Given the heightened level of international operations and globalization, pressure is mounting for corporations to behave ethically. Corporations are forced to developing standards, policies and behaviors as a demonstration of their sensitivity to concerns of stakeholder. The policies behaviors and standards are what a European commission called corporate social responsibilities. The Commission defined corporate social responsibility (CRS) as "a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis" Commission, 2001.
Complementing this definition, McWilliams and Siegel. (2001)
, said CRS include all actions that are intended to forge, beyond the firm's interest, a social good, and is a requirement in law.
Composition Corporate Social Responsibility
Corporate social responsibility entails coming up with solutions specific to a society. The corporation is however, not forcefully charged with an obligation to take up all the burdens in society. Proactive social responsibility calls upon the corporation to assume a share of society's burden and contribute solving it. Maybe by starting up initiative that will target the burden or even availing resources that will resolve the difficulty McWilliams & Siegel., 2001.
The basic query is whether the corporate citizenry (participation in the social aspect) form or yield a business edge. From a citizen's point-of-view, it is ascertained that involvements in social aspect guided by social contract, citizens expect to receive a higher quality of life Wilson, 2000.
Whether this applies when a corporation acts a corporate citizen is accessed with the kind of benefits and the reputation directly attributable to CSRs Buckley & Ghauri, 2004()
Consider a corporation that opts to reduce its emission to the environment as it CRS to the society and also as a regulation. The immediate benefits are to be borne to the society through reduced emissions and clean air. The corporation may benefit much later when its operation is sustainable. The corporation by meeting the regulations may be entitled to some form of tax reliefs Balmer, John M.T., & Dinnie, 1999()
Further to meeting the least amount of emission, the corporation will become more innovative to advance its production technology for efficiency purposes. The new technology to reduce emission can be sold to other corporations and also be applied in other location of interest to the corporation. The benefits to accrue out citizenry practice can multiply to the extent of attracting employees with talent and devotion to its operation. The image of the corporation in the society will change the leap to even greater heights Buckley & Ghauri, 2004()
For a corporation to become a fully fledge citizen, its external environment needs to set condition for it to meet. Just like in the society roles and obligation are set and one is considered to be part of the society is they meet the obligations set. The society is thus expected to put up conditions through its regulatory body (formally) or through implied actions (informally) to foster or hamper corporation citizenry Mehra, 1996()
Meeting the social values set in society are part of Corporate social responsibilities and they form an important requirement for Corporate citizenry Wan-Jan, 2006.
Cultural practices, Values and beliefs in society ought to be considered in a corporation's operation. Failing to appreciate these values and cultural practices will deal a hard blow on the corporation. It is likely that the corporation will be considered an outsider to the society, will have to deal with intolerable attitude, and the products will receive a poor reception in the market Langman, 2005.
Corporations will need to consider the ideal measures to embrace and being embraced in the society values. This is a Social responsibility that avails tolerance from the society and open up avenues for fruitful relations Wan-Jan, 2006.
Respect of society's culture and values will increase to value of the corporation through the respect the society will give back. The respect and appreciation will be through performance of products in the market and/or motivation in participating in employment Langman, 2005()
Direct Verses indirect Corporate Social Responsibility
Corporate social responsibilities can be grouped into two groups depending on the contributions they mark to an organization - direct and indirect benefits. The direct benefits are obtained from the generation of products that will raise revenue to the corporation. The indirect benefits entail development of products specific to the firm that require further steps for revenue to be captured by the firm Commission, 2001()
Direct benefits related to CRS acts as a tool for innovation which serves as a test to a product. Example, starting up a community banking service to provide banking and financial services to a marginalized group of people may at the onset seem socially oriented. Considering the case for Bank Boston, which now provides financial services in more than 47 branches under the name the First Community Bank, we see case of CSR that contributes to revenues. The Idea of serving the community and giving benefit to the community has evolved and grown to incorporate service provision in economic and business scale. The development seen with the BankBoston have also incorporated to provide multilingual ATMs, new comers products, equity investment and generally providing services to a marginalized category of individuals.
Corporate Social Responsibility and Corporate Identity
Many analysts have evaluated CRS contribution to a corporation's performance as well as sustainability of their business practice. Some of the analyst have gone as far as to explain the how well CRS mold a corporate identity Wilson, 2000.
Although Wilson duly notes that CSR comes as part of compliance with public policy set, they do a great deal in reforming a corporation and shaping its identity. To some extent CSR, are seen as some civic duty undertaken by individuals.
Concern arises which is compliance and which is self-driven social responsibility. The question we are asking are the corporations doing this out of concern or as part of meeting the minimum set standards. Wan-Jan, 2006()
argue CSR contributes to corporate identity; thus the final result is of benefit to the corporation. Following from this observation it can be argued then that CRS in a corporation are intentional meant to push its growth and performance in a market.
The recent increase in CRS within organizations and guided by research evidence to CRS's contribution on performance and sustainability of corporations' it is incorporated in company strategy. CRS are observed to a have a bearing on the corporation's public view and will improve its position against its competitors J.M.T. Balmer (2001)
, in support of this position claims, every organization has an identity. It is importance how it articulates the corporate ethics values, policy formulation and still maintains a links of all this with its core objectives and vision. Blamer argues that each corporation articulates in its strategy measures of values, objectives and vision in different environments. Core to these formulations is to keep touch with the corporation's main objectives considering the specifics of the environment needs, values and policy J.M.T. Balmer, 2001()
McWilliams and Siegel. (2001)
further say assessment of whether the CRS is reactive or proactive is a deterministic factor growth of the company's image. If the CRS is just based on public policy compliance, it is expected to have a lesser impact on the company's image.
Corporate social responsibilities and Risk management
In traditional operations of the corporate investment, risk aversion has been considered as important to the success. Risk aversion is a key component to any investment and corporate social responsibility is incorporated in considerations for investment. For any corporation, CRS is an investment and expenditure item Copeland, 2001.
Although not considered as beneficial to an organization, rather to direct beneficiaries (Society in which operation is undertaken), they are meant to contribute to the long-term benefit of the corporation. In assessing the potential of operations, corporations are forced to factor in the CRS expenditure outlay. In these assessments, they calculate the possible contribution CRS has on cash flows and profits plus stock performance.
Corporations in many instances are forced to reject operations in regions with negative contribution to these aspects. Key to these is satisfaction of shareholder interests which unless well articulated, will reduce their share capital potential McWilliams & Siegel., 2001.
According to Copeland (2001)
, corporate social responsibility also involves decisions on resource allocations and this is why deep consideration on allocating these resources are factored. First they are meant to safeguard the corporation's investors and secondly to ensure that leadership in the business venture is not derailed.
McWilliams and Siegel. (2001)
have put it rightly that CRS is a form of investment, thus treating it as factor for consideration the risk competent it carries with it is vital. Whether it will offer an opportunity for the corporation to grow and propel its core objectives, needs to be considered.
Summary and Conclusion
Corporate social responsibilities are now integrated in the society and the internationalization of world business is propelling the trend further. It is unavoidable that…