Social responsibility has become the hall mark of mature, global civilization………. The primary duty of the management is to work for the shareholders who expect maximum returns on their investment. The policies of profit making and social responsibility are mutually exclusive and hence any contributions made for social causes reduce profits. Economists like Milton Friedman believe that such practices conflict with the basic premises underlying U.
In a free and democratic economy, all groups are expected to take care of their own problems and responsibilities: Why should the managers be concerned with the interests of the workers and consumers? The prices should be fixed by the economic forces of supply and demand and not by the capabilities of the consumers to pay. The consumers must look after their own interests.
Similarly, the workers should be responsible for their own safety and well being. The management is not properly equipped and trained in handling social issues and activities: It would be better to leave social interests in the hands of people more skilled in social programmes such as teachers, social workers and so on.
Furthermore, management is so heavily involved in enormously imposing tasks of managerial functions that it will not be desirable to impose an additional task of social responsibility.
Businesses control the economy of the country. Giving them the social power as well would be detrimental to the general and optimal welfare of the society. Such social power could influence political results and hence legislative results which would undermine the true principles of democracy. For example, contributions to a favourite charity of a legislator could tip the legislation in favour of given business which would be counter to democratic principles.
There are a number of social issues where the businesses are expected to get involved. The managerial responsibility to various constituencies was discussed in Chapter 1. CSR activities have become more proactive and target those segments that may affect the future operations of businesses in domestic and international markets Tengblad and Ohlsson, , p. To this end, Carroll and Shabana explain that engaging in proactive CSR activities relating to the environment reduces the risk and cost of doing business.
The cost and risk are mitigated in the sense that addressing environmental issues today would save the companies from stringent future regulations that may aim to conserve the environment , p. This trend has been seen in the increased focus on climate change by international businesses.
Recent financial reporting trends show that a majority of corporate entities consider CSR as an important element in their performance statements.
The adoption of CSR in financial statements can increase the amount of relevant information that is available to stakeholders both in the domestic and foreign markets Lemus, , p. Today, people have become more aware of business practices and their social, economic and environmental consequences.
As the level of awareness relating to the effects of global trade increases among stakeholders, the expectation for more information rises, hence the need for businesses to disclose their CSR engagements. Although there is no legal requirement to make such disclosures, the inclusion of CSR fosters effective and transparent communication to stakeholders Singh and Sater, Forbes.
By so doing, companies improve their investment returns due to improved brands. However, companies have the liberty choose on how to disclose information relating to charitable works, environmental stewardship, and community involvement among other initiatives Singh and Sater, Forbes. Auditing of accounts is another area that has received considerable attention in regards to CSR.
The audit function ensures that reporting practices conform to governance practices. Evidence suggests that companies that include CSR in their financial reports receive high-quality standards as opposed to those that disregard CSR in their financial statements.
Since high-quality standards have a relationship with financial improvement, less financial risk, the company reputation and higher earnings Lemus, , p. Such favorable projection of corporate institutions is essential for sustainable business operations. For this reason, companies can be expected to continue with the inclusion of CSR in their annual performance reports.
The survey found that businesses are wasting no time in interpreting the implications of CSR and acting on them. When companies talk about CSR publicly, they tend to describe it in terms of philanthropy. The survey, however, found that businesses have actually assimilated a much more strategic view; 68 percent are now utilizing CSR as an opportunity and a platform for growth. The survey suggests that companies are finding that many CSR initiatives, including those that reduce energy consumption or benefit the environment, help reduce overall cost structures or increase productivity.
For example, Catalyst Paper Corporation, a Canadian pulp and paper company, uses its own by-products to power its operations. This view holds that, if business is to have a healthy environment in which to operate in the future, it must take actions now that will ensure its long-term sustainability.
A second argument in favor of CSR is that it will fly under the radar when it comes to government regulation. These two views maintain that, because business has a wealth of management talent, practical expertise and capital, and because so many others have tried and failed to solve social problems, business should be given the chance to do as its within their capability. Another justification for CSR holds that being proactive is better than being reactive. Finally, it has been argued that business should engage in CSR because the public strongly supports it.
Today, the public believes that, in addition to its pursuits of profits, business should be responsible to their workers, communities and other stakeholders, even if making things better for them requires companies to sacrifice some profits Bernstein Many of these arguments for and against CSR have been around for decades and published in many journals.
They certainly present the legitimate perspective that there are, indeed, two sides of the argument with respect to almost any concept.
Organizations are fast learning that CSR is viewed favorably in the markets in which they operate. Businesses have responsibilities beyond just profit making and good CSR often increases profits.
Organizations now pursue CSR strategies to defend their reputations, justify benefits over costs, integrate with their broader strategies and learn, innovate and manage risk Zadek CSR has evolved over time and we can look at it from two different viewpoints. The social viewpoint is one where society has become more aware of the consequences and negative externalities associated with business activity. The second viewpoint is from an economic standpoint.
The Organizations have become involved in more socially accepted practices that are viewed more favorably and participate in events deemed necessary or important. We see and hear about this everyday on television in magazines etc. Rainforest alliance certification is one of the best examples, which highlights this. The Rainforest Alliance also works to connect certified communities and businesses to buyers of forest products.
They work to build sustainable livelihoods by helping certified communities and businesses to market their products effectively and increase technical ability. By promoting green building and helping companies that purchase forest products to incorporate sustainability into their sourcing policies, they are also working to increase the demand for certified products.
Many organizations such as Gloria Jeans have obtained certification with the aim of demonstrating CSR and increasing coffee consumption through its outlets. Organizations that adapt and implement CSR practices are securing their futures and maintaining competitive advantage.
They are responding to market demands in a bid to increase their profile and the rationale for CSR may be categorized under four arguments: There is growing support for the broad view of CSR amongst academics and practitioners. Only when firms are able to pursue CSR activities with the support of their stakeholders can there be a market for virtue.
Proponents of the narrow view argue that the only social responsibility of corporate organizations is to make profit. However, the adherents of the broader view have come up with a rival position that argues that corporate organizations have social responsibilities in addition to their economic responsibilities both of which are supposed to treated as ends in themselves.
The broad view is argued in favor of if organizations are to have a sustainable future and are to remain competitive moving forward. The narrow view does not take into account the changing attitude of consumers and society as a whole. Profit maximization is achieved through good CSR, one that the broad view supports and illustrates. Mainstreaming corporate social responsibility: California Management Review, 49, pp.
Too much corporate power. Business Week, 11 September, p. Business and Society, 38, pp.
Essay on “Corporate Social Responsibility and Ethics” Type of paper: Essays Subject: Business Words: Social responsibility is an idea that has been of concern to mankind for many years.
A key point of CSR is that it recognises the responsibility that companies have to take into account of those impacts. CSR is a framework for thinking about business ethics, making ethical decisions and working within the law, it says a company responsibilities reach further than just making a profit.
Social responsibility is defined as a business firm's obligation, beyond that required by the law and economics, to pursue long time goals that are good for society. Over the decades, there have been numerous controversial reports of social and ethical issues business organizations faced. Corporate Social Responsibility (CSR) is a self-regulatory mechanism incorporated by corporations in their business model. The term CSR is also used for activities carried out by companies around the globe to give back to the society.
- Corporate Social Responsibility Corporate Social Responsibility (CSR) is an idea that has expanded over time so its meaning and definition is somewhat vague. Votaw (), as quoted by Carroll (), summarizes the difficulties of giving a deﬁnition of CSR when he notes that: The term [social responsibility] is a brilliant one; it means something, but not always the same thing, to everybody. Corporate Social Responsibility (CSR) is a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations.