The effect of corporate social responsibility (CSR ) initiatives on Corporate Reputation

Corporate Reputation This article consists of 18 pages and 4000 words. In order to have full access to this article, email us at thedocumentco@hotmail.co.uk

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Table of Contents

INTRODUCTION.. 2

LITERATURE REVIEW… 3

CSR AND CONCERNS TO ETHICAL ISSUES IN BUSINESS. 4

CSR AND CONSUMER PERSPECTIVE.. 5

SCOPE AND IMPLEMENTATION OF CSR IN CORPORATE WORLD.. 6

Supply Chain Process. 6

Accounting, auditing and reporting. 7

Human Resource. 7

POSITIVE IMPACT OF CSR.. 8

1. Creating Financial Value. 8
2. CSR helps firms in attracting Long Term Capital and also constitutions which are favorable for financing 8
3. Raising Product Awareness: 8
4. Help Human Resource Department in attracting and retaining employees. 8
5. CSR Provides a management system that is reliable: 9
6. CSR provides risk awareness. 9
7. Enhancing the reputation of the company. 9
8. Transperacy of work to stakeholders. 9
9. Brand Loyal customers. 10
10. Help organizations in maintain license to operate. 10

NEGATIVE IMPACT OF CSR.. 10

EXAMPLES OF BRANDS WITH BEST CSR REPUTATION.. 12

EXAMPLE OF ORGANZATIONS WITH NEGATIVE CSR REPUTATION.. 13

RECOMMENDATIONS FOR COMPANIES ON BUILDING STRONG CSR REPUTATION: 14

CONSCLUSION.. 14

Reference: 16

 

INTRODUCTION

The corporate social responsibility also known as corporate conscience, corporate citizenship and the responsible business is a way in which the organizations make sure that they follow some form of corporate regulation which is integrated in the organization’s business mode. (Wood, 1991)Corporate Reputation.

The CSR policy are derived and formulated by the organizations to make sure that they are following and are abiding to the laws and ethical standards of the norms and culture being followed in the society where they are operating. (McWilliams, 2001). Organizations plan and formulate strategies and also events to promote their interest in being socially responsible and able to comply with the rules and regulations in the society where they are operating their business.

The aim of such CSR activities and following CSR policies is to build a relationship of trust with the stakeholders of the organization. This also helps in achieving the positive public relationship and high ethical standards that are followed by the organization and its workers in order to reduce and minimize the risks that may be associated with legal issues and law of the country. (Klarsfeld, 2008)Corporate Reputation.

This article also focuses on the importance of CSR activities for any organization and also contains examples of such activities and policies that are being followed by different well known multinational brands. The article also discusses the importance of CSR and also includes what some of the critics feel are the negative effects of CSR activities and policies for the overall organization.

 

LITERATURE REVIEW

Corporate Reputation: Leading companies all around the world are abiding to the CSR activities to prove them safe and environmental friendly. The purpose is to let the world and the society know that they care for the surrounding environment where they are operating and running their business.

According to Shamir (2011), there are mixed opinions regarding the companies who follow CSR strategies and are involved in the CSR activities. As there are some critics who feel that CSR activities hinder in the economic growth of the organization and such activities distracts the organization from their business related to economic role. According to Shmaeer (2011), a number of studied had been conducted in the past to find out the overall impact of such CSR activities on the financial outcomes of the company, where there were mixed reviews. Some of the companies had positive impact, other negative and some also had neutral impact of CSR activities on the overall performance elf the company’s financial objectives. The research conducted by him was concluded as there was no impact neither positive nor negative of CSR activities and policies on the financial outcome of some of the major brands. The effect and the impact of CSR were neutral on the financial outcomes.Corporate Reputation.

The literature reviewed for CSR impact on the companies have also had some critics like, Rosenberg (2002) and Henderson (2001), who argue against the un realistic expectations that companies have from their CSR policies According to them, these policy are just alike window dressings which a company use in order to protect them from the government’s law regulatory bodies. This is because they appear in the eyes of law as law abiding organization who are working towards the betterment of the society.

According to a political socialist, Shmeer(2011), CSR has been of some importance for the organizations especially when it comes to globalization, neoliberals and late capitalism. He was of the opinion that CSR is being used by the organization as a mean to prepare for risk management and also as a business model. However, this CSR concept started as a social movement or a drive for social cause but it has found its roots in the corporate world. The impact either positive or negative of the CSR on the organizations is still questionable as most of the time the impact of such CSR policies is close to none or is neutral on the financial and strategically outcomes of the organization.

