Introduction Of Social Responsibility To Corporate Business example essay topic

Corporate Social Responsibility (CSR) is a very controversial topic. A question that has been debated for the past few decades is; is it corporately viable to introduce social responsibility as a proposed addition to the work ethic of business organisations. As well as, if adopting the framework of corporate social responsibility would yield positive improvements for those organisations. The purpose of this essay is to research the notion of CSR and uncover its true framework and outline what social responsibility truly means to corporate organisations, and whether it should be seriously considered to be a legitimate addition to the corporate framework of an organisation.

This will be done by outlining some of the basics through the explanation of some terms underpinning CSR and managerial involvement. An explanation of how CSR is an essential part of business language. This will then be followed by a breakdown of the complex framework that CSR is believed to have. The social expectations that consumers have of business, and ways those businesses can meet these expectations will be addressed. Then an outline of the role management plays in the incorporation of socially responsible attributes to a corporation will be expressed, evidence to suggest that 'if this means that there a social contract that requires business to honour a moral bare minimum, then a business manager is duty-bound to obey it' (Bowie 1991: 56-66).

This essay shall also investigate some of the classical theories of CSR and its contribution to profit maximization. Finally, some specific arguments that state that the introduction of social responsibility is not a good idea and how it has failed to create the 'good society' (Friedman 1970: 122-126) will be discussed. Corporate social responsibility has undergone a definitional evolution over the past half century but has always and will always remain an essential part of business language. Definitions of CSR have became more specific; since the 70's, with alternative emphases, being placed on issues such as the understanding of corporate citizenship (which is a key concept of CSR), and the stakeholder theory. In early writings CSR was referred to more often as social responsibility (SR) rather than as CSR. Bowen (1953: 6) set forth an initial definition of the social responsibility: 'It refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society'.

However, nowadays CSR is simply defined as 'operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society demands of business' (Gillis & Spring 2001: 23). Corporate citizenship is commonly defined as 'a company's management of its influences on and relationships with the rest of society' (Marsden 2000: 9). A recent study conducted by Hill and Knowlton found that 79% of Americans consider corporate citizenship when deciding to buy a particular company's product, 36% of which considered corporate citizenship to be an important factor (Verschoor, 2001: 20). This shows us that by achieving good corporate citizenship, a company's practices become transparent to the interested public and provide a basis for accountability for the future (Waddock, 2000: 324). The stakeholder theory made popular by Ed Freeman (1984) does seem to represent a major advance over the classical view (Freeman, 1984).

It might seem inappropriate to refer to the stakeholder position as neoclassical. Bowie (1991: 56-66) has defined stakeholders as a group whose existence was necessary for the survival of the firm -- stockholders, employees, customers, suppliers, the local community, and managers themselves. The framework of corporate social responsibility is such that it is relatively complex and multidimensional. A three-dimensional interpretation of the social responsibility construct by Boal, K. & Peery, K. (1985) seems to be somewhat consistent with the three-phase interpretation suggested by Hay, R. & Gray, E. (1974), which are: 1. Economic / market values as opposed to non-economic / human values. 2.

The ethics of non-maleficence contrasted with the ethics of beneficence, and 3. A stakeholder interest dimension. According to Boal, K. & Peery, K. (1985: 71-82) in terms of explained variance, their analysis suggests that the dimension of economic / market values - non-economic / human values is the most important dimension. The second most important dimension was ethics (non-maleficence vs. Beneficence), which corresponds to 'quality-of-life' issues such as cultural values, social justice, and employee rights.

This is an ethical dimension, which, according to Boal, K. & Peery, K. (1985: 71-82) is independent of the economic dimension and is of crucial importance to an understanding of social responsibility. The third dimension of social responsibility considers the outcomes of decisions in terms of who benefits from them. An acceptable decision outcome should either protect or promote the rights of those affected. There could be exceptional circumstances, which would justify minimizing one of these dimensions. However, indiscriminate ignoring of these dimensions could undermine the legitimacy or, in turn, the long-term social support of an organisation. Society has many expectations of business, and business in order to be successful must meet these expectations.

'The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time' (Carroll 1979: 500). Corporate Social supply refers to corporate endeavours aimed at satisfying society's demands. A surplus of models representing businesses' responses to social demands has been formulated in recent years. For example, Carroll (1979: 500) contends that corporate social responsibility can be analysed by examining its four components: the legal, economic, ethical, and discretionary responsibilities. Managers continually encounter demands from multiple stakeholder groups to devote resources to CSR. These pressures emerge from customers, employees, suppliers, community groups, governments, and some stockholders, especially institutional shareholders.

