Multinationals and Corporate Social Responsibility - Assignment Example

DISCUSSION PAPER ON CSR By Student’s Name Code + Name of Course Professor/Tutor Institution City/State Date Discussion Paper on CSR According to Leonard and Rodney (2003, pg. 1), corporate social responsibility is a concept used to describe the way organizations take into account the social, financial, and environmental impacts of actions and decisions they engage in. The term is an increasingly significant issue in business, as employees, investors, managers, and consumers have started to comprehend how economic growth is connected to environmental and social well-being. Corporate social responsibility is a major concern for any firm aiming sustainability in their long term. Whereas it is a typically voluntary theory, there is rising pressure on organizations to make constructive contribution to people, or at least, minimize their negative effects (Clarkson E 1995, pg. 92). Internationally, states are also advancing towards enforcing certain essentials of corporate social responsibility, especially concerning environmental protection. Responsible organizations may not necessarily have the ability to measure the positive contributions their action has on their performance. Nevertheless, irresponsible businesses are able to notice the negative outcomes their decisions portray on their bottom line (Lindgreen & Valérie 2010, pg. 4). Sustainability of businesses now and in the future depends on whether organizations take into account the environmental and social significances of their behaviour and decisions. In the past, many organizations and managers were primarily focused on augmenting shareholders' value. Traditionally, managers paid attention on short to medium term profits and fuelling the shares price up (Anshen 1970, pg. 6). Nevertheless, there has been an improving trend, which shifts from simply improving the shareholder’s returns and rather focuses on aggregating the value of the organization in terms of the stakeholders. The shareholders comprise of people like business owners, consumers, employees, shareholders, and associates. Businesses, which are socially responsible, seek to undertake decisions that are meant to benefit their different stakeholders. Understanding and developing corporate social responsibility can assist businesses to edge out their competitors. By staying ahead of the competitors, the business will gain a chance of providing benefits to a wider variety of business stakeholders (Baron 2001, pg. 7). Different Stake Holder Perspectives Opinions differs on the way responsibility should be allocated across different stakeholders such as regulators and governments, employees, communities, customers, and suppliers who constantly demand that businesses recognize a broader range of responsibility in addressing different challenges (Clarkson E 1995, pg. 95). As a result, firms are increasingly working alongside their stakeholders to comprehend their stakeholder’s concerns and views on various social, environmental, economic and corporate governance issues and to integrate and address them in the tactical decision-making developments of the business (McWilliams & Donald 2001, pg. 117). The different stakeholder’ perspectives include: Economic Perspectives This perspective entails a company revealing its effects regarding the economic conditions of its stakeholders as well as on economic systems at local, nationwide, and international levels. Businesses should be profitable to their shareholders but should also offer quality product and at fair prices to their customers. Businesses should make fair returns on the investments delegated to the organizations by their investors; they should also gratify their customers with commodities and services that are of actual value (Lantos 2001, pg. 595). The organizations should create wealth, with capabilities of amassing to non-profit institutions, which own shares of publicly held organizations and assist lifting the poor out of poverty when their wages improve. They should also encourage innovation and diversify their economic benefits in order to shield against the tyranny of the majority. The firms should also develop and maintain new jobs for the society. Businesses have been depended upon as main pillars of the economy in provision of employment, income, raw materials, technological improvements, and payment of taxes. Moreover, people have depended on business organizations for generation of investment capital, which assists in economic growth. This is normally acceptable for as long as the businesses confines its activities within law (Lantos 2001, pg. 595). For example, in an article “The Wealth of Nations,” there is a framework for a firm in the current world as well as it is with the society (Carroll 1979, pg. 500). The article suggested that while capitalism encourages the pursuit of efficiency and gains, there is the creation of greater wealth compared to any other economic system. The manager’s role is to act as a trustee to the shareholders or to a principal, being their steward in efficiently managing the assets of an organization (Litz 1996, pg. 1355). Organizations have to recognize certain value connected with the economic perspectives comprising avoiding or minimizing business risks because of better business intelligence