Corporate social responsibility

 

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Corporate social responsibility (CSR, is also known as corporate conscience, corporate citizenship or responsible business. (McWilliams and Siegel, 2001)

The dictionary of business and trade has defined the corporate social responsibility as “the sense of responsibility” of an organization in connection with the environment and community, both social and ecological, in which area that organization is carrying out its operations. The business organizations explain this term in the light of their processes of reduction of pollution, by their contribution in social and educational programs and by taking invisible profits on the resources of employees. The stakeholders have defined the corporate social responsibility in a broader way as voluntary offers and philanthropy.

Corporate social responsibility is a type of regulation which has the main role in the model of business. Its policy function is a mechanism which is self-regulatory where some business assurer or monitors have its fast compliance along with the implementation of law, strong norms of international values. In some role models, the implementation of the corporate social responsibility move away from compliance and becomes involved with such actions that have social impact and are required by the law but may be against the interest of a corporation.

Corporate social responsibility has got a clear aim to embrace the responsibilities of corporate action and to boost up some positive impacts on the environmental situation and stakeholders as well as on the communities, employees, consumers, investors and any other individual.
This term corporate social responsibility attained popularity in 1960s and remained a term which was being used indiscriminately by most of moral and legal responsibilities construed with some narrow situations (Perrini, 2006).
Most researchers had argued that many corporations had got increase in long term profit by operating with the corporate social responsibility, but on the other hand the critics have argued that distracts from the economic role of business.

In 2000 a study held a comparison of existing economical views regarding relationships in between financial and social performances and it concluded that the contradicted results of studies held previously which gave the results as negative, positive and neutral financial impacts were because of flawed empirical analysis.

This study has further claimed that when some study becomes specified properly, the corporate social responsibility puts a neutral impact on financial outcome.
The critics have raised objections that as to whether the corporate social responsibility is simply a window dressing or is an effort to get pre-emption of the role of government as a watchman against the power gained multinational corporations.

Some political sociologists have got interested in corporate social responsibility with regard to the socialism, lateral capitalism and globalization theories some of sociologists have given views that corporate social responsibility is a type of legitimacy of capitalism. Particularly it was started as a social move against the non-habited power of corporate and was transformed by the corporations as a model of business and as device of risk management in the organizations often with a questionable result.

Corporate social responsibility has been named to provide aid to the mission of an organization as well as to provide guideline to all the efforts which any organization considers for the welfare of its customers. The ethics of the business us a part of applied ethics which could examine the principles of ethics and ethical problems which are being arisen be arisen in the environment of business. ISO means the globally recognized standard of the corporate social responsibility.
This is accepted widely that the corporate social responsibility had adopted the principles of triple bottom line which has been adhered by the organizations of public sector, but this adoption of the model of triple bottom lines is without any formal act of litigation.
Consumer prospective
It is view of most of the consumers that at the very moment as any corporation achieves its business target it must do the corporate social responsibility at the same time. In view of the most consumers the consumers which are involved in charitable activities will defiantly receive positive and better response. Some think tanks have also concluded that customers are loyal to and are cordially willing to pay more to the retailers who are indulged in activities of charity.

Consumers have also the view that the retailers who are selling local brands are gaining more loyalty. Smith (2013) has shared the belief that marketing of local brands will be gaining more trust of the consumers but the efforts of environment have got negative views giving the belief that boosting up the local brands would badly affect the customer services (Lindgreen and Swaen, 2010).
(ASSIOURAS et al., 2011) had declared that entire activities of corporate social responsibility are not attractive to the consumers therefore they have recommended that the sellers should focus only on one activity. (FOLKES and KAMINS, 1999)has held that if the social initiatives taken by the organization is not co-operated with the other goals of the company, then it would have some negative impacts. (MOHR, WEBB and HARRIS, 2001) have also emphasized the importance of reaching the consumer for an organization.

