Concept of Corporate Social Responsibility - Coursework Example

Corporate Social Responsibility Introduction This essay deals with an analysis of the concept of Corporate Social Responsibility (CSR). In addition, this work examines two different views of CSR, namely, the Classical and Socio-Economic views. In addition, this work makes an argument for and against CSR, with respect to organisations. Finally, conclusions have been made. Purpose The purpose of this work is to present information on different views of CSR and its impact upon organisations. Plan of the Work This essay consists of an introduction, explaining the aims and purposes of the work. The main body consists of a discussion of CSR with examples. The second paragraph discusses issues regarding the classical view of CSR, including an argument against CSR. The third paragraph provides a discussion of the socio-economic view of CSR and an argument for CSR. The final paragraph furnishes a conclusion of the work that analyses all the findings. Paragraph One Definition of CSR From a fundamental perspective CSR is visible in the choices made by a firm regarding the manner in which it will operate within the ethical, legal, political, and social norms of its environment[Dev]. In addition, CSR constitutes an intricate notion, and it has generally been conceded that it has a variety of connotations[Wal12]. Direct Quotes “CSR has been defined as the duty of the organization to respect individuals’ rights and promote human welfare in its operations (Mannakalathil and Rudolf, 1955; Oppewal et al., 2006). Businesses not only have the economic responsibility of being profitable…”[Haz07]. “CSR, therefore, is an unstable arena of exploration (Lockett et al., 2006) where ideals, standards and goals are continuously expanding and evolving (Gilbert et al., 2011; Scherer and Palazzo, 2007, 2010).”[Chr13]. Example CSR admits of different interpretations by different stakeholders and tends to be bereft of consensus. Moreover, CSR is deficient from a theoretical and conceptual perspective, and overlaps several social and business concepts, especially stakeholder theory and corporate citizenship. Researchers have identified certain interrelated areas of concern, such as, communication, implementation, stakeholder engagement, and measurement[Wal12]. As such, CSR obliges organisations to extend their responsibilities to a vast array of entities, including stockholders, customers, employees, local community, governments, and other stakeholders such as suppliers. Paragraph Two Classical View of CSR The classical view declares that the purpose of a firm is primarily to manufacture quality goods and services, make reasonable profits, and to provide employment. This notion is emulated by the economic model of social responsibility, which propounds that society benefits to a much greater extent, when business was allowed to freely manufacture and market products required by society[Man111]. Arguments against CSR The academic and practitioner literature depicts a certain amount of dispute regarding the precise definition of CSR. The concept of CSR encompasses value judgements and conceptualisations regarding the social responsibility of the corporate sector. Milton Friedman and similar neo-classical economists had contended that the principal goal of business was to address shareholder needs. [McG101]. Direct Quotes “Corporate Social Responsibility (CSR) has been customarily seen as an inherently voluntary corporate endeavour that inhabits the area stretching 'beyond compliance' with law. However a growing number of writers and practitioners deem this understanding of CSR inaccurate and unproductive.”[Mar10]. “On the other hand, as individual moral agents, they may experience, or repress, a sense and a conscience of social or moral responsibility toward stakeholders and people in their moral space (Jensen et al.2009).”[Bev11]. Examples In this context, the evident expectation from corporations is that they improve society by creating and delivering goods and services required by consumers, provide employees with career opportunities and employment, develop markets for suppliers, make regular payment of the taxes and duties owed to the governments, and make returns to shareholders and other claimants with regard to the rents produced by the corporation[Dev09]. As such, a corporation is nothing more than a legal entity, whose primary objectives are to comply with the relevant laws and to earn profits for the shareholders. In other words, the first view of CSR limits CSR to economic and legal obligations. This is quite similar to the classical view regarding the responsibilities of the corporate sector. The classical view had believed that the primary function of business was to provide goods and services, with a view to legally maximising profits[Jam081]. As such, Classical view of CSR states that organizations have to accord greater importance to the welfare of the company and its shareholders. Paragraph Three Socio-economic View of CSR The socio-economic model of social responsibility holds that managers are responsible to consumers, employees, suppliers, and the general public, in addition to the stockholders. The emphasis of this model is on the impact of business decisions upon society, and it is not limited to the profits made by the company. There has been an increase in the number of managers and companies that have adopted the socio-economic model[Man111]. Some of the reasons behind their decision are; first, the corporate form of ownership dominates business, and the corporation constitutes a creation of society. Second, several firms have expressed a sense of achievement and pride, with respect to their social responsibility achievements. Finally, a large number of business entities consider it in their best interests to forge ahead in this area, prior to their competitors doing so, and thereby gaining an advantage over them[Man111] Arguments for CSR CSR encourages business accountability among a wide range of stakeholders. The critical areas of concern are the wellbeing of employees, civil society, and the protection of the environment. Such concern pertains to the present, as well as the future. The basic notion of CSR is that corporations cannot conduct their activities as sequestered economic units that function independently of society[Owa14]. Direct Quotes “The business case for CSR argues that there are legitimate reasons for a corporation to invest in CSR activities. From an economic standpoint, there is theoretical logic and some (albeit inconclusive) empirical evidence that engaging in socially responsible activities can reduce costs and risks to the firm, build firm competitive advantage, enhance reputation and legitimacy, and create synergies (Salazar and Husted 2008).”[For13]. “For example, the World Business Council for Sustainable Development defines CSR as the ‘‘commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life’’.”[Ric10]. Examples The proponents of CSR firmly believe that the social sanction accorded to corporations from society makes it incumbent upon them to contribute towards the development and growth of society. Although there is near consensus regarding this societal sanction, there exists considerable debate regarding the extent of the responsibility of corporations towards society[Dev09]. The recent years have witnessed an unprecedented resurgence in the principles of CSR. As such, companies have to include CSR issues into their basic strategic planning and implementation procedures. Moreover, several commentators had increasingly stated that contemporary corporations had several other onerous obligations. Thus, the stakeholder theory had contended that the operations of corporations had to satisfy several groups and that no single group was superior to the other groups[McG101]. As such, socio-economic view of the CSR declares that organizations should adopt policies that benefit society and the environment, in addition to the welfare of the company. Conclusion This work deals with an analysis of two different views of Corporate Social Responsibility. The cultural view of CSR holds that corporations do not owe society anything more than the generation of economic benefits that could accumulate for the stakeholders with certified entitlements towards these benefits. On the other hand, those who envision CSR as a broad based principle, relying on the socio-economic view, believe that corporations should also promote public policy. Thus, the CSR strategy of a firm cannot be comprehended without reference to the environment in which it functions. Additionally, as per socio-economic view, the concept of CSR connotes that organisations have ethical, moral, and philanthropic responsibilities towards society. This is over and above their duty to provide investors with a fair return for their investment and to carry out the activities of the company in a legal manner. As such, the discretionary, economic, ethical, and legal expectations of society from organisations, at a specific point of time, is defined as corporate social responsibility After analysing different views on CSR, this work concludes that businesses should accord importance to social issues, instead of restricting themselves exclusively to profit generation. 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Implementing corporate social responsibility through social partnership. Business ethics, 21(4), pp. 417-433. Read More