Corporate Social Responsibility and Business Success
Corporate Social Responsibility (CSR)
CSR refers to the events and occasions that an organization undertakes for the common benefit of the general society. CSR is a deviation from organization’s significant role of profit- making and is also different from the social fulfillment requirements of businesses by the government. Interest on CSR has tremendously increased in the recent years. CSR significance and importance have increased in the organizations due to the recent concern of the role of firms in the society. Organizations have a role in the society. Companies are taken to play part in the society and that their primary interest surpasses just making profit. The concept of CRS rose in the 1960’s after World War II (Carroll & Shabana, 2010, 86)). The primary cause of increased concern in the CSR concept is due to consumer concern social behavior of firms.
Current arguments on CSR concept
The concept of CSR has faced both favors and objection. The main objection of CSR is that the primary concern of a business is to improve the profit of its stakeholders. Social issues are the interest of the government and corporations ought not to be involved. Business is also thought not to be capable of handling social issues. According to Carroll and Shabana (2010, 87), business has acquired enough power and the social power should not be entrusted to it. Embracing CSR concept in businesses will reduce the national competitiveness both at local and global level.
On the other hand, CSR concept has been accredited as the source of business success in various ways. First, CSR determines business viability that consequently determines its future operations and success. CSR concept is also believed to offer a platform to enable business institutions to shun influence and regulation by the government. According to Carroll and Shabana (2010, 88), use of CSR will help business to anticipate and initiate social events. Such pro-action is less costly than reacting to than responding to social problems encountered.
The significant influence of a product to business performance lies in customer awareness. Products highly affect customer’s top of mind awareness that, consequently affect their loyalty. Top of mind awareness depends on customer’s perception of the ethical values of a firm’s product and services. In determining the relationship between product and business performance, this paper explains the corporate social organization and its outcome of different companies. However, business success in penetrating the market is mainly affected by its quality, price and convenience (Vogel, 2005, VII). However, corporate social responsibility is also vital to business success. According to Sallyanne (2004, 1), CSR is crucial in causing dynamic change in businesses by determining its structural change.
Major Corporate Institutions and their use of CRS
Social responsibility is a significant aspect of consideration and forms an important culture in Co-operative Bank’s activities. The bank's primary intentions during its start was to help individuals build upon savings and access loans. The bank began as a movement fighting financial exclusion of some social groups. At its start, such services were only available to upper-class individuals. This initial reason for the formation of the bank captures in it the need to do well in the society.
One way the company ensures maintenance of CSR is by democratic control. The bank provides democracy in their management which is defined by the customers. To ensure the control democracy, the bank stipulated the formation of a committee comprising 48 members who are democratically elected. Banks are can keep abreast with the needs of their customers through democracy. Meeting these needs helps top improve the standards of customer’s lives. Moreover, the bank plays a role in ensuring success of the local enterprises. The bank offers monetary support and education to such enterprises.
Co-operative bank uses marketing based on ethical policies. According to Sallyanne (2004, 1), Co-operative bank has achieved success through the use of ethical policies in its marketing. CSR offers competitive advantage to a business. Co-operative bank has used ethical policies as a source of competition in the market. Competition depends on sustainability of customers. Meeting the needs of customers offers the central platform of ensuring sustainability. Customers’ needs are meet if apart from price and quality, their ethical standards are met. Co-operative bank has exploited the fact of using ethical policies as a way of ensuring sustainability.
Use of ethical policies results in customer approval and hence the business from a broader perspective. For instance, Co-operative Bank was among the top five most trusted brands in the world. The bank was the overall best performer in CSR. Moreover, the use of partnership program through the use of the control committee has increased number of customers by double which has also increased their profit (Sallyanne, 2004, 1).
Co-operative bank uses services such as on food outlets as a way of meeting social responsibilities. Failure however for subsidization of the services compared to other providers forms a major drawback in ensuring its popularity. The company also uses marketing as its major way of implementing CSR. Such only meets social requirements of the community but does not improve it as required in CSR (Sallyanne, 2004, 1).
Shell Company concerns with the production of electric power. The company undertakes excavation and processing of fossil fuel. The excavation and the processing of the crude oil may highly pollute the environment. As a way of ensuring community safety, the company has developed mechanisms to prevent environmental pollution.
Oil forms a primary source of money for most countries. The activities of the company are, therefore, susceptible to being involved in political conflicts. Such conflicts due to oil have been the case in major developing countries. According to Vogel (2005, 1), the company has adopted policies to help ensure environmental conservation and human rights. For instance, the company has been caught up in the conflicts in Niger. However, the company incorporated measures to ensure social responsibility.Through the implementation of such policies, Shell Company emerged the best in maternal health and poverty reduction in Nigeria (Koen, 2014, n.p.).
Shell Company uses several core values as a guide for ensuring social responsibility. These values are such as integrity, honesty and respect for the people. The implementation of these values in how it operates helps ensure transparency, trust and ensure professionalism. The company’s General Business Principles help form the principal basis for ensuring social responsibility. These principles are crucial in its commitment to both short and long-term interests and economic integration. Koen (2014, n.p.) argues that these principles guide the company in its social and environmental considerations.
The stipulation of Shell’s competitive principle requires that the process should base on fairness and ethics. Shell also requires that its operations should be transparent and free from bribery. The company also ensures that its politics is in line with those of the hosting country to avoid conflicts (Koen, 2014, n.p.). A business that uses CSR ensures that its activities consider the wellbeing of the community. To ensure community’s welfare, Shell developed principles concerned with observing the health, security, safety and environment. This principle helps the company to reduce environmental pollution and hence ensure health safety of the community.
