Corporate Social Responsibility Of Businesses

Why Corporate Social Responsibility is important for business?

Question:

Write an essay on “Corporate Social Responsibility of Businesses” 

Over the past two years corporate social responsibility has become one of the major concerns of the businesses. Earlier businesses have to take only those decisions concerning their economic growth and profitability but now this range has widened to the impact on the society, environment and culture. Corporate social responsibility now is not only an option for the businesses worldwide but also an obligation (Chandler, 2013).  It would be correct to say that the Corporate Social Responsibility is not only the obligation of individuals in the society but also of businesses and corporations. So the CSR is a concept whereby the business takes the responsibility of its processes and the impacts it have on its employees, customers, stakeholders and the environment and society and it take steps in the favor of them to improve their lives. Corporate social responsibility is not only obeying the norms and the regulations by the businesses but also voluntarily taking steps for the favor of the mankind. Its main aim is to maintain the long-term profitability, maintain the trust of its stakeholders, and reduce business and legal risk and taking responsibility of their actions. ISO 26000 is considered as international standards for the corporate social responsibility (Malsch, 2013). Corporate social responsibility is becoming one of the main streams of the forward businesses thinkers as they include sustainability into the core business operation which create the vital value both for the business and the customers, and sustainability is vital for not only customers, environment but also for the business (Becchetti, 2012).

Now a days corporate social responsibility has become a mainstream especially in the global competitive businesses and it is not viewed as how much money a business puts in charity but as how much of the business activities are inclined towards making the life of the workforce, their families and the society better. CSR is continuously commitment towards doing businesses ethically and contributing towards the economic sustainability. It is how company modifies and carries out their business processes so that it is profitable and beneficial but at the same time contributing to the society economically and environmentally. In other words corporate social responsibility is undertaking the corporate citizenship (Frynas, 2016), on one hand ensuring the profitability and wealth for the business and on the other hand improving the society, people and planet.

Every successful businessman knows that sustainability is the one of the main reason for a business to succeed, and maintaining the sustainability and a good consumer perception is very important fro any organization, but on the same time a business can’t succeed if the society health is not good, whether due to economic condition, environmental condition or due to lack of the governance, so a intelligent decision makers try to improve the health of the society simultaneously with the increasing profitability because in this way they would be able to gain a good customer perception and rust form the customer and the society and will ultimately increase the balance sheet profit (Lund-Thomsen,2014). And in this way both the business shareholder who are interested in increasing profits and business stakeholder who are concerned with the better life and life balance and society improvements are satisfied.

The challenges businesses face in implementing Corporate Social Responsibility

• The expectation of the costumers, its stakeholder, shareholders and the government agencies and to add external condition like globalization to add to the competition have put a great impact on the corporate social activities of the overall industries.
• The increasing emphasis on the social impact of an investment made by an investor, an institution or a country. It is being a great concern now a day and is topic of debate, which what’s in for society as a whole. There must be a social cause for a big investment rather than only profitability.
• The growing concern about the environmental degradation, and the efforts to conserve the environment. There are many processes carried out which are being very fatal for the environmental health and the concerns like rising land pollution, water pollution, air pollution which have been affecting the daily life of a person. So to reduce the hazardous effects of these things various steps are needed to be taken like recycling, proper dumping of the hazardous chemical waste and more effective processes keeping nature in mind, so that society as a whole can e benefitted (Hoivik, 2015). The protection of the environment has become center of all the humanitarian activities aimed at the carrying out the business and protecting the environment because the environmental resources are of at most importance in the existence of the human breed and they are being exhausted and being negatively impacted by the human activities being carried out. A proper code of conduct is being tried to maintain, for example there are any many countries in which the proper dumping of the waste is mandatory because over the past years when the chemical waste was being dumped in the sea bodies, its impact was noticed on the sea life and many of the sea breads were extinguished permanently, which creates a huge environmental imbalance.

