Corporate social responsibility: concepts and implementation

¶ … Corporate Social Responsibility (CSR). It puts light on the history of Corporate Social Responsibility (CSR). It also discusses the approaches for the implementation of Corporate Social Responsibility (CSR) and also the benefits of its implementation. This paper also seeks to understand the principles and priorities of Corporate Social Responsibility (CSR) and puts light on its future as well.

In the business era the responsibility of the organizations has been to make a profit and to maximize shareholder wealth. The goal of shareholder wealth maximization has been the underlying motivating factors for most the decisions taken by the organizations. The above mentioned goals were considered as the driving force of many organizations historically but now the situation has changed. In the past era the organizations have been exposed to a number of responsibilities in relation to their environment, society and community. This new responsibility or driving force of the organizations is called Corporate Social Responsibility (CSR). It is also termed as the triple bottom line of the organizations, that is, how does the organization performed economically, socially and financially for conducting the operations of the business. (Rionda, 2002)

Definition of Corporate Social Responsibility (CSR)

Although there is no universal definition of Corporate Social Responsibility (CSR), but in general terms it can be defined as the practices of the organizations that have a high level of transparency and are in alignment with legislations, rules and regulations, ethical codes, norms and principles. These practices depict a high level of respect for the people and communities and the societies in which the organizations are operating. Therefore, apart from making profits, organizations are also held responsible for the impact that they have on the people and on the planet earth. People are very for the organizations as they are the stakeholders of the organizations including, employees, investors, consumers, suppliers, business partners etcetera. Nowadays, stakeholders give a lot of importance to Corporate Social Responsibility (CSR). They expect that the organization should act more responsibly in social and environmental terms while conducting their business. In the business world, Corporate Social Responsibility (CSR) is often referred to as corporate citizenship which implies that the organization should act as a responsible and dutiful neighbor in the community in which it is operating. (Rionda, 2002)

History of Corporate Social Responsibility (CSR)

The history of Corporate Social Responsibility (CSR) roots back to a century. However, the most prominent emergence of this pattern was seen in the 1950s. Some formal works were being published in the United States of America but the traces of this principle were quite evident throughout the world. The history of Corporate Social Responsibility (CSR) can be classified into following parts; (Carr, Hart, Mackinnon & Mellinger, 2004)

1950s-1960s; the Modern Period of CSR

The history of CSR is strongly connected with Howard R. Bowen's Social Responsibilities of the Businessman. In his book Howard clearly expressed that businesses must think about their responsibility to the environment and society and making profits must not be the sole purpose of the organizations. Howard contributed a lot to the field of CSR and that is why he is known as the 'father of CSR'. Another achievement in this era in the field of CSR was Keith Davis's 'Iron Law of Corporate Social Responsibility'. This law stated that corporate social responsibility has a positive relation with the size of the business. In other words, the larger the size or the impact of the business on the society, the larger will be its corporate social responsibility or environmental and societal obligations. (Carr, Hart, Mackinnon & Mellinger, 2004)

1970s-1980; the 4 part Definition of Corporate Social Responsibility (CSR)

The early literature indicated that the businesses must not only consider the stockholders but also other people who have a connection with the organization and are related to it. This idea gave rise to the term stakeholders. The theory of stakeholders elaborates that the responsibility of business goes beyond the specific stockholders who have a financial investment in the organization as it also includes other people who have some other relation with the organization no matter if it is in nonfinancial terms. (Carr, Hart, Mackinnon & Mellinger, 2004)

Another important development in this era was Committee for Economic Development (CED)'s Social Responsibility of Business Corporations. The definition given by CED suggested that the businesses should first fulfill their economic obligations and then they should go for increasing their information about the changes in the society and in the end they should try to make major improvements in the society with the aim of benefitting the society. This definition gave rise to Carroll's four part definition of Corporate Social Responsibility (CSR). The four part definition of Carroll consists of the following components; economic, legal, ethical and philanthropic. Another major contribution in this era was made by Thomas Jones, who described Corporate Social Responsibility (CSR) as a process. (Carr, Hart, Mackinnon & Mellinger, 2004)

