The Truth About Corporate Social Responsibility

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Table of Contents

Introduction
Background Information
Summary
Evaluation
Conclusion

Introduction

The following paper is a review of the article “The truth about CSR“ by Rangan, Chase, and Karim. The aim of the review is to analyze main points of the article, validate the integrity of claims, and conclude on its value for business practices. The main point of the article is a misunderstanding of the ultimate goals of CSR initiatives by the majority of companies and the resulting discrepancies in its implementation. To address the issue, the article outlines a four-step framework aimed at improving the situation.

Background Information

Nowadays, corporate social responsibility (CSR) is widely recognized as both necessary and beneficial for business practices. Managerial departments implement it at certain stages of their company’s operations to improve corporate image, align the organization’s goals with a broader range of responsibilities, and achieve specific milestones. Nevertheless, on many occasions the goals of CSR get misinterpreted – most often they are perceived as means to directly affect the success of business practices and increase profitability of the firm.

As a result, the implementation process is uneven, fragmented, misdirected, uncoordinated, and ultimately faulty. An even more common scenario is the implementation of CSR with a specific outcome in mind, which may or may not be consistent with its intended goal of addressing the environmental and social specificities and improving the overall corporate image. Thus, there is a growing demand for a revision of the current approach in the form of reconsidered meaning of the term, its core goals, and essential steps for its implementation. Consequently, a research highlighting the common misinterpretations and reasons behind the shortcomings of CSR implementation could be utilized for the creation of meaningful guidelines to streamline the process and eliminate unnecessary steps.

Summary

An article by Rangan, Chase, and Karim provides an overview of perception of CSR by the managers engaged in its implementation. According to the survey conducted by the authors, most of the companies which utilize the approach display inconsistencies in its understanding and execution. To illustrate them, the authors suggest categorization of the CSR activities in three distinct theaters: focus on philanthropy, improvements of the operational effectiveness, and introduction of new business models. The results of the research indicate the tendency to recognize a specific theater as a priority and focus the effort on achieving certain goals within it. While not fundamentally wrong, such view reflects the disparate nature of actions.

Simply put, different managerial departments (and, on some occasions, managers within a department) tend to operate in separation, out of synch with other departments, and more often than not without the involvement of a CEO. This naturally leads to poor outcomes. Even more importantly, around 30 percent of respondents report increased costs and increased revenue as either actual or expected result of CSR initiatives. The latter is arguably inevitable since most of CSR programs have a spillover effect of improving corporate image and, by extension, customer satisfaction, employee retention, and company reputation. Nevertheless, CSR is not meant to directly impact the said variables. Therefore they should not be used as performance indicators. To address this, the authors suggest several improvements to change the managerial perspective of CSR.

Since its primary goal is the alignment of company’s business activities with its social and environmental setting, the programs must be coherent with the mentioned factors, fairly distributed alongside theaters, and properly synchronized with the vision and mission of the company. To successfully achieve this condition, the authors propose four steps. First, the selected initiatives must be inspected for consistency with the intended goals and those which show poor or no alignment should be either eliminated or adjusted. The simplest (but not necessarily the most effective) way of doing it is focusing on one objective and concentrating effort on one field, although it would be more appropriate to utilize the technique of waste elimination. Once the focus of operations is determined, the next step is to develop relevant metrics which would allow evaluation of performance.

As was mentioned above, one of the most common approaches is to observe the financial impact associated with CSR to conclude on its success. However, such approach does not align well with ultimate goals of CSR initiatives and on many occasions displays a limited connection to its viability. Instead, a range of monitoring tools must be developed, including, but not limited to, public involvement, performance, customer satisfaction, and societal value. Third, once the programs in each theater are coordinated and properly controlled, it is necessary to synchronize them across theaters to make sure all of the company’s initiatives contribute and reinforce each other and create a comprehensive holistic strategy which is consistent with the company’s goal and vision. Finally, once the links and communication channels are established across three theaters, it becomes possible to create an interdisciplinary CSR strategy with a vertical hierarchical structure. The authors suggest a dedicated entity or an individual tasked with overseeing and coordinating the CSR operations. As a result of these steps, a coherent CSR activity is expected to emerge which is both effective in reaching its objectives and beneficial in a financial sense.

Evaluation

The article presents a comprehensive overview of the current state of CSR initiatives across different companies. While the research is generalized and, according to the authors, biased in favor of the companies with advanced CSR background, it nevertheless delivers an important message and supports the authors’ central lesson of inconsistencies within the CSR domain. The intended goal of the article, however, is to suggest the alternative approach which would hopefully improve the matters. Admittedly, the proposed framework displays an overall consistency and integrity; however, there is no way of estimating its applicability.

Therefore, the viability of the suggested approach is currently purely theoretical. Furthermore, the complexity of the outlined theaters and their interconnection and mutual dependence limit the possibility of estimating the weight of the proposed intervention. In other words, the multifaceted and porous nature of the theaters prevents us from definitively ascribing the success of the undertaken initiatives to the performed steps or introduced components. Despite this, the general premise of coordination and consistency is ultimately beneficial and therefore is recommended for application within managerial practices.

Conclusion

The article describes an important issue in the CSR implementation field and suggests a way of improving the matters in the form of a four-step framework. Both points are important to improve the understanding although, admittedly, the research undertaken by the authors is insufficient to determine the weight of the issue or effectively measure the success of the suggested framework against the baseline. It would be thus beneficial to extend our understanding by performing an additional inquiry into the issue. Additionally, evaluation tools must be devised which could account for the multifaceted nature of the suggested fields to assess the success of each step in separation from the financial performance of the business entity.

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Introduction

Background Information

Summary

Evaluation

Conclusion

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