The argument between the authors entails social, corporate responsibility. There is an inquest on whether shareholders benefit from social responsibility activities enhanced by an organization. This is because the resources disbursed from this activity are meant to bring the desired return to shareholders. An argument has been raised that several studies designed to explain this scenario lack theoretical explanations.
Several relationships and models have been outlined to help shed a light on the issue. Among them is the relationship between Corporate Social Responsibility and Corporate Financial Performance. This relationship has been discussed in over 225 studies that were conducted earlier (Godfrey, Craig and Jared, 2008). The main argument under this approach is to show whether corporate social responsibility generates corporate financial performance. Analysis of this relationship tries to set up several shortcomings that have resulted from previous studies. Among them is that there are no theoretical explanations that accompanied the studies. The rationales used are theoretically broad and underspecified. There is also an argument that the studies use coarse grained measures when displaying aspects of corporate social responsibility.
Another relationship involved is the relationship between shareholders value and risk management activities. The relationship applies the theoretical model found in perfect capital markets. It argues on how mangers that aim at maximizing profits do not invest in risk management. The theory argues that such expenditure usually result to reduced expected returns. A comparison is made with the real world where firms take the initiative of investing in risk management (Godfrey, Craig and Jared, 2008).
Corporate social responsibility and moral capital is another relationship used in article. This entails the actions within the firm that are designed to enhance social conditions. There s an argument that these activities can be viewed as mere grants or gifts from the corporation. However, this does not mean that corporate social responsibility is a gift with no strings attached.
The concepts described above have precise definitions. The relationship between CSR and CFP has been outlined to be positive for both the stakeholders and the society. This activity has resulted in the creation of stronger exchange relationship between the business and customers and employees (Godfrey, Craig and Jared, 2008). This is because they are all members of the general public. Insurance and shareholder value on the other hand, also shows how the shareholders stand to benefit. Reduction of risk always adds value to shareholders. Among the basic mitigations is protection from the deadweight loss. This saves them the financial distress that would have occurred if precautionary aspects had not been instituted. The issues relate directly on how shareholders would benefit if they embraced corporate social responsibility.
The article has contributed significantly on the modern management thought. It has tried to outline the benefits that might accrue to shareholders as a result of enhancing social responsibility. The Daimler report can be used to supplement this aspect. Daimler report suggests that once an organization enhances social responsibility, it is moving towards attaining its goals and objectives. It stipulates that these aspects should be enhanced by all the managers in their levels of management. Daimler showcases several initiatives that have received awards due to their enhancement of social responsibility. There have also been other benefits accruing, as a result. The article will help individuals in management positions to rethink of their business models. They will have to endorse cultures that enhance social responsibility. This will ensure that the organization’s stakeholders stand to benefit in the long-run.
Work Cited
Godfrey, Paul, Craig Merrill, and Jared Hansen. "THE RELATIONSHIP BETWEEN CORPORATE SOCIAL RESPONSIBILITY AND SHAREHOLDER VALUE: AN EMPIRICAL TEST OF THE RISK MANAGEMENT HYPOTHESIS." Strategic Management Journal 30.4 (2008): 425-455. Print.
"Overview: Sustainability | Daimler > Sustainability." Home | Daimler. N.p., n.d. Web. 25 Nov. 2012.
