Lecture No.
16 – Concept of Corporate Social Responsibility
Academic Script
The practice of CSR or Corporate Social Responsibility as a paradigm for firms
and businesses to follow has evolved from its early days as a slogan that was
considered trendy by some firms following it to the present day realities of the
21st century where it is no longer just fashionable but a business requirement to
be socially responsible
This evolution has been necessitated both due to the myriad problems that we
as a race face which has changed the environment under which firms operate as
well as a realization among business leaders that profits as the sole reason or
raison d’être for existence can no longer hold good.
The reason why companies must look beyond profits is also due to the peculiar
situation that humanity finds itself in the second decade of the 21st century.
Given the political, economic, social and environmental crises that humans as a
race are confronting, corporations have a role to play since they contribute the
most to the economic well-being of humanity and in turn influence the political
and social trends.
Corporate Social Responsibility or CSR makes for eminent business sense as
well when one considers the knock-on effect that social and environmental
responsibility brings to the businesses. For instance, corporations exist in a
symbiotic relationship with their environments (the term environment refers to
all the components of the external environment and not to ecological
environment alone) where their exchange with the larger environment
determines to a large extent how well they do in their profit seeking endeavors.
The evolution of CSR as a concept dates back to the 1950’s when the first
stirrings of social conscience among management practitioners and theorists
were felt. The writings of Keith Davis starting in the 1950’s and continuing into
the 1970’s speak of the need for businesses to engage in socially responsible
behavior and to ensure that society as a whole does not lose out in the process
of profit making behavior by businesses. CSR as a concept was starting to be
taken seriously by the time the 1970’s dawned and through the tumultuous
decade when big business and their minions were accused of several
misdemeanors pertaining to rampant disregard for the environment and society
as a whole.
One can trace the anxieties of activists and management theorists during this
time as they feared that the rapacious behavior of businesses and corporations
ought to be checked if a semblance of social responsibility was to be
maintained. Of course, both sides started to stick to their positions and this
resulted in the debate over CSR getting shriller during the 1980’s. I conclude the
article with two quotes that illustrate the need to think beyond the ordinary and
at the same time remind ourselves of the responsibility we have towards
succeeding generations: The first one by Albert Einstein where he said that
“problems cannot be solved from the same level of consciousness that created
them” and the second one which says that “We have not inherited the Earth.
We have merely borrowed it from our children.”
Corporate social responsibility (CSR) is a self-regulating business model that
helps a company be socially accountable — to itself, its stakeholders, and the
public. By practicing corporate social responsibility, also called corporate
citizenship, companies can be conscious of the kind of impact they are having on
all aspects of society including economic, social, and environmental. To engage
in CSR means that, in the normal course of business, a company is operating in
ways that enhances society and the environment, instead of contributing
negatively to them.
Corporate social responsibility is a broad concept that can take many forms
depending on the company and industry. Through CSR programs, philanthropy,
and volunteer efforts, businesses can benefit society while boosting their own
brands. As important as CSR is for the community, it is equally valuable for a
company. CSR activities can help forge a stronger bond between employee and
corporation; they can boost morale and can help both employees and
employers feel more connected with the world around them.
In order for a company to be socially responsible, it first needs to be responsible
to itself and its shareholders. Often, companies that adopt CSR programs have
grown their business to the point where they can give back to society. Thus, CSR
is primarily a strategy of large corporations. Also, the more visible and successful
a corporation is, the more responsibility it has to set standards of ethical
behavior for its peers, competition, and industry.
In today's socially conscious environment, employees and customers place a
premium on working for and spending their money with businesses that
prioritize corporate social responsibility (CSR).
CSR is an evolving business practice that incorporates sustainable development
into a company's business model. It has a positive impact on social, economic
and environmental factors.
Katie Schmidt, the founder and lead designer of Passion Lilie, said CSR can
positively impact your business by improving your company image, building your
brand and motivating you as a business owner.
"What the public thinks of your company is critical to its success," Schmidt told
Business News Daily. "By building a positive image that you believe in, you can
make a name for your company as being socially conscious."
As the use of corporate responsibility expands, it is becoming extremely
important to have a socially conscious image. Consumers, employees and
stakeholders are beginning to prioritize CSR when choosing a brand or company.
They are holding corporations accountable for effecting social change with their
business beliefs, practices and profits.
"A robust CSR program is an opportunity for companies to demonstrate their
good corporate citizenship … and protect the company from outsized risk by
looking at the whole social and environmental sphere that surrounds the
company," said Jen Boynton, CEO of B Targeted Marketing Co.
