The business essay Example

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    Undergraduate
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Corporate Social Responsibility Analysis

Introduction

Corporate social responsibility is popularly perceived as being a fundamental tool used for enhancing an organization’s immediate reputation and, also prompting aspects related to goodwill amongst the many customers. According to Adeneye and Ahmed (2015, p. 152), corporate social responsibility portrays the capacity of an organization to be socially responsible to the underlying growth and development of the existing environment for which it conducts its day-to-day operations. In essence, corporate social responsibility amongst companies defines their respective voluntary services towards the immediate society. The resultant effect is improved social goodwill, financial performance, purchasing behavior as well as positive brand image of the company by the larger society. It is important to note that the capacity to embrace aspects related to environmental protection, charitable initiatives and community relations have ensured that these companies portray a sound and improved performance over their immediate competitors that overlook the aspect altogether. The focus of this paper is on providing a coherent discussion of the importance of CSR as well as possible advantages and limitations. The first section of the paper provides a discussion on the importance of the practice, then its advantages and lastly, the disadvantages associated with the CSR.

Importance of Corporate Social Responsibility

Chernev and Blair (2015, p.1413) notes that organizations that engage in active CSR related activities continue to provide superior levels of financial performance. This research finding is vehemently correlated to the research that indicates an organization’s reputation for corporate social responsibility will likely decrease the level of customer’s price sensitivity while at the same time improve on their respective brand loyalty and image (Chernev & Blair, 2015). Organizations that engage in CSR had a higher chance of being advocated for by the customers and also, enjoy defense by these stakeholders against any possible criticism that could arise externally. Notably, it is stated that organizations that effectively embrace the aspect of CSR will likely enjoy improved sales revenues since customers will act to reward the firm for its rather pro-social behaviors (Chernev & Blair, 2015). Remišová, Lašáková and Krzykala-Schaefer (2013, p.532) study posits that CSR related activities is important in managerial decision-making processess. The study further notes that a substantial section of the university student sample that were to be later assume managerial positions indicated CSR stood for a long-term economic success of a given organization in regards to such elements as customer satisfaction, product quality, profitability levels as well as competitiveness capacity (Remišová, Lašáková & Krzykala-Schaefer, 2013).

Adeneye and Ahmed (2015, p. 153) notes that the capacity of an organization to be greatly involved in corporate social responsibility is important since it makes the overall community upon where operations are conducted to perceive the firm in both positive reputation and image, which has a direct influence on the total returns on capital. Subsequently, it is noted that the CSR is an important factors especially amongst the listed companies because it fosters a significant increase in terms of return on assets, (ROA), return on equity (ROE) and profitability as a whole (Adeneye & Ahmed, 2015).

Advantages of CSR

The advantages of CSR are discussed as below;

First, it is argued that CSR allows organizations to maintain most of its stakeholders. Companies that exhibit highly-acceptable practices within a given society will likely enjoy a significant increase in their customer-base, satisfied employees as well as owners thereby prompting a continual survival of the company’s overall operations for a long period (Devinney, 2009). Second, the aspect of CSR helps to improve a company’s overall innovativeness, creativity as well as knowledge and skills that they later use to customize products to meet the appropriate customer desires. The ability of organizations to engage in continuous research and development through CSR-related activities assist them to comprehend demands for the numerous stakeholders. A perfect example is when Toyota engaged in the creation of a hybrid automobile as a result of intensive CSR related research of the underlying market demand (Devinney, 2009).

Subsequently, it is noted that increased corporate social responsibility amongst organizations helps to foster product performances. In fact, this attribute is more visible whenever customers are made to believe that an organization’s motivation for embracing pro-social behavior is indeed benevolent as opposed to self-interest (Chernev & Blair, 2015). The ability to attract a positive consumer moral undertone is more important for those firms that cannot freely an easily pronounce the aspect of quality in their products and services. In addition to this, it has been noted that continuous engagement in CSR ensures that company enjoys substantial competitive advantage over its immediate rivals. The effect has been perceived to be true because such organizations ensure to grasp a fundamental understanding of significant trade-off, technologies and trends operating within a given market and as a result formulate efficient counter-measures for possible hindrances (Devinney, 2009).

Disadvantages of CSR

Some of the notable disadvantages of CSR include; first, it is assumed that the entire process does not add any form of value. The recently experienced economic downturn ensured to cut down on money and time attributed to CSR and rather placed these resources in some other place (Falkenberg & Brunsael, 2011).

Subsequently, it has been noted that CSR is only focused on generating future economic returns for stakeholders as opposed to solving societal issues. It is only meant to optimize the underlying wealth of shareholders and managers at the expense of the overall community for which it operates (Devinney, 2009).

Conclusion

In concluding the discussion above, it can be seen that the paper has clearly discussed the importance of CSR; its advantages and disadvantages. It has been noted that CSR is important to a positive public image and brand of a company, allows for protection by customers and ensures efficient managerial decision-making process. Its advantages rests with the fact that it helps maintain most of stakeholders, improve a company’s overall innovativeness and also, allows for creativity as well as knowledge and skills that they later use to customize products. CSR limitations include; the inability to add value and also, only focusing on future economic gains as opposed to solving societal challenges.

References List

Adeneye, Y, & Ahmed, M 2015, ‘Corporate Social Responsibility And Company Performance’, Journal of Business Studies Quarterly, 7, 1, pp. 151-166

Chernev, A, & Blair, S 2015, ‘Doing Well by Doing Good: The Benevolent Halo of Corporate Social Responsibility’, Journal of Consumer Research, 41, 6, pp. 1412-1425

Devinney, MT 2009. Is the Socially Responsible Corporation a Myth? The Good, the Bad, and the Ugly of Corporate Social Responsibility, Academy of Management Perspectives, 44-55.

Falkenberg, J, & Brunsael, P 2011. Corporate Social Responsibility: A strategic Advantage or a Strategic Necessity. Journal of Business Ethics, 99, 9-16.

Remišová,-Lašáková, A, & Krzykala-Schaefer, R 2013. ‘Corporate social responsibility in European countries: The keystones of the concept and intercultural connotations’, Journal for East European Management Studies, 18, 4, pp. 512-543.