Corporate social responsibility (CSR) is becoming a major business undertaking aimed at increasing the competitiveness and marketability of a business. It is the criteria through which an organization accesses its social, economic and environmental development. Through corporate social responsibility, organizations are able to forge cohesion between markets, labor and local communities.
Further, CSR increases investments directed towards community social welfare, enhancing trust and meeting the increased global expectations placed on business ventures (Gray et al., 1987). It is represented by the assistance accorded to the society through company hub business actions, social ventures, charity programmes and its commitment to public procedure.
For example, the Shell Foundation input in the Flower Valley of South Africa has seen the company develop early learning centers for children and adults to lower the level of illiteracy. Other companies are involved in the establishment of facilities to create awareness on environmental issues.
CSR enhances Business competitiveness
Incorporating corporate social responsibility program in an organization enhances its competitiveness. It has been determined that businesses output on the fiscal, social and environmental aspects straightforwardly affect its affiliation with stakeholders, workforce, consumers, company associates, governments and local communities.
Research conducted on CSR Programs have found out that 70% of customer buying decisions, stakeholders and staff decisions are influenced by the level of social contribution that the company makes to the society (Hohnen, 2007).
Corporate social responsibility produces reimbursement such as brand-strength, higher employee spirits and greater shareholder assurance which ensures trust in the company business activities that enhances its competitiveness in the market (The Economist, 2005). Many companies emphasize on good moral ethics as a corporate social responsibility measure citing that this finally leads to tangible competitiveness over other companies with other forms of CSR program but poor morals in their business deals.
Other companies use the golden rule of reciprocating the good advanced to them by their consumers that ensures attracting and retaining customers (The Economist, 2005). Although the benefits of corporate social responsibility are hard to quantify, it is agreed that companies without CSR programmes incur high costs of production. For example, companies involved in polluting production activities incur a lot of losses when neutralizing the effects of production activities.
CSR enhances business growth and stability
Effective CSR programmes can enhance the development of a business. Due to the global outlook of many businesses today, a strong base is required from which a business can grow. Sustainable development in businesses requires the implementation of strong corporate social responsibility program that will ensure stability in both production and sales in the market. Firms that do not incorporate CSR in their decision making will likely face different problems that can take them out of business.
Furthermore, firms will be faced by prospects of legal suits by employees, communities and government (Hohnen, 2007). The rising risk involved in business activities can easily be managed by putting into consideration those involved in the business activities ranging from the stakeholders to consumers. Through greater future assessing and investors’ analysis of corporate social responsibility programmes, the protection of supply, production and market solidity can be enhanced.
CSR increases business reputation, trust and sustainability
Consumers tend to align themselves with reputable firms. CSR is one of the ways that a company can build its reputation. Entrenching trust, good morals, reliability, quality and consistency in a company ensures steady consumer flow. The growth in reputation of a company enables a company to recruit, develop and retain high quality staff that are not only proud of their employer but are devoted to enhance the development of the company.
CSR enables a company to draw information from many sources that are loyal to it. Aligning itself with one sector of CSR application, the firm can innovate and create a product suited for that given market. For example, CSR directed towards the environment can enable a company to increase its processes and become a leading supplier in environmental products.
CSR also improves the company chances of creating effective and long lasting supply chain with companies that share the same ideologies therefore reducing risks and costs involved in production.
CSR programmes through its connections to various people and information channels has the potential to adapt to changing trends in the business world through information relayed to it by its CSR intervention programmes. CSR also increases a company’s market size through tapping into communities that allow the company access to their areas (Hohnen, 2007).
CSR application by business companies
Many firms are increasingly incorporating corporate social responsibility programmes into their decision making. There is a growing pressure from nations, international organizations and regulations that are forcing companies to adopt the corporate social responsibility programmes. For example, in South Africa all companies on Johannesburg Stock Exchange by June 2010 are obliged to submit an integrated account that shows economic, social and environmental developments beside the financial records.
The Google Company has been extensively involved in programmes that are supposed to better the lives of people. Since incorporation of CSR, Google profits ensuing mainly from advertisements have developed in each quarter since 1993. Google websites offer 34.5% of all searches carried out through the internet (ComScore, 2005).
In 2005, Google donated US $1billion to its charitable division dubbed as Google.org to invest in social projects throughout the world (Ethical Corporation magazine, 2005). In addition, Google’s motto that prohibits doing any evil against any person acts as its selling point. From its loyal and dedicated staff, Google has also managed to provide the world with innovative choices on the field of communication and networking.
References
ComScore Inc. (2005). Measuring the Digital World. Web.
Ethical Corporation magazine (2005). Business Briefs. Web.
Gray, R. H., Owen, D. L. & Maunders, K. T. (1987). Corporate Social Reporting: Accounting and accountability. New Jersey, NJ: Prentice Hall.
Hohnen, P. (2007). Corporate social responsibility: An Implementation Guide for Business. Manitoba, Canada. International Institute for Sustainable Development.
The Economist (2005). The Importance of Corporate Responsibility. Web.
The business world is getting more sensitive and very competitive. Given the definition of a company, it would be right to say that a business unit is an entity, a person who can be viewed independently as a member of the society.
It therefore has an obligation to ensure that it participates in the normal developmental projects that other members of the society are involved in. The manufacturing companies are the leading polluters of the environment. The retail stores are also adding to this pollution.
Wal-Mart for instances, wraps its products with plastic papers which are poorly disposed and turn into menace in our environments. Many of the manufacturing firms emit the greenhouse gases into the environment, causing massive pollution (Keinert, 2008).
They therefore have great responsibility to the society. It takes away a very important item which it must find a way of compensating in order to ensure success.
There are a number of ways through which a firm can give back to the society. Corporate Social Responsibility is one of the most important activities for most of the corporate businesses in giving back to the society.
It is a kind way of appreciating the fact that the community is important. It is a fine way of telling the society that the firm appreciates its support. This way, the society will come to the realization that it is acknowledged by the firm.
This would create trust and a close tie between the community and the firm. It is one of the best ways of making a firm part and parcel of the community. This way, the community would not view the business as just a simple business unit out for pure gains in profits.
They will see the firm as one of their own and therefore will feel obliged not only to offer it any assistance and protection it may require, but would naturally be turned into a pool of loyal customers.
Asongu (2007) says that corporate social responsibility cannot be avoided by any firm that hopes to succeed in the market.
Coming up with an appropriate corporate social responsibility is one of the biggest challenges in the twenty first century. The cultures of societies around the world are varied.
For a firm with an international outlook, there is a serious need to develop a strategy through which this process can be made a success. Corporate social responsibility can be taken from many fronts.
There are different activities that a firm can do as a corporate social responsibility. However, what may be appreciated by the American society may not be the same thing that the people of the United Arabs Emirates appreciate.
This is not only because of the cultural difference between the two countries but also the difference in economic status. The United States is a developed country. Some of the activities that a firm may do in this country may fail to make any significant impact to the country’s population, but may mean a lot in another country.
The biggest huddle will be for a firm to precisely determine what would be needed in each society. This would call for a deep understanding of the society not just from the economic terms, but also the socio-cultural and political fronts.
This paper seeks to develop corporate social responsibility strategy that would enable this firm be seen in a new perspective as a listening and caring partner to the society members within its areas of operations
The Corporate Strategy
The world is getting increasingly competitive. As the chief executive of the Dubai Electronics, the researcher has come to the realization that the business world has gotten more competitive.
The suppliers are getting more and more assertive in this country, not because they have the monopolistic power, but because they have managed to cut the direct link between the manufactures and the large scale retailers like this firm.
They have formed a pool amongst themselves, making them speak with one voice, giving them greater bargaining power. On the other hand, customers are getting increasingly knowledgeable because of the constant exposure to information through the social and mass media.
Large retailers like Dubai Electronics have to face a further challenge of stiff and unhealthy competition amongst themselves, making it difficult for a firm to survive.
Given such an environment, a firm may not be in a position to prosper unless it develops a strategy to attract the customers and controls the suppliers.
One of the best ways of appealing to both parties is through developing an appropriate corporate social responsibility that would make it be seen as a firm that is beyond personal gains of making the profits.
Both the customers and the suppliers would see the firm as a member of the society who is concerned with a positive transformation of the society. Kline (2010) says that a diligently executed corporate social responsibility will act as a special way of creating awareness of the firm.