To illustrate how critical social responsibility has become, previous research by
Cone Communications found that more than 60% of Americans hope businesses
will drive social and environmental change in the absence of government
regulation. Nearly 90% of the consumers surveyed said they would purchase a
product because a company supported an issue they care about. More
importantly, roughly 75% will refuse to buy from a company if they learn it
supports an issue contrary to their own beliefs.
Consumers aren't the only ones who are drawn to businesses that give back.
Susan Cooney, head of global diversity, equity and inclusion at Symantec, said
that a company's sustainability strategy is a big factor in where today's top
talent chooses to work.
"The next generation of employees is seeking out employers that are focused on
the triple bottom line: people, planet and revenue," said Cooney. "Coming out
of the recession, corporate revenue has been getting stronger. Companies are
encouraged to put that increased profit into programs that give back."
In addition to a better company image, Schmidt said sustainable development
can help your business financially. For example, using less packaging and less
energy can reduce production costs.
Building a socially responsible business
Although being socially responsible isn't free – it can cost time, money and
resources – it is important to remember that every little bit can help the
environment. Schmidt said you can start making an impact on society by
donating a small portion of your sales to a cause you care about.
"Even 5%, though it might not sound like a lot, can add up to make a difference,"
said Schmidt. "When thinking of ways to donate and give back start local and
then move from there."
When initiating CSR, give your employees a voice by involving them in the
decision-making process. Create an internal team to spearhead the efforts and
choose an organization or cause they care about. Contributing to something
your employees are passionate about can increase engagement and success.
Involving your employees in the decision-making process can also bring some
clarity and assurance to your team.
"If decisions [about CSR] are made behind closed doors, people will wonder if
there are strings attached, and if the donations are really going where they say,"
Cooney said. "Engage your employees [and consumers] in giving back. Let them
feel like they have a voice."
Regardless of which strategies you use for sustainable development, Boynton
said it is important to be vocal. Let your consumers know what you are doing to
be socially conscious.
"Consumers deserve to share in the good feelings associated with doing the
right thing, and many surveys have found that consumers are inclined to
purchase a sustainable product over a conventional alternative," she said.
"Announcing these benefits is a win-win from both a commercial and
sustainability perspective."
Benefits that Corporate Social Responsibility offers to the business
Both ecommerce and brick-and-mortar businesses stand to benefit from the
implementation of CSR strategies. Some activities that fall under the umbrella of
CSR, with their corresponding benefits, include:
1. Prevent financial ramifications: Compliance with the spirit and letter of
the law — both nationally and internationally — through self-regulatory
processes will prevent fines, put your business "low on regulators' radar
screens," and lower legal expenses.
2. Increase employee loyalty: Treating your employees fairly and generously
is a part of corporate social responsibility. By providing good jobs and
encouraging high professional and moral standards, you increase
employee loyalty, and by procuring only those overseas products
produced at factories where workers were treated ethically, you gain
support among "Fair Trade" advocates.
3. Maintain a positive reputation: Demonstrated consciousness in a variety
of areas can garner publicity and give a business tangible proof of their
conduct, which can be proudly displayed on a company website. These
include:
a. Environmental consciousness: Reducing waste, recycling,
minimizing carbon footprint, and other best practices can. Using or
producing only sustainable products, lowering energy usage, and
supporting environmental causes will boost a business's "green
reputation" among environmentally concerned clients.
b. Social Concern: Donating to humanitarian causes that fight
persistent poverty, help the victims of epidemics like AIDS or Ebola,
or assist those displaced by hurricanes or earthquakes shows
concern for issues that consumers are more and more aware of in
our modern, interconnected world.
c. Local Community: Involvement in local community projects, either
through financial donations, employee participation, connecting
your customers with project leaders or promotion of the project
through advertising and fundraising enhances your CSR credentials
with clients in the given location.
Need for corporate social responsibility
Corporate Social Responsibility or CSR makes for eminent business sense as
well when one considers the knock-on effect that social and environmental
responsibility brings to the businesses. For instance, corporations exist in a
symbiotic relationship with their environments (the term environment refers to
all the components of the external environment and not to ecological
environment alone) where their exchange with the larger environment
determines to a large extent how well they do in their profit seeking endeavors.