Corporate Reputation: CSR also act as a guideline for the organizations to make sure that they are operating in a way that is not harmful for the surrounding environment and the people who are direct or indirect stake holders of the organizations. The purpose of such activities is providing the organization and its employees a path that is according to the ethics and law of the country of operation for the organization. There are a number of certifications that are designed for the companies to make sure that they follow the business and work ethics in the proper way. An example of such international standard is ISO 26000 which is recognized globally for its standards of CSR. Most of the public limited companies or the companies working for the social cause use this standard as a mean to let the customers and the people around know that the company is following standards which do not harm the interest of environment and people around. (Jobber.2012)

 

CSR AND CONCERNS TO ETHICAL ISSUES IN BUSINESS

In the recent years, organizations have realized the importance of their business not only towards maximizing profits but also to work for the betterment of the society and the environment.  But along with some positive views. Therehave been some questions raised by a number of critics regarding the ethical issues of the business. in this response Carroll (1991), came up with the opinion that these CSR activities are a way in which organizations extend their concern for the social and economical betterment of the society, By doing so, the companies portal their interest as being responsible towards the betterment of the society and the environment where they are operating.

In a research published by Caroll in 1991, he was of the opinion that any organization cannot call them as being committed to CSR without following four basic principles of social responsibilities. These four principals of social responsibility include economic, legal, ethical and philanthropic responsibility. By following CSR, the companies express their sense of social citizenship. They do so by making sure that their process are all in an easy to reduce waste and pollution reduction from the environment, by contributing towards the programs evolving education and social concerns, and by making sure that their employee’s resources are earning adequate returns from the business. (Somerville, 2013)

 

CSR AND CONSUMER PERSPECTIVE

CSR has always been assumed and perceived as having positive impact on the consumer’s perception of the company. Where most of the consumers are of the opinion that the companies, apart from earning and focusing on profits, must also engage in activities for the promotion of social causes and for the well being of the society and environment. (Becker-Olsen,2006).

A number of researches were conducted to find out what the consumer think and perceive about the Car activities of the companies. According to a research conducted by Somerville(2013), that the consumers are more inclined towards buying from the retailers who are engaged in social activities like charity. Such organizations have loyal consumers who are willing to pay for the charitable causes.

At the same time, there is a negative perception too, where critics believe that not all the activities and CSR policies are of the nature that attract the consumers or which are perceived positive by the consumers. (Opewll, 2006).

A research conducted by Becker-Olsen(2006), concluded that for CSR to be successful for the organization, it must always been lined with the financial outcomes and goals of the company. If it is not, it would not have any positive impact on the organization and instead will cause negative impact on the organization.

A research conducted by Mohr et al. (2001) also was of the opinion that in order to increase the interest of the consumer in purchasing the product or availing the services of the company, the CSR activities and policies should be focused on the benefits of the consumer. That is the company’s must follow CSR in a way that the consumer perceive it to be a positive initiative from the company towards the betterment of the society and the environment.

 

SCOPE AND IMPLEMENTATION OF CSR IN CORPORATE WORLD

The importance elf CSR has been realized by many organization globally. And therefore, there have been major initiatives that are being taken by big names in the world to start and formulate their strategies and policies pertaining to CSR. Initially, the major focus of CSR was based on the official behavior of individual firms which with time has expanded and found its way in almost every function of the organization from, supply chain, HR, to finance and technology. The major emphasis of the CSR was on the supply chain process that an organization follows, this include how thaw companies make use of the products and then the final disposing off of the material and its waste products. (Levis, 2002).

The scope and implementation of CSR in different organizational functions are as follow:

Supply Chain Process

The major implementation of CSR is on the supply chain process of the organization. Ever since the companies had found out the importance of CSR activities they have been engaging and following the CSR for their supply chain process. According to Jobber (2011), the major focus of CSR has been on the supply chain and the suppliers of the product . CSR provided an ethical framework for them to follow in fair trading standards, and also for setting up ethical relationship to the human rights, laborand the after effects of the product disposal on the social and environmental issue. The CSR in the supply chain of the company has greatly influenced the reputation of the company in the corporate and consumers world. There have been incidents in the history like, the one in 2013where the Savor building collapsed killing almost more than 1000 people. It raised questions for the supplier and the companies to make sure that the products they are using and the operations that they are conducting are in accordance with the betterment of the society and the environment.

A similar controversy was held in 2013 in United Kingdom, when the rumors spread of food retailers using horse meat for their meat products. It badly affected the known names like TESCO in the food chain business. There were ethical questions raised for these companies where even if they were not involved in these unethical practices, had to bear consequences of the rumors.

According to Wieland and Hadfield (2013) there is a dire need for the companies to include CSR in their supply chain context. The companies must focus on the use d of technology to increase and improve the quality of their supply chain processes……..continue