Corporate Social Responsibility (CSR): Supporting And Arguing Against

Benefits of CSR practices

The corporate social responsibility which is also regarded to as CSR is that duty of a company embracing roles for its actions and motivating and promoting positive change and impact through conducting activities on the consumer, communities, environments, employees, and other stakeholders. It can also be described as that practice by a company to integrate social, environmental, ethical, and other global issues into most of their business operations as well as in their interactions with stakeholders who include: investors, local communities, government, employees and customers (Campbell 2007). Although some tangible evidence connects CSR practices to business performance, other organizations link it to non-financial advantages of all their efforts. Generally, CSR is supposed to be a win-win situation so that a company accumulates profits while the society also benefits from it.  The main question is whether the society benefits from CSR. In most cases, the benefits of the society are doubtful in most cases. The other issue is whether the advantages that the society receives are outweighed by losses to the community in other aspects of the company’s business operations (Carroll 2010). According to research conducted, it shows that eighty percent and above of corporate CSR determinants or rather the decision makers are confident in the strength and ability of a good CSR to provide branding and at the same time employee benefits. This paper will highlight some of the arguments found in the literature supporting and arguing against CSSR.

For instance, whenever a corporate philanthropy takes place, the corporations are usually giving money to as charity through donations which ii most cases, the money donated belongs to shareholders. Typically, shareholders will allow their money to be given away only if they see some potential for profit in the activity (Friedman 2007). Usually, the main reason is usually to create and improve their images through association with cause and make use of a cheap vehicle to advertise themselves or counter any form of pressure, but the issue is there is always a financial motive behind such acts. At the end of the day, the company ends up benefiting even more than the charity.

CSR can be described as a corporate response to the mistrust of the public, and it attracts regulation. According to an Echo Research poll, the financial executives interviewed refused any form of restrictive regulations of their organizations. The argument of companies is that, When they set minimum regulations, then that stops innovation, or they cannot control ethics since it is either they have the, or they do not (Henderson 2001). Therefore, unless companies are in a position to attain a competitive edge from the CSR, then they cannot justify the costs involved.

Concerns about the balance of benefits and losses

Most businesses are holding the government to ransom on matters pertaining regulations claiming that if regulations are put in place, then they will threaten the good and positive work that they are conducting. Besides, the CSR consultancy Business in Community reinforces the corporate debating and lobbying against having regulations. They argue that what regulation does is to defend against the bad practices and never promotes the best practices. Therefore, this argument exposes the sham of CSR. It’s hard to understand why a socially responsible company would take issues with government regulation to handle the dangerous corporate exercises (Karnani 2010). Thus making companies vulnerable to going way beyond the standard legal minimum expectations. One can easily conclude that the reason as to why companies would refuse regulations is so that they can be selective about which “bad practice” they eradicate and make use of their best practice to shift attention from that which is bad. Additionally, the socially responsible companies would want the bad practices of their competitor companies to be their counterpoint to their respective best practices.

It is a fact that CSR sells since it is appealing to the customer’s desires and consciences. Mainly it assists companies to develop their brand loyalty and at the same time establish a brand loyalty with their clients (Lantos 2001). Most of the corporate charity activities acquire company’s access to major markets and the participation of the charity promotes the company’s message and gives it much greater influence and power.  Since our culture is saturated by media, companies are striving to find innovative ways in which the can pass their message across and CSR is one of the avenues that provides such platforms. For instance, the guerilla marketing, word of mouth for subtly reaching to consumers.

CSR will practically cover up for a company’s negative impacts by filling the media with positive images of the company’s CSR activities and credentials. Thus green washing the company’s image.  According to Deborah Doane, CSR helps an organization to only claim progress when they cannot present evidence of any verifiable change (Lee 2008).  Since most of the business cases for CSR rely on corporations appearing to be socially responsible, CSR will remain to be just PR for as long as it remains easy and cheap to navigate than to bring about change.

According to Milton Friedman and several another conservative critic, the major purpose or corporations is to ensure that they maximize their returns to its owners or the shareholders but does not a duty to the entire society. As part of their critic (Matten 2008).  Managers should not choose social causes for the different owners, but corporations should help the society by properly distribute profits to the owners, who can in return make donations to charity organizations and perform other socially responsible actions that they see fit.

