INTRODUCTION
Corporate social responsibility is also known as CSR, and it is the growing social trend of businesses. It is now being practiced throughout the world by many companies to enhance their image and build good reputation of the company (McWilliams, Siegel, & Wright, 2006). Even many multinational firms today are highly active in such activities, regardless of the fact that wherever they are operating, they just want to have positive image of their companies and in a way establish relationships with their customers and other stake holders.
Corporate social responsibility is defined as the responsibilities that an organization has towards its society, within which they are based and where they operate (Cochran, & Wood, 1984). It is an ethical way of operations pursued by any organization that takes into account profits, people and planet where they operate. It means that an organization is committed to consider environmental and ethical concerns while decision making. It gives a view of an organization that it cares about not only its own customers, but the whole environment and people where they are functioning (Garriga, & Melé, 2004). It also means that an organization is well aware of all the local laws and it is working according to the compliance of those laws and avoids being involved in corrupt practices.
The basic idea behind the concept of CSR is that none organization can exist isolated with the world, they are a part of environment and then they will also have to behave in such a way that they contribute to the environment just like a normal person does, after all these organizations are also artificial persons of this society.
CSR AREAS:
There are various areas where CSR programs of various companies are directed. The four broad major categories are:
- Environmental responsibilities
- Human rights responsibilities
- Financial responsibilities
- Political responsibilities
Environmental responsibilities:
These are the businesses where their CSR is directed towards sustaining the environment. Their activities are designed in a way that they exhibit environmentally responsible behavior. These programs include programs that contribute to carbon emission reduction. Some of those programs are like, ‘Going green’ that is working for greener environment by planting and saying no to trees cutting. This is a way to establish pollution free environment.
These environmental steps also contains actions to get rid of reduce the effect of issues like global warming, sustainability of scarce or precious natural resources and pollution.
Toyota launched a car namely ‘Toyota Prius’ which also produced good results for the company, this car was based on the idea of cars being environment friendly, as they were hybrid cars, they did not do gas emission which actually saved not only pollution but also environment.
Even Starbucks is committed to work for greener environment and they claim that they take steps to reduce waste from their operations and recycle.
Human rights responsibilities:
This human right aspect involves the attitude of an organization towards dealing with human rights issues such as gender discrimination at work place or the society, racism and sweat shops. It emphasizes on the fact that companies should treat all humans including their employees, customers and everyone around fairly and equally.
Companies that are not careful about this fact, often have to face difficulties and boycotts from several groups of customers and also by NGOs. For example, Nike was being popular for having sweatshops where the working conditions were very dangerous for the workers and they were not taking any steps to improve those conditions deliberately to save their cost, in other words to maximize their profits. It eventually resulted in decrease in Nike sales, as people became annoyed of the fact that Nike was being unethical by having sweatshops. However, Nike has denied of this fact.
If an organization decides to operate in a low cost country then it must make sure that it does not exploit the poor labors there.
Another example is of Starbucks that is working for a better environment as they have an arrangement with SOS Village Foundation. Each Starbucks store has adopted a child and has taken the full financial responsibility of those children. They also have outings with those children. Starbucks also arranges events and shows for children of SOS Villages. This is to help the needy and orphans of the society.
Financial Responsibility:
Firms that are fair in their financial reporting and dealing are said to be financially responsible. That means they do not misrepresent their finances, they do not get involved in financial frauds, insider trading, under the desk agreements, faking of financial data to misguide stakeholders or any other form of financial frauds (McGuire, Sundgren, & Schneeweis, 1988).
These organizations discourage any tenders or projects being awarded on the basis of gifts, bribery or any references but only encourage merit and performance. This is how fairly they operate in their environment. As today, white-collar crimes are at peak, it is highly important for an organization to be fair in their finances. Organizations should have people who could act like whistle blowers for the organizations so that nothing harmful can be done for the society (Lindgreen, & Swaen, 2010).
Political responsibility:
This is about how an organization works under the regime of particular government and how it establishes relationships with the government. For example, shell Oil Company faced consumer backlash during 1990’s when the company was having complicit involvement with Nigerian government which was involved in the murder case of anti-oil activists.
