Benefits and Dangers of Corporate Social Responsibility
Over the years, corporate social responsibility has become a core issue in the business fields and more so in business reporting. It takes a very broad definition and according to David et al. (2008, pp. 10) it involves the relationship between international companies, the government of countries and the respective citizens. It is specifically concerned with the relationship between a company and the surrounding or local community in which the business is established. Furthermore, corporate social responsibility is concerned with the relationship between the company and all its stakeholders.
Zairi, (2000, pp173), broadens this perspective by outlining that corporate social responsibility is all about “social, ethical accounting, auditing and reporting”. It further involves ethics against social concerns where there is an undisputed relationship between the two, and that firms have got to put in place ethics so that all other activities of the company can follow suit.
Moreover, corporate social responsibility is not just an activity, but a corporate concept where businesses take into account the societal interests. This is done by taking responsibility of the effect of their actions on all stakeholders that includes customers, shareholders, employees, suppliers, community, as well as the environment according to Ismail (2009, pp.199). As a result of applying this concept, it shows the willingness of companies to voluntarily comply with the rules and regulations and engage in activities that will aid in improving the well-being of the stakeholders more so the society.
However, according to Lemon et al., (2011, pp. 1), the impact of corporate social responsibility must be accessed in order to determine who and how the CSR programs affect. It is important for enterprises to have a set of measurements in order to analyze and prioritize the goals of the diverse stakeholders.
Benefits
Community
Corporate social responsibility improves the societal well-being in terms of health where companies engage in health projects. According to Adeyanju, (2012, pp. 041), MTN involvement in the health activities of Nigeria as part of its corporate social responsibility improved the health of community and companies have to give back to the society. This is because, “progressive companies cannot work in a retrogressive community”. In addition to MTN, Guarantee Trust Bank started the Massey Street Children’s hospital in the field of health care with the aim of helping the community. It renovated the facility and annually supported the hospital through equipment purchase and innovation. Adeyanju goes ahead to add that the impact of Corporate social responsibility is great and impacts on the society by” adding to the infrastructures and development of the society” (pp. 041).
In addition, corporate social responsibility ensures that human rights are protected, according to Ismail 2009, pp. 206. This through companies taking part in initiatives from various fronts such as the United Nations Global Compact that aims at convincing firms to take the responsibility upon them to further the universal principles related to the human rights. Ismail states further that corporate social responsibility is “an aid to alleviate poverty”. This is by companies taking the initiative to improve impoverished societies and to change their livelihoods.
Environment
Corporate social responsibility helps conserve the environment. For instance in India, MARUTI company has been in the forefront in addressing global warming issues such as climate change by making products that are suited to the society (Sampada, pp203). Moreover, according to Ismail, (2009, pp. 205), multinational corporations in Malaysia have taken CSR as their responsibility to sensitize on protecting the environment. This is through slogans such as “we green the earth” and others as such as “Friends of the earth” as reported by the United Nations.
Moreover according to Sivaranjini, Rekha and Nisha, (2014, pp. 59), CSR leads to great environmental benefits such as greater material recyclability, and “integration of environment management tools into business plans” such as eco-labeling.
Organization and Management
According to Crowther (2008, pp. 61), a company with good corporate reputation inspires the confidence in the investors who bring funds in the company. As a result, the company enjoys a higher stock price and gains competitive advantage in its industry. In addition, customer loyalty is enhanced to the firm’s products and thus a company enjoys a strong market share that leads to profitability.
In addition, a firm with a strong corporate reputation is the driving force when it comes to forming partnerships and strategic alliances with other companies. This is because; the partnering firm knows that it will improve on its reputation through the partnership. As a result, the management of the company can further the objective of the company and hence make gains.
Crowther (2008, pp61), further states that, “at a time of crisis a good corporate reputation can shield the company from criticism and even blame”. This is evident in the Pepsi Cola case where the company’s products were found to have hypodermic syringes. But due to good corporate reputation, Pepsi dealt with the problem through public relations campaign by highlighting the integrity of its manufacturing process and corporate reputation.
