Lecture’s Name: Essay Example

  • Category:
    Management
  • Document type:
    Essay
  • Level:
    High School
  • Page:
    3
  • Words:
    1766

Corporate Social Responsibility

Lecture’s Name:

Introduction

Corporate social responsibility has grown tremendously owing to the realisation that business does not exist as a profit minting mechanism, but also as moral agents that are responsible to the whole society which supports their existence. As such, business are called to be proactive to engage in corporate ventures that promotes the well being of the whole society irrespective of the economic return by adopting deontological aspirations. The beauty of such engagements is that it empowers a business organisation to be in a position to meet expectations and balance them. This leads to reduction of friction and attainment of harmonious working environment. Owing to such realisations, the aim of this paper is to identify three critical issues pertaining undertaking in corporate social responsibility. The first is to conceptualise the term; secondly, outline associated advantages and lastly, pinpoint possible advantages to be experienced while pursuing corporate social responsibility.


The paper opines that corporate social responsibility is about meeting expectations with deontological aspirations in the mind. In regard, to the associated advantages, the paper argues that engaging in corporate social responsibility is critical in helping organisations address public good/ well being by churning out best practices that addresses environmental issues and philanthropy. Additionally, engagement is such activities are significant in the creation of positive reputation therefore leading to enhanced brand awareness. Finally, the paper points out that corporate social responsibility is potential in aiding firms avoid legal fines and thus, delivering required institutional accountability. On the other hand, the paper argues that the associated disadvantage relates to the substantive cost incurred by organisations that might equally affect cost leadership strategy of an organisation. Secondly, there various confusing standards that makes implementation difficult.Definition

Corporate social responsibility can be best conceptualised in regard to meeting of stakeholders expectations. In any given business environment, there various vested varying and competing interests. For instance, stockholders/ shareholders under the theme of shareholder value expect to be rewarded for investing in the business and this implies that business has to make profit. On the other hand, consumer expects product and services that are able to meet their needs. Additionally, government as a regulator expects business organisations to adhere to expected legal standards and finally the public at large expect organisations to adhere to moral standards while conducting business. As such corporate social responsibility is the process of ensuring a balance is a strike between various business stakeholders so as to guarantee institutional accountability (Benabou & Tirole, 2010, p.1).

In another perspective, corporate social responsibility is best understood within the framework of normative non-consequentialism theory and deontological expectations that go beyond profit oriented utilitarian approach of doing business (Iamandi, 2007, p.6). In this regard, business as a creation of society and moral agent is expected to adhere to moral expectations (Donaldson & Dunfee, 1994, p.254). For instance, under deontological expectations business are expected to engage in what is morally upright by not only placing profitability at the forefront, but also the good of the public (Iamandi, 2007, p.7). As such this is why most business organisations engage in events/ activities that promote public good such as sustainable development, charitable events such as support for needy and sponsorship of events (ASX Corporate Governance Council, 2007, p.21).

Adams (2004, p.731 & 732) notes that the hallmark of such deontological expectations is best exemplified through social, ethical and environmental disclosures. According to him, social and ethical disclosure entails “the establishment of appropriateness of an organisation’s business practice”. Moreover, he posits that, such disclosures are not only restricted to financial aspects, but also social issues, environmental and ethical issues. Carroll (1991, p.40) lists possible engagements under corporate social responsibility domain as diversity management, sustainability reporting, sponsorship, philanthropy, consumer safety, capacity development and equal employment opportunities.

Advantages

There are numerous advantages associated with engaging in corporate social responsibility. The first advantage associated with such endeavours is the attainment of best practices that are for the good of the community/ public. This is mostly driven under the societal and deontological expectations of doing what is good (Iamandi, 2007, p.6). There numerous examples that have been undertaken by most corporations. One is sustainability reporting and sustainable development/ processes as informed by the concept of natural capitalism. In this regard, corporations seek to engage in green initiatives that are critical in protection of environment (Aras and Crowther, 2008, p.281). To attain such endeavours corporations have initiated approaches such as reduce, reuse & recycle concepts; leadership in energy & environmental design and green processes. The greatest beneficiary in this context is attainment of normative expectation in regard to sustainable development.

The second advantage is closely related to marketing principles, especially positive reputation. A company that engages in corporate responsibility through various initiatives such as philanthropic approaches is able to develop a positive public reputation. Positive reputation is an integral in how public views and trust an organisation. An institution that is trusted by the public is able to leverage on this positive reputation to enhance their sales and subsequently profitability since they have developed a long- term mental image on given consumers (Abrahamsom, Forsgren & Lundgren, 2003, p.4). Closely related to positive reputation is brand equity and brand awareness. While engaging in corporate social responsibility, a firm is presented with opportunity to market itself to local communities as they brand most of their activities. Moreover, these acts as a customer contact point especially those programmes that are community driven (Iamandi, 2007, p.8).

