Corporate social responsibility: necessity and relevance in modern business

Corporate Social Responsibility in a Transcontinental Business Context

Transcontinental Management and Global Business

Understanding Corporate Social Responsibility

Is Corporate Social Responsibility Necessary?

In a world of ever expanding global corporations, how should we hold these companies responsible for the nature of how the conduct business? Should we allow companies to continue the massive exploitation of past generations of doing business in foreign lands? Within a modern context such production practices are unnecessary and unethical. There are now alternatives which can help reduce exploitation of land, resources, and human labor. Corporate Social Responsibility aims to stop such exploitation and force corporations to take responsibility n the regions the produce and sell in. The concept forces global corporations to take responsibility for their actions both at home an abroad. Despite arguments against implementing Corporate Social Responsibility, it proves essential to help preserve the world and its consumer markets as we know them today. Utilizing Corporate Social Responsibility will prove to benefit foreign nations that are the homes of mass production as well as the average consumer who can then buy guilt-free their favorite and needed products.

The nature of business in today's market place has changed drastically within the past few decades. What was once a single minded institution with mainly one individual region in mind has morphed into a business machine with much more in its control. Traditionally, many companies were aligned to fit the need of specific regions and not a larger consumer base. In this set up, there might be a few isolated sub-markets which the corporation might have dabbled in, however these were much different than today's multitude of markets. In many cases the state still had control of working and business conditions in these markets. That meant that the state was in control of overseeing things like production, environmental, and workers regulations. The state therefore was responsible for regulating social responsibility and olding various corporations accountable for their actions during production. However, "One of the most significant business and economic trends of the late 20th century is the stateless corporation," (Eom 1994:22). Many states failed to uphold stricter regulations, and from nation t nation such regulations were vastly different. This lead to rampant corruption in the social responsibility of many corporations; they followed the bare minimum which would in most cases not be deemed very responsible by American standards. On top of that, corporations were being fragmented by the various regulations set forth in different geographical regions which they conducted business in. Essentially, this meant that many corporations outgrew the states which they have their headquarters in. This means that they have much larger interests in other nations, and must abide by a more international agenda rather than a more limited state bound agenda. Since international rules are much weaker and shakier than some state regulations on corporations, this left many corporations to basically manage themselves and to regulate themselves in various ways.

Transcontinental Management and Global Business

Many state governments and institutions bound these early corporations. However, the growth of the consumer base was tempting. This forced many companies to expand their interest beyond one single region and onto a more global approach which aimed at several markets all over the world. With globalization came new ways of expanding and regulating business. For instance, Early Decision Support Systems (DSS) focused on the individual region, not truly acknowledging the larger context of global sized business. This was popular up until the 1980s, where "many companies shifted their attention to the application of DSS technology to large-scale organization and global decision making," (Eom 1994:23). Technology and regulations were changing to fit the needs of the newly established global corporation.

Today, most companies now structure the nature of their business within a more globalized scale. What has resulted is a whole new breed of businesses and corporations which operate strictly with a global agenda in mind. Today, many corporations have their production in one country, with vastly different marketing campaigns in other nations which are geared toward the individual consumer markets within those regions. Companies are no longer thinking streamlined to fit only on demographic. They have expounded that traditional technique to fit single demographics in a multitude of different market places. Going global has completely changed the face of business and has created the field of transcontinental management in order to best regulate and manage international assets and individual consumer markets. Management has now been promoted to a global scale.

There are several key elements which have helped the rise of transcontinental management and the global corporation. Developing technologies have allowed companies to access global markets with much more ease. Various developments in information technology have allowed for the same kind of strict information regulation and control on a much broader and global scale. For example, "The forces unleashed by the telecommunication and microcomputer revolutions over the past decade have brought two significant phenomena: increasing global interdependence and internationalization of business firms," (Eom 1994:24). In today's world, technology now helps managers in one region to control and monitor an entire globes worth of corporate information and market data. Production in China, sales in Japan, employee information in Canada -- all can be handled in a neat package over the desktop of a manager in the headquarters in Dallas. Such technologies and new emerging markets have expounded traditionally local companies onto a global level, "To many global companies, online access to corporate data has already become vital for their success in managing numerous overseas subsidiaries," (Eom 1994:25). Development of web based applications has allowed a more streamlined method of controlling such a vast and fragmented global presence. The continual growth of the international business has also driven the need for new technologies. Constant new developments come out of the need to unite such a widely divided global presence. With this continual technological development, running a globalized business will soon be just as labor and resource consuming as owning a local or domestic corporation, just with much more profit potential.

Understanding Corporate Social Responsibility

With developing technologies comes seemingly unlimited growth potential. And many global corporations have expanded far beyond what they would have projected back when they were catering to a single market. However, this growth on the global scale means that these growing companies must understand the responsibility of operating in these various markets. Since state regulatory guidelines have subsided in the midst of ever expanding global corporations, many have found themselves in charge of handling the social and environmental responsibilities of working in various regions in the world. Thus modern global companies are forced to acknowledge a wide variety of different aspects of the different regions they work and sell in. This can include making crucial decisions based on things like differing economic and political factors, "When making any global decision, several global risks must be considered, including political, foreign exchange, and tax rates," (Eom 1994:27). Differing political agendas and economic conditions are a major part of doing business in other nations. Global corporations must constantly respond and negotiate with unfavorable or favorable conditions in the political and economic sphere. However, these corporations cannot truly control external regional political and economic forces, they merely maneuver around them to still maximize their profit share.

However, one aspect they can control is their commitment to Corporate Social Responsibility, or CSR. In today's modern business application, Corporate Social Responsibility, (CSR), is a way for global corporations to manage and regulate themselves as stipulated within each corporation's business model. It stipulates what is crossing the line for an individual corporation in terms of environmental and employee regulation. Such policy is interwoven within the traditional business model, and so serves as an internally regulatory function to watch over the actions and policies of the business itself. This would then leave the business with the responsibility of regulating itself within the multitude of global markets it enters. Such responsibilities within these varied markets include environmental, consumer, employee, community, and stakeholder responsibilities within each an every location the corporation was conducting business. Perfect practice of Corporate Social Responsibility is the true execution of what is lined up so nicely within business strategy. This means that a corporation is serious about keeping its products and practices ethical with the implementation of environmentally friendly and respectful employee practices. In generations past, previous global enterprises were known to rape foreign lands of their resources with little regards to the natural habitat or the native inhabitants. On top of the environmental damage caused by foreign companies in delicate natural regions such as Africa, many global corporations within ages lie the Imperial Age also held no respect or duties to the employees which were exploited for little money. Since the days of imperialism, the attitude towards environmental and human exploitation has changed dramatically. In today's world, many consumers are calling for more ethical companies who are known to have high standards for Corporate Social Responsibility. In many cases consumers tend to shy away from corporations known for having weak or unimplemented social responsibility policies. This has lead to a greater corporate awareness of their impact in the multitude of regions they work and sell in. It has lead the concept of Corporate Social Responsibility to become a highlighted feature in the nature of global business today.

There are numerous examples of successful implementations of Corporate Social Responsibility in today's marketplace. Take one for example, the Caremark Corporation which is typically known to Americans as the owners of the CVS chain pharmacy and drug stores. This corporation has expanded rapidly over the past few years and has now become a global powerhouse. Yet, within its store locations, even in nations many corporations might exploit, they sill over excellent employee health packages that are equitable with the ones they offer their American employees in the United States. This seemingly small token shows corporate responsibility for their employees. However, not all seemingly wholesome American companies end up with a pristine image thanks to good practices of Corporate Social Responsibility. Recently, the Wal-Mart corporation fund itself in some pretty hot water when it was discovered to have been exploiting illegal immigrants in the United States to work for well under the federally established minimum wage, and with no health benefits for full time employees. This is a red flag of poor social responsibility on behalf of the Wal-Mart Corporation, who was even tied to the scandal with executive knowledge of such practices. Many believe that this has negatively affected Wal-Mart's image within the consumer's minds, leaving them vulnerable to drops if profit potential. These two corporations show both sides of good and bad social responsibility policies.

