Motivations behind Corporate Social Responsibility
Organizations embark on social and environmental reporting for a variety of different reasons and not to simply improve credibility with stakeholders; although that is a primary reason in many organizations. However, other organizations have different objectives altogether that can include a range of different motivations. Some models have broken the range of motivations into signaling or greenwashing or used legitimacy theory to explain the motivations by firms to report on their social and environmental performances. This analysis will look at some of the different models that have been constructed to attempt to explain why firms utilize CSR frameworks.
The popularity of CSR has grown substantially in the last couple of decades. Many people may have grown skeptical of business in the wake of corporate scandals such as Enron, Tyco, and WorldCom followed by the sub-prime mortgage market which have all gained large amounts of negative publicity. Stakeholders are more aware of the performance of companies along a broader set of metrics that portray the company's operations in a more comprehensive manner that provides information about social performances and environmental performances. Much of the concept of corporate sustainability is rooted in the notion of sustainable development with can be defined as the ability to meet the needs of the current population without compromising the ability of future generations to meet their own needs as well (Searcy & Buslovich, 2014).
Much of the business world has also been viewed as an enemy of the environment. Many firms have tried to promote their positive environmental practices in their reporting while often leaving out the negative aspect which has become known as greenwashing (Lyon & Maxwell, 2011). Greenwashing has been defined as the "act of misleading consumers regarding the environmental practices of a company or the environmental benefits...
They will try to skew CSR reporting to attempt to portray the firm in a positive light rather than accurately reporting the firm's collective performance on environmental impacts from business activities.
As a result of greenwashing many firms of the subject of activist attention to point out the discrepancies between the actual firm performance and the published CSR statements. In turn this can have the effect to put pressure on firms to disclose less of their environmental activities. There have been many firms that have voluntarily participated in CSR reporting only to later stop publishing this information to the public. The voluntary aspects of the different CSR reporting mechanisms gives firms this option if they fail to increase their credibility to stakeholders by reporting their performance.
After the major corporate scandals went public there also appears a major shift toward more ethical decision making among marketing professionals from the year 2003 to 2006 (Premeaux, 2009). The idea that the responses specified such as shift could possibly embody the impact of the negative publicity that organizations added during that timeframe For the most part, consumers are cynical of CSR promoting marketing messages unless it is a "good fit" (Jahdi & Acikdilli, 2009). Most people can easily detect greenwashing and if the firm is not portraying their environmental activities in an accountable way then this can have a counterproductive effect on CSR reporting which in turn would lead firms to disclose less.
Some studies have tried to build models to understand the extent and nature of ethical, social, and environmental reporting by focusing on the influence of corporate characteristics such as size and industry grouping while other models focus more on the contextual factors such as the social, political, and industry grouping; yet these approaches have failed to produce any type of explanatory power (Adams, 2002). The implementation of a CSR reporting mechanism has been found to vary widely by firm and the individual motivations for reporting are hard to generalize in most cases (Searcy & Buslovich, 2014).
Despite the variances in motivation, the use of CSR reporting mechanisms has become popular in the world's largest companies. KPMG's International Corporate Responsibility Reporting Survey of 2011 found that 95% of the 250 largest companies in the world currently report on their CSR activities, and that nearly half of these companies reported gaining financial value from such initiatives (Hughen, et al., 2014). The Global Reporting Initiative (GRI) offers a website in which stakeholders can access and compare different CSR reports from a number of top companies from all over the world. There are a number of options for companies to produce…
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