Corporate Social Responsibility
The nature and scope of corporate social responsibility are broad, and no universally acceptable definition of corporate social responsibility exists. According to A.B Caroll and A.K. Buchholtz, corporate social responsibility can be defined as "economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time".
Essentially, corporate social responsibility (CSR) also called corporate citizenship, indicates the ethical behaviour of an organisation towards society.
The Evolution of Corporate Social Responsibility
The concept of corporate social responsibility is not brand new; however it has evolved considerably in the last few decades since the phrase corporate social responsibility was coined in 1953 with the publication of ‘Social Responsibility of Businessmen’ by Howard R. Bowen.
The phrase has been in wide use since the 1960’s and through the 70’s and 80’ discussion of the concept grew. Around the same time, big international companies also faced anti-corporate sentiments because of environmental and human rights issues. In fact, companies faced large scale boycotts of their goods and services to force change.
Though initially CSR was seen as the moral responsibility of corporate managers, it is now increasingly being accepted as being in the long term interest of corporations. Organisations as well as consumers are recognising that companies have a responsibility not only to their shareholders, but also to stakeholders including their employees, consumers, suppliers, communities, legislators and the environment. CSR now represents an organisations contribution to these stakeholders, the society at large and increasingly the global society in which they operate.
Corporate Social Responsibility Programs
Organisations exhibit their corporate social responsibility in a number of ways, depending on the resources they have allocated for this purpose. Prior to the 1990’s, CSR was a philanthropic activity based on a fixed budget that the organisation allocated – mostly doing so to “look good”. These funds were sometimes allocated to many organisations and causes with the idea to satisfy as many interest groups and to gain as visibility as possible. The commitment was usually short term and restricted to making donations that were heavily influenced by the wishes of the senior management of the organisation.
With the changing attitudesss to CSR, corporations are increasingly taking on long term commitments in few strategic areas. Major international organisations such as the United Nations, World Bank, and ILO are spreading endorsing and setting guidelines for CSR. Companies are following through by employing CSR strategies that are in line with corporate goals while doing the most good. Some of these strategies include:
- drafting a code of ethics for the organisation to follow
- public education programs
- setting up community forums
- undertaking pro bono work and contributing corporate expertise
- employee volunteering programs
- social and environmental audits and reports
The Case against Corporate Social Responsibility
Corporate social responsibility, as all with all other ideas, has its detractors. Mostly, CSR is often criticised because it is believed that the first and foremost responsibility of an organisation is its financial responsibility to its shareholders. Supporters of this opinion believe that an organisation should do all it can (within the law) to maximise profit, and that CSR conflicts with this goal. Since CSR investments have uncertain outcomes, there is also the opinion that organisations that undertake CSR activities are placed at a disadvantage since addressing social issues comes at a cost to the company.
There are concerns that organisations are not equipped to deal with social issues, and in fact, corporate involvement in complex societal issues may make the situation worse. CSR is also criticised as being simply a marketing tool for organisations to gain publicity and that corporations undertake CSR activities out of selfish interests.
Also, corporations are being viewed with a degree of mistrust and suspicion which has caused more discussion within the CSR movement. For example, the collapse of ENRON in 2001 has raised many questions about the real validity of the many CSR activities that it had undertaken.
The Case for Corporate Social Responsibility
Corporations have been criticised for damaging the environment and depleting natural resources. Corporate social responsibility is seen as one of the tools to ensure that companies voluntarily change products and processes that will cause less damage to the environment. Corporations are now operating in an increasingly global setting. The social issues across continents are extremely complex. Living standards, wages, working conditions and labour standards are vastly different in different countries. This means that organisations have to deal with many ethical issues. As a part of CSR many organisations are now attempting to integrate common standards world wide as far as possible.
Even though the concept of CSR is still evolving rapidly and continues to face some criticism, the best case for corporate social responsibility is, it is obviously preferred to corporate social irresponsibility. With consumers and the general public becoming increasingly sensitive to social and environmental issues, corporations will have to take a serious look at their role within the society as expectations of them increase. Large corporations have access to huge human and financial capital placing them in a position to effect positive change. In the long run, this will perhaps increase their goodwill within society and reduce the need for strict government regulations.
A leading non-profit organisation, Business for Social Responsibility, involved in CSR services, through their research and experience has concluded that companies have earned benefits from engaging in CSR activities. These include stronger brand positioning, corporate image, market share and sales. It also increased their ability to attract and retain employees and appeal to investors and financial analysts. Many other organisations are conducting research into the positive impact of CSR activities which may fuel the CSR movement further.
- Corporate Social Responsibility by Philip Kotler, Nancy Lee
- Strategic Corporate Social Responsibility by William B Werther, William B. Werther, Jr., David Chandler
- Corporate Watch:Evolution of CSR
- Evolution of CSR
- Corporate Social Responsibility
- CSR in practice