It will also go beyond in convincing the society that this firm is a part of the society. This would generate reputation for the firm within the society.
As stated above, there is a need to have a deep understanding of the society before coming up with an activity to conduct as a social responsibility.
Given that this firm is an affiliate to the American firm which is actually the parent country, the head office most likely have strategies that have worked well in the home country.
Given the difference in the social context of the two countries, the strategy may not be as successful as it was in the home country here in United Arabs Emirates.
There is therefore a need to develop a new strategy that would be successful here in United Arabs Emirates.
Bird (1977) says that in developing a business strategy, it is important that a firm understands the problems that bedevil the society. It may be in the financial, environmental or social end.
Financial Responsibility
United Arabs Emirates is one of the leading economies in the Middle East. However, it is very important to note that this wealth is held by the few members of the society.
A good number of the citizens of this country are poor. When developing a corporate social responsibility, it is very important that this firm brings in the factor that it may be financially responsible for this society.
There are various activities that this firm can undertake to demonstrate its financial responsibility. One factor that is gaining a lot of public attention is the need to ensure that both male and female members of the society get equal opportunities in the society.
This country has its majority population professing Islam as their religious group. For a long time, the Islamic society had not given a lot of emphasis on the importance of taking the girl child to school just like the boys.
However, due to the massive international pressure from various world organizations and the rapid change of the societal structure caused by the emerging technologies, the society has come to embrace the need to educate both male and female children.
Many firms have gotten into this wave and are sponsoring several girls at different levels of education. Some of the main rivals of this firm have been very vocal in advocating for the need to ensure that the girls of this society go to school.
They have committed themselves financially to get involved in the process of educating these children. It is important that this firm also gets involved in this activity because of the publicity that it has.
However, it is important that this firm takes a different approach from that taken by other firms. While the other firms have been moved by the euphoria and the wave that is keen to ensure that the girl child is given her rightful position in the society, the boy child is increasingly getting neglected.
A survey by Majer (2011) demonstrates that male members of the society are by far more enthusiastic about electronics than the female members of the society. By posing as a crusader for the female members of the society at the expense of male, the firm risks the loss of this important segment of the market.
As such, the researcher proposes that this firm must take a common ground that would be viewed as neutral by all the members of the society.
The firm may commit itself to financially help bright students in their education, irrespective of their gender. This way, the firm will be able to strike-off as a gender sensitive organization that does not discriminate any member of the society on the basis of gender or otherwise.
According to Urip (2010), getting financially involved in the education of needy children in the society is one of the most effective ways of conducting corporate social responsibility.
This is because it leaves a permanent mark to the people involved. It also makes the other members of the society feel that this firm is taking parental responsibility because it feels like one of the parents in the society. This will help the firm develop a base of loyal customers.
The customers would easily be evangelists of the firm because they would develop personal ties with it. In this case, this firm would be going for double benefits.
While it will receive the reputation as a firm that cares for the education of bright children of this society just as other rival firms would, it shall cut across both genders and it would be seen as a firm that appreciates both genders in equal measure. This would make it retain the male customers, and appeal to the female customers.
There are other ways of getting financially responsible to the society. The researcher proposes that a given amount of money should be set aside by this firm to enable it help the society members in case of a calamity.
This fund can be kept to wait for such a time that this society has a calamity such as fire tragedy or other forms of accidents. It can then chip in to offer financial assistance to the affected members by paying their hospital bills or giving any other financial aid that would be within the budget for this task.
It is important to note that this process should not be misinterpreted. The society should be able to appreciate that this firm is determined to help when there is a pressing need for the same, and not that it is a prophet of doom.
Environmental Responsibility
Environmental conservation has been synonymous to corporate social responsibility. Whenever a firm mentions the need to conduct a corporate social responsibility, what comes to mind is environmental conservation.
In the world over, there is the need to conserve the environment. The Kyoto protocol was developed when the nations around the world came to the realization that the world was losing its forests at an alarming rate. The emission of greenhouse gases was also on the rise.
Many of the manufacturing firms have been accused of emitting poisonous gases into the environment. Such gases are not only poisonous to people when they are inhaled directly, but also cause an adverse effect to the natural environment.
They affect the ozone layer and also interfere with other natural aspects of the environment hence causing a complete disruption in the pattern of weather. It is even worse that the forest cover is getting eliminated at an equally alarming rate.
It is the forests that can be in a position to counter the effects of the manufacturers’ emissions. However, if the very forest is being destroyed, then it becomes a big challenge to help the natural environment.
Large retail stores like the Dubai Electronics have not gone without blame either. The Greenbelt Movement has accused most of the retailing stores of worsening the situation that has already been made bad by the manufacturers.
They claim that it is the retail stores that contribute to the pollution of environment with the non-biodegradable plastic bags which they use to wrap their products. As a retailer, the researcher proposes that this firm gets involved in the environmental conservation of this nation.
There are various fronts in which this firm can undertake this social responsibility to the environment. The first approach is to ensure that its own wastes are well taken care of, given the fact that it is located in the heart of Dubai city.
This firm may consider changing its wrappers. Instead of using the non-biodegradable plastic papers, this firm can develop paper wrappers or better still, reduce the wrapping and encourage the use of permanent bags that can be reused when one goes shopping.
This way, the firm would be in a position to reduce the level of pollution within this city. The researcher also proposes that the firm should consider the process of planting trees and flowers within its compound besides the fences and the lighting system.
The firm can also sponsor tree planting activities within the city and its environs. This would boost the forest cover of this nation, making it easy for carbon in the air to be eliminated hence enhances purification of air.
The researcher also proposes that this firm should sponsor a television and radio advertisement on the importance of environmental conservation and the role each member can play in order to ensure that the environment remains unaffected by the effect of industrial revolution taking place in the United Arabs Emirates and other neighboring countries.
Social Responsibility
The other important aspect of corporate social responsibility is the social aspect of the environment. Within the society, there are some social issues that warrant the attention of the members of the society.
One issue that has been a real cause of concern in this society in social sphere is the child trafficking and forced labor. There has been an international outcry that this country has been one of the destinations of kidnapped children.
According to Weiss (2011), children who are kidnapped find their way to this country as home workers or industrial laborers. This firm has the responsibility to sensitize the society against engaging in such acts. This scholar notes that this trend has negative effect both to the kidnapped individuals and the hosts.
There are numerous occasions where some of these foreigners who are abducted from other countries have engaged in serious criminal activities just to ensure they get back to their home countries.
As a concerned firm, the researcher proposes the Dubai Electronics launch a campaign against child trafficking through road shows and other such social forums.
Another issue that this firm should consider is the labor laws. The United Arabs Emirates has been petitioned severally over the issue of contravening the labor laws. There are claims that many firms in this country do not respect their employees.
This firm has the responsibility to ensure that the social welfare of its members is well taken care of. They should not be put under any inhumane working conditions while within this firm.
The employees in various stores of this retail market should always be allocated time off-work, so that they may have some good time with their families.
To the customers, this firm has the responsibility of ensuring that they are caring and ready to listen to any customer who may need their attention at any time.
They also have the right to get correct information from the firm in regard to the stock of the firm and the services they offer.
Conclusion
Corporate Social Responsibility is one the most current strategies of marketing a firm. The market is so competitive that any misstep by a firm would lead to its automatic fall.
Corporate social responsibility comes in as a way through a firm can show its concern to the society’s well being. In such competitive markets, it is very important that this firm comes with strategy that would make the firm stand out among the rest, as the preferred firm that is able to understand the needs of the society.
As stated above, this firm has three approaches to its corporate social responsibility. The first front is the financial aspect. The firm can engage in various charitable activities in the society that may involve giving out financial support to the members of the society.
Environmentally, the firm may get involved in such activities that would ensure it is seen as an agent of pollution-free environment.
Socially, the firm should not only ensure that its employees working conditions are bearable, but also make the society appreciate the importance of respecting the rights and freedom of every member of the society.
References
Asongu, J. (2007). Strategic Corporate Social Responsibility in Practice. Lawrenceville: Greenview Publishing Co.
Bird, A. (1977). Team structure and success as related to cohesiveness and leadership. Journal of Social Psychology, 103(2), 217-223.
Keinert, C. (2008). Corporate Social Responsibility as an International Strategy. Heidelberg: Springer.
