CSR stands for Corporate Social Responsibility and it plays a significant role for the organization in these recent years of the globalization. With the handling of business operations, many organizations now also need to consider the various necessary prescription related to government and social concerns (Lindgreen and Swaen, 2010). This report outlines how companies in Sri Lanka realize the role of business in society in respect with their business perspectives. In addition, an analysis of existing perceptions of the social role of business in respect with the establishing sustainability and development is also made in the context of Sri Lanka. By fulfilling the social responsibility, businesses can make a balance between the profits making activities and social welfare activities. In this report, a comprehensive analysis is made related to the prominent firm of Sri Lanka, which endures sustainable development and ethical behaviour. It is necessary that the organization follow various standards of ethics under their operating activities (Dahlsrud, 2008). In the more detailed analysis, there is an understanding of the nature and avenues of practices of CSR in Sri Lanka. In fulfillment of the desired roles and objectives, it is also explored the various social engagement activities undertaken by the business firm. Some of the organization also uses CSR for the promotion of their vision in account of several stakeholders connected to the organization other than shareholders and investors. In the connection with the corporate social responsibility, various theories are also been propagated which can be used by the business entity to solve several issues and thus increase the overall performance of the business firm.
In order to gain better insights into the various CSR plans in Sri Lanka, it is important to describe existing activities, approaches and other theories. Many organizations believe and focus on the general aspects of the corporate social responsibility such as good corporate governance, standard ethical practices, transparency in operations and operating business in a profitable manner. However, the necessary area of engagement includes community involvement, good employee practices and reporting, and evaluating performance on a continuous basis (Alvarez, 2015). Many experts differentiated CSR on the basis of two areas i.e. one perceive as a well-being for the society while other sees as a benefit for the business only and leave community backside. Sri Lanka boasts of a rich legacy of corporate philanthropy. As per many business firm philosophies, the CSR is driven by the conventions and they perceive CSR as an important practice, which can fulfil the modern needs of the society. On the other hand, various traditional corporations operate in Sri Lanka are directed by formal policies with some degree of elasticity to outfit the requirements of the business enterprise. With the help of CSR activities, one can perceive the organization ability in relation to image building, getting new customers base, and the rise in the market share against various industry players and competitors. An organization can face and solves various commitment issues if they build better relationship with the communities and also get surrounded by them in relation to various activities. As per the various researches and studies, it can be said that resources that are based or build on socially responsible entities gives superior motivation, commitment and loyalty and it is directly connected with the business growth and productivity (Gupta, and Kumar, 2013). For an organization, there are varieties of CSR engagements that the company needs to be highlighted. The main aspects of these events include education, unemployment, livelihood, safety awareness, etc. The logical aspect of this report is to explore the influence of this planned and tactical move as a tool of success for the business enterprise and also imitates over the need for progression while employing CSR activities by the administration of the firm.
Corporate Social Responsibility was evolved back in 60 years. In the year 1900-1966, Morrell Herald also mentions the corporate social responsibilities in the books of social responsibilities of organization (Vazir et al, 2008).
Social responsibility history started back in 19th Century. However, many critics contended that the real intervention of the corporate social responsibility is started in the year 1950. But, Caroll diverged with the idea as during the era of 1800, the supervisor or employer were more apprehensive with the employees and were researching out various ways so as to make them more productive for the business enterprise.
In Great Britain, the employed factory system can be seen as a good sign of starting the practice of corporate social responsibility. Many thoughts and view put forward in relation with the women and children employment in the factories. Due to this, many reformers feel that this employment will cause various social problems and issues such as poverty, child labour and rise of slums. These social problems happening in the factories help the society to understand the need for the protection of the employees from the various labour issues and thus take necessary actions considering both social and business aspects (Dhaliwal et al. 2012). The companies’ employees working conditions can be improved with some of the areas getting improvement in the provision of hospitals, bathrooms, and hospitals-clinics.
The case of the corporate philanthropy was evolved from the idea of corporate social responsibility. Acknowledging the previous time, it was said that there were more generous relations between the supervisors i.e. managers and employees. On corporate philanthropy, two legal aspects and cases were also discussed by Wren with the evolvement of the first case in 1883 (Hahn, 2013). In this case, the organization i.e. West Cork Railroad Company follows several steps in compensating their employees who lost their jobs with the dissolution of the business firm. However, this compensation action is not supported by Lord Justice Byron as he believes there is no connection between the charity and the business. He also stated that the business money should be used for the purpose of the business only.
Another case was related to Steinway, the court permitted a piano manufacturer to build the church and school on the adjoining land of the workplace for their employees. According to the court, it will help in enhancing employee relations.
Both the above cases reflect that the individual and organization behaviour is directed towards enhancing the position of the employees, however, the judgments of both the cases were different (Hiller, 2013). This clears the decision related to the philanthropy approach that those individuals who know the importance of this approach faces difficulty in making understand the meaning of this approach on the community.
