideration (Carly, 2002). Businesses in Uganda have to follow guidelines set by the Uganda National Bureau of Standards (UNBS) in as far as products are concerned. The set standards are meant to protect consumers from counterfeits, hazardous and substandard products (Standards Act 1983).
Responsibility towards employees; Equal opportunities for rewards and advancement should be provided to all employees for a company to be socially responsible. Responsible employment practices with well-trained, well-managed and motivated employees, who are fairly rewarded - sharing in the company's successes should be instituted. A company that ignores this responsibility may likely face a risk of losing productive, highly motivated employees as well as lawsuits, a case in point being Del Monte (Litan, 2004). A company should ensure that the workplace is safe, both physically and socially and should aim to be the employer of choice in all areas of operation (Carly, 2002). In Uganda, a number of laws are in place to help guide companies in aspects of employees and the workplace; examples include the Employment Act (2006), and the Occupational Health and Safety Act (2006).
Responsibility towards investors; Managers have a responsibility to ensure that they do not act irresponsibly towards shareholders by denying them their due earnings or misrepresenting company resources. Financial management should be proper and finances should be correctly reported. Conformation to IFRS's and IAS's is a unilateral requirement (International Federation of Accountants, 1998). Wanyama (2006) cites previous studies on the importance accounting information plays in enabling relevant parties to monitor the performance of an organization as well as holding management accountable for the stewardship of resources. Sound accounting principles should enable investors to make a fair assessment of the performance of companies and guide the decisions of those investors in making investment decisions, holding management accountable and in CSR considerations (Wanyama, 2006).
Responsibility towards suppliers; Socially responsible companies should regard suppliers as partners and work with them in order to achieve their policy aspirations in the delivery of products and services.
Responsibility towards community; Companies should strive to be good corporate citizens by contributing to community well being, and be able to recognize their responsibility to work in partnership with the communities in which they operate. In their research on CSR in Uganda, Katamba and Gisch-Boie (2008) identified the 5 top CSR activities in the community in Uganda as education, sponsorship of events related to the company's marketing strategy, health, HIV/AIDS related issues, and employee volunteerism. They concluded that community initiatives contribute to sustainable business development and shape the economic future especially if people are healthy and educated.
- Quote paper
- Lilian Rebeccah Akullo (Author), 2012, The Effect of Corporate Social Responsibility on Sustainable Business, Munich, GRIN Verlag, https://www.grin.com/document/538616