Kline, J. (2010). Ethics for International Business: Decision-Making in a Global Political Economy. New York: Routledge.
Majer, C. (2011). The silent killers of productivity and profit. T+D, 65(2), 62.
Urip, S. (2010). CSR Strategies: Corporate Social Responsibility for a Competitive Edge in Emerging Markets. New York: John Wiley and Sons.
Weiss, W. H. (2011). Building morale, motivating, and empowering employees. Supervision, 72(9), 23.
General electric is a company that operates in more than 100 countries offering services in technology and financial sectors. It has more than quarter a million employees who have endeavored in delivering solutions diverse solutions in transportation, finance, home, building, health and energy amongst others.
Over the years General electric has adhered to strong values dictated by its core values and governance that have always taken in account its customers, employees, share holders and the environment it trades in.
Due to its global presence, General electric human resources function has adopted a corporate social responsibility programs that have utilized technology and have produced positive results in increasing employee involvement, boosting shareholder’s value and encouraging environment conservation (Nina, 2008).
General electric electronically publishes many features and articles, newsletters and magazines that can be accessed through their website and free online subscriptions and downloads i.e.
General electric publishes an annual GE citizenship report that is updated on their website and expounds the corporate social responsibility activities within a given year. The report revolves around capacity building, climate change, sustainable health care and energy.
The company effectively utilizes television and video in its corporate social responsibility plan this involves countless television advertisements that aired daily by television channels around the world and tens of videos available on the General electric website i.e. the “want to change the world video” that encourages other stake holders to combine efforts with General electric in changing the world while making use of resources available from the company, the video is available on the website.
Audio teleconferencing is major part of General electric’s social corporate strategy in educating, informing and receiving feed back from its primary and secondary stake holders since the company strives to ensure its products are reliable and safe.
General electric organizes audio teleconferencing forums whereby concerned stake holders give views and feedback on the products impact on environment and personal health i.e. the company used audio teleconferencing in getting views, suggestions and feedback while conducting its research towards reduction of mercury from its lighting products (Perrini, 2006).
Interactive multimedia is the principal mode of instruction in General electric’s inbound e-learning program which offers training to employees in order to acquire and upgrade their skills.
The company is concerned about the safety of consumers of its defense and health care services and products hence it always ensures that they are accompanied by simulations and virtual reality software for training purposes (Nina ,2008). Data scan is a General electric product in molecular imaging that comes with simulations to ensure safety.
General electric has developed intelligent tutoring systems that facilitate authoring of generation of procedures templates and online surveys which incorporate pictures, audio and video which have proven to be very successful due to their higher response rates compared to alternative surveying methods.
The authoring aids are used in generation of templates that simplify the process of formulating procedures and policies.
In order to improve and monitor performance and productivity in a cost effective way the company has developed electronic performance support systems which have reduced the complexity of the process of performing the task employee performance evaluation, productivity evaluation and sales quota reporting.
The company has employed all the above mentioned technologies in its corporate social propensities and has won favor of both primary and secondary stakeholders.
References
Nina, B. (2008).Perspectives on corporate social responsibility. New York. Ashgate.
Perrini, F. (2006). Developing corporate social responsibility: A European perspective. I New York: Edward Elgar.
Article Review: The Business Case for Corporate Social Responsibility: A Review of Concepts, Research and Practice. By Archie B. Carroll and Kareem M. Shabana
Introduction
Several studies have been conducted over the past on the Corporate Social Responsibility. This review intends to analyze the main concepts presented in the article “The Business Case for Corporate Social Responsibility: A Review of Concepts, Research and Practice”, which was compiled by Carroll and Shabana.
This article gives a clear analysis of business case for the corporate social responsibility. The article also seeks to find out how organizations benefits in one way or another by engaging themselves in CSR policies. In other words, it seeks to find out what organizations really get by engaging themselves in CSR policies and practices.
The article begins by giving a general background on the topic. By so doing, the article gives an outline on how the idea of how the practice of business participation in community activities has been viewed over the past as well as the evolution of these views over time.
This includes the ideas opposing business participation in community activities and the ideas proposing business participation in these activities. Initially, there was little effort to study the benefits organizations get by participating in community development activities.
The main focus was the business responsibilities to the societies and the duties they are expected to meet (Carroll & Shabana 2010). This undermined the CSR to some extent since this view presented the program as a cost ignoring the benefits associated with it.
Background Information
In the recent past, the idea of corporate social responsibility has been a critical issue in business policies. According to Tonello (2011), there has been a measurable payoff of corporate social responsibility efforts both to the stake holders and their respective companies over the last decade.
There are some benefits for a company enraging in CSR. It has been realized that CSR can assist an organization in creating its competitive advantage (Tonello 2011). In the contemporary business world, the market has become very competitive, a condition which has threatened the performance of many organizations.
Therefore, this article touches important issues which can significantly help organizations in improving their performance by reducing their operational expenses and improving their competitive advantage.
The issue of CSR can be traced far back before the World War II. The concept of CSR has been used over the past by various organizations in an attempt to align their business interests to defend the free market capitalism (Carroll & Shabana 2010). This was aimed to counter the danger posed through the soviet communism. However, there are increased benefits for organizations engaging on CSR.
Summary
As already noted, this article gives an analysis of the company participation in CRS, how a company benefits from it as well as its shortcomings. The authors recognize the importance of the CSR in the contemporary business world.
For instance, the authors have identified several bodies like the Business for Social Responsibility (BSR) which has been organized by the business community in order to understand these issues better and hence enjoy its benefits (Tonello 2011). Other than thinking about their profits and their employees, organizations are encouraged to think about the entire public as well in order to achieve their goals effectively.
The article has clearly analyzed the reasons why companies are advised to engage themselves with CSR activities, policies and practices. On the other side, the article has also analyzed the reasons against the idea of CSR. According to this article, the main reason against the CSR policies and activities is based on Friedman’s classical economic argument that argues that the management has one responsibility, which is to maximize profits (Carroll & Shabana 2010).
Therefore, the social responsibility in this case is not one of the businesses. According to Friedman’s argument, the social issues are automatically resolved through the operations of the free market. In case the free market fails to meet these functions, then it is the duty of the government and not the business’s responsibility.
It has also been argued that the business does not have the capacity to handle the social responsibilities in the society. The managers are trained to handle the management cases and do not have the social skills. Therefore, the business should not be given any social responsibility. There is also another group which argues that CSR makes an organization to be less competitive in the global market (Tonello 2011).
Despite of these arguments against the idea of CSR, there are several reasons for the CSR policies and practices presented in this article. To start with, every business aims at creating a good working environment by cultivating good relationship with the society (Carroll & Shabana 2010). This is realized by promoting operations, which makes a company to bed socially responsible.
This article has also paid attention in analyzing the concept of the CSR business case purposes. CSR has been said to cover four main areas that includes legal, economic, discretional and ethical practices which the society expect from organizations (Carroll & Shabana 2010). By accomplishing these expectations, an organization manages to fulfill its social responsibilities and in the process helps in solving the problems in the society.
Finally, the article has given an analysis of the business case for the CSR. It has been pointed out that CSR has been evolving over the past decades, which have led to change in how it is viewed over time (Carroll & Shabana 2010). Although there has been several social responsibility business cases that have been developing over the past years, there has been no single rationalization for ways in which CSR improves the bottom line.
Evaluation
This article has presented a clear explanation in its purpose to achieve its goals. The article has presented a clear background of the general issue at hand that has helped in understanding the problem. This has been supplemented with the past studies which have been on the field. This provides a firm support of the ideas presented.
Through the CSR policies and activities, an organization manages to facilitate its operational efficiency as well as creating competitive advantage. For instance, an organization can reduce the level of government intervention in the business activities since the practices provide a kind of self discipline and standards (Carroll & Shabana 2010).
This increases the efficiency in the business operations. It is also advisable for business to act rather than just reacting to the problems facing the society. This will yield better results.
Since several parties have tried to solve the social problems in vain, it is advisable for the businesses to play their role in solving these problems (Carroll & Shabana 2010). These are some of the most convincing points in the article. This is because they are supported with evidence.
However, this article suffers from the fact that it has failed to provide figure to support its arguments. Figures can increase the convincing power by providing evidence.
Direct Comment
In conclusion, this article has helped in understanding the importance of CSR in the contemporary business world. Over the past, this has been viewed as an obstacle since it comes as a cost to an organization.