1990s to the Present Era; Evolution of New Corporate Social Responsibility (CSR) Themes

The era of 1990s proves out to be an era of research and expansion of theory. The research in this era led towards the concepts corporate citizenship, business ethics theory and Corporate Social Performance (CSP). This era of financial development and growth increased the ability of firms to contribute financially in the field of Corporate Social Responsibility (CSR). But the financial crises that followed the drastic event of 11th September 2001 decreased the firms' ability to financially support Corporate Social Responsibility (CSR) but the firms do not deny its influence while making important decisions regarding the operations of the business and important policies and schedules. (Carr, Hart, Mackinnon & Mellinger, 2004)

Implications and Effects of Enviromental Issues

Generally, when an organization operates in a society it always has an impact on the environment. This impact can either be positive or negative. Whatever the impact might be the organization does not include this impact in its traditional accounting statements. The negative impacts that an organization has on the environment are generally borne by the society and theses are known as the external costs. The organizations do not include these costs in their accounting procedures along with the internal costs and due to this exclusion of external costs most of the traditional and historical organizations usually overstate the value they generate for the society. (Crowther & Aras, 2008)

Principles of Corporate Social Responsibility (CSR)

There are no universal principles related to Corporate Social Responsibility (CSR) but the following six principles can guide the managers regarding Corporate Social Responsibility (CSR); ("General principles of,")

First of all, all the organizations should work in alignment with two bodies of legislation. The first one is related to the shareholders and it guides the organizations about how to maintain strong and loyal relations with the shareholders and the other body of laws is related to the stakeholders other than the shareholders and it governs the relationship between stakeholders and the organization. ("General principles of,")

Secondly, corporations are financial institutions that work for earning a profit hence it should not be expected from them to indulge in socially responsible tasks without any underlying financial motives. Organizations usually incur short-term costs in order to eliminate the social evils that might affect the profitability of the organizations in the long run. The companies should be encouraged when they make a profit in socially responsible ways. ("General principles of,")

Thirdly, the organizations are responsible for undoing the harm that they have caused. They should try to make the external costs internal that is the cost of production that is being borne by the society should actually be borne by the organizations. For example, if an organization discharges toxic effluents in the atmosphere then the harmful effects of these effluents are faced by innocent human beings, animals and nature in the form diseases and destruction of natural beauty. Therefore, it is the social responsibility of the organizations to restrain from such actions that might harm the society either directly or indirectly and they should try to make profit not by maximizing the external costs but by reducing them as far as possible. ("General principles of,")

The fourth principle is that the organizations should also be considerate about the fact that there is a strong correlation between Corporate Social Responsibility (CSR) and the size of the organization. Therefore, a large multinational organization should act in a more socially responsible way as compared to a small local organization. ("General principles of,")

The fifth principle states that the managers should try to fulfill all the legal needs of the stakeholders and the sixth principles says that the managers should be guided under the light of the public policy of the nation which not only states the literal perspective of the laws and regulations but also addresses the public perspective and emerging problems related to the Corporate Social Responsibility (CSR). ("General principles of,")

Priorities of Corporate Social Responsibility (CSR)

According to the top management following are the major priorities of Corporate Social Responsibility (CSR); ("On principles of," 2006)

Maintain Business Practices that are Sound in Nature: The businesses are responsible for conducting their operations in a way that benefits the society. They are also responsible for reducing the cost of production that is being borne by the society generally known as social cost. In addition to that the organizations are also responsible for increasing the efficiency of the labor force at the local level. ("On principles of," 2006)

Development of personnel: The organizations are responsible for making a decent investment in the human resources. In addition to that, the organizations should provide their employees with handsome remuneration, bonuses and compensation benefits, promotion prospects, training opportunities, job security, healthy working environment and employee empowerment. ("On principles of," 2006)

Health and Safety Measures: the organizations should health and safety measures that are in addition to those that are already being introduced by the laws. ("On principles of," 2006)

Management of Environment and Resources: The organization should restrain from performing those actions that might have a negative or harmful impact on the society and the environment.

