Corporate Social Responsibility : Corporate Citizenship

The companies globally are trying to project a new brand image and taking up the CSR (corporate social responsibility) route. Thus shunning the profit and economic motive, firms are strategizing to not only meet their survival needs but to last generations after that impacting societies and natural environment. The global trends show that being committed to larger causes involving stakeholders’ leads to aligning business goals with CSR amidst competitive forces.

CSR is defined as ‘’ the continued commitment by employees to be ethical for profit making venture and improving quality of life of workforce, society.’’ (Angus-Leppan,et al. 2010). The global trends which are found in the emerging firms who are using CSR, is also changing the expectations of the society while engaged in business. In information driven world, the ability to act on crisis of trust, inequality, sustainability is thus testing the business practices. Some of the practices, action plans used by firms are: innovation for greater good, putting people first, engage in new alliances, spreading economic activity, goal centric, leadership driven governance and performance driven, looking beyond profit. Du et al (2010) added that complying by ILO, OECD, UN regulations and framework, firms are more transparent and committed to employee rights, health and safety, human rights, environment pollution under their top leadership.

CSR has evolved over the period of time and the firms integrating supply chains with stakeholders is trying to improve value chain output in partnership model. Firms are now embracing CSR with environmental reporting that tags them to be socially responsible and to feature in sustainability index. Initially a more corporate philanthropy approach, tending towards community volunteering, right now corporate social marketing for ‘cause promotion’ is a part of responsible business practices. The above initiatives thus prove the utility of the Carroll’s Pyramid model where the CSR definition starts with economic responsibilities, to legal, ethical domain as well (Sharp and Zaidman, 2010).

The leadership philanthropy which is the earliest CSR has realised that CSR is the right instrument to match the corporate operations, upholding societal values. The tactical and strategic moves in the corporate operations then adopt ethical principles to guide them. Friedman and Bavmol economists by origin opposed the social approach and its contribution to the firm and the country at large. While businesses should not be a part of social game, the issue of profit and competitiveness will fail the company if they pursued social goals (Preuss, 2011).

A change over several decades show that plenty of MNCs, showed how their organisational culture, values derived from the corporate are shared with suppliers, vendors, customers made them accountable and add it as a compulsory reporting element to make it ethical, transparent. However, it was later on understood that the involvement of the leader, employees to make it as a philosophy. The effectiveness of CSR therefore also linked the brand name and the corporate intentions in their annual agenda. The EU firms started incorporating both financial and sustainability to test CSR in reality found that the movement requires innovation to sustain their venture. They supported EU theories of citizenship, corporate identity and accountability with ethical commitment. The firms like Siemens and BASF from Germany maintained their CSR agenda with OECD guidelines are more holistic in their approach towards overcoming the challenges of CSR implementation (Preuss, 2011).

In contrast to that, the US companies use the economics of the triple bottom line approach in their actions and corporate communication. There is more voluntary and social approach to the multi stakeholder dialogue model, as the EU governments promoted the CG (corporate governance) which has given a shape to the movement of CSR. US firms like Johnson and Johnson and Enron both from US showed stark differences with CSR more strategic than moral. The leadership and its actions therefore defines the company behaviour which affected its innovation, outlook towards environment, employee welfare that gradually became a norm (Rangan et al. 2015).

The argument whether CSR benefits thus turns the discussion to understand the strategic angle and the efforts applied as the business circumstances for TNC (transnational companies) shows CSR as an indicator for corporate identity and reputation. Therefore, anything that is extrinsic cause that is affecting the firm level operations are short term gains in CSR. A more internalised approach to CSR is the value driven agenda which is committed to the social or environmental cause. The CSP (corporate social performance) of a firm therefore calls for correlation of the social and financial performance which is hard to relate. The broad and narrow views of CSR approach benefitting a firm and leading to competitive advantage needs empirical evidence. The current trend is towards sustainability that indirectly affects lower emissions of GHG, while firms are more proactive to maintain the EEO (equal employment opportunity), funding sports, shifting to green production practices. The win-win outcomes in gaining speed, time, cost efficiencies are done through engaging stakeholders while corporate philanthropy is limited to few firms. Some of them are cause related contributor (Katrina hurricane), while others are more reputation oriented. The upskilling of the employees, innovation in product/services/process is commonly seen while the risks are well managed in a CSR driven business environment (Sharp and Zaidman, 2010).

The above argument of the CSR agenda actually benefitting the firm level profits and meeting the triple bottom line approach or value creation is still a matter of debate. There have been models which are drivers of the strategic and operations metrics which are shared with stakeholders show that it does improve efficiencies of scale and profit. The concept of CSR also brings the CSV (crating shared value) element which is a social element for the business engaged into profit making. The real test is between the CSR and the trade off between CSV in the lines of cost benefit analysis. However, it has been seen that creating the competitive advantage for sustainability of a firm is based on the creating the values which is inimitable. Thus a CSR strategy needs to be tested against ethics framework that calls for stress on the strategies it follows. The ability to differentiate and find a solution has the ground rules of audits, reporting (GRI), accounting rules to be followed. The firms however also state that there is no tangible benefit of CSR which is visible that makes Friedman’s approach to be true (Du et al, 2010).

