Corporate Social Responsibility Essay

Competition is becoming more and more fierce while the market is becoming globalization. With higher consumer sovereignty, customers are no longer satisfied with qualify products and good services. The society concerned more about the business ethic and environmental issues. Companies are expected to act virtuously nowadays. The ideas of Corporate Social Responsibility and Corporate Citizenship are spreading faster than ever before and become one of the hottest business models in the recent decades. â€Å"Corporate Social Responsibility (CSR)† is defined as â€Å"the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life† at the World Business Council for Sustainable Development in 2000. The main idea of CSR is that corporations should be responsible to the stakeholders which include the customers, shareholders, suppliers, employees or any other party that may be influenced by the corporate actions. Different organizations may have formed different social responsible programs which can be categorized in four major components: the environment, the community, the work place and the market place. Different companies will emphasize on different aspects to create the social responsible programs. â€Å"Particular CSR initiatives may do good, or harm, or make no difference one way or the other, but it is important to resist the success of the CSR idea. â€Å" (Briggs & Verma, 2006) Mounting evidences show the benefits brought by the CSR Programs. For example, corporations made huge donation to disasters nationwide and to the bottom billions. However, not every CSR Program can be built up successfully. Nestlà © had suffered from a boycott last over 30 years which is the result from its failed CSR Program. Known as the baby killer, Nestlà © is blamed to kill thousands of Babies in the less developed region. They promoted and distributed free instant formula milk powder to replace breastfeeding and led to severe health problems or even death to the babies (Sethi, 1979). The two opposite results of CSR programs bring up queries for CSR programs. Is there a business case for CSR? How can corporations be benefitted from CSR? Theses questions will be discussed in this essay and so as the answers. B. Is there a business case for CSR? â€Å"Corporations are expected to be good citizens† asserted by Briggs and Verma (2006). Customers are demanding more from the corporations. Responsible corporates are required to meet the â€Å"Triple Bottom Lines† which are the economic sustainability, environmental sustainability and social sustainability. Join Elington illustrate the interrelationship of the triple bottom line in 1997, â€Å"Society depends on the economy – and the economy depends on the global ecosystem, whose health represents the ultimate bottom line† (Elkington, 1997). CSR programs can also help the company to achieve sustainable growth which is the ultimate goal for every CSR program. Sustainable development is development to satisfy the needs of present generation without sacrificing the ability of future generations to development (WCED, 1987). Study indicates that sustainable growth and business success cannot be achieved solely by maximising short-term profits, but instead th rough market-oriented and social responsible programs (Neal, 2006). The CSR programs may engage with the following four aspects: the environment, the community, the workplace and the market place (World Business Council, 2000). As the foundation of every human being in the earth, responsible to environment is an essential part of CSR programs. Learnt from the Industrial Revolution when people sacrifice environment for business growth, private organizations today have worked to improve the environment. For example, Toyota has developed the hybrid card models which can use both fuel and electricity as power source. It can help to reduce the air pollution and reduce the carbon dioxide in the atmosphere. This innovation is also being considered as long-term oriented and sustainable for future development so both the customers and investors are satisfied with it. The second aspect of corporate social responsibility is the community. Corporations have to be responsibility to the local community as they are the essential for the business success. Social responsible firms should hire local labour force in the work place. Corporations often make donation after huge disasters such as earthquake or hurricane. For example, companies had donated over US$547 millions after the catastrophe of Hurricane Katrina in 2005 (Briggs & Verma, 2006). Although some criticize that the corporations are making disasters into opportunities for public relationship, the donation can certainly help the community to rebuilt their home afterward, The third aspect of corporate social responsibility is the workplace. Companies are responsible to ensure the safety and ethnic in the workplace. The employees are generating the profit so the companies should be responsible to them by creating harmless and harmony working environment. For example, Nike, and other American and European sports wear production companies, promise to monitor the working conditions in its supplier factories in less developed countries (Vogel, 2005, 1). Corporations should also be responsible to the market place. Not just manufacturing quality product but also meeting the needs of various customers. For example, although smart phones are becoming popular in recent years, some people with visual disability may not able to use those products without assistant from other people. By introducing the Voiceover application, customers with visual disability can use the smart phone or other devices created by Apple easily. Besides the positive point of view, there have always been criticisms of CSR ever since it was invented. In 1970, the Nobel Price winner, Friedman wrote â€Å"The Social Responsibility of Business is to increase its Profits† and the three main arguments he stated in his article have become the foundation for the criticisms against CSR. In his first argument, Friedman claimed that only human beings have a moral responsibility for their actions (Friedman, 1970). As a collected entity, companies do not have the responsibility of the decision made by the management. However, corporations act like human in many ways. For examples, in legal terms, corporations are consisted as an artificial person whose behavior is decided by the corporate internal