Advantages of businesses practicing CSR:
Businesses that are practicing CSR are having many advantages such as they have a better image and reputation of them in the society, better public relations, and enhanced relationship with stakeholders, increased motivation.
BRAND IMAGE ENHANCEMENT:
Because of the ethical practices, brand or the organization gets popularity and also gains the support of people which in return creates better and positive image of the organization and then the organization is perceived as a company that cares about its people and surroundings. Then even the consumers would be happy to buy or consume the products of the brands that are working for a better world.
PUBLIC RELATIONS:
CSR works as a great Public relations tool. It creates publicity for the brand. Masses get aware of the activities of the brand as number of people talks about it. All of this actually helps in more sales for the brands (Lindgreen, & Swaen, 2010).
RELATIONSHIP WITH CUSTOMERS AND OTHER STAKE HOLDERS:
CSR improves relationship of an organization with its customers as they feel delighted by acquiring products and services of those brands which are environmentally responsible. It also affects the relationship of the company with its other stake holders such as share holders, distributors, suppliers, employees and others. They all feel proud to be associated with such an organization (Lindgreen, & Swaen, 2010).
INCREASED EMPLOYEE MOTIVATION:
When an organization is involved in doing something good for the society and to bring a positive change in the society even the employees of that organization gets motivated because of the fact that they realize they are also a part of that positive change and a part of an initiative to will bring good to people. So they work harder (Lindgreen, & Swaen, 2010).
Disadvantages of businesses practicing CSR:
HIGHER EXPENSES:
As this is mostly an extra effort done by an organization to do good so it also have to take steps that eventually results in higher expenses for the company. As company starts a campaign about greener environment, it will also have to start a marketing campaign or will have to organize an event for awareness. This will all be an extra cost incurred by the company.
SHAREHOLDERS REACTIONS:
Most of the times, initially shareholders are not very welcoming to the idea of CSR, as they know that it will result in higher expenses for the company which will basically reduce their profits. The challenge is to convince shareholders with the notion that implementation of this idea will result in greater profits and benefits for the company.
DIVERGENCE FORM FOCUS:
An organization’s main concern is their customers. Companies strive to make them happy and delighted all the time by innovating something on regular basis. By starting CSR program, company’s focus and primary concern often deviates to the additional responsibilities held by the company in accordance with CSR program.
DOUBTS ON LIFE OF CSR PROGRAM
Businesses do start CSR but they themselves are most of the time not aware of the fact that what would be the longevity of this program. They do not have clear idea about when to end this program or either to end it or not. Mostly these programs are also in response to various problems that occur but are temporary in nature. As the problems end, the programs end too.
EDGE TO COMPETITORS
At times, it works better for competitors, as the company involved in CSR is busy doing that. This requires lots of efforts, time, and money of the company. Mean while competitors save their money by not doing CSR and then save it for future (Lindgreen, & Swaen, 2010).
SOCIAL RESPONSIBILITY THAT ARE REQUIRED BY FEDERAL AND STATE LEGISLATION IN THE UNITED STATES
United States Government has been taking initiatives to control and maintain the healthier environment due to which, it has also passed number of laws which the companies operating in US have to abide by, in order to keep on operating and existing in the market smoothly. Few of those laws are:
U.S. NATIONAL ENVIRONMENTAL POLICY ACT (NEPA)
U.S. national environmental policy was established with the aim of devising a national policy for the protection of the environment and to establish a council to control environmental quality. The primary purpose of this act is to protect the relationship between humans and the environment and to provide an environment to the people of U.S. and for that purpose Government has taken steps to eliminate, reduce and prevent damage to being done to the environment by formulating this law which all companies have to abide by (Redemtech, n.d.).
TOXIC SUBSTANCES CONTROL ACT (TSCA)
Toxic Substances Control Act (TSCA) was another effort of U.S. Congress that provided the authority to U.S. Environmental protection Agency (EPA) to track the industrial chemicals being produced in U.S. or either being imported from abroad. This agency then tests those chemicals and then prepares the report on those indicating whether those are poisonous for the environment and humans or not (Redemtech, n.d.).
POLLUTION PREVENTION ACT (PPA)
Pollution Prevention Act (PPA) is one of the attempts of Government that is also highly admired by U.S. Environmental policy Act (EPA). Here steps were taken to reduce the amount of pollution present in the environment through using means that are cost efficient in nature and then amending the ways how operations, productions and raw materials of a company are acquired and used. These actions also include the process recycling (Redemtech, n.d.).