The profit maximisation theory, tending towards accumulation of the wealth, therefore cannot ignore the broader environment. The failure of not meeting the audits, thus makes the firm to make it socially unsustainable which re-strategizes to achieve the business goal. It is however, evident that firms and employees who are engaged into practices also indulge into unethical practices which tarnish the corporate reputation. The motives of the corporate operations are also vital for the scrutiny as the boundary of ethics by employees or a group of employees can fail the business motive. There can be also misdirection which is what leadership thinks to use CSR in order to camouflage the wrong deeds. It is also true for controversial industries that are more prone to damage to environment and interact with the customers. There can be negative corporate psychopathy which that does not drive social responsibility tenets but use it as an eyewash. The stakeholder influence also can be barrier to the CSR being digressed from the corporate mission. The wider network of stakeholders makes the complexity of the CSR mission to be almost neutralised. There are however firm level frameworks like SA8000 to check social accountability of the business entity. In many firms, the most common actions starts with quality QMS approach, where the environmental sustainability is stressed on to comply. The next phase sees the community involvement while the last strategy is to resort to ethical or cause related marketing. This has given rise to ethical consumerism where the firm level actions are creating negative outcomes which have wider social, health, legal implications for the consumers. There is a fine line of ethics for an employee in a firm and the firm itself which engages into unethical act (Angus-Leppan,et al. 2010). These are short term approach to success and easy money that gets audited and are subject to legal actions. It shows that either way, the employee or the firm level actions initiated leads to the digression which have a better manner to approach CSR effectiveness, i.e. shared values.

There are MNCs traversing over the globe while many of them have a defined CSR policy. The company chosen for CSR analysis is Microsoft, the world’s leading software firm based in US. It started its company CSR agenda in the year 2005 shows how they have reduce carbon emissions in its office by adopting a strict agenda based target. It gives out $900 million in cash and in kinds (software) to people last year, setting the trends of philanthropy. Reputation wise it still tops in IT industry so it Corporate citizenship are value add ons to the social and economic well being. The above CSR fund is not the only effort, but training the needy on short term courses for employment showed its vision. It has over 600,000 business partners and stakeholders but is committed to reduce carbon emissions in IT environment which even after EU Commission fines of $899 million for Internet Explorer shows their commitment. There has been increase in employee morale, community and health development projects funded by the firm at distant remote parts of the world. It has been able to create jobs, and has enabled the stakeholders to make them economically viable (Microsoft making $1 creates $8.70 for the stakeholders). The model has innovation that in the IT field is also taking the scope of CSR to a level which is more holistic when compared with others (Weber, 2008). 

The CSR journey after the agenda is set is too arduous as there are strict methodologies which need employees and management to believe in creating a sustainable solution. The ability to stand the test of time wading through the external challenges are for every firm and its employees while there framing of the CSR objective needs time. The argument of externalising and internalising the approach to CSR it is therefore open to top management and leadership. This has been cited as one of the key successful factors in making effective CSR work. The examples from the individual and the firm level unethical acts show how the external factors influence while the controllable ones can be done with the value driven approach. This is more long term approach that addresses the firm values to be linked to the CSR agenda. Though there has been failures and mixed results in the effectiveness of CSR implementation the firm level gain is either brand reputation or camouflage on the converse to eyewash the crowd. The tenets of ‘triple bottom line approach’ or the OECD principles that are the frameworks on which the firm management can substantiate to drive its CSR however needs transparency from employees, stakeholders and management. This is a challenging task as the complex web of the relationships, motives and the business criteria between each of them thus tests the philosophy of the firm level CSR to be put to test.

Angus-Leppan, T., Metcalf, L. and Benn, S. (2010). Leadership styles and CSR practice: An examination of sensemaking, institutional drivers and CSR leadership. Journal of Business Ethics, 93(2), pp.189–213.

Du, S., Bhattacharya, C.B. and Sen, S. (2010). Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication. International Journal of Management Reviews, 12(1), pp.8–19.

Preuss, L. (2011). Innovative CSR. Journal of Corporate Citizenship, 1 (3).

Rangan, K., Chase, L. and Karim, S. (2015). The truth about CSR. Harvard Business Review.

Sharp, Z. and Zaidman, N. (2010). Strategization of CSR. Journal of Business Ethics, 93(1),pp.51–71.

Weber, M. (2008). The business case for corporate social responsibility: A company-level measurement approach for CSR. European Management Journal, 26(4), pp.247–261.