However, this article has revealed some of the benefits which are associated with the CSR activities, practices and policies. There is several business benefits associated with CSR. It is therefore advisable for all organizations to adhere to the CSR policies and practices.
Reference List
Carroll, A. and Shabana, K. (2010). The Business Case for Corporate Social Responsibility: A Review of Concepts, Research and Practice. International Journal of Management Reviews. pp. 85-pp. 104. Web.
Tonello, M. (2011). The Business Case for Corporate Social Responsibility. Web.
Premier Oil Company put in significant efforts in carrying out activities aimed at improving the nature and conditions of the societies that form its environment through out the world.
The different nature of the various environments this multinational company operates in, provide for unique approaches in playing this vital role as a corporation. In Indonesia, this company engaged in various activities. Their aim was to improve the general welfare of the society for the year 2009.
Community Centered Responsibility
Premier Oil believes in empowering people. Hence, its corporate social responsibility policy provides for consideration and adoption of approaches that seek to promote this worthy course.
To be specific, it took part in development of infrastructure in the Palmatak sub- district through the construction of health facility, supporting the education programme of the people of Indonesia through construction and maintenance of such learning facilities as kindergartens as well as setting up of sponsorship programmes for locals especially in various institutions of higher learning.
In conservation matters, the company was involved with turtle conservation efforts in Durai Island. Furthermore, it was also involved with provision of relief aid after the devastating earthquake that struck the country in 2009.
Impact of This Engagement
By choosing to invest in the various sectors in Indonesia, Premier Oil places the interests and the future of the people of that country on a path that is to guide them realise their potentials. The government and the people of this country are the biggest beneficiaries, since they directly gain from the infrastructure and other facilities that are put up.
Scholarships enable students that would not have otherwise been able to attain degrees and other professional qualifications due to financial constraints to do so.
This translates to bigger trained and qualified workforce for the country; with invaluable contribution in the various sectors of the economy contribute to positive economic growth in the long run. Its conservation measures ensure that nature’s gifts to the country are well taken care of for posterity and promotion of other industries such as tourism (Blomstrom, 1975).
An educated public is also more informed, and is better placed to make informed decisions and participate effectively in promoting the activities of the company, by virtue of its involvement in improving the welfare of the people. The company’s image is greatly enhanced in Indonesia as a result of the kind of support it offers to the people of that country.
A positive image translates to preferential treatment by the consumers of oil and gas products which are its main areas of concern. This ensures that sales volume is on the increase, and as thus the profit margins. The company is therefore better placed to get involved in even more activities aimed at assisting the community (Crane and Matten, 2007).
Resource Centered responsibility
Premier Oil being a commercial entity requires a workforce to enable the entity carry out its responsibilities in its day to day operations. There is therefore the prospect of exploitation of the country’s resources to achieve this purpose. Reports for 2009 show that majority of the company’s employees were Indonesians.
This is further reinforced by the fact that the company was interested in and did give scholarships to students in universities within its proximity, understandably with a view of recruiting qualified personnel from these institutions.
In addition to employment, there are training programmes and deliberate efforts geared towards personal development for existing employees to ensure they remain current and relevant to the requirements of the industry in their respective departments. Low turnover of employees reflects the company’s fair treatment of the workers at their work stations as well as remunerations (Schmidpeter, 2005).
To the government, hiring of the citizens reduced the unemployment numbers while at the same time increasing the purchasing power of the people. Remittance of income related taxes to the government also benefits it as it contributes to increased revenues. This has a positive effect on the overall gross domestic product of the country denoting economic growth.
The living standards of the people that get employed are also improved, leading to contribution in reduction of the poverty levels in Indonesia. The employees are motivated to put their best efforts in their respective duties, enhancing efficiency in performance and output for the company.
This greater efficiency is reflected in the company’s profits in the long run since it operates at its optimum in terms of labor efficiency and relevance (Saether, 2008).
Critics to These Undertakings
There are numerous arguments that question the relevance and business sense of Premier Oil’s involvement in meeting its social responsibilities in Indonesia with respect to the types of activities it was undertaking. The general outlook by external critics is mainly focused on the priorities of the company as a multi national rather than the role it has to play by virtue of being part of the society.
Critics also argue that the company is not doing enough of corporate social responsibility work. They say that such a big company should be seen to engage in bigger projects. The motive behind this work should be pure good causes rather than an attempt to woo more market share. This is because it kills the very essence of the work.
It is also notable that premier oil is facing major criticisms as concerns its handling of various commodities. Many critics argue that despite hard efforts aimed at helping the public, the company is also doing so much harm to it. The net effect cancels out or even leans to negative. This means that the public is seen to miss out instead of gain.
The company should have policies that duly govern the essence of its corporate work. This should be in line with many other corporate endeavors to ensure that it is not an act in futility. This is what many critics say. On the other hand, there are those who highly laud the company for its hard efforts in its CSR (Buchholtz, 2006).
Conflict of Course
As a business, Premier Oil’s ultimate goal is ideally maximizing profits by enhancing efficiency and reducing operational costs. This calls for limiting outward cash flows especially if such out flows are not related to the operations of the firm.
By diverting some of its revenues towards numerous social courses, Premier Oil is viewed to veer from the purpose of being in business in the first place since the overall effects of such diversions is proportional reduction of the company’s net profits.
In addition, engagement in social responsibility activities is likely to divert the attention of the management thus affecting the company’s efficiency in performance since too much time and effort would be diverted to the non business aspects of the company in the form of social responsibility (Branco, 2007).
However, this is not necessarily the case since the company’s long term sustainability is not only dependant on its volumes of output, but also the command it would have in the environment it operates in. By being part of the Indonesian community, the company has to play its roles that transcend beyond its areas of operation to encourage a cordial coexistence with the various elements of its environment.
The level of involvement is not defined due to the uniqueness of the environment it is in, in terms of need and capacity to respond. Indonesia is a relatively poor country with low literacy levels, strained public utilities and poor infrastructure. These therefore form the stress points that can be addressed albeit in smaller capacities and in the process improving the general conditions (Crowther, 2000).
Limited Repatriations
As a multinational, the company is expected to make its repatriations of part of the earnings it makes to the parent company’s country. These repatriations are usually a percentage of the earnings for a specific period of time.
This means that the amounts sent to the parent company are directly proportional to the earnings for that particular period. Since engagement in social responsibility limits the profit levels for the company, the amounts repatriated are also limited in the process.
The existence of the company in another country such as Indonesia does not guarantee returns of the parent company’s expectations irrespective of its performance there. Sustainability is vital to existence in this country in the first place, thus the need to take measures that are aimed at ensuring that the future of Premier Oil Company in Indonesia is catered for.
This is one of the long term purposes of corporate social responsibility for any firm. Besides, the company’s social responsibilities in the country seek to build the image of the entire corporation all over the world. Goodwill and a respected brand is in themselves an asset to the parent company. By hiring citizens of a country, the firm cuts the extra costs that come with hiring and maintenance of expatriates (Kytle, 2005).
Institutional Interference
Some activities that constitute social responsibility are such that they take the form of the host country’s government responsibility. Provision of social amenities and construction of infrastructure are a good example of what should be left to the government especially because taxes are paid for the same purpose.
When a company like Premier oil gets involved in provision of the same, it is viewed to interfere with the duties and responsibilities of the government in this case of Indonesia. This may lead to punitive measures should there be legislation that provide for action against multinationals that get involved in such activities.
Alternatively, where such moves are permitted, the requirements and procedures to be followed may be very expensive to the company, further decreasing the already reduced profits (Jill, 2008).
For a company like premier oil to be involved with such responsibilities that are essentially the duty of the government, it must have established beyond reasonable doubt that it would get the necessary support and cooperation from the authorities.
For instance, Premier oil was involved in the construction of the health centre with conjunction with the local government of Anambas which had presented the request for development of the projects (Kytle, 2005).
Reference List
Blomstrom, R. (1975) Business and Society: Environment and Responsibility. New York: Blackwell Publishing Ltd.
Branco, M.C. (2007) Positioning Stakeholder Theory within the Debate on Corporate Social Responsibility. Electronic Journal of Business Ethics and Organization Studies, 12: 5-15.
Buchholtz, A. (2006) Business and Society: Ethics and Stakeholder Management. Ohio, Thomson/South-Western Publishers.