When one considers the fact that the RBV or the Resource Based View of the
firm is all about how well the firm exists in harmony with its external
environment and how this exchange of inputs and outputs with the
environment determines the quality of its operations, it can be inferred that
socially responsible business practices are indeed in the interest of the firm and
the argument against imposing hidden social taxes on the firms by undertaking
socially responsible business practices might not hold good in the current
business landscape.
Indeed, the world since the days of Friedman has changed so much that socially
responsible business practices ought to be the norm rather the exception and
the various readings surveyed for this paper do seem to indicate that it is high
time for businesses to engage in responsible behavior.
However, there is a tendency to treat CSR as yet another cost of business and
hence be business like about the practice. So, mainstreaming the idea might not
bring the desirable effect unless the media, the businesses, and the citizens
themselves understand what is at stake and behave accordingly. Paying lip
service or corporatizing the idea of CSR might not be the intended outcome of
the proponents and the advocacy groups that promote this idea. Rather, a
change in the mindset and attitude is what these groups have in mind when
they push for socially responsible practices.
It has been mentioned elsewhere that CSR as a concept and as a paradigm ought
to be woven into the DNA of the corporations and when the very fabric
resonates with the threads of social responsibility; the goals of conscious
capitalism and compassionate corporations would be realized.
Hence, a cautionary finger wagging is due for those who believe that since the
concept of CSR has been mainstreamed, they can relax in the knowledge that
corporations would do the rest. Given the history of profit seeking and
mercantilist behavior where fads and ideas come and go but the very nature of
the corporations mutates rather than undergoes a fundamental change, we still
have some distance to cover before the goals of the idea of CSR are achieved.
Further, we should not end up in a situation where the imperatives of the 21st
century force corporations to change their behavior. Instead, a voluntary
mindset change is something that is better suited given the vast resources that
corporations have and which they deploy to resist change and thwart those that
push for legislation that aims to do so.
Importance of Corporate Social Responsibility
Corporate social responsibility allows organizations to do their bit for the
society, environment, and customers or for those matter stake holders.
Let us go through the importance of corporate social responsibility.
The term corporate social responsibility gives a chance to all the employees of
an organization to contribute towards the society, environment, and country
and so on. We all live for ourselves but trust me living for others and doing
something for them is a different feeling altogether. Bringing a smile to people’s
life just because your organization has pledged to educate the poor children of a
particular village not only gives a sense of inner satisfaction but also pride and
contentment. One should never forget the importance of society and
environment in our lives. It is indeed high time when we also start thinking
about people around us who are less privileged and fortunate than us.
Corporate social responsibility gives an opportunity to organizations to work
towards the betterment of the society and make it a better place to live.
Corporate social responsibility goes a long way in creating a positive word of
mouth for the organization on the whole. Doing something for your society,
stake holders, customers would not only take your business to a higher level but
also ensure long term growth and success. Corporate social responsibility plays a
crucial role in making your brand popular not only among your competitors but
also media, other organizations and most importantly people who are your
direct customers. People develop a positive feeling for a brand which takes the
initiative of educating poor children, planting more trees for a greener
environment, bringing electricity to a village, providing employment to people
and so on. You really do not have to invest much in corporate social
responsibility activities. Do not undertake CSR activities only to gain publicity but
because you believe in the cause. There are many organizations which tap
remote villages, some of which are even unheard as an initiative of corporate
social responsibility.
Corporate social responsibility also gives employees a feeling of unparalleled
happiness. Believe me, employees take pride in educating poor people or
children who cannot afford to go to regular schools and receive formal
education. CSR activities strengthen the bond among employees. People
develop a habit of working together as a single unit to help others. Infact they
start enjoying work together and also become good friends in due course of
time. They also develop a sense of loyalty and attachment towards their
organization which is at least thinking for the society. Who does not like to work
with an organization where management is kind enough to take out time for the
society and contribute in own small way? Ask yourselves, when is the last time
you did something for your society, customers, stake holders or environment?
Corporate social responsibility also goes a long way in building a positive image
of the brand. Trust me, your brand becomes a “common man’s brand”. People
start believing in the brand and nothing can help you more than your customers
trusting you and your brand. Positive word of mouth eventually helps to
generate more revenues for the organization.
In today’s scenario of cut throat competition, everyone is so occupied in chasing
targets and handling the pressure at workplace that we actually forget that
there is a world around us as well. Have you ever thought about those who can’t
even afford proper meal twice a day? If you can take some time out of your busy
schedule, please try to visit a village once. You would be surprised to see how
people manage their lives there. Corporate social responsibility in a way also
plays a crucial role in the progress of the society, which would at the end of the
day benefit us only.