• Corporate social responsibility as a value creation- for a business to thrive a competitive strategy is very essential, and more important is realization of the linkage between the competitive advantage, business strategy and healthy society (Newell, 2005). A healthy society needs a good competitive environment and continuous improvement in processes backed up by innovation, a good governance which can be given by the successful corporate and a successful business requires a good human resource a competitive environment within and a healthy society within which the business can thrive. So keeping in mind how a business can create that health in the society can provide a value for both the business and the society and it should be very carefully included in the business strategy and should be inclined with the business mission, vision (Palazzo, 2016).
• Corporate social responsibility as a risk management- complying with the CRs and the other operational norms helps the organization in minimizing the operational risks and also in mitigating the risks, which can arise in future. Because some of the risks are well managed and well mitigated, organization can go according to the planned strategy and can execute activities accordingly, but if these risks are not well mitigated and minimized then there is huge uncertainty and things can go out of track anytime.
• Corporate social responsibility as corporate philanthropy- providing funds to the non profitable organization have a little strategic and operational impact (Baden, 2014), and sometimes the organization provides the funds to the organization that themselves do a lot of CSR activities, this can be a good option because it provides short term profitability, and a additional value created in the minds of customers and other companies about the shareholder value of the organization.
• Brand differentiation- some big global companies use corporate social responsibility activities for the brand differentiation as marketing promotional activities as they are able to create a good brand image in the minds of people. For example the ITC Indian tobacco company which donates every rupee for every item sol d on the education of the poor deprived children.
• Human resource- CSR activities also helps in maintaining the goodwill among the employees of the organization and it is even more when the employees are in decision making roles or fund raising activities, employees thing bigger of an organization when it is involved in the activities which are beneficial for the society and employees being a part of the society take it positively and also spread the positive word of mouth which ultimately increase the brand equity of the organization (Campbell,2013).
• Triple bottom line advantage- by indulgence in the corporate social activities organization gets triple bottom line advantage. Triple bottom line refers to people, planet and profits. By people it means labors, employees which are working for the organization and the working environment they get more over the lifestyle their families are living, it improves the working condition of the people. Planet is being given great concern by indulging in certain activities and modifying the business operation in such a ways the conserves the natural recourses and on the same line maintain the business profits to satisfy the interest of the investors and the other shareholders so that they get the proper return they were expecting to maintain goodwill and brand name and maintain the opportunity for the further investments and a positive word of mouth which can increase the organization brand equity.
• Good supplier relation- CSR activities not only maintain the good supplier relation with the existing suppliers but also make the organization more attractive for the other suppliers who want to e a part of that organization supply chain (Tassabehji, 2007). For example a merchandise supplier can want of be the suppliers of an clothing organization domestic or globally for a brand which has a huge name in the CSR activities because that organization would have a positive perception in the minds of customers and would have a good amount of loyal customers and that what make a organization attractive for a supplier.

The major challenge in today’s competitive world regarding the corporate social activities is that these activities limit the profitability of an organization, because of the tariffs imposed government regulation, taxation and many other obligations it becomes a very expensive affair for the organization to invest in the social cause which may also cost millions of dollars to the company (Mason, 2014). This may also limit a company to invest hugely on its core competency due to which it has become a brand and in such a way the organization has a chance to loss its market share and profitability. 

Malson Coors Canada is a Canadian company, which is indulged in brewery of beer. It is one of those companies, which have taken advantage of the CSR activities in creating the brand name of it. It has a dedicated social media teams, which continuously spreads its message of careful drinking. It invests hugely on the events which core message is not to widen the popularity of its beer but to spread the message of careful drinking especially for the young’s and teen-agers (Abratt, 2007). By engaging in these kind of events it has developed an image of a very ethical brands and has also gained popularity in the minds o people and its sales also shoot up.

So clearly corporate social responsibility can be used as a tactic to gain much of the public support by integrating it with the integrated marketing communication and gain the competitive advantage over other and increase the market share. And corporate social responsibility should be included in the strategy in such a way that it doesn’t harm the economic health and the mission, vision of the company but instead complements it (Lozano, 2007). CSR activities opens a all now horizon for the improvement for both the employee and the employers, for business and the society. And now is the time for more and more organizations to feel the importance of these social activities in realization of organizational and social goals and to take a right step towards it. It is important that the businesses should work together with the employees, customers and other individuals.  

References

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