Business And Society A Strategic Approach To Social Responsibility PdfBy Jaisonmendez In and pdf 29.11.2020 at 13:56 9 min read
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- A literature review of the history and evolution of corporate social responsibility
- Business and Society: A Strategic Approach to Social Responsibility
- Corporate social responsibility
Metrics details. There is a long and varied history associated with the evolution of the concept of Corporate Social Responsibility CSR. However, a historical review is missing in the academic literature that portrays the evolution of the academic understanding of the concept alongside with the public and international events that influenced the social expectations with regards to corporate behavior. The aim of this paper is to provide a distinctive historical perspective on the evolution of CSR as a conceptual paradigm by reviewing the most relevant factors that have shaped its understanding and definition, such as academic contributions, international policies and significant social and political events.
A literature review of the history and evolution of corporate social responsibility
Corporate social responsibility CSR is a type of international private business self-regulation  that aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in or supporting volunteering or ethically-oriented practices. While it has been considered a form of corporate self-regulation  for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organizations to mandatory schemes at regional, national, and international levels.
Considered at the organisational level, CSR is generally understood as a strategic initiative that contributes to a brand's reputation. With some models, a firm's implementation of CSR goes beyond compliance with regulatory requirements and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law".
Furthermore, businesses may engage in CSR for strategic or ethical purposes. From a strategic perspective, CSR can contribute to firm profits, particularly if brands voluntarily self-report both the positive and negative outcomes of their endeavors. CSR strategies encourage the company to make a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others.
For example, a CEO may believe that harming the environment is ethically objectionable. Proponents argue that corporations increase long-term profits by operating with a CSR perspective, while critics argue that CSR distracts from businesses' economic role. A study compared existing econometric studies of the relationship between social and financial performance, concluding that the contradictory results of previous studies reporting positive, negative, and neutral financial impact, were due to flawed empirical analysis and claimed when the study is properly specified, CSR has a neutral impact on financial outcomes.
In line with this critical perspective, political and sociological institutionalists became interested in CSR in the context of theories of globalization , neoliberalism and late capitalism. Some institutionalists viewed CSR as a form of capitalist legitimacy and in particular point out that what began as a social movement against uninhibited corporate power was transformed by corporations into a "business model" and a " risk management " device, often with questionable results.
CSR is titled to aid an organization's mission as well as serve as a guide to what the company represents for its consumers. Business ethics is the part of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment.
It is widely accepted that CSR adheres to similar principles, but with no formal act of legislation. It is also called corporate sustainability, sustainable business, corporate conscience, corporate citizenship, conscious capitalism, or responsible business. Since the s,  corporate social responsibility has attracted attention from a range of businesses and stakeholders. A wide variety of definitions have been developed but with little consensus.
Part of the problem with definitions has arisen because of the different interests represented. A business person may define CSR as a business strategy, an NGO activist may see it as ' greenwash ' while a government official may see it as voluntary regulation.
In the s, two law professors, A. Berle and Merrick Dodd, famously debated how directors should be made to uphold the public interest: Berle believed there had to be legally enforceable rules in favor of labor, customers and the public equal to or ahead of shareholders, while Dodd argued that powers of directors were simply held on trust.
Corporate social responsibility has been defined by Sheehy as "international private business self-regulation. The definitions reviewed included the economic definition of "sacrificing profits," a management definition of "beyond compliance", institutionalist views of CSR as a "socio-political movement" and the law's own focus on directors' duties.
Further, Sheehy considered Archie Carroll's description of CSR as a pyramid of responsibilities, namely, economic, legal, ethical, and philanthropic responsibilities. Carroll extended corporate social responsibility from the traditional economic and legal responsibility to ethical and philanthropic responsibility in response to the rising concerns on ethical issues in businesses. Companies express this citizenship 1 through their waste and pollution reduction processes, 2 by contributing educational and social programs and 3 by earning adequate returns on the employed resources.
Businesses have changed when the public came to expect and require different behavior [ Most consumers agree that while achieving business targets, companies should engage in CSR efforts at the same time. Consumers also believe that retailers selling local products will gain loyalty. However, environmental efforts are receiving negative views given the belief that this would affect customer service. Mohr et al. A more common approach to CSR is corporate philanthropy. This includes monetary donations and aid given to nonprofit organizations and communities.