decision structure and the organizational culture. Many corporations are acting progressively to create a public perception of good citizenship to gain positive image and competitive advantages from the society (Brigs and Verma, 2006). In the following article, Friedman pointed out that the government, instead of the private business section, should be responsible to solve the social issues and problems (Friedman, 1970). Later scholars support his argument that with huge amount of tax collected by the government, the responsibility of social support should be transferred to the government and the public sectors. However, in some cases, government may not be able to take the responsibility due to insufficient funds or malfunction of government agent. Geoge Kell, executive head of the United Nations’s Global Compact Office, indicated that â€Å"So long as government fail to do their part and so long as business goes global, CSR helps fill an important void† (Brigs and Verma, 2006). The last argument of Friedman is that the managers should be responsible for the interest of shareholders (Friedman, 1970). Charring out CSR programs may increase the cost and weaken the company’s performance. In which way, the interests of the shareholders are harmed (Henderson, 2001). This argument is proven wrong by the countless successful business cases of CSR programs. C. How can corporations be benefited from the CSR programs? 1. CSR can help the corporates to increase the profits. Corporations can be benefited from the CSR programs in many aspects. Since the most important goal for the company is maximise its profit, scholars and managers are working to figure out how CSR programs will influence the company’s profitability. Companies generally increase their profitability by two means: Cut cost and Differentiation (Porter, 1985). An effective CSR Programs can help the corporations to achieve both points. Cost reduction can be achieved by CSR Programs directly or indirectly. The direct way is to reduce the cost by using the raw material or energy in a more efficient way. For example, by reducing the packaging, companies can cut the unit cost of product and protect the environment by producing less waste at the same time (Welford, 2000). The other way is to reducing the indirect cost such as the employee training cost, the management cost. For example, the employee caring programs can lower the employee turnover rate and reducing the hiring and training cost for new employees. By this mean, the employees are more satisfied to the companies and will be less likely to resign and have better performance in the workplace. Google has been paid attention to this issue. The company created the â€Å"best† working environment in the world and create the most satisfied. The CSR program successes in increasing ability to attract and retain employees and reducing operating cost. Another way to increase profitability is differentiation. By using differentiation strategy, the products can be outstanding among the competitors (Welford, 2000). Corporates have been using CSR programs as differentiation points long ago and achieve positive result. Take the Body Shop as an example. They differentiate their products from the other skin care products by using all natural ingredients and making statements such as â€Å"no animal test† and â€Å"support community fair trade†. By building such social and environmental responsibility image, the Body Shop successfully build up its brand image and reputation and create the customer loyalty. 2. CSR can enhance brand competitiveness. Today’s companies can no longer afford to ignore CSR. More and more corporates build up their own CSR programs to enhance their brand competitiveness by enhancing the image and reputation of the corporates. Firstly, customers nowadays focus more on the image and reputation of the brands. They demand more than quality product and nice services. According to the research conducted by the PR firm Hill & Knowlton, 79% of Americans take corporate citizenship into account when makings purchase decision (Briggs and Verma, 2006). Corporate Social Responsibility Programs can help the corporate to gain the public trust and support which will enhance the brand competitiveness. Customer sovereignty has further supported the ideas that with high degree of freedom and information, customers can make their choices among different brands. The brand with better image or reputation will be more likely to win in the industry. Secondly, Corporate Citizenship is demanded by the government. Especially for some sensitive business that companies need to maintain nice relationship with the government. For example, Casino Industry in Las Vegas and Macao are expected to make large donation to the â€Å"responsible gambling program† or the charity funds. By making public donation, the firms may be able to build up better image to reduce the resist in the society and the government. Managers continually encounter demands from multiple stakeholder groups to devote resources to corporate social responsibility (McWilliams & Siegel, 2001). Investors consider more about the social responsibility of the invested firms nowadays. Companies cannot managing their impact on society and the environment if engaging in CSR (Brigs & Verma, 2006) D. Conclusion Corporate Social Responsibility is becoming the trend of social public relationship strategies in the recent decades. In this essay, questions of CSR programs have been discussed in many aspects. With thousands of successful cases of corporate citizenship, companies all working hard to catch up with the trend and develop their own CSR programs. Although there are criticisms about the intention and the necessity of corporate social responsibility programs, the effective of CSR programs is ascertained. Later study shows that successful CSR program can benefit the society and the company at the same time. The corporations can enjoy higher profits and better brand competitiveness by setting up CSR programs. Therefore, companies should work with the community to achieve the â€Å"win-win† situation. Bibliography: Briggs, W. & Verma, A. 2006. ‘Sharing the wealth’. Communication world. January – February 2006. pp. 25-28 Freeman, R.E. 1984 ‘Strategic Management: A Stakeholder Approach’. Marshfield, MA: Pitman Publishing Inc. Friedman, M. 1970 ‘The Social Responsibility of Business is to Increase its Profits’. 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