and developing and increasing business opportunities, reputation, and brand value. Legal Perspectives This perspective addresses any potential legal issues due to a business. Firms ought to be cognizant of certain likely legal issues that affect them in a particular country. This perspective entails existing government laws or those from industry moderators (Zerk 2006, pg.16). Examples of such legislations could be Regulation of Fair Disclosure of CSR reports that are supposed to contain information that is consistent with other public documents such as securities and other supervisory filings, as well as other company practices and policies. Therefore, businesses can identify a corporate team, which will assist in ensuring compliance with the local community, legal, and human resources departments. The legal perspective of stakeholders maintains that the legal duties of businesses encompass complying with the law as well as playing within the rules of doing business (Husted & David 2006, pg. 838). Laws moderate the ways in which the businesses conduct their operations and they affect different stakeholders to different degrees. Moreover, the laws are normally passed because businesses cannot be trusted by the society to do right. Nevertheless, the regulations from the society and government can portray some disadvantages in ensuring that people do the right things, as they are limited in their scope. This means that the laws cannot cover everything that concerns society. The laws merely lay a platform for conducting businesses by dictating what ought to be done and what is likely to follow as punishment if the right thing is not done rather than being followed out of internal moral conviction (Lantos 2001, pg. 597). Altruistic Perspectives This perspective mainly concerns the shareholders of a business and is also referred to as the philanthropic responsibility. This denotes giving back money and time in form of voluntary service. This is a crucial aspect of CSR. For a long time organizations have been judged by their moral and economic contributions to society. This implies that the terms of service between industry and society are changing. Businesses are increasingly being called upon to serve values that are more human and to assume responsibility to members of the public even when they have no commercial transactions (Lantos 2001, pg. 598). For example, towards the twentieth century end, there developed the concept of corporate social contract. According to Zerk (2006, pg. 16). This concept dictates the expectations of the society over businesses as well as the expectation of the business to society. The perspective suggests that businesses should have altruistic or humanitarian impacts towards society in positive ways. If well applied, this viewpoint could be a significant marketing tool used to enhance the image of firms and in aiding to attain the financial responsibilities of any business to benefit the society. Positive and Negative Arguments for CSR Findings by Alniacik, Alniacik and Genc (2011, pg. 234) established that positively communicated CSR improved the consumers’ intention to purchase commodities from firms as well as potential employees’ intentions to look for employment with prospective investors in the firm. Filho et al. (2010, pg. 295) assessed the merits of CSR in reference to gaining an edge over competitors, which is a significant issue for the contemporary debate on corporate responsibility within society. These researchers also recognized that there is a positive association between competitive advantage and social responsibility. This can be observed in attracting valuable workers or improving the firm’s reputation and image and reputation, in order to enhance relationships with external parties, such as customers, governments, and suppliers (Branco & Rodrigues 2006, pg. 111). Galbreath (2010, pg. 411) stated that ethical corporate acts of social responsive activities, fairness, and the execution of CSR play a significant role in communicating positive attributes to external stakeholders that can increase or lead to an overall optimistic business reputation. This can in turn minimize employee turnover. Corporate socially responsible creativities support the notion that CSR is a beneficial ethical methodology and a business approach for attaining and meeting the “Triple Bottom Line.” The media and governments have also shown greater consideration to firms who implement the ethical concept (Porter & Kramer 2006, pg. 78). On the other hand, CSR could portray negative impacts to businesses as it could be regarded as an inevitable business priority for businesses. Morsing and Schultz (2006, pg. 323) suggest that when firms expose their social and ethical ambitions, the highly likely to draw serious stakeholder attention or they can trigger questions of scepticism. Moreover, there are those who regard CSR as a faulty and misleading concept altogether. Critics argue that CSR behaviour should be outside the description of businesses as it mirrors an unrealistic expectation for enterprises. Stanislavská, Margarisová & Štastná 2010, pg. 63) argue that the major purpose of a business is to capitalize on the financial return to its shareholders and owners. These owners can then freely decide, how and whether to use these profits for improving the environment