Crane, A. & Matten, D. (2007) Business Ethic. Oxford: Oxford University Press.
Crowther, D. (2000) Social and Environmental Accounting. London: Financial Times Prentice Hall.
Jill, S. (2008) Corporate Governance and Accountability. London: John Willey and Sons LTD.
Kytle, B. (2005) Corporate Social Responsibility as Risk Management: A Model for Multinationals. Harvard. Web.
Kytle, B. (2005) Corporate Social Responsibility as Risk Management: A Model for Multinationals: Social Responsibility Initiative Working Paper. Cambridge, MA: John F. Kennedy School of Government, Harvard University.
Saether, K. (2008) Corporate Social Responsibility in a Comparative Perspective: The Oxford Handbook of Corporate Social Responsibility. Oxford: Oxford University Press.
Schmidpeter, R. (2005) Corporate Social Responsibility across Europe. Oxford: Blackwell Publishing Ltd.
Corporate Social Responsibility refers to all the efforts made by an organization to satisfy the interests of the society and its stakeholders. An organization goes beyond the expectations of regulatory bodies to promote the social welfare of its stakeholders and the surrounding community.
Corporate Social Responsibility is not a profit making venture but a way of giving back to the society by guarding stakeholders’ interests. The benefits of Corporate Social Responsibility should trickle down to all the members in the community without any kind of discrimination. Corporate Social Responsibility should begin from within the organization where the welfare of employees is taken care of.
Organizations are always under scrutiny by the, government public and other stakeholders with failure to participate in activities that enhance the welfare of its customers, employees and the community at large dents its leading serious consequences. This essay will compare and contrast different Corporate Social Responsibility models used by organizations.
The financial power exhibited by organizations means that the national economy of any country depends on their general input (Mallin, 2009). The surplus money that organizations have at their disposal should be used on funding environmental conservation and social welfare programs.
The Social Corporate Responsibility concept is understood differently by different organizations. The Corporate Social Responsibility programs and initiatives are implemented using different models that depend on a company’s philosophy on Corporate Social Responsibility (Mallin, 2009). There is always a contention on how far organizations should go when trying to meet societal goals.
Many Corporate Social Responsibility models used by organizations are normally integrated with the overall business model of the organization. Organizations are expected to comply with legal and ethical standards when carrying out corporate and social responsibilities.
The pyramid of Social Corporate Responsibility is a graphic model that defines Corporate Social Responsibility in four parts. This broad definition has some similarities and differences with other Corporate Social Responsibility definitions (Mallin, 2009). The four facets of the Corporate Social Responsibility pyramid define and explain Social Corporate Responsibility from different perspectives.
The Corporate Social Responsibilities are very wide and this calls for a clear understanding of the four perspectives. The economic facet that represents all the economic responsibilities of an organization forms the base of the pyramid (Mallin, 2009). Organizations have shareholders that invest in them with an aim of getting returns from their investment.
The economic facet ensures that shareholders do not lose their investments. Companies have the responsibility of ensuring that investors receive rightful dividends and investment returns on time. It is the responsibility of a company to come up with ways of making profits for investors to enjoy the benefits of their investment.
The economic facet brings a new dimension to the definition of Corporate Social Responsibility because other definitions do not actually highlight the investors’ welfare (Bacher, 2007). A profitable company ensures continuous supply of important goods and services as well as the creation of employments opportunities for the unemployed.
It is the responsibility of an organization to come up with the right strategies and systems in order to improve its revenues for the benefit of shareholders (Bacher, 2007). The second facet of the Corporate Social Responsibility pyramid is the legal facet. Organizations have the responsibility of obeying all the regulations that govern its operations.
The company has to adhere to all the laws and regulations governing environmental conservation, employee protection, consumer protection and contractual agreements.
The legal facet of the pyramid only focuses on the laid down regulations but does not mention the extra effort put in place by organizations beyond the normal legal requirements (Bacher, 2007). Organizations come up with extra initiatives to help the community which supersede the minimal legal requirements.
It is important for organizations to adhere to all regulations because failure to do so puts the company at the risk of being shut down and in the process harming investors and employees (Bacher, 2007). The third facet of the Corporate Social Responsibility pyramid is the ethical facet.
All the activities of an organization should be just and fair without causing any harm to employees, consumers and the environment. It is the responsibility of an organization to observe the law and demonstrate ethical leadership for the benefit of all stakeholders (Bacher, 2007).
Examples of an organization’s ethical responsibilities include waste management, genuine advertisements and how the employees are treated within the organization. It is also ethical for an organization to provide good working conditions for its employees.
The ethical facet emphasizes the fact that Corporate Social Responsibility should begin from within the organization as it spreads to the community (Bacher, 2007). The fourth and final facet of the Corporate Social Responsibility is the philanthropic facet.
This is the facet that is highlighted in almost all models of Corporate Social Responsibility. According to the philanthropic facet, it is the responsibility of organizations to commit its financial and human resources towards improving the quality of life in the community (Anderson, 1989).
Some of the programs that organizations support under the philanthropic facet include health programs, educational programs, civic programs and volunteer programs (Anderson, 1989).
The four facets of Social Corporate Responsibility have critical tensions among themselves (Anderson, 1989). There is a strong relationship between the economic facet and the philanthropic facet because the financial position of an organization determines whether it will participate in philanthropic programs or not.
Philanthropic initiatives require finances and it becomes difficult for an organization that is struggling financially to sponsor philanthropic initiatives.
The economic and legal facets are dependent on each other since it is difficult for an organization to operate and make profits without having complied with all the laws and regulations (Anderson, 1989). All the components of the Corporate Social Responsibility pyramid are very important in the general running of an organization.
The corporate Social Responsibility pyramid forms the basis on which different models are built upon. The similarities between the various Corporate Social Responsibility models are many compared to differences (Bacher, 2007). The objectives of Corporate Social Responsibility are very similar regardless of the model adopted by an organization.
It is important to conduct a feasibility study before choosing the type of Corporate Social Responsibility model to use in a particular community. The two most common models are the constituency and the sustainability model (Bacher, 2007). The constituency model classifies an organization into different groups that have similar interests.
The company management should work hard to ensure the interests of each group are satisfied. Some of the constituencies under the constituency model include shareholders, employees, consumers, creditors and the outside community (Bacher, 2007). This model can lead to conflicts if an organization satisfies the interests of one group and fails to consider other groups.
The interests of shareholders and non-shareholders should be considered in a company’s Corporate Social Responsibility strategies (Bacher, 2007). A company that focuses on making a lot of profits without giving its employees fair remunerations is bound to have conflicts.
The idea of splitting an organization into constituencies is what makes this model to be very unique compared to other models (Schwartz, 2011). The Sustainability model takes a different approach by advocating for economic sustainability for the successful implementation of Corporate Social Responsibility initiatives.
According to the sustainability model, an organization should have long-term strategies to ensure it maintains profitability on a long-term basis (Schwartz, 2011). An organization’s future depends on the economic sustainability of the organization. The well-being of stakeholders is key to an organization’s sustainability.
In conclusion, Corporate Social Responsibility initiatives are aimed at ensuring the interests of all stakeholders are satisfied. Corporate Social Responsibility is a way through which an organization can give back to the society.
The Corporate Social Responsibility pyramid consists of four fundamental components that are necessary for a company to be fully operational (Schwartz, 2011). Corporate social Responsibility models may have different approaches but the goals and objectives are almost similar.
The sustainability and constituency models are the two major models that organizations use when implementing Corporate Social Responsibility initiatives.
The Corporate Social Responsibility pyramid broadens the definition of Corporate Social Responsibility definition to include the economic, legal, ethical and philanthropic components. Corporate Social Responsibility Definitions have many similarities compared to differences because the goals and objectives are almost similar regardless of the model or approach a particular organization adopts.
References
Anderson, J., (1989). Corporate Social Responsibility: Guidelines for top management. New York, NY: ABC-CLIO.
Bacher, C., (2007). Corporate Social Responsibility. New York, NY: GRIN Verlag.
Mallin, C. (2009). Corporate Social Responsibility: A case study approach. New York, NY: Edward Elgar Publishing.
Schwartz, M., (2011). Corporate Social Responsibility: An ethical approach. New York, NY: Broadview Press.
