Overview of corporate social responsibility Essay Example

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Overview of Corporate Social Responsibility

Organisations maintain intricate relationships with a number of other organisations and people within a society who affect or affected by their decisions and actions. Banerjee (29) defines the concept of stakeholder as referring to all people who affect or are affected by the organisation’s activities. As a result, creating relationships that are mutually beneficial and upbeat may help an organisation to address crucial ethical and social problems. This paper identifies and analyses stakeholders and their power.

a) Identify stakeholders and their power.

The main stakeholders for business corporations vary from employees, regulatory authorities, shareholders, customers, suppliers, and local communities.

Stakeholder power refers to a stakeholder group’s capacity to utilize resources in order to facilitate the occurrence of an event or to achieve a desirable outcome. There are five forms of power: economic power, legal power, voting power, informational power, and political power (Anon 10-15).

Voting power implies that stakeholders maintain a valid right to vote on issues surrounding a corporation’s management. For instance, shareholders have voting power relative to the size of their shares. They may vote on the general makeup of the Board and others issues like mergers and acquisitions (Zu 93).

On the other hand, customers, employees, and suppliers have economic power. This is because customers decide whether to purchase a company’s products or go to a competitor. The customers may also reject products that deem to be unsafe, of low quality or expensive. Suppliers may choose to hold back supplies when they determine that a company has failed to address its contractual obligations. Employees may also decline to work under unfavourable work conditions. This is a form of economic power, through slowdowns or strikes, as they determine whether a company continues to operate efficiently to make profits (Zu 93). Customers and employees also have legal power, specifically when they bring lawsuits against a business corporation, for harms the corporation has caused to them. For example, customers bring lawsuits for damages resulting from defective services or products sold by a company. Employees may also sue their employers for damages resulting from workplace injuries (Anon 10-15).

Governments and regulators have political power. They use regulations or legislations to oversee the activities of business corporations. The local communities also have political power. They can pressure the government through their representatives or lobby groups to encourage the government to pass laws that affect a business corporation’s activities. For instant, community activists may protest against certain corporate actions (Anon 10-15).

b) Identify two views with its pros and cons.

The first view is that when employees may also decline to work under unfavourable work conditions, they determine whether a company continues to operate efficiently to make profits. This is advantageous to the employee and the organisation as it increases social responsiveness of corporations, leading to work-life balance, diversity policies, and increased pay and benefits, where the employees feel more satisfied. However, it is also disadvantageous to companies, as increased pay and benefits may eat on a company’s profitability.

The second view is that customers may reject products that are deemed unsafe, of low quality or expensive hence leading an organisation to be more socially responsive. This is advantageous as it influences a company to produce safe and environmentally friendly products and to charge fair prices. According to Crowther and Guler (19-23), customers are likely to buy from a company they consider socially responsible, hence influencing socially irresponsible ones to be more responsible. It may also be disadvantageous to firms, as they may not meet all customers’ interests at the same time, leading them to lose focus on their corporate objectives.

c) Select one point of view and analyze it using the supporting material.

As discussed, employees may decline working under unfavourable work conditions and set up slowdowns and strikes, hence influencing a company to be more social responsible by proving fair pay, work-life balance and to observe health and safety concerns.

According to Banerjee (29), employees determine if a company will continue to function efficiently in order to make profits. On the other hand, companies are interested in making profits to increase shareholder values. Zu (93) argues that when companies fulfil employees’ interests, they actually increase employees’ motivation and productivity leading to increased organisational productivity.

Jackson (38) also observes that their nature of interest between the company and employees comprise receiving
fair exchange, including giving value
and quality for the money they spend on the employees. According to Banerjee (30), such benefits influences employees to work in the best interest of the organisation leading to an increase in their productivity, and reduced risks of unethical behaviour and fraud.

d) Prepare four open-ended questions, two for each point of view.

1. Employees

a) How can employees’ economic well-being ensure that an organisation becomes more socially responsible?

b) What is the nature of interests the employees hope for from their employers?

2. Customers

a) What is the nature of power that customers have over companies?

b) What is the nature of interests the customers hope for from companies?


Anon. “Business in Society,” n.d. 14 Sept 2016, <http://highered.mheducation.com/sites/dl/free/0078029473/996351/Law29473_ch01.pdf>

Banerjee, Subhabrata. «Corporate Social Responsibility: The Good, the Bad and the Ugly.» Edward Elgar Publishing: New York, 2009

Crowther, David and Aras, Guler. «Corporate Social Responsibility.» Ventus Publising ApS: New York, 2008

Jackson, Steve, Roby Sawyers and Greg Jenkins. «Managerial Accounting: A Focus on Ethical Decision Making.» Cengage Learning: New York, 2007

Zu, Liangrong. «Corporate Social Responsibility, Corporate Restructuring and Firm’s Performance: Empirical Evidence from Chinese Enterprises.» Springer Science & Business Media: New York, 93

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