However, streamlining the company’s politics with those of the hosting company has been difficult. For instance, Niger faces a lot of political wrangles. Division in the country’s politics results to lack of a clear way of cooperating with either of the parties which can intensify the conflicts further.
NIKE is an incorporation that concerned with the cloth and footwear products. The incorporation is based in Washington, DC. Major CSR concerns of the incorporation revolve around its use of energy, waste handling and the design of the product (Walker, 2014, n.p.). According to the incorporations report in 2014, it had succeeded in reducing emission of greenhouse gasses. The same period considered in making the report marked a 26 percent economic growth.
NIKE continues to focus more on the chemical nature of its raw materials. Knowledge of the materials nature will help determine their degree of pollution to the environment. NIKE also deals with issues regarding worker’s payment and number of working hours. NIKE’s management believes that the business has a role in meeting the challenges faced by people regarding the environment, climate and in the global economy (Walker, 2014, n.p.).
Saltaire Company was founded in 1851 and produced textile products. The company was located in Bradford, England. Bradford was renowned for its environmental pollution. Pollution was mainly from factories that disposed waste materials without meeting the required standards. Significant pollution was due to disposed sulfurous smoke, sewage and factory effluent. These waste materials caused pollution of water and air that consequently resulted to decline life span. The life span at Bradford reduced to about 20 years of age (Smith, 2003, n.p.).
Titus Salt, one of the company owner, was concerned with the worker's welfare. Titus built an industrial community for the workers that had a park, hospital, school and church (Smith, 2003, n.p.). Moreover, the community was supplied with clean water from the company’s reservoir. Salt’s actions despite being in the 1980’s intensify on the role of business in meeting social needs and welfare of the community.
The Saltaire however failed to enact mechanisms to prevent further pollution. Their mechanism despite improving the living standards failed to address the issue of future pollution by the companies.
Other companies that have embraced the concept of CSR are such as Citibank. Citibank assesses the environmental effects of it lending to the developing countries. Pepsi COMPANY also withdrew its investment in Burma due to concerns about human rights violation.
Inference on various factors concerning CSR
CSR concerns with business ethics. It revolves around the impact of the business community on the social welfare of the people. The extent of meeting CSR requirements for a business is determined by various factors. The extent which a business meets the ethical, legal, economic and philanthropic expectations of the community determines these factors. Material profit also determines the degree of implementation of CSR (Carroll & Shabana 2010, 89). Business activities, which by any form violate the legal and ethical requirements of the immediate and target community faces rejection and poor market penetration if any.
According to Carroll and Shabana (2010, 95), ethical performance measure of the business' social responsibility measure is the Kinder, Lydenberg and Domini (KLD) social performance index. KLD index covers the performance of a corporate in social, environmental and governance issues. The index further includes corporate activities that are controversial to the community. Philanthropic factor is concerned with level to which a business meets the expectation of the community (Carroll & Shabana 2010, 96). Philanthropic responsibility is met through such as corporations and donations.
As earlier discussed, there is a clear relationship between economic growth of a business and maintenance of social ethics. For instance, Co-operative Bank registered improved profit due to use of ethical conduct in their operations. Carroll and Shabana (2010, 90) argues that ethics from the primary determiner of the contract between the society and the business. Carroll & Shabana (2010, 93) notes that CSR leads to long-term shareholder value. The main reason for the long-term shareholder value is due to improved reputation and legitimacy of a corporate by CSR (Carroll & Shabana 2010, 990). Factors that influence the responsibility performance in a business affect the degree to which a business meets social requirements.
Two major factors determine the role of government in enacting CSR. The first is enhancing implementation of the CSR when it is voluntary but raises concern by the public. The second determiner of whether the government ought to enact CSR is when they legally become mandatory to effect in businesses (Steurer 2010, 14). The extent to which a government pushes for enactment of CSR is based on the contribution of the business towards achievement of developmental goals (Steurer 2010, 2). CSR is vital in guiding policy formulation and development growth. Governments may hence push for CSR implementation to push businesses to perform beyond legal requirements and hence lead to more economic growth.
Carroll, A. B., & Shabana, K. M, 2010, The business case for corporate social responsibility: a review of concepts, research and practice. International Journal of Management Reviews, 12(1), 85-105.
Koen Wellink, 2014, Social Corporate Responsibility and Shell. Available at: <http://www.culturaldiplomacy.org/academy/content/pdf/participant-papers/2014-biec/Koen_Wellink_-_Social_Corporate_Responsibility_and_Shell.pdf.> (Accessed 06 March 2015)
Sallyanne Decker, O. 2004,Corporate social responsibility and structural change in financial services. Managerial Auditing Journal, 19(6), 712-728.
Smith, N. C, 2003,Corporate social responsibility: not whether, but how.Center for Marketing Working Paper, 3, 701.
Steurer, R, 2010, The role of governments in corporate social responsibility: characterising public policies on CSR in Europe, Policy Sciences, 43(1), 49-72.
Vogel, D. 2005, The market for virtue the potential and limits of corporate social responsibility. Washington, D.C., Brookings Institution Press. Available at: <http://public.eblib.com/choice/publicfullrecord.aspx?p=267634> (accessed at 6 March 2015)
Walker M, 7 March 2014, ‘Nike's latest CSR report examines drop in emissions, labor challenges’, South Florida Business News. Available at: <http://www.bizjournals.com/portland/blog/sbo/2014/05/report-nike-breaks-pattern-lowering.html> (Accessed at 6 March 6, 2015)