Cost-benefit analysis
In the present global, markets of competition the analysis of cost benefits of corporate social responsibility initiatives may be examined by using the resource based view. In accordance with Barney) “formulation of the resource based view as a maintainable advantage of competition requires that the resource may be defined as Valuable (V), rare (R), inimitable (I) and non sustainable (S) (Shaw, 2007).
A commercial organization which has introduced the strategy based upon the corporate social responsibility may sustain only high returns towards their investments bit with the condition that their strategy which is based upon should not be copied by some other organization. Of the compotators succeed to create imitation of that strategy; it would be increasing the social benefits of the entire area. The corporations which have chosen the corporate social responsibility for strategically financial benefits are also showing responsible behavior. The formula of resource based view (RBV) has presumed that the organizations have got a lot of capabilities and heterogeneous sources which can move across the organizations in some imperfect manner. Such imperfect mobilization can produce advantages of competition among the companies which have got immobile sources. McWilliams and Siegel (2001) have examined the activities of corporate social responsibility and had attributed it as differentiated strategy. They have stated that a manager can determine the proper levels of the investment in corporate social responsibility through conducting the analysis of cost benefits in the same manner in which they perform analysis regarding any other investment.
(Reinhardt and Stavins, 2010) had found that any organization which has been engaged in a strategy based upon corporate social responsibility can get high returns more than the normal if it adopts the preventive measures for preventing the competitors from creating the imitation of its strategy.
Supply Chain
In its early age the corporate social responsibility was emphasized only for the office behavior of firms on individual level but afterwards it expanded t with inclusion of behavior of suppliers and the use of the brands and their disposal after losing of their value. In 2013 when the incident of collapse of Saver Building took place, the business organizations had started to consider about the appropriate procedure to behave their suppliers according to impact of the brand on entire society. Any sort of misbehavior can reflect bad impression not only on the corporate customers but also on the misbehaving institution .In most commercial organizations the management of supply chain has been expanded to consider the context of the corporate social responsibility (Maxfield, 2011).
(TATE, ELLRAM and KIRCHOFF, 2010)had suggested that the commercial organizations must include the social responsibility while they are reviewing the component quality of their brand. They have further highlighted the use of modern technologies for improvement of visibility in the supply chains.
Implementation
Corporate social responsibility could have its base in the public relation, human resources of business development departments of an organization or the same are separate units directly answer able to the board of directors or chief executive officer. Some organizations have established the corporate social responsibility without any specific program or team however a plan for engagement may be helpful in reaching to the appropriate and desired group of the consumers.

The team or individual planning of any corporate social responsibility is necessary for n organization to achieve the objectives and goals. As the corporative activities of any organization are concerned the importance may be seen in the budget of the organization which is demonstrating the scale and commitment towards the program.

Social accounting
It is a sort of communication of the social and environmental effects of economic decisions of an organization regarding specific interested groups in the society or to the society large.
It is based upon the basis of accountability of the corporate. Crowther has defined the social accounting as “an access to a report regarding activities of any firm which can identify the behavior of the society, Identification of the authority to whom an organization is answer able for its performance in social sector, any developing measure and any technique in respect of reporting about development or decline.
In the states like as France the legal demands of existing reporting and audit system, for social accounting through a legal agreement on local or global level for measurement of environmental or social performance, yet could not be achieved. Various organizations had published their annual external audit reports which show the maintainable development and issues of corporate social responsibility including triple bottom line reports but all the reports have contradiction on a very wider level in style, of evaluation, methodology of evaluation and style, even in the same corporation.
Critics have rejected such types of reports declaring them a lip service and have further cited the example the social reports of tobacco companies and Corporate Responsibility Report of a company namely “ENRON” (Reinhardt, 1998)
In June 2010, all firms of South Africa which were registered with the stock exchange of Johannesburg were called upon to furnish integrated reports in lieu of the sustainability reports and annual financial reports. As the integrated reports review the social, economical and environmental performances alongside the fiscal performance, therefore the requirement was brought into field due to absence of legal and formal standards of social sector. In this behalf an integrated reporting committee was also formed for issuing of guidelines about good conduct (WADDOCK and GRAVES, 1997).
Ethical training