Employees
Corporate social responsibility benefits the internal sphere of a company such as the employees. This is according to Sino-German Company, (2012, pp9), that outlines that CSR activities improve the employees’ commitment and the learning processes. The improvement in commitment leads to improved skill level and the effectiveness of the employees. Corporate responsibility also makes a company more attractive to diversely qualified applicants giving the firm an opportunity to increase the average skill level of its employees.
According to Sampada, having an effective CSR program in place can assist the company to recruit and retain employees especially in a competitive graduate market. This is because “potential recruits often ask about a firm’s CSR policy during an interview” and therefore having an effective program in place would be beneficial to the firm. Crowther (2008, pp62) supports this notion and adds that a good corporate reputation boosts the employees commitment in addition to enhancing their work morale.
Disadvantage/Criticism of Corporate Social Responsibility
Though CSR has benefits on various fronts such as employees, environment, organization and the society, there are arguments against the concept. Opponents of CSR feel that it imposes costs to organizations making them less efficient and thereby reducing their overall social welfare as illustrated by Bacher (2007, pp. 17). The opponents feel that organizations do enough by supplying goods that were initially unavailable to the market and the population. Therefore, engaging in social activities comes as an extra cost.
In addition, it is unfair to the shareholders since managers are forced to divert profits that belong to the shareholders to societal programs. This is the profit that would have been used to improve the shareholders’ value at the organizations. As such, the opponents feel that CSR supporters are progressives with a leftist policy program and thus the market should be left to allocate resources since the market based approach is efficient.
References
Adeyanju, O, D 2012, ‘An Assessment of the Impact of Corporate Social Responsibility on Nigerian Society: The Examples of Ban king and Communication Industries’, Universal Journal of Marketing and Business Research Vol.1 (1) pp. 017-043, May, 2012.
Ismail, M 2009, ‘Corporate Social Responsibility and its Role in Community Development: An International Perspective’, journal of international Social Research, Vol. 2/9, fall 2009.
Bacher, C 2007, Corporate Social Responsibility, München: GRIN Verlag GmbH.
Costs and Benefits of Corporate social Responsibility, 2012, a company level analysis of three sectors: Mining industry, Chemical industry and Light industry. Sino-German Corporate Social Responsibility project, February, 2012. [Accessed 31 October, 2014]. https://www.google.com/search?q=sino-german+corporate+social+responsibility&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a#rls=org.mozilla:en-US:official&q=sino-german+corporate+social+responsibility-cost+and+benefits
Crowther, D 2008, The Ash gate research companion to corporate social responsibility, Aldershot, England: Ash gate.
Lemon, K, Roberts, J, Raghubir, P 2011, A Stakeholder-Based Approach to Measuring the Effects of Corporate Social Responsibility. New York: The Conference Board. https://www.google.com/search?q=sino-german+corporate+social+responsibility&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a#rls=org.mozilla:en-US:official&q=Lemon%2C+K+2011%2C+measuring+the+effects+of+corporate+social+responsibility%2C+
May, S 2007, The debate over corporate social responsibility. Oxford: Oxford University Press.
Ms. Sampada, 2014, CORPORATE SOCIAL RESPONSIBILITY, A study of key features, benefits, criticism and the various initiatives,.1,s.l.: IRJMSH,2014, International Research Journal of Management Sociology & Humanities ,Vol.5 www.IRJMSH.com.[ ISSN 2277 – 9809 (online) ISSN 2348 - 9359 (Print)][ Accessed 31 October, 2014].
Sivaranjini, P, Rekha T, Nisha S, T, 2014, ‘Issues and Challenges Faced by Corporate Social Responsibility in Community Development: India human Resource Development’, IOSR Journal of Business and Management, 2014. e-ISSN: 2278-478X, p-ISSN : 2319-7668, PP58-61[Accessed 31 October, 2014]
Social responsibility, 2001, New York, United Nations.
Mohamed Zairi, (2000) "Social responsibility and impact on society", The TQM Magazine, Vol. 12 Iss: 3, pp.172 - 178 . Available at http://www. Emerald-library.com. [Accessed 31 October, 2014]. http://www.emeraldinsight.com/doi/abs/10.1108/09544780010320278?journalCode=tqmm
