Corporate Social Responsibility (Blog 2)

Definition to Corporate Social Responsibility

Jamali (2015) explains that CSR is the obligation for business organisations to impact the society in which they operate beyond the singular motive of pure profit maximization and further she emphasise the role of HRM in the development of internal CSR initiatives by claiming that the nature of the organisation’s CSR objectives has impact on the role of HRM in developing these objectives. Sahlin-Anderson (2006), considers CSR as a global trend incorporating business corporations, states, international organizations and civil society organizations

Human Resource is a strategic partner in an organisation and as such, can help drive the formulation of the CSR strategy. This is the case especially in companies where CSR is positioned in HR department and thus the HR manager has a key role when it comes to CSR strategy development (Strandberg, 2009). According to Cohen (2010), HR can leverage CSR strategies to deliver greater benefits for the business, for employees, for society, for the environment and ultimately, for HR professionals themselves.

Carroll’s Pyramid of Corporate Social Responsibility

This covers the Economic, Legal, Ethical and Philanthropic responsibilities of an organisation.

Economic responsibility: Companies have a responsibility of an economic nature, since they have a responsibility to produce goods and services that society wants and sell them in a profitable way. The basis for the functioning of a company is producing and selling goods for profit.

Legal liability: The company expects companies to undertake their economic mission within the legal requirements established by the legal system of society. It is expected that the company complies with laws and regulations or that the products and services offered by companies have security standards and comply with existing environmental regulations.

Ethical responsibility: Represents ethical behaviors that are expected that companies have. This has become more important, because the tolerance of society against unethical behavior is dwindling. The decision should consider the consequences of their actions, honoring the rights of others, fulfilling obligations and avoiding harming others.

Philanthropic responsibility: Represents discretionary actions taken by the company in response to social expectations. They respect the activities undertaken by companies assuming a social role that goes beyond the legal and ethical obligation, assuming an increasingly strategic importance. Examples: charitable contributions, employee training, extension of benefits to employees' families.

The Benefits of Corporate Social Responsibility

Corporate Social Responsibility (CSR) refers to a company's efforts to operate in an economically, socially, and environmentally sustainable manner. There are several benefits of CSR for businesses, including:

1. Improved reputation: CSR activities can improve a company's reputation and help build trust with customers, employees, and other stakeholders. This can lead to increased brand loyalty and a competitive advantage.

2. Increased employee engagement: CSR initiatives can boost employee morale and motivation by giving them a sense of purpose and pride in their work. This can lead to higher retention rates and increased productivity.

3. Cost savings: CSR activities can help companies save costs by reducing waste, improving efficiency, and identifying new business opportunities. For example, implementing green initiatives can help reduce energy costs and waste disposal fees.

4. Enhanced relationships with stakeholders: CSR activities can help build stronger relationships with stakeholders such as customers, suppliers, and the local community. This can lead to increased collaboration and support for the company's business objectives.

5. Reduced risk: Companies that prioritize CSR are less likely to face legal, reputational, and financial risks. For example, implementing strong ethical standards can help prevent corruption and fraud.

Overall, CSR can help companies create long-term value by promoting sustainability and improving relationships with stakeholders. It can also help companies differentiate themselves in the marketplace and build a stronger brand.

Advantages of CSR

Corporate Social Responsibility (CSR) can provide several advantages to businesses. Here are some of the key advantages:

1. Enhanced reputation: By engaging in CSR activities, a company can improve its reputation and build trust with stakeholders. This can lead to increased customer loyalty and higher sales.

2. Improved employee morale: CSR initiatives can create a sense of purpose for employees and increase their motivation and job satisfaction. This can lead to higher productivity and lower turnover rates.

3. Increased competitiveness: CSR can help a company differentiate itself from competitors and appeal to customers who value socially responsible companies.

4. Cost savings: CSR can lead to cost savings by reducing waste, improving efficiency, and identifying new business opportunities.

5. Improved stakeholder relationships: CSR can help build stronger relationships with stakeholders such as customers, suppliers, and the local community. This can lead to increased collaboration and support for the company's business objectives.

6. Reduced risk: Companies that prioritize CSR are less likely to face legal, reputational, and financial risks. For example, implementing strong ethical standards can help prevent corruption and fraud.

Overall, CSR can provide significant advantages to businesses by promoting sustainability, building stronger stakeholder relationships, and improving the bottom line.

Disadvantages of CSR

While there are many advantages to engaging in Corporate Social Responsibility (CSR) initiatives, there are also some potential disadvantages that businesses should be aware of. Here are some of the key disadvantages:

1. Increased costs: Implementing CSR initiatives can be expensive, and businesses may need to invest in new technologies, training, and other resources to achieve their goals. This can increase operating costs and reduce profits.

2. Diluted focus: Focusing on CSR initiatives can take time and resources away from core business activities, which can affect the company's performance and competitiveness.

3. Unintended consequences: CSR initiatives can have unintended consequences, such as increased regulatory scrutiny or negative reactions from stakeholders who do not agree with the company's approach.

4. Greenwashing: Some companies engage in "greenwashing," which involves making exaggerated or false claims about their environmental or social impact. This can damage the company's reputation and lead to legal or financial consequences.

5. Difficult to measure impact: Measuring the impact of CSR initiatives can be challenging, and it may be difficult to demonstrate a clear return on investment.

Overall, while CSR can provide significant benefits, businesses should carefully consider the potential disadvantages before committing to initiatives. It is important to develop a clear strategy and measure the impact of CSR initiatives to ensure they are aligned with the company's goals and objectives.

References

Carroll, A.B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34(4), 39-48.

European Commission. (2011). A renewed EU strategy 2011-14 for Corporate Social Responsibility. Retrieved from https://ec.europa.eu/social/BlobServlet?docId=6399&langId=en

McWilliams, A., & Siegel, D. (2001). Corporate social responsibility: A theory of the firm perspective. Academy of Management Review, 26(1), 117-127.

Mohr, L.A., Webb, D.J., & Harris, K.E. (2001). Do consumers expect companies to be socially responsible? The impact of corporate social responsibility on buying behavior. Journal of Consumer Affairs, 35(1), 45-72.

Porter, M.E., & Kramer, M.R. (2006). Strategy and society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78-92.

World Business Council for Sustainable Development. (2019). Corporate social responsibility. Retrieved from https://www.wbcsd.org/Sector-Projects/Circular-Economy/Resources/Corporate-Social-Responsibility