Corporate Social Responsibility
For companies to function effectively, they must collaborate with other participants in a socially responsible manner. Even though it is not a statutory requirement, it is a good practice for the company to follow. A successful organization must consider equality of opportunities for all stakeholders, no one is innately more worthy of a better position in life than anyone else. Thus, ethics, as well as social responsibility, happen to be critical to the success of a business. As per the 2015 survey performed by Cone Communications and the Global Equality study, 91 percent of clients want firms to operate responsibly and address environmental and social concerns (Samidi et al., 2019). Consumers nowadays are aware of the implication of CSR, as seen by the data mentioned above, and choose to purchase merchandise from firms that act ethically, thus increasing a company’s profit.
Organizational desirability plays a significant role regarding what would make an organization have equality of opportunity. The first factor of corporate social responsibility is a better public image: for a business to attract more individuals, it must first establish equality among those it serves (Murwaningsari, 2019). For example, corporate employees should be allowed equal opportunities for working in the company. The second step is enhanced brand awareness and recognition, where a company or brand commits to ethical standards, and the word spreads. Thus, more people learn about the company, and as a result, increasing brand awareness and recognition (Murwaningsari, 2019). The next is a competitive advantage; if a company tries to help society and contributes to doing well for the community, it gains an edge over competitors. In such cases, individuals switch from other companies and become engaged in the brand.
The final factor is a strong employee commitment and the benefits to employees. Like consumer engagement, management must ensure that staff is informed of corporate social responsibility efforts. Employees prefer to work for a company with an excellent reputation in the community than one that does not. Furthermore, by demonstrating that the firm is devoted to issues such as human rights, the corporation is far more likely to attract and keep excellent applicants (Jeffrey et al., 2019). When a business participates in Corporate Social Responsibility (CSR efforts), it benefits its employees. The workplace becomes a more positive and creative environment, and the organization supports professional and personal growth by encouraging activities such as volunteering.
Corporate social responsibility has several agendas that are potentially harmful effects that can cause damage to a business. Firstly, it may divert attention away from what companies should focus on and lowers the firm’s legitimate accountability (Jeffrey et al., 2019). The capacity of a firm to achieve and maintain sufficient profitability to sustain itself and go forward is not simple. One out of every two businesses fails during the first five years, and less than one out of every three survives after ten years (Jeffrey et al., 2019). There is no magic formula for commercial success, but the company must concentrate on the necessary basis.
Secondly, CSR is a type of business distraction tool. For instance, a company that takes on an irrelevant obligation that is unrelated to its commercial commitment and goals dilutes the company’s main focus from its commercial responsibility and goals. Thus, that detracts the firm from achieving its primary business goal (Trong, 2019). Moreover, CSR is a practice that fosters and welcomes more broad and instructional company laws, whether in the shape of voluntary codes of behavior or statutory restrictions, both of which obstruct the business’s focus. Corporate social responsibility strengthens the current impediments to company development and survival through concepts, moral demands, and rules of conduct.
The business operates in three ways: first, it focuses on developing a product or service for the customers’ market; second, it emphasizes producing goods and delivering services so that they can be sold for a specific price, allowing for a particular return. Thirdly, it concentrates on converting revenues into real cash and not wasting that cash on wasteful wrong things (Murwaningsari, 2019). Therefore, a business would not last long if it has poor services or produces faulty products, which fails to generate and maintain proper cash flow.
Corporate Social Responsibility and its Demerits
The following are some of the downsides of CSR responsibility for any business. Within that gap exists life, with peace-making reason forever beholden to the emotional conflict. That encounter steadily undermines people’s ability to accord each other the necessary respect of acting as if others are as real to them as they are to themselves. The first is that it is expensive to adopt, which is one of the critical disadvantages since it is costly for small firms. Although large or major corporations can still afford to allocate budget reporting, this is not suitable for small businesses. The next problem is that it clashes with economic motivation; for companies, expense can be one of the major obstructions to success. This is because the management has a legal duty to the company’s stakeholders, which CSR might oppose. Moreover, the shareholders’ primary obligation to executives is to increase earnings (Dolan & Rajak, 2018). A manager who puts profits ahead of cultural welfare is prone to losing his job and being replaced by one who puts income first.
The third disadvantage is greenwashing, which is a term that describes organizational views that seem to be friendly but is altering how a firm is run. As a result, the corporation should be aware of the issues and wishes of the general public. A corporation should provide positive outcomes that limit negative repercussions, which impact the wider public (Jeffrey et al., 2019). Company strategy is a driver of corporate social responsibility enterprises that should analyze the benefit and costs of analysis when implementing a new plan. Fourth is globalization, another critical and prevalent challenge in executing corporate social responsibility (Jeffrey et al., 2019). Since business norms and standards governing framework and stakeholder stressors might change for CSR between nations, territories, and business outlines, international and multinational corporations operate in more than one geographical region. Thus, working across diverse sectors can result in extra spending that can damage business operations.
Thus, because globalization is a significant and pervasive difficulty in implementing corporate social responsibility, organizations attempting to implement CSR protocols should be aware of the differences between critical, benign, and coercive practices. Subsequently, companies involved in CSR initiatives have identified a distinction in the appropriateness of vital, generous, and coercive corporate social responsibility exercises (Jeffrey et al., 2019). Important activities partnering with CEOs can provide a problematic competitive advantage for other firms. In any case, altruistic CSR resolving social problems is widely emulated. Coercive methods are more responsive than proactive methods and should be avoided.
For example, ventures into cutting-edge research innovation to develop alternative energy sources would be considered a crucial corporate social responsibility initiative. The activities that provide long-term outcomes and benefit a larger group of partners will be assessed as social rather than value-based (Jeffrey et al., 2019). Pioneers who focus on a social methodology as a vital means to deal with corporate social responsibility frequently achieve long-term recognition of the firm and, in general, acquire more prominent benefits via client devotion.
Corporate social responsibility is not a trend or fad in the corporate world. Working for an organization that makes one feel safe and there is no inequality makes one feel better. CRS helps firms stay current in new eras by allowing them to aid individuals in need worldwide while increasing their revenue and expertise. A good organization with good social responsibility will enable workers to include their communal morals. CSR benefits include improved brand awareness, favorable company image, higher profitability, customer devotion, reduced operational expenses, enhanced financial success, more robust capacity to recruit and retain personnel, productivity improvement, and excellent financing. However, one major drawback is its disproportionate effect on small firms. Big organizations can obligate funding to CSR activities, whereas minor ones cannot afford the above.
Dolan, Catherine, and Dinah Rajak. The Anthropology of Corporate Social Responsibility. New York, Berghahn, 2018.
Jeffrey, S., Rosenberg, S., & McCabe, B. (2019). Corporate social responsibility behaviors and corporate reputation. Social Responsibility Journal, 15(3), 395-408.
Murwaningsari, E. (2019). The relationship between corporate governance, corporate social responsibilities, and corporate financial performance in one continuum. Indonesian Management and Accounting Research, 9(1), 78.
Samidi, S., Hakim, L., & Nurfadilah, D. (2019). The role of corporate social responsibilities (CSR) in maximizing the firm’s profitability for sustainable competitive advantage. International Academic Journal of Business Management, 06(01), 259-269.
Trong T. L. (2019). Corporate social responsibility, ethics, and corporate governance. Social Responsibility Journal, 8(4), 547–560.
Yang, Y., & Stohl, C. (2019). The (in) congruence of measures of corporate social responsibility performance and stakeholder measures of corporate social responsibility reputation. Corporate Social Responsibility and Environmental Management, 27(2), 969-981.