Donations are made in areas such as the arts, education, housing, health, social welfare and the environment, among others, but excluding political contributions and commercial event sponsorship. Creating shared value or CSV is based on the idea that corporate success and social welfare are interdependent. A business needs a healthy, educated workforce, sustainable resources, and an adept government to compete effectively.
For society to thrive, profitable and competitive businesses must be developed and supported to create income, wealth, tax revenues, and philanthropy. CSV gives the impression that only two stakeholders are important — shareholders and consumers. Many companies employ benchmarking to assess their CSR policy, implementation, and effectiveness.
Benchmarking involves reviewing competitor initiatives, as well as measuring and evaluating the impact that those policies have on society and the environment, and how others perceive competitor CSR strategy.
According to Barney , "formulation of the RBV, sustainable competitive advantage requires that resources be valuable V , rare R , inimitable I and non-substitutable S. However, should competitors imitate such a strategy, that might increase overall social benefits. Firms that choose CSR for strategic financial gain are also acting responsibly.
RBV presumes that firms are bundles of heterogeneous resources and capabilities that are imperfectly mobile across firms. This imperfect mobility can produce competitive advantages for firms that acquire immobile resources.
They concluded that managers could determine the appropriate level of investment in CSR by conducting cost-benefit analysis in the same way that they analyze other investments. Reinhardt found that a firm engaging in a CSR-based strategy could only sustain an abnormal return if it could prevent competitors from imitating its strategy. The relationship between corporate social responsibility and a firm's corporate financial performance is a phenomenon that is being explored in a variety of research studies that are being conducted across the world.
Based on these research studies, including those conducted by Sang Jun Cho, Chune Young Chung, and Jason Young, a positive relationship exists between a firm's corporate social responsibility policies and corporate financial performance.
To investigate this relationship, the researchers conducted a regression analysis and preceded the analysis with the provision of several measures that they utilized to serve as proxies for key financial performance indicators i. Initially, CSR emphasized the official behaviour of individual firms. Later, it expanded to include supplier behaviour and the uses to which products were put, and how they were disposed of after they lost value. In the 21st century, corporate social responsibility in the supply chain has attracted attention from businesses and stakeholders.
A corporations' supply chain is the process by which several organizations including suppliers, customers, and logistics providers work together to provide a value package of products and services to the end-user, who is the customer.
Corporate social irresponsibility in the supply chain has greatly affected the reputation of companies, leading to a lot of costs to solve the problems. For instance, incidents like the Savar building collapse , which killed over people, pushed companies to consider the impacts of their operations on society and the environment. On the other side, the horsemeat scandal of in the United Kingdom affected many food retailers, including Tesco, the largest retailer in the United Kingdom,  leading to the dismissal of the supplier.
Corporate social irresponsibility from both the suppliers and the retailers has greatly affected the stakeholders who lost trust in the affected business entities, and despite the fact that sometimes it is not directly undertaken by the companies, they become accountable to the stakeholders. These surrounding issues have prompted supply chain management to consider the corporate social responsibility context. Wieland and Handfield suggested that companies need to include social responsibility in their reviews of component quality.
They highlighted the use of technology in improving visibility across the supply chain. Corporate social responsibility includes six types of corporate social initiatives: . All six of the corporate initiatives are forms of corporate citizenship.
However, only some of these CSR activities rise to the level of cause marketing , defined as "a type of corporate social responsibility CSR in which a company's promotional campaign has the dual purpose of increasing profitability while bettering society. Companies generally do not have a profit motive when participating in corporate philanthropy and community volunteering.
On the other hand, the remaining corporate social initiatives can be examples of cause marketing, in which there is both a societal interest and profit motive. CSR may be based within the human resources , business development or public relations departments of an organisation,  or may be a separate unit reporting to the CEO or the board of directors.
An engagement plan can assist in reaching the desired audience. A corporate social responsibility individual or team plans the goals and objectives of the organization. As with any corporate activity, a defined budget demonstrates commitment and scales the program's relative importance. Social accounting is the communication of social and environmental effects of a company's economic actions to particular interest groups within society and to society at large.
