Corporate social responsibility concepts and practices

CSR

Corporate Social Responsibility

Corporate Social Responsibility (CSR) has recently reached an unprecedented level of salience with the emergence of global protests that seem to be driven in a large part by concerns over social issues such as equality as wells as environmental issues such as the regulation of greenhouse gas emissions. Although the protestors are occupying various parts of the world for a plethora of mixed motivations, it is reasonable to speculate that much of these individual motivations are embodied in the concept of CSR. The concept of CSR covers a lot of ground but there are two core principles that account for most of the commentary.

The first concept embodied within the notion of CSR is in respect to the manner that people are treated. Under classical models this would only include investors, customers, and internal employees. However the CSR approach includes all stakeholders locally, regionally, or even globally. For example, pollution emitted by manufacturing processes may not only local residents but also contribute to atmospheric contributions of greenhouse gases which not only affect the global population but may also affect unborn generations. The way corporations act in regards to environmental issues is also of primary importance to the concept of CSR as ecological problems are becoming increasingly identified primarily among the scientific community as well as various activist groups.

Growth of Corporate Social Responsibility

The processes by which organizations operate are increasingly becoming the target of the attention of individuals and organizations across the world. The recent interest in corporate social responsibility (CSR) has been fueled by immeasurable examples of unscrupulous conduct that have been the focus of much media attention; especially in the last decade. These occurrences have done much to shed light upon the implications that follow acts that are void of ethical considerations. Not only have these unethical acts become more salient, but their effects on the economy are also reached a level of transparency that has never before been possible. Technology has increased not only the speed, but also the amount of information that is available to the public about corporate operations.

CSR practices may include corporate philanthropy but its reach extends far beyond charity donations. Some have argued that CSR doesn't have to be complicated nor does it significantly differ from ethical values that are generally considered to appropriate in society on an individual level such as honesty, humility, respect, and dignity (Hui). Others argue that there need not be a separate classification of CSR or business ethics because, in the end, any ethical system is curtailed from the similar origins and thus the concept of CSR isn't any more relevant than the study of ethics for any circumstance (Drucker). Others have also argued that organizations have absolutely no responsibilities other than maximizing shareholder value; given that they operate "within the rules" and any attempt to impose other considerations represents a form of socialism (Friedman).

Despite the varying opinions on whether or not CSR is ethically necessary, many researchers have approached the dilemma from a purely financial perspective. One study developed a framework by considering the salience of stakeholders, their perceptions of the CSR effort, and their collective ability to impact a corporation's financial performance (CFP) (Peloza and Papania). This framework is illustrated by Figure 1. This framework may be able to provide further insights into the debate surrounding CSR and if it has financial ramifications for CFP. It is reasonable to suspect that it could also provide companies that have an organizational dedication to CSR insights into how to leverage this dedication to create a competitive advantage.

It is reasonable to suspect that CSR will not create a competitive advantage in all industries until consumers place higher value on CSR criteria. However CSR initiatives have proven successful in many individual case studies in which the activities received publicity or were properly marketed. Theoretically a company could have the most remarkable dedication to social responsibility internally but never receive consumer recognition for their efforts. Thus for CSR to translate into monetary rewards for an organization there must also be some element of marketing that it employed in conjunction to CSR to promote its responsibility.

Other CSR Aspects

CSR must be embedded deep within the organizational fabric for it to be successful. This includes outlining a CSR code into the corporate charter as well as in the mission and vision statements. Since the establishment of Sarbanes-Oxley regulations this is actually required by publically owned companies however for CSR to be effective it must go far beyond just compliance. Employees must be trained so that they can integrate ethics into decision making processes and this training must also be ongoing to maintain salience at all times. The corporate culture must also foster a climate in which CSR can flourish. If the corporate culture isn't consistent with CSR practices then even with codes of conducts and training programs then often CSR considerations are often dismissed or ignored in practice.