Financial motivations behind corporate philanthropy

Positive Impact

Some of the CSR proponents argue that CSR can impact positively on an organization by improving the retention and recruitment of employees, and at the same time managing all the environmental risks by minimizing unfortunate accidents and distinguishing brands so as to achieve higher consumer loyalty.  A socially responsible company would strive to gain the recognition of a “triple bottom line” efforts or performance which involves not just the financial advantages of the owners but also the environmental and social benefits for the larger society.

Moral Obligation

The general public, policy makers, and even corporate leaders agree to the fact that companies of all types should meet the needs of the communities in which they conduct their business. Clearly, the society expects a lot more from companies than just a well-structured product or simply a reliable service at an affordable price (McWilliams 2001). Communities are continually becoming less tolerant of companies that go about their businesses without addressing the society’s social responsibilities.  Therefore, it is difficult for companies just to ignore CSR. Hence the numerous debates even in the boardrooms concerning the best strategic approaches to effective CSR.  Thus making some corporate leaders perceive CSR as part of their strategic program while other view it as a source of innovation (Windsor 2006). As a matter of fact, several companies have come up with products that are very innovative and services which are of great benefit to the profitability of the company.

Innovation

Although this is an area that has not received the much attention that it deserves, innovation is one of the reasons for arguing for CSR. Basically, innovation can be deemed as the result or a particular research and projects that are meant for CSR.  There are some effective methods of conducting business or developing new services and products that corporations may never realize if they do not have any CSR initiatives in their companies (Smith 2003). A CSR normally serves as the framework that innovation can easily be identified and at the same time exploited to the greater advantage of the company. Therefore a lot of care is taken to ensure that the preservation of the environment becomes a priority (Valor 2005).  What companies do is they reach out to all their local communities in means beyond their product lines and beyond simply complying with the regulations.

Conclusion

It is imperative for corporations CSRs to distinguish between making charitable donations and should, therefore, the balance between all the needs of stakeholders and its need to generate profits and at the same time rewarding the stakeholders as they deserve. The corporate culture of different organizations will have direct impacts on the manner in which individually make decisions that influence how the entire corporation is run. Although there are some reasons for arguing against CSR, there are enough reasons as to why it should be conducted by organizations. Corporate leaders should ensure that they strike a good balance where they socially meet the needs of all their shareholders and at the same time the needs of the society in which they run their businesses. The most important thing for them to do is, act in accordance to the ‘triple-bottom-line’ which moves beyond the desire to fully exploit the shareholders’ value by integrating social justice considerations and environmental quality in most of their business decisions.

Reference List

Campbell, J.L., 2007. Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of management Review, 32(3), pp.946-967.

Carroll, A.B. and Shabana, K.M., 2010. The business case for corporate social responsibility: A review of concepts, research and practice. International journal of management reviews, 12(1), pp.85-105.

Friedman, M., 2007. The social responsibility of business is to increase its profits. In Corporate ethics and corporate governance (pp. 173-178). springer berlin heidelberg.

Henderson, D., 2001. The case against’corporate social responsibility’. Policy: A Journal of Public Policy and Ideas, 17(2), p.28.

Karnani, A., 2010. The case against corporate social responsibility. Wall Street Journal, 23, pp.1-5.

Lantos, G.P., 2001. The boundaries of strategic corporate social responsibility. Journal of consumer marketing, 18(7), pp.595-632.

Lee, M.D.P., 2008. A review of the theories of corporate social responsibility: Its evolutionary path and the road ahead. International journal of management reviews, 10(1), pp.53-73.

Matten, D. and Moon, J., 2008. “Implicit” and “explicit” CSR: A conceptual framework for a comparative understanding of corporate social responsibility. Academy of management Review, 33(2), pp.404-424.

McWilliams, A. and Siegel, D., 2001. Corporate social responsibility: A theory of the firm perspective. Academy of management review, 26(1), pp.117-127.

McWilliams, A., 2000. Corporate social responsibility. Wiley Encyclopedia of Management.

Smith, N.C., 2003. Corporate social responsibility: Whether or how?. California management review, 45(4), pp.52-76.

Valor, C., 2005. Corporate social responsibility and corporate citizenship: Towards corporate accountability. Business and society review, 110(2), pp.191-212.

Windsor, D., 2006. Corporate social responsibility: Three key approaches. Journal of management studies, 43(1), pp.93-114.