Many sceptical business individuals argued that in business, profit is the main aspect and not any welfare of the society or community. On the other hand, various shareholders take part in the business and the business enterprise uses the money of the company for the works related to the corporate social responsibility (Calabrese et al. 2013). This seems to be a theft as the organization is using the money of the shareholders; therefore, it is the business enterprise is not allowed to use the money of an external source.
Many individuals believe that the primary responsibility of the business is to make product according to the needs of the customers. The manager needs to find out the ways in the good sake of the business enterprise rather than relating to the functions for the betterment of the society. In handling of the various social issues, managers are not much expertise. Therefore, the exact social issues of the society may not acknowledge by the managers. If they focus on the enhancement aspect of the society, they would not able to devote the necessary time in the major functioning of the organization, which they have been hired.
The industrial activities create huge amount of pollutants in the organization and this need to be compensated by the organization as this has a severe impact on the various being on nature and people (Calabrese et al. 2013). The organization cannot pollute the environment for the sake of their own personal objectives. This makes the importance of the corporate social responsibility to eradicate the damage to society.
With the help of corporate social responsibility, public relations can be built and sustain effectively (Dhaliwal et al. 2012). If the business enterprises do something good for the society, it will be highlighted in the society and thus gain huge recognition in the external market and nations. If the organization looks for the social problem, the stakeholders will get impressed and could make partnership with the company in future.
In the older age, people engaged in philanthropy try to enhance the working condition of the workers. In respect to this, they also try to solve small social problems in relation to the employees of the business enterprise. However, the organization come at the position of globalization and does also operate on an international level. The focus areas shifted from narrow to wider in respect with philanthropy approach to a global business player and get the position of citizenship. Later on, the citizen follows CSR principles for the betterment of the community and society. In addition, the organization can use CSR tool as a business strategy rather than just for the enhancement of the society (Korschun, Bhattacharya and Swain, 2014). Many organizations realized that the opting CSR activities are not just good for cost cutting but they can also gain money from the market with the help of corporate social responsibility (Lund-Thomsen and Lindgreen, 2014). Moreover, the final phase of the CSR can help the organization in the longer-term sustainability. By implementing the principles of CSR, the organization can reach mutually beneficial solutions (Boulouta and Pitelis, 2014). This shows that the organization in the market does not just operate for the profit making but they also act as a responsible citizen that works at full pace for the progress of the society. This responsibility is also connected with their future growth.
The approach of corporate social responsibility has been adapted in these following theories –
For sustaining themselves economically, the company follows the principles of corporate social responsibility (Gimenez, Sierra and Rodon, 2012). The organization business will help them to be recognized in the external market. The corporate social responsibility will help them in sustaining themselves as the people will able to see the operations of the company and this will make the organization grow. In last, the aspect of environment sustainability will lead to maintaining healthy operations for the business and thus benefits the society as a whole.
For getting insights about the relevancy of CSR in today’s world, a research was made to explore if the individuals of the society feel that there is a requirement of this approach for the business. The war between the government and Liberation Tigers of Tamil Eelam (LTTE) has a huge impact on Sri Lankans. In the year 2001, Norway as a facilitator tries to extend help so as to bring peace to the country (Svensson, 2009). However, the entire was broke down in the year 2003 and when the people have no idea about the functions of the corporate social responsibility when they asked. However, some of the felt that with the continuous operations of the business the company need also to concern about the social cause. Moreover, they are not having a full confidence over their ability as they felt that these organizations are working to exploit the customers and also harms the cultural values of the society. In that period, it was found that many organization are involved in some kinds of the charitable activities, however, there were not any proper strategy or policies related to the corporate social responsibility for those business enterprises (Kim, Park and Wier, 2012). They not know the process of the betterment of the nation but they want to.
A business goodwill is more important than financial prosperity. There are various threats to long-term sustainability such as mergers, acquisitions and business scandals. CSR is more of management approach and philosophy. It also plays a crucial role in the merger and acquisitions. Various research also tried to bring a relation between the corporate social responsibility to that of merger and acquisitions. However, the factual reality is that those companies are more involved in merger and acquisition who faces governance issues. One can analyse with the help of this example. In Brazil, the private firms like Shell Do Brasil, an oil company and RedeGlobo (Media Company) join to help the nation in restoring of Christ the Redeemer, the statue in Brazil in the year 2010 (Mendis, 2016). The contribution of both companies in fulfilling their CSR role can be associated with another strategic approach like merging and acquisitions (Rajapakse and Manamperi, 2015). In restoring the statue, both the companies help each other including the people of Brazil. This partnership not only helps the company in fulfilling their CSR role but also support them in manages of extra finances for the corporate social responsibility. The company also gets the good name in the market and public as that statue represents the public interest in Brazil.