Is Corporate Social Responsibility Necessary?

However, even with cases at hand, there are some who would debate against the need for Corporate Social Responsibility as a fundamental part of business policy and practice. Many individuals and corporations have found much to criticize within traditional usage of the CSR within the business model. As it is constructed today, there are possibilities for flaws and flat out exploitation of the image having Corporate Social Responsibility policies within the business model. Many who is against the institution of CSR within business models present the idea that such practices actually distort the function of the utilitarian business model from being purely functional, "For most firms, most of the time, CSR is largely irrelevant to their financial performance," (Vogel 2008:1). This means that unnecessary money and resources are spent on the implementation of policy which has nothing to do with the function of the business. According to such critics, Corporate Social Responsibility is something that should be worked out within a corporation outside the context of the functioning business model. Several others present another argument, the idea that CSR is not sufficiently implemented, but rather a sheer tactic to say that the corporation is taking some initiative towards respecting the multitude of markets. Instead of becoming the revolutionary policy that it should be, many corporations use hints of CSR within their business model to pretend like they are taking real ethical concerns within the various markets they work in. However, failure to truly put that policy into practice shows that they are just milking the idea without putting any weight into it. This shows how corporations are once again trying to exploit not only the region and its people, but also the consumer's weakness for environmental and social protection policies. One final argument is that corporations with good CSR policies and practices have failed to show a true profit increase based on their implementation of ethical Corporate Social Responsibility. According to these critics, "Ethical' goods are a niche market: virtually all goods and services continue to be purchased on the basis of price, convenience and quality," (Vogel 2008:1). Therefore, there is an unfortunate limit of profit increases thanks to a costly implementation of CSR. To some, Corporate Social Responsibility just proves too costly.

However, many argue that CSR is a beneficial element of any business model. Those who believe in its benefits promote the concept that CSR helps corporations benefit in a plethora of different aspects and situations. There are a number of people who support implementation of Corporate Social Responsibility as a way for corporations to help protect and promote better business standard throughout the regions they produce and sell in. Many will state that "A number of companies believe there are benefits associated with acting responsibly and are, in turn, investing in initiatives that reduce their environmental footprint, increase the transparency of their operations, or improve the well-being of their workers and surrounding communities," (Assadourin 2006:1). Corporations understanding their impact in the various regions they do business in are an important feature of truly implemented Corporate Social Responsibility standards. In fact, CSR is said to be beneficial in looking beyond short-term profits into a more long-term and sustainable conductivity of business. On top of the benefits of implementing CSR, it proves a much better alternative for handling globalized business than the former method of control, the state system. According to CSR proponents, "The state-base system of global governance has struggled for more than a generation to adjust to the expanding reach and growing influence of transitional corporations, the most visible embodiment of globalization," (Ruggie 2007:4). Therefore, with the state-based system being unable to truly handle the onset of massive global growth, regulating individual companies through their own implementations of Corporate Social Responsibility policies proves a much better alternative.

In today's changing world we can see the dramatic impact business and production has had on the environment. Consumption has increased greatly due to transcontinental business, and so "the environment is becoming increasingly taxed as a result of this consumption and the continued growth of the human population," (Assadourin, 2006:1). With the knowledge of the depleting environmental conditions, implementation of Corporate Social Responsibility can be much more than just a token policy aiming to please the consumer market. It can be a real method of change which will one day preserve the environment as we know and love it today. According to many, "it is imperative that the members of the business community -- especially corporations, as the dominant business institutions -- take a leading role in creating a sustainable society," (Assadourin 2006:1). Without the proper implementation of responsible environmental policies, the degradation of the environment will continue unchecked, leaving us as a society to have to deal with a world of depleting resources.