Social accounting emphasizes the notion of corporate accountability. Crowther defines social accounting as "an approach to reporting a firm's activities which stresses the need for the identification of socially relevant behavior, the determination of those to whom the company is accountable for its social performance and the development of appropriate measures and reporting techniques. Reporting guidelines and standards serve as frameworks for social accounting, auditing, and reporting:.
In nations such as France, legal requirements for social accounting, auditing and reporting exist, though international or national agreement on meaningful measurements of social and environmental performance has not been achieved.
Many companies produce externally audited annual reports that cover Sustainable Development and CSR issues "Triple Bottom Line Reports" , but the reports vary widely in format, style, and evaluation methodology even within the same industry.
Critics dismiss these reports as lip service, citing examples such as Enron 's yearly "Corporate Responsibility Annual Report" and tobacco companies' social reports. In South Africa, as of June , all companies listed on the Johannesburg Stock Exchange JSE were required to produce an integrated report in place of an annual financial report and sustainability report.
This requirement was implemented in the absence of formal or legal standards. One of the reputable institutions that capital markets turn to for credible sustainability reports is the Carbon Disclosure Project , or CDP.
Corporate social responsibility and its resulting reports and efforts should be verified by the consumer of the goods and services. Due to an increased awareness of the need for CSR, many industries have their own verification resources.
The United Nations Global Compact provides frameworks not only for verification, but also for reporting of human rights violations in corporate supply chains. The rise of ethics training inside corporations, some of it required by government regulation, has helped CSR to spread. The aim of such training is to help employees make ethical decisions when the answers are unclear.
Organizations see increased employee loyalty and pride in the organization. Common CSR actions include: . Social License to Operate can be determined as a contractual grounds for the legitimacy of activities and projects company is involved in.
As stated in Enduring value: the Australian minerals industry framework for sustainable development the concept of the 'social license to operate', then defined simply as obtaining and maintaining broad community support and acceptance. Unless a company earns and maintains that license social license holders may intend to block project developments; employees may leave the company for a company that is a better corporate citizen: and companies may be under ongoing legal challenge.
In research of Requisite Organization , Elliott Jaques defines Social License to Operate for the company as the social contract the company has with the social license holders employees, trade unions, communities, government for them to manifest positive intention to support the business short- and long-term objectives by "providing managerial leadership that nurtures the social good and also gives the foundation for sustainable growth in organizational results.
The primary objective for the companies is to obtain and maintain the Social License to Operate. Based on the Requisite Organization to achieve this goal a company needs to:. Although a positive relationship has been shown to exist between CSR and a firm's corporate financial performance, results from these analyses may need to be examined under different lenses for emerging and developed economies, especially since firms based in emerging economies oftentimes have weak firm-level governance.
For companies operating in emerging markets, engaging in CSR practices enables widespread reach into a variety of outside markets, an improved reputation, and stakeholder relationships. A large body of literature exhorts business to adopt non-financial measures of success e. The business case for CSR  within a company employs one or more of these arguments:. Profit is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital unlike accounting definitions of profit.
Business and Society: A Strategic Approach to Social Responsibility
Corporate social responsibility CSR is a type of international private business self-regulation  that aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in or supporting volunteering or ethically-oriented practices. While it has been considered a form of corporate self-regulation  for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organizations to mandatory schemes at regional, national, and international levels. Considered at the organisational level, CSR is generally understood as a strategic initiative that contributes to a brand's reputation. With some models, a firm's implementation of CSR goes beyond compliance with regulatory requirements and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law". Furthermore, businesses may engage in CSR for strategic or ethical purposes. From a strategic perspective, CSR can contribute to firm profits, particularly if brands voluntarily self-report both the positive and negative outcomes of their endeavors. CSR strategies encourage the company to make a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others.
Corporate social responsibility
Corporate Social Responsibility CSR has come a long way, morphing from a nice thing to do to what it is today: a necessity for a successful business. Wealthy businessman and philanthropist Andrew Carnegie challenged wealthy people to support social causes, following his belief in the Gospel of Wealth. Rockefeller, taking inspiration from Carnegie, followed suit in donating more than half a billion dollars.
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