In addition, there are some cases also where the private players of the industry use CSR in a wrong manner (Rodrigo and Arenas, 2008). There was a case where one organization has provided contaminated milk to the poor section of the society and that too at a significant amount of price. This makes the people ill, the same organization provide them medicines from their pharmaceutical division, again at a low price. One can analyse, that the competition is now prevailing at a very high height and also some of the organizations are steadily forgetting the basic business ethics in the light of corporate social responsibility.
The value creation is the origin of blue ocean strategy. This strategy is created when the business enterprise understood the significance of innovation that can lead in creating value for both organization and consumer. This strategic framework i.e. value innovation which entails over two pronged step where an organization build various factors while creating new innovative products and solutions with an aim of positioning in an uncontested market place (Alvarez, 2015). Managers play a vital role in strategic decision making for the accomplishment of sustainable growth. Moreover, the high growth organization focus on innovation aspect rather than competing with their rivals in the industry. It can be said that both CSR and Blue-Ocean strategy are similar in some manner as they both focus on the creation of value for the organization and the society. In either of the cases, if the client’s commitments are built effectively, organization will keen focus on the improvement of the product in addition to innovation (Wang et al. 2016).
Both CSR and Five Forces are interrelated. One of the most significant aspects of this economic stability is the globalization, which raises the power and wealth of the various international businesses. However, some complexities can be seen in CSR due to the differences in cultures as the behaviour of people differs according to the respective regions. CSR will assume to be more important in the perspective of the strategic management (Dacin, Oliver, and Roy, 2007). Both of the above approaches are directed toward greater social responsibility. However, these approaches can differ on the industrial basis, but both have a significant impact on the profitability because they affect the prices capital investment in respect with necessary strategic decisions as per the organization structure.
Rajapakse and Manamperi (2015) also further states in respect with significance of the corporate social responsibility as mentioned the Sri Lankan companies in the article, ‘The Title How Do Sri Lankan Companies Perceive Corporate Social Responsibility? An Empirical Study of the Motivations Underlying CSR Projects and Reporting By Sri Lankan Companies’. In their research, a survey is conducted based on twenty companies involved in CSR activities. According the companies, there were several reasons to follow the principles of corporate social responsibility like pressure of the stakeholders, issue of the annual or monthly report in the public, government interventions, etc.
It is also known that many organizations fail to recognise that CSR is a blessing for them or burden. However, due to the globalization and modern civilization, every organization understands the significance of CSR towards the sustainable growth of the business. Moreover, stakeholders are influencing the business enterprises to mention the CSR activities in their annual report (McWilliams and Siegel, 2011). They believe that this will help the business to behave ethically and also improve the various aspects of the society. Therefore, it can be expected that the business enterprises will fulfil their social responsibility with full responsibility so that to formulate overall growth.
In Sri Lanka, Expolanka Holdings Plc. is a popular name that is involved in many CSR activities like solving environmental problems by reducing the carbon footprints. However, the organization faces some challenges while the employment of corporate social responsibility. One of the major challenges was in the form of regional consideration in which various religious beliefs of Sri Lankans are influencing the professional idiom and this can be seen across the different sectors as per the religious observance (Dissanayake et al. 2016). In Sri Lanka, around eighty percent of the population is Buddhist. Some of the activities by the company cause impediments and exerted influence in the relief activities. This makes Explolanka Holdings perform their business operations by considering various religious sentiments (Patel, 2017). The other challenge is the difference between the rich and poor as in Sri Lanka, there is a huge space between the line of rich and poor and this also influence the CSR activities of the firm. Most of the activities of the companies are directed by this principle. They do not focus on the reduction of poverty in society. However, the firm researched various issues of the environment, but they need to involve some of the community services.
The next challenge is the victims’ expectations as there were various natural disasters flawed in Sri Lanka. The victims of droughts, floods affect a lost and it can be said that the support of nature to Sri Lanka was not extended. Therefore, Expolanka Holdings Plc. Need to focus on various rehabilitation projects by altering their basic primary activities in respects to the victims of natural disasters (Tschopp and Huefner, 2015). The other challenges are also related to this only i.e. influence of disasters. Generally, the mitigation of disasters is the responsibility of many aid agencies and the public sector. Moreover, the country had faced immense magnitude of floods and disasters before. However, later on, Expolanka Holdings Plc. came up with many ideas such as de-salivation of plants to control the crises.