Corporate social responsibility is a term that has gained significant prominence in the past two decades. For a long time, it was held that the only purpose companies were created is to generate profits. While this is true, people began to realize that corporations also have an obligation to the society as prescribed by law.
According to Carroll (1999), the first real definition of corporate social responsibility was provided by Howard Bowen in 1953. Bowen described social corporate responsibility as the obligations of corporations to act in such a manner that is desirable with regards to societal values and objectives.
This definition has undergone various changes and has been refined by various economists to set out a more concise statement on what CSR is about. Carroll (1999) defined corporate social responsibility as a voluntary obligation which a corporation has to the society other than that set by contract or by law.
Joseph Stiglitz: Opinions on Corporate Social Responsibility
Various arguments have been brought up about the topic of corporate social responsibility. Most of the arguments raised are mainly due to differences in definition about Corporate Social Responsibility and the nature of businesses (Hussain, 1999).
Various economists have different views about CSR and understanding these views may pave the way forward in forging a comprehensive standard to guide Corporate Social Responsibility. Joseph Stiglitz is a Nobel Laureate and an influential American economist.
He has written several books on different economic issues and has also served as a policy maker in the Clinton administration (Friedman, 2002). From his various writings and policies, it can be shown that Stiglitz is one of modern proponents on Corporate Social Responsibility.
In his book Making Globalization Work, Stiglitz looks at the problems brought about by globalization and holds the view that globalization victimizes several countries as well as individual citizens. He argues that globalization has led to loss of jobs, unfair competition and an increase in drug cost for serious illnesses such as AIDS (Stiglitz, 2008).
Companies make deals with governments (especially developing countries) such that they can operate with minimum intervention and with little regards to the society in which they operate. In this book he also notes that the environment is one of the most precious resource people have and that governments and corporations have an obligation to reduce the effects of global warming (Stiglitz, 2008).
He notes that pollution, unfair subsidies and tariffs have led to the destabilization of the global economy. He proposes that to solve this problem, more transparent institutions should be created (Stiglitz, 2008). These views basically propose that both governments and institutions should embrace corporate social responsibility if societal problems are to be solved.
In an interview held in 2010 by tikkun Magazine, Stiglitz offers his direct opinion on corporate social responsibility. In the interview, Joseph Stiglitz asserts that the only way to create a fair society is through collective action between the various stakeholders in the economy (Lerner, 2010).
Global poverty, health and environmental degradation can all be mitigated through proper government policies and through voluntary participation of the various stakeholders in the global economy. During the interview, Stiglitz also affirmed his support for the current government policy requiring that all large corporations should get a corporate charter that is renewable every five years.
The Environmental and Social Responsibility Amendment requires that a charter be given to those corporations that have a good past with corporate social responsibility as per a jury of average citizens (Lerner, 2010). He however has reservations on the applicability of the Act as he notes that the definition of corporate social responsibility is diverse and different individuals have different comprehension on its meaning.
He notes that some companies embrace going green but readily offer loans to cigarette companies whose very existence is a form of social irresponsibility (Lerner, 2010). He further adds that there should be precise sets of standards that set the expectations of corporate social responsibility.
From his interviews and books it can be noted that Joseph Stiglitz supports corporate social responsibility but has several worries on the interpretation and application of CSR in companies. He proposes that collective participation is required in order to solve societal problems both at the local and the global scene.
On the issue of Corporate Social Responsibility, he argues that all companies have an obligation to the society and should thus try to act in the best interest of the society.
However due to differences in interpretation and misunderstanding as to what really constitutes Corporate Social Responsibility, it is necessary for the government to set up a given set of standards that would serve as the guidelines for companies to meet the said obligations (Lerner, 2010).
Stiglitz also notes that this government intervention should not be rigid as standards change over time and thus the government should constantly review the standards set for corporate social responsibility.
Conclusion
Joseph Stiglitz has had a very illustrious career both in policy making and as an economist. He is particularly known for his criticisms on the management of the International Monetary Fund, free market economist and the failures of globalization.
Most of his criticisms are based on the fact that most international institutions do not practice corporate social responsibility and are only there to make profit with disregards to the community they are supposed to serve. His views has granted him several prominent position in the government and has also seen him attain top position within the World Bank, at one time serving as the senior vice president.
His work on these subjects has also granted him several prize and award recognition the most notable being the 2001 Nobel Prize in economics. He teaches at various universities in the world and also has been noted to be one of the most referred economists in the world.
Stiglitz also began the Initiative for Policy Dialogue, a corporation dedicated to promoting global development through proper policy making and sound business practices such as CSR.
While many economist do not readily agree as to what constitutes as Corporate Social Responsibility, the consensus is that every corporation has an obligation to the society it serves. Joseph Stiglitz has campaigned vigorously for global development both in his writing, work as a policy maker and activist for change.
Looking at his various achievements, it can be easily shown that people have noticed the need for change and that his beliefs have granted him various advantages. Corporate Social Responsibility is not just a fad but a real development that has slowly gained influenced in the business field.
Reference
Carroll, A. (1999). Corporate Social Responsibility. Business and Society, 28(3), 268 – 295
Friedman, B. (2002). Globalization: Stiglitz’s Case. New York Review of Books, 49(13), 26.
Hussain, S. (1999). The Ethics of ‘Going Green’” The Corporate Social Responsibility Debate. Business Strategy and the Environment, 8, 203-210.
Lerner, M. (2010). Economics for a Global Community – A Conversation with Joseph Stiglitz. Tikkun, 25(5), 12-16.
Stiglitz, J. (2008). Making Globalization Work – The 2006 Geary Lecture. The Economy and Social Review, 39(3), 171-190.
DU Company was first established in 2006. It deals with the connection of mobiles and fixed telephones for individuals, businesses and homes. Five years after its opening, the company experienced a big improvement of about five million people and about forty thousand businesses using their services. These individuals and businesses eventually became their customers.
It has over two thousand working staff to ensure good and timely service delivery. People who use their services come from over sixty countries, they therefore they offer services in various languages so as to reach their customers. Half of the senior management and customer servicing staff are UEA nationals.
They are very committed in providing quality services to the customers. Its corporate governance structure is based on three brand values; friendly, confidence and honesty. It also argues that its workers should not only consider profits or dividends, but should also consider short term and long term effects of its operations to the environment.
Corporate Social Responsibility, CSR, has so many definitions, which depend on the context in which it is being used. For instance, in this context it can be defined as the way a company manages its businesses in order to impact the society in a good way.
That is, how the business can impact the society with the kind of results it obtains, and how the business is committed to improving economic development while improving the living standards of its workforce.
The various definitions of CSR raise a challenge in considering cases for and against CSR. The human rights case for CSR highlights the management by using stakeholder approach as hindering shareholders from getting their property rights. Through CSR, corporations give out money which do not belong to them but rather rightfully belong to the shareholders.
CSR is an act that a company takes to establish good relationship with its customers and to maintain its staff members. Studies show that real men do not do CSR, for instance, Bill Gates of Microsoft, which has obtained a high profile in the recent market and gained substantial dominance.
Gates has however proved to be able to give out a lot of money by his own choice. However, very few businesses operate plainly; some companies have been successful in their social responsibility activities. For example, the Coca Cola Company has achieved more because of its good corporate social responsibility.
Some corporations argue that they do not have time in doing it and prefer going out to sell and make their profit. However, it is meaningless to take consider short term profits. What is important is the long term profitability of the company, which can be achieved through substantial responsibility towards the society and the environment.
So many times the society views companies as bodies which are out there to take advantage of the poor in the society in order to make huge profits for themselves. This can be solved by recognizing CSR as a business framework of creating good for society, and looking into the performance to ensure that its customers are well taken care of so as to improve the quality of its services.
In DU company, the existing shares are owned by various share holders; UEA government owns about thirty nine percent, Abu Dhabi government and Dubai holding own about nineteen percent each, while the rest of the percentage is owned by individual shareholders who are either UEA nationals or non-UEA. The main purpose of the corporation is to maximize the returns of the shareholders (DU, 2012).
Since it is a customer based company with various targets, it makes it their priority to provide sponsorships and events to the society.
There are so many benefits in getting involved with the company, for example; reduced cost, increased business leads, increased reputation, increased staff motivation and development of their skills, better relationships with the community and its environs, management of the risks that might happen to the company and innovations carried out on services, products and processes.