Restructuring in a Socially Responsible Way: The organizations should conduct and reconstruct the business in a way that is accepted by the community and society and that is in alignment with the norms of the society. ("On principles of," 2006)

Providing Support to the Local Community: The organizations should help the local community in all possible ways so that they can enhance their economical, financial and developmental abilities. ("On principles of," 2006)

Approaches for Implementation of Corporate Social Responsibility (CSR)

When the process of implementation of Corporate Social Responsibility (CSR) comes into question, then there are different methods that are being designed to answer this question. Implementation of Corporate Social Responsibility (CSR) means that the organizations should work in alignment with the laws and regulations. It also implies that organizations are held responsible for stakeholders, the environment in which they operate and the future generation. The organizations shall try to motivate their stakeholders such as, employees, customers, partners, suppliers and government etcetera. They should also work to ensure that the environment stays healthy and safe. They should try to promote the development of society and economy to the maximum level. In addition to that the organizations must also work to develop a coordination and harmony between rural and urban development. ("Guidance for the," 2008)

In order to implement Corporate Social Responsibility (CSR) the organizations shall conduct their operations in accordance with moral and ethical standards. They should also promote socially accepted practices. In addition to that, organizations should make sure that they operate in alignment with the corporate code of conduct. And in order to achieve stable growth the organizations shall undertake more responsibilities in relation to the development of society and environment. The organizations should also incorporate the requirements for the implementation of an Implementation of Corporate Social Responsibility (CSR) in their operations. They should try to fulfill the requirements of stakeholders and should try to achieve stable growth. The organizations shall also try to develop a coordination between the growth of an organization, society and environment. The organizations shall also work in a way that they generate maximum value for the stakeholders, society, community and environment. And they should also add to the overall value of the society and environment. In order to implement Implementation of Corporate Social Responsibility (CSR) the organizations should not only follow the rules and laws and norms of the society but shall also try to promote developmental change in the society and they shall also increase the creation of wealth in the society and shall try to increase the economic development and the standard of living in the society. ("Guidance for the," 2008)

Benefits of Implementing Implementation of Corporate Social Responsibility (CSR)

Implementation of Corporate Social Responsibility (CSR) enables the organizations to better mitigate different risks as by following all the rules and regulations their operations are always in alignment with the policies of the state therefore, they are better able to track and manage different types of risk. In addition to that implementation of Corporate Social Responsibility (CSR) also has a positive impact on the goodwill and reputation of the organizations as when the organizations work for the betterment of the stakeholders it enhances their goodwill and as a result organization can get better investors and suppliers and loyal customers. (Hohnen, 2007)

Implementation of Implementation of Corporate Social Responsibility (CSR) also enhances an organization's ability to recruit better staff and also to retain them as through the implementation of Corporate Social Responsibility (CSR) organizations are better able to analyze and entertain the legal needs of the workforce and as a result there is a prominent decrease in the turnover rate. It also enables the organizations to have an effective supply chain and competitive edge as all organizations stay in touch with their stakeholders and this gives them a better know how of market conditions and as a result they are able to gauge unexpected market conditions in a better way. Most of the organizations nowadays use the Corporate Social Responsibility (CSR) as a radar to track the movement of the market. (Hohnen, 2007)

Through Implementation of Corporate Social Responsibility (CSR) companies get an open access to the capital as the investors are more willing to invest in organizations that operate in a socially responsible manner and conduct their business in a way that benefits the society. Corporate Social Responsibility (CSR) also enables the organizations to have good relations with the regulators as because of the implementation of corporate social responsibility they strictly follow laws and this act gets them in the good books of regulators. (Hohnen, 2007)