The next challenge is the government role where ministry of social service calls the shots in respective with the disaster management. Various disaster related concern and issues are handled by the National Disaster Management Centre, however, they also know that private sector plays an important role in the mitigation of disaster. Therefore, this division issued a notice to all the private players in the market to make them focus towards the area of relief and reconstruction other than the generic activities. This division also proposed a bill in the parliament to make follow the rules and regulations of the disaster mitigation by the private entities. In this plan, various committees also participate including the private entities. In addition, as many entities are not want to come in this participation, Government Issue several grants in the growing discontent and due to this special grant in the business, private entities realize to participate (Hettiarachchi and Gunawardana, 2012). Expolanka Holdings Plc. also found it tough to play with the government interventions as were used to the private entity thinking i.e. profit in the business. The company also revealed that there were no such organized structures, which is important to implement the project. In addition, the red tape paraphernalia of government made several issues in the path of CSR activities as they were built for the relief work, which was totally against their core competencies. However, it was noted that few of the private organizations maintained good contact with the government by following their commitments and this makes easy for them to work in states scheme of things (Berkman and Galpoththage, 2016).
The next challenge is connected with the NGO association where Expolanka Holdings Plc. was disinclined with the partnership with the NGO as they believe in working independently. As the company are fulfilling the environmental needs in respect to the carbon footprints, NGO involvement is not necessary. Expolanka Holdings Plc. therefore follows the unilateral approach and wants to perform their operations without any institutional linkages (Chen and Johnson, 2015).
The role of Chamber of Commerce and Associations is also one of the predicaments which the organization found wanting in. It is important to describe the role of Chamber of Commerce in Sri Lanka. This chamber was formed in 1839 focuses on every domain of the business and economic activities. This association was built more on the profit objectives rather than the philanthropic activities and this makes the backside to the engagement in the disaster related events (Betz, 2015)
Corporate Social Responsibility aspect not only related to the following of the environmental standards but the firm growth and sustainability also play a due importance. In Expolanka Holdings Plc, the managers have adopted CSR principles above the legal requirements that are willingly accepted to gain sustainable development (Westermann-Behaylo et al. 2015). Moreover, the company knows that if they employ the CSR principles and standards in their organization, there will be benefit for all the stakeholders and the employees who are the part of the company. Below, there is a framework stated which shows the effectiveness of CSR in the case of Expolanka Holdings Plc.
|
Stage |
Degree of effectiveness |
Comprehensive Description |
|
Defensive |
Abjuration of practices, duties or result. |
In Expolanka Holdings Plc, evidence of some degree of CSR was found. |
|
Compliance |
Amendment of policy-based compliance technique in the process of business. |
As due to limited resources, the implementation of CSR will be beneficial. It will also defence the organization from any type of harm as the business is directed towards the philanthropic activities. |
|
Managerial |
Embed social concepts in core management procedure. |
In this case, implementation of CSR in the business activities will lead to human capital development and diversity management. |
|
Strategic |
Amalgamation of societal issues into core business plans. |
For Expolanka Holdings Plc, CSR will lead to value proposition and the managers are also focused on gaining shared values (Shamil et al, 2014). |
|
Civil |
Promote broad industry involvement concerning corporate responsibility. |
With the help of collaborative approach, organization made progress in CSR in light with the joint innovation by stakeholders (Berkman and Galpoththage, 2016). |
As stated before, corporate social responsibility can help the organization in showing shared values beyond the business phraseology. It is a collective phenomenon, which helps in enhancing various aspects such as environmental, cultural and social. The organization seeks to those competent employees who can effectively direct towards the corporate social responsibility and also help other to do so (Wang et al. 2016). As various initiatives are taken by the business firm in light of goodwill under the category of healthcare. Various significant operations are also conducted by Expolanka Holdings Plc CSR division in respect with social development, environment and disaster relief. One can perceive the efficiency of the company through their health camps, which gives reliefs to over three hundred elderly people in places like Gampaha and Kaduwala. As the company has invested in the field of sustainability, this shows that the company is concern about the environment with the integrations of the social aspects. Expolanka Holdings Plc. wants to be the leader in developing continuing sustainability in the communities it works in.
Conclusion
With the above analysis, one can conclude that corporate social responsibility plays an important role in strategic management. Various necessary comparison also held between CSR and Merger, and Acquisitions, which explicates the involvement of both as an effective device of Strategic Management. In this report, several key theories of CSR are also been discussed in relation with the Expolanka Holdings Plc. In addition, an organization believes that more number of stakeholders will look into the company if there is a continuous sharing of information takes place across all departments and divisions. In addition, the organization also faces some of the challenges while realizing the organization objectives and that creates a bottleneck in the operations of the business. Moreover, Expolanka Holdings Plc. had effectively annulled the shortcomings during positioning itself in the business domain.
CSR will also help the company in improving their public image. Their corporate social responsibilities are connected with the social responsibility programs and it is important to analyse that how aware consumers are of these programs. Once they improve their goodwill by supporting non-profit with the help of volunteerism, monetary donations and strong partnerships, it can be ensured that they are moving to the direction of the long-term sustainability and growth. In addition, this will also boost employee engagement in the vision and objectives of the organization and thus attain more numbers of investors.
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