Additionally, corporate social responsibility has ability in aiding companies address institutional accountability to whole stakeholders (Kearns, 1994, p.187). This has a positive connotation as it empowers firms to avoid legal fines associated with inability to meet such expectations and negative marketing aspects such as product boycott (Yoo, Donthu, & Lee 2000, p.195). For instance, if a firm invests heavily in conservation of environment, it is unlikely that it will receive reprimand from the government or experience boycotts.

Disadvantages

According to Porter’s model, an organisation can pursue a cost leadership strategy or differentiation strategy. Under cost leadership strategy, organisations aim at cutting costs of production and operation with the ultimate aim that this can be transferred to the final consumer. Once a low pricing has been transferred to the consumer they are then able to compete effectively by attracting segment that is mostly concerned with pricing. On the other hand, a firm might decide not to focus on cost and pricing issues and direct their energy towards differentiation through high value products that are equally priced highly (Ogutu & Samuel, 2012, p.71). The concern for the disadvantage especially for those firms pursuing cost leadership is the possibility of escalation of prices. For instance, investing in new production system requires massive investment so that to produce green products (Bordes, 2012, p.8).

The next disadvantage relates to the conflicting nature of the guiding principles. The rationale for this argument is premised on the fact that corporate social responsibility draws its inspirations from ethical principles yet ethical principle are not uniform. For instance, there are consequantialism approaches that address the end as opposed to the means and the non-conaequentialism that dictates that individuals ought to do what is good (Farrell, Fraedrich & Farrell, 2011, p.162). Such experiences are equally present in the global standards. For example, Werhane (2010, p.696) found out there is a conflict between Global Economic Ethic (GEE) and United Nations Global Compact (UNCG). For instance, article three of GEE directs organisations to undertake what is good by avoiding evil activities, but the question remains such open standards are relative and subject to varying interpretation.additionally, the same document in article 6 calls for embracing of sustainable development yet this is a direct contradiction of principle 7, 8 7 9 of UNCG that calls for precautionary steps in tackling environmental issues.

Conclusion

The aim of the paper was to define or determine what the concept of corporate social responsibility refers to. Additionally, it sought to establish the advantages and disadvantages associated with investing in such endeavours. In conceptualizing corporate social responsibility, the paper established that corporate social responsibility relates to internal and external mechanisms of creating a balance among competing stakeholders interest anchored on the realization that businesses as moral agents are obliged to engage in good practices by not only focusing on bottom line alone. In terms of advantages, the paper found out that there are three critical merits. The first is its role in attaining best practices that contributes to common good of the community welfare and the environment. Secondly, it was realized that the whole process is significant in addressing marketing concern, especially delivering long-lasting metal image through positive relation therefore aiding in ensuring the creation of brand awareness and equity. In relation to advantages, the paper established that investing in corporate social responsibility can be a costly affair thereby undermining cost leadership strategy of businesses. Lastly, there are various contradictory principles that makes its implementation challenging.

References

Abrahamsom, J., Forsgren, T. & Lundgren, H. 2003. Sport sponsorship as a marketing communication tool. Lulea University of Technology.

Adam, C. A. (2004). The ethical, social and environmental reporting-performance portrayal gap. Accounting, Auditing & Accountability Journal, 17 (5): 731-757.

Aras, G. and Crowther, D. (2009). Corporate sustainability reporting: a study in disingenuity. Journal of Business Ethics, 87: 279-288.

ASX Corporate Governance Council (2007). Corporate governance principles and recommendations, 2nd edn. Retrieved on 29 April 2014 from: http://asx.ice4.interactiveinvestor.com.au/ASX0701/Corporate%20Governance%20Princi ples/EN/body.aspx?z=1&p=-1&v=1&uid=#.

Benabou, R. & Tirole, J. (2010). Individual and corporate social responsibility. Economica Vol. 77, pp. 1-19.

Bordes, J. (2009). Strategic Management Assignment. Retrieved on 29 April, 2014 from: http://www.aiu.edu/applications/DocumentLibraryManager/upload/Jeff%20Bordes.Strate gic%20Management.pdf.

Carroll, A. B. (1991). The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders. Business Horizons, 34(4), 39-69.

Donaldson, T., & Dunfee, T. W. (1994). Toward a unified conception of business ethics: Integrative social contracts theory. Academy of management review, 19(2), 252-284.

Ferrell, O. C., Fraedrich, J. & Ferrell, L. (2011). Business ethics: ethical decision making and cases, 8th edn, South-Western Cengage, USA.

Iamandi, I. (2007). Corporate social responsibility and social responsiveness in a global business environment: a comparative theoretical approach. Romanian Economic Journal, 23(1),1- 16.

Kearns, K. P. (1994). The strategic management of accountability in nonprofit organizations: An analytical framework. Public Administration Review, 185-192.

Ogutu, M., & Samuel, C. M. (2012). Strategies adopted by multinational corporations to cope

with competition in Kenya. Strategies, 2(3), 69-82.

Werhane, P. H. (2010). Principles and Practices for Corporate Responsibility. Business Ethics Quarterly,20(4), 695-701.

Yoo, B., Donthu, N. & Lee, S. (2000). An examination of selected marketing mix elements and brand equity. Journal of the Academy of Marketing Science, 28(2), 195-211.