The implementation of ethical training inside the organizations through regulations of the government is very helpful to spread corporate social responsibility among the organizations or companies. The very purpose of such training is to educate the employees for making ethical decisions when their knowledge is unclear. It is a demand of every organization that the pride and loyalty of the workers must increased in the organization. The main and direct benefit of the ethical training is the reduction of likelihood of some “dirty hands”, fines and damage to reputation due to breach of moral obligation as well as laws (Sundaram, John and John, 1996).
Common CSR actions
The main and common actions of corporate social responsibility are as under
Environmental sustainability:
To manage the waste, management of water, to adopt the process of recycling, to find renewable energy, green supply chains, reduction in use of paper and adoption of building standard according to (LEED) Leadership in Energy and Environmental Design.
Community involvement
Community involvement is based upon the local welfare of the area or local inhabitants. Thus it may include the act of raising funds for local charitable issues, provision of volunteers for social work, providing sponsorships for local festivals and events, providing emplacements to local workers, providing support for local growth of income and involvement in fair practice of trade.
Ethical marketing
It is very important for the companies to treat the consumers and customers in good manners. The corporations which are marketing ethically with paying respect to their customers and placing high values on them do not need any manipulated or false advertisement for potential customers. The will pay regard and respect in return, as well as themselves will advertise the company and product through words of mouth (Sen and Bhattacharya, 2001).
Social license
Social license means the approval or acceptance of a company by the local community. This is existing outside any formal regulations and process. The social license can be obtained by effective dialogues, better communication and respectful behavior (Shaw, 1988).
Triple bottom line
People Planet and Profit is known as triple bottom line and it is a path for evaluation of corporate social responsibility. The “People” is being referred to conduct fair labor practice at the place of operation of business. “Planet” means the maintainable environmental practice and the “Profit” is the fiscal return of the capital after deduction of total cost of input. This measure is being considered helpful for the organizations which are more conscious about their responsibilities in moral and social fields. But it is a view of critics that triple bottom line is a substituted and selective perspective of an organization for any community. There is another criticism which high lights that the process of standard audit is absent in the model of triple bottom line (Desrochers, 2010).
Human resources
A Corporate social responsibility program is an aid for recruiting and retaining the local workers especially competent graduates. Recruitment of potential workers is the main policy of corporate social responsibility of an organization. Corporate social responsibility program is also helpful for improvement of perceptions of the organization among the staff members, especially when the staff members are also committed by payroll giving, fund, volunteering for social issues of community and activities of fund raising. The corporate social responsibility has also encouraged the customer orientation in the employees who are facing the consumers (Becker, Carbo and Langella, 2010).

Risk management
It is an important responsibility of the management and executive, the reputation of an origination which has been built in long period of time may be ruined in minutes by an environmental accident or involvement in the scandals of corruption. Corporate social responsibility can control or reduce this risk but on the other hand it also requires the attention of the Governments, media, regulators and the courts (Innovative CSR: From Risk Management to Value Creation, 2010).

Brand differentiation
Corporate social responsibility may be helpful in establishing distinct able ethical values purely based upon the loyalty of the customers. Some companies are using their commitments to the corporate social responsibility as an effective tool of their basic positing. e.g. American Apparel, The Co-operative Group and The Body Shop.
Some other companies are using the methodology of corporate social responsibility as strategic tactics for getting the support of the people for their retention in the markets of the globe, which could help the corporations for sustaining competitive advantages with the use of their social contribution to the local community and by other ways of advertisement (Aslan and Şendoğdu, 2012).
Reduced scrutiny
The organizations are interested in avoiding the interference of any sort in their business by any regulation and taxation. A corporate social responsibility program may assure the government that the organization is taking very serious steps towards in respect of environment, safety, health and diversity. It would reduce the likelihood of a closed monitoring the practices of the organization by the various departments of the government (Jansen, Gössling and Bullens, 2011).

Supplier relations

A proper program of corporate social responsibility may enhance the attraction of the supplying firms for the corporations or groups of potential customers. For example a fashion designer and supplier of out fittings may see interest in an overseas manufacturer who is using corporate social responsibility program for establishing some positive images and for reduction of the risk of bad publicity by some mischief and misbehavior (Roy and Alam, 2007).

Nature of business
Milton Friedman and others have argued that the very purpose of an organization is to enhance the profits and returns for the partners and shareholders and also to obey the laws of land in which territorial jurisdiction the organization is holding its operation and is bound to constitute a responsible social behavior (SCHWARTZ and SAIIA, 2012).
While supporters of corporate social responsibility program had claimed that the organizations practicing with corporate social responsibility program particularly in developed states have lesser interest to exploit the communities and workers. But the critics have claimed that the corporate social responsibility can itself impose the foreign values in the local communities along with no predicted results.
Better enactment and enforcement of laws and regulations on the government level and voluntary steps taken individually by the organizations may be treated as alternates to the corporate social responsibility programs which can shift the authority of recourse allocations and decision making from public sector to private sector.
However the critics have claimed that an effective program of corporate social responsibility should be voluntarily and must be a mandatory social responsibility which should be kept under vigilance by the government. It should also be interfered with the preferences and plans of the community and also with appropriate allocation of resources and by decreasing the chances of undesirable/irresponsible actions and decisions…