Companies and managers go beyond required social responsibilities and do much more voluntary
There are organizations that are doing CSR, these organizations are not only keeping in mind the local regulations but they are also doing something more to give a positive thing to society from their part. Following are the examples of some organizations that are involved in CSR programs:
- Tyson Foods
Tyson Foods are striving hard to make an impact in the society by working for the elimination of childhood hunger. They did that by using social media, for each comment they donated 100 pounds of chicken capital Area Food Bank of Texas. Within 2 hours they were able to gather 658 comments and eventually they loaded two trucks of chicken for the hungry children. They then repeated this work in other cities as well.
- Haggen-dazs
Haggen Dazs that is famous for their excellent foods; they did a CSR program thatw as aimed towards protecting honey bees. As honey bees being very useful and tremendous species, were disappearing from the environment. They created awareness to the masses by sharing information that honey bees are responsible for 1/3rd of the foods we eat, including their favorite brand Haggen DASz as they used natural ingredients.
CSR programs like these, they not only comply by the ethical and legal laws of the society but they show that the companies are constantly striving to bring something good to the society and to serve the society because of which they have become able to generate profits.
This study was conducted in ABN AMRO which offers financial services in more than 70 countries. The concept of employee volunteering states that the company or the organization encourages its employees to get involved in social work or to do volunteering for the betterment of the community. For this service, the company or the organization agrees to sacrifice employees’ working hours to go for volunteering during the working hours, not only that the organization also gives funds to the employees to donate and to spend on volunteering work (Gilder, Schuyt, and Breedijk, 2005).
But even in this particular program there are certain challenges that a company faces such as there are times when employees feel that doing social work is a sort of private thing and sometimes employees do not have interest in doing social work.
The effectiveness of ‘employee volunteering programs’ for companies doing so was still not clear. There were not sufficient researches that supported the fact. For that reason ABN AMRO conducted a research to measure the effectiveness of employee volunteering on the profitability of the company. This research took three groups as its sample which included Employee Volunteer, Non-Volunteer and Community Volunteer.
- Employee Volunteer included participants that took their time from their official working hours and served those hours in volunteering.
- Non-Volunteers were the participants who either took time from their working hours or from their vacant time.
- Community Volunteers were the participants who served their hours for volunteering other than their working hours.
This study also showed that aspects like an individual’s gender, religion, marital status, age and education background, all contributes in evaluating an employee’s or an individual’s interest for volunteering or social work.
The result showed that employees who participated in social work during working hours, they felt very positive and were motivated by the fact. The participants who were of higher educational background were highlighted more during their social work.
CONCLUSION
Over all this is another way of companies to get involved in CSR with a new way of influencing the society. Corporate social responsibility is just another way of businesses to show their concern for the society where they operate by being involved in ethical, legal and philanthropic activities that could ultimately affect organization’s image. This is another trend that is being followed by most of the companies to make their mark in the world by showing themselves as very responsible artificial persons.
References
Cochran, P. L., & Wood, R. A. (1984). Corporate Social Responsibility and Financial Performance. Academy of Management Journal, 27(1), 42-56.
Garriga, E., & Melé, D. (2004). Corporate social responsibility theories: mapping the territory. Journal of business ethics, 53(1), 51-71.
Gilder, D., Schuyt, T., and Breedijk, M. (2005). Effects of an Employee Volunteering Program on the Work Force: The ABN-AMRO Case. Journal of Business Ethics, 61, 143–152.
Lindgreen, A., & Swaen, V. (2010). Corporate social responsibility. International Journal of Management Reviews, 12(1), 1-7.
McGuire, J. B., Sundgren, A., & Schneeweis, T. (1988). Corporate Social Responsibility and firm financial performance. Academy of management journal, 31(4), 854-872.
McWilliams, A., Siegel, D. S., & Wright, P. M. (2006). Corporate social responsibility: Strategic implications. Journal of Management Studies, 43(1), 1-18.
Redemtech. (n.d.). Regulations. Retrieved 15 March 17, 2013 from https://www.redemtech.com/ewaste-federal.aspx