Because of these various benefits, CSR is becoming a major part of all the business processes, and thus it has been incorporated into the company (DU, 2012).
The commitments that this company has include; ensuring that their employees get a chance to exercise their potential; they aim at providing career opportunities rather than just providing a jobs. They take the responsibility of giving back to society thorough providing sponsorships of important events. They also take good care of the environment by minimizing waste output.
The company’s major policy is to seek to be a good corporate citizen in every activity they perform. They ensure that they bring various existing operating principles into a single framework (DU, 2012). In ensuring that every activity they perform is in a corporate manner, they face challenges.
This is because the management requires consultations from all the shareholders, which may take more time to come to a common ground. It therefore becomes a drawback to the company in that, it fails to compete with the government organizations where major decisions are made by the politicians and they little or no say in the decisions that have been made.
This essay will discuss what Corporate Social Responsibility is and three ways in which a corporation may practice the aspects of Corporate Social Responsibility.
Definition of Corporate Social Responsibility
Corporate Social Responsibility refers to the involvement of corporate bodies in social aspects of the consumers in order to attract and retain them. According to this practice, the corporations are like public citizens and they are responsible for the environment. The environment in this case is the people and the general topography surrounding the business.
This responsibility may not be of economic benefit to the company but enhances the image and perception, which the public have about the company. This social responsibility has increasingly become popular in the twenty first century and many organizations are looking for ways in which they may affect their practice in the society (Habisch, 2005).
Aspects of CSR in Tesco
The company of choice in this case is Tesco Group of companies with one of the largest chain stores as well as grocery in the United Kingdom. This is a multinational company with branches in many countries in order to ensure that there is ready market for the products required by the customers. This company can practice the concepts of Corporate Social Responsibility in several aspects such as philanthropy.
Philanthropy is an act of charity where the company assists the needy members of the society through donations. Donations may be in form of food, clothing’s, or money. As a company that serves large number of poor people this may be one of the best ways of ensuring there is progress in the society (Habisch, 2005).
The other aspect in which the company is involved in Corporate Social Responsibility is the environmental aspect. With the current degradation of environment all over the world, the responsibility of conserving resources and reducing waste is one of the best ways of practicing Corporate Social Responsibility. This involves donating funds to organizations that work towards conservation of environment.
The company will also look for ways to get rid of waste to have a clean environment. The store like most of the chain stores packs the products in plastic materials for the consumers.
The company will adopt policies of biodegradable materials in packaging to reduce plastic waste that may be hazardous. The company will also set up a recycling machine for waste plastic materials into new ones rather than making new plastic materials (Fomburun, 2000).
The company in acknowledgement of the need to ensure that there is an equitable society and that young people who finish school do not abuse drug and engage in crime due to lack of employment, it will start a project to train young people on electronics and technical skills.
This project will employ more than one thousand young people and after the completion of the course, they can choose to work in the company or other chain stores. This will play a great role in reduction of unemployment and lead to economic growth (Griffin, 1997).
As part of Corporate Social Responsibility, the company employees will be having a corporate Social day. During this day, the business will close and all the employees go out and clean the streets, remove garbage and assist the needy in the community. This is important for the organization to create a good image and ensure that they benefit the community (Habisch, 2005).
Assisting the disabled is Social corporate responsibility that the organization will be involved. This is because at times, the community neglects the disabled, which creates a society of people who are discriminated. Tesco group of companies will assist the disabled wherever they are in the United Kingdom through donations or the employment programs.
Finally, as part of Social corporate responsibility, the company will pay its employees the highest possible salaries to ensure that they are motivated to continue working and reduce turnover of employees.
Although this is an economic aspect of the company, it is also important part of Social corporate responsibility. This is because it may be impossible for employees of the company to go out and help poor people if they are not financially stable (Griffin, 1997).
The successes of these programs involve proper mechanisms to take care of the corporate social responsibilities of the organization. This will provide the company with accountability mechanisms and ways of ensuring that funds allocated to Social Corporate responsibility are not embezzled.
Conclusion
Social corporate responsibility is an important aspect of the modern day business because it shows that it is not all about making profit alone. Organizations need to have a mechanism that endears them to the community, which they serve. Organizations that neglect these aspects become irrelevant (Fombrun, 2000).
Critiques of Corporate Social Responsibility argue that it is of no benefit to the organization but that is not the truth. The positive sentiment, which the company stimulates from the stakeholders, endears it to the public and maintains the profitability of the organization in the end.
References
Fombrun, C. (2000). The value to be found in corporate reputation. Financial Times, December 4, 2000.
Griffin, J. (1997). The corporate social performance and corporate financial performance debate. Business and Society, (36), 5-31.
Habisch, A. (2005). Corporate social responsibility across Europe. London: Springer Press.
Corporate social responsibility is a self-regulated idea that was introduced in business models in early 1960s. Its major aim was to ensure that businesses were behaving ethically as well as contributing to the economic development, but at the same time the business is improving life quality of its employees, their families, as well as the nearby community and the society as a whole (Crane, et al, 2008).
This has been considered being a positive way through which companies and organizations can impact communities in the name of ensuring that its brand has a positive perception in the eyes of their clients. This has been aiding company mission and guiding stands towards its customers (Garriga & Mele, 2004).
Stakeholders
Going with the definition from Post James (2002), the term stakeholder means “an individual, group of individuals, or even organizations who are either directly or indirectly can affect or be affected by the practices, goals and policies of the organization (Post, 2002).
Stakeholders vary depending on their interests in the company’s practices as well as their power of influencing the company’s decision making processes. In general, stakeholders include:
Shareholders aim at getting profits, dividends as well as the growth of share prices. They always have the powers of electing company directors. Creditors and lenders like bank, forms another group of stakeholders. This groups aims at getting interests on the amount borrowed and maintaining credit rates. On their part, they enforce covenants of loans and provision of banking facilities.
Managers, directors and employees on their part aim at getting salaries as well as satisfaction of jobs. This group makes the company decisions. They can also affect product or service quality as well as staff turnover. Suppliers aim at getting long- term contracts as well as prompt payments. This group has the powers of controlling the availability of products and pricing.
Customers on their part are interested in quality reliability, money value and. product availability. Customers control sales and company revenue. The community targets employment opportunities, environmental and other impacts. Though their influence is indirect, they usually influence planning and opinions.
The government forms another stakeholders group. This group aims at maintaining legal operation, getting revenue through taxes and provision of jobs to its people. This group maintains regulations, subsidizing and even planning.
Managers’ Challenges when dealing with Stakeholders
Stakeholders’ Precedence
Those bestowed with the responsibility of managing any organization opt to be keener on what they do pertaining managing the organization. The various stakeholders ranging from shareholders to the local community have certain specific expectations from the managers. It is thus very challenging to accommodate all of them.
For instance; the issue of understanding factors that are valued by employees is one of the most important factors in management. This is based on the fact that there are many integrated business gains that can be as a result of employee commitment. This might include things like increased productivity, satisfied and loyal customers as well as increased retention rates in the organization.
On the other hand, shareholders prioritize profit maximization. Shareholders will always be willing to invest more in the organization that creates wealth for them, and the reverse is true. As a result, they prioritize more on profit maximization. In contrast to profit maximization, customers prioritize on product/service quality and at competitive prices.
In addition, local communities might be at the same time demanding for cleaner environment. As a result, stakeholders’ priorities differ from one stakeholder to the other. According to Branco & Rodrigues (2007), the responsibility of managers to stakeholders should be an inclusion process involving all groups. However the problem faced by many managers is that every group has its own priorities.
Managers are faced with the issue of ensuring that all collaborations are accepted positively by stakeholders, apart from ensuring that such collaborations have no detrimental effects on the company. As a result, managers are faced with the issue of ensuring that all sides acknowledge network complexities occurring in cross sector relationships.
Politics and Government Legislations
There have been transitions to democratic as well as decentralized political systems which has ended up empowering societies and allowing them to protest against any company management that is not keeping its responsibilities to them. Generally, this is because the managers have no protection from the central government (Waddell, 2011).
In addition, decentralization and democracy has placed most of business teams’ negotiation powers in the hands of local communities as well as local governments, who in one way or the other are demanding from organizations and companies to do more as a payback for the natural resources and cheap labor accessed by such organizations.
This in particular happened in Indonesia in early 2000, where political decentralization along with democratic systems of governance raised corporate social responsibilities in the country (Arthaud-Day, 2005).