or the society. These authors argues that it is irrational for corporation leaders to go beyond the social and legal norms that shape the business setting. Furthermore, the responsibility to undertake decisions regarding the improvement of society lies within the jurisdiction of the current elected administration. Therefore, CSR can weaken the attention on competitiveness and possibly result into bankruptcy. Ethical Organizational Behaviour Ethical responsibilities of businesses overwhelm the demerits of legal duties. According to Anshen (1970, pg. 6), these responsibilities encompass being moral and doing the right thing in a fair and just manner. This includes respecting other peoples moral values as well as avoiding social injury or harm caused by other actors. Ethical roles entails those laws, policies, decisions, institutions and practices that are deemed as positive or negative by society members, although they are not necessarily entrenched into the law. Such laws derive their power from moral traditions, religious convictions and human rights and principle. Currently, almost all almost all members of business systems agree that that there is a new set of responsibilities referred to as the ethical CSR. Some time back, ethics in businesses was not given importance to people in business but was left to theologians to tackle various issues such as unfair labour prices, fair wages, and capitalism morality issues (Anshen 1970, pg. 8). There were teachings given by the Protestants on how to attain success through hard work. Later son, business ethical issues were given great concern, as there was increased realization that there were repressive labour activities in in various corporations. Businesses were portrayed as evil with the consumerist media. The result of this negative publicity was the up rise of corporate consciousness in the USA in different platforms. Thus, from the 1970’s there has been an up rise in business ethics. In conclusion, corporate social responsibility describes the way organizations consider the social, financial, and environmental effects of actions they undertake in the society. There are different stakeholder perspectives, which compel firms to increasingly work alongside different actors to comprehend concerns and views on various social, environmental, economic and corporate governance issues and to integrate and address them in the strategic decision-making processes of the business. These perspectives are the economic, legal, and altruistic perspectives. CSR has both positive and negative impacts. CSR is important in gaining an edge over competitors and in attracting valuable workers or improving the firm’s reputation and image. The concept plays a significant role in communicating positive attributes to external stakeholders that can increase or lead to an overall optimistic business reputation. Opponents to the concept argue that CSR behaviour should be outside the description of businesses as it reflects an unrealistic expectation for enterprises. Moreover, CSR can weaken the attention on competitiveness and possibly result into bankruptcy. Ethical organizational behaviour entails respecting other peoples moral values as well as avoiding social injury or harm caused by other actors. Bibliography Alniacik, U, Alniacik, E & Genc, N 2011, 'How corporate social responsibility information influences stakeholders' intentions', Corporate Social Responsibility and Environmental Management, vol. 18, no. 4, pp. 234-45 Anshen, M 1970, ‘Changing Social Contract-Role for Business.’ Columbia Journal of World Business Vol. 5, no. 6: 6-14. Baron, DP 2001, "Private politics, corporate social responsibility, and integrated strategy." Journal of Economics & Management Strategy 10, no. 1 : 7-45. 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Journal of International Business Studies 37, no: 838-849. Lantos, G 2001, ‘The boundaries of strategic corporate social responsibility.’ Journal of consumer marketing. Vol. 18, no. 7: 595-632. Leonard, D & Rodney, M 2003, "Corporate social responsibility." Quality progress 36, no. 10 : 27-33. Litz, RA 1996, ‘A resource-based-view of the socially responsible firm: Stakeholder interdependence, ethical awareness, and issue responsiveness as strategic assets.’ Journal of Business Ethics. Vol.15, no. 12 :1355-1363. Lindgreen, A & Valérie, S 2010, "Corporate social responsibility." International Journal of Management Reviews 12, no. 1: 1-7. McWilliams, A & Donald, S 2001, “Corporate social responsibility: A theory of the firm perspective." Academy of management review 26, no. 1: 117-127. Morsing, M & Schultz, M 2006, 'Corporate social responsibility communication: stakeholder information, response and involvement strategies', Business Ethics: A European Review, vol. 15, no. 4, pp. 323-38. Porter, ME & Kramer, MR 2006, 'Strategy and society: the link between competitive advantage and corporate social responsibility', Harvard business review, vol. 84, no. 12, p. 78. Stanislavská, L, Margarisová, K & Štastná, K 2010, 'International Standards of Corporate Social Responsibility', AGRIS on-line Papers in Economics and Informatics, vol. 2, no. 4, pp. 63-72 Zerk, JA 2006, Multinationals and corporate social responsibility: Limitations and opportunities in international law. Vol. 48. Cambridge University Press. Read More