On the other hand, there are situations where “Decentralization of power to local governments, combined with corruption and weak law enforcement results to additional administrative costs and bureaucracy” (Waddell, 2000). This implies that, after decentralization corruption shifts from a version that is centralized to a bribe system that is most fragmented.
This is proved by issues like environmental regulation compliance, employment opportunities and license leading to corruption and rent seeking activities. As a result, managers responsible to stakeholders in such scenarios have ended up being confused on which way to follow.
Community and Customer Issues
Managers operate their companies in areas inhabited by different cultures (cultural diversity). For them to learn and adapt to these diversified cultures, more time and effort is required. There are times when stakeholders particularly local communities demands more from the company, hence over depending on the company.
Additionally such diverse communities have diversified perceptions to the company, like in terms of the type of the product produced, as well as its quality. As a result, the new managers might not be in a position to understand their diversified perceptions and attitudes Branco & Buchholtz, 2003).
Costs
In most cases managers are faced with the issue of financial problems. This is based on the fact that, most of them work under tighter budgets as a result of raising material costs, energy costs as well as raising wages. As a result, they are not in a position to fully implement their responsibilities to the company stakeholders (Arthaud-Day, 2005).
Socially Responsibility Behavior by Organizations
Integrity and honesty; enhancing integrity and honesty in all aspects of the organization’s work can be achieved by ensuring that their actions are in good faith, for instance by using assets belonging to the organization only in ways that promote the organization’s policies, other than personal gains by abusing their status in the organization.
Returns; the organization should ensure that it is providing fair returns to their suppliers of both goods and services. This can be achieved by ensuring that the company buys their materials at a fair price, not at a price that will make the company to get more profits, while their suppliers are languishing in poverty due to poor prices of their products (Arthaud-Day, 2005).
Client satisfaction; the organization should be in a position to satisfy both internal and external clients. This can be done by ensuring timely provision of goods and services or even both, at very high quality. As suggested by Waddell, 2011 poor social behaviors will be experienced when organizations don’t care about its clients other than making profits (Crane, et al, 2008).
Environmental observation; the organization should be in a position to respect social environment of the communities in which it operates. This can be done by ensuring that it has maintained an active partnership with neighboring communities. Apart from social environment, “the organization should also be in a position to show respect for the physical environment” (Sullivan & Schiafo, 2005).
This implies that the organization should not engage in activities that pollute the physical environment in any way. This can be achieved if the company can adhere to local, national and international standards of pollution control. In case an organization finds itself violating this concept then, it should be in the forefront to help affected communities to mitigate such hazards.
For instance an oil company that is responsible will not in any way drill at sites that have been reported as being catastrophic as a result of drilling. In addition, due to green technology, responsible companies change ways of packaging their products; for instance, food companies can alter their bags’ composition to ensure that they are biodegradable (Sullivan & Schiafo, 2005).
Acknowledging people; organizations should recognize that the most valuable resources they have are the people. In achieving this, the organization should be in a position to “respect human diversity, provide equal opportunity, and reward job performance” (Waddell, 2011). Organizations lacking gender equity, paying low salaries to their employees and providing harsh working conditions, are termed as poor social behaviors.
Cultural values; companies that have enhanced good social responsibility underlay organization cultures that promote strong values. Such organizations don’t punish their people for coming forward to report a particular problem. This is because punishing them is a bad social responsible behavior. Good ones have gone a step higher by even allowing their people to air their problems anonymously.
Such organizations have even set up suggestion box or phone numbers to report any incident. On the other hand, organizations that have enhanced poor social responsibility behaviors don’t allow their employees to report any ethical concern to their seniors (Griffin, 1993).
Social Responsibility Approaches
There have been arguments supporting while others opposing corporate social responsibilities. As a result depending on managers’ belief, organizations have approached social responsibility issues differently.
Arguments Against
Economic; some managers particularly American managers like Allegheny Technologies and Ford are of the view that the main responsibility of any business is to create wealth for its shareholders, provided that it is adhering to the laws and regulations. Going with this perception many participants undertaking self-interested actions in the free market, starting with utility principles lead to positive results for communities.
Such companies have argued that, in case free market operations are not in a position of solving social problems then it is the duty of governments to deal with such issues, but not businesses. Such businesses enjoy lots of profits, pay taxes and pressurize governments to play their role in solving social responsibilities like building schools and hospitals (Post, et al, 2002).
Competitive argument; it has been argued that carrying out corporate social responsibilities come with a fee, hence increasing business costs. These costs can even go to an extent that companies internalize the expenses from social responsibility practices. For instance, Intel has argued that their CSR in developing countries have hurt their competitive advantage position as compared to other organizations.
“Since CSR is increasingly becoming a global concern, the differences in societal expectations around the world can be expected to lessen in the coming years” (Arthaud-Day, 2005). As a result, this point has been very strong in the global competitive surrounding. This is because there are some organizations in some countries using their assets to deal with social responsibilities.
However their competitors are not doing the same in other countries; as a result there are higher chances that these organization practicing social responsibilities are disadvantaged; since they will have to sell their products at higher prices as compared to others.
Managerial capabilities; there are organizations which are just ill-equipped in addressing social issues. There are managers who are well trained on matters dealing with financial issues, marketing and selling, processes and operations; however, such managers have no idea on issues dealing with social issues.
As a result such managers have no idea, experience or even skills required in dealing with social responsibilities. They believe that such involvement might end up making things worse. Most managers who have such minds have ended up failing.
On the other hand, there are those who have just specialized in areas they think they can do better; for instance provision of quality services and goods, and selling them at cheaper prices to individuals needing them. Such organizations have gained lots of profits due to customer loyalty (Carroll & Buchholtz, 2003).
Arguments For
Solving social problems; companies like Coca Cola and Nokia thinks that, since their organizations have created social problems, then it is their responsibility to solve them.
This view has criticized “production, marketing, accounting, and environmental practices of corporations,” (Carroll & Buchholtz, 2003) because, they believe that this are some of the processes and operations that creates social problems. This view has resulted to quality and safe products as well as from operating in open and honest environment (Waddell, 2000).
Self-interest; BMW believes that it is their responsibility to undertake social responsibilities to ensure that in future they have conducive environment to operate in. they have not only concentrate on short term gains, but realized the importance of investing in communities and societies.
In addition engaging in social responsible activities can be advantageous to any organization as it might prevent government interventions in terms of new laws that might ultimately prove to be deleterious to the organization (Carroll & Buchholtz, 2003).
Resource availability; there are those who have argued that private entities should engage in social responsible activities because they have resources to do so. As a result, some organizations have ended up utilizing their financial and human resources to make the world a better place (Sullivan & Schiafo, 2005).
Conclusion
Social corporate responsibility is an issue which has received mixed reactions. In achieving their responsibilities towards organizations’ stakeholders, managers are faced with various issues, some encouraging them to go on, while others hindering their operations.
As a result the perception of organizations towards being socially responsible varies from one organization to the other depending on whom the manager want to serve first. However it is good for managers to avoid unethical behaviors which might tarnish the organization’s brand name.
References
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Branco, M. & Rodrigues, L. (2007). Positioning stakeholder theory within the debate on corporate social responsibility. Electronic Journal of Business Ethics and Organization Studies. 12(4): 5–15
Carroll, A. & Buchholtz, K. (2003). Business and society: Ethics and stakeholder management. Australia: Thomson South-Western.
Crane, A. et al. (2008). The Oxford handbook of corporate social responsibility. Oxford: Oxford University Press.
Garriga, E. & Mele, D. (2004). Corporate social responsibility theories: Mapping the territory. Journal of Business Ethics. 53 (2): 51–71.
Griffin, W. (1993). Management. Geneva: Houghton Mifflin.
Post, J. (2002). Redefining the corporation: Stakeholder management and organizational wealth. Palo Alto, California: Stanford University Press.
Post, J. et al. (2002). Business and society. Boston: McGraw-Hill.
Sullivan, N. & Schiafo, R. (2005, June 12). Talking green, acting dirty (Op-Ed). New York Times. A1.
Waddell, J. (2011).Contemporary management. New York: McGraw-Hill Education.
Waddell, S. (2000). New institutions for the practice of corporate citizenship: Historical intersectoral and developmental perspectives. Business and Society Review. 105, 323–345