Many managers have responded to heightened stakeholder interest in CSR in a very positive way, by devoting additional resources to promote CSR. A primary reason for positive responses is the recognition of the relevance of multiple stakeholders (Donaldson & Preston, 1995: 65-91; Mitchell, Agle, & Wood, 1997: 853-886). Other managers have a less progressive view of stakeholder relevance. They avoid attempts to satisfy demand for CSR, because they believe that such efforts are inconsistent with profit maximization and the interests of shareholders, whom they perceive to be the most important stakeholder. Managerial roles (or the roles of managers / management ) in the incorporation of socially responsible attributes are important in attempts to solve social problems while increasing the organisations profits so long as it stays within the rules of the game (Bowie 1991: 56-66). Management as defined by Robbins, Bergman, Stagg and Coulter (2000: 6) is 'the process of coordinating and integrating work activities so that they are completed efficiently and effectively with and through other people'.

Bowie, N (1991: 56-66) argues that that the role of managers as stated by Freeman 'isn't merely to maximis e profits but rather to protect and promote the rights of the various corporate stakeholders' (Freeman 1984). A good manager is concerned with all stakeholders while increasing profits for stockholders as well as considering the social impact their decisions about the usefulness of investing in CSR and activities have upon the community and society as a whole (Bowie, 1991: 56; Brown, 2001: 6). CSR investment may entail embodying the product with socially responsible attributes, such as pesticide-free or non-animal-tested ingredients. Consumer oriented CSR may involve intangible attributes, such as a reputation for quality or reliability.

Fombrun and Shanley (1990: 233-258) and Weigelt and Camerer (1988: 443-454) have described how reputation building is an integral component of strategy formulation. A reputation for quality and reliability may be especially important for food products. Thus, McDonald's employs the handicapped and supports such organizations as the Ronald McDonald House, establishing a reputation for CSR. The assumption is that firms that actively support CSR are more reliable and, therefore, their products are of higher quality. The Target department store chain is a branch of the Dayton Hudson Company. It has a special program for hiring the disabled, and even assists these people with up to one-third of their rent (Bowie 1991: 56-66).

At Christmas it closes its stores to the general public and opens them to the elderly and disabled. These people receive an additional 10 percent discount and free gift-wrapping. In many stores 75 percent of the trash generated is recycled. Target's superior social performance creates an obligation for members of the community to shop there.

All these examples lead to a general point. 'For too long corporate responsibility has been analysed simply in terms of the responsibilities of the firm (firm's management) to all other corporate stakeholders except stockholders. If the managers and stockholders have a duty to customers, suppliers, employees, and the local community, then the local community, employees, suppliers, and customers have a duty to managers and stockholders' (Bowie 1991: 56-66). It is suggested that corporate profit maximization and the development of firms is directly related to corporate social responsibility. In existing studies of the relationship between CSR and financial performance, researchers have primarily addressed the question 'Do socially responsible firms outperform or under perform other companies that do not meet the same social criteria?' (McWilliams & Siegel 2001: 117-128), and the results have been very mixed.

Studies indicate 'no relationship' (McWilliams & Siegel 2000: 603-609), a 'positive relationship' (Waddock & Graves 1997: 303-319), and a 'negative relationship' (Wright & Ferris 1997: 77-83). This leaves managers without a clear direction regarding the desirability of investment in CSR. To some the introduction of a socially responsible attitude to business is a good idea. However, others believe 'that the introduction of social responsibility to corporate business is not a good idea, as corporations should pursue their economic self-interest also, any attempt to promote corporate social responsibility amounts to moral wrong' (Friedman 1970: 122-126). Freeman, E. & Liedtka, J. (1991: 92-99) believe that the idea of corporate social responsibility has failed to help create the 'good society'.

Friedman (1970: 122-126) questioned the logic of corporate social responsibility as it had developed. He insisted that in a democratic society, government was the only legitimate vehicle for addressing social concerns. Freeman, E. & Liedtka, J. (1991: 92-99) have come up with seven reasons to abandon the concept of corporate social responsibility: 1. The origins of the concept are suspect, as they derive primarily from the field of economics, and fail to include, among others, history, religion, and culture. 2.

The different models of corporate social responsibility all accept the terms of the debate as set forth by Milton Friedman's argument that sees corporations only as profit maxi misers. 3. Corporate social responsibility accepts the prevailing business rhetoric of 'capitalism love it or leave it. ' 4. Corporate social responsibility is inherently conservative -- it starts with the standard received wisdom and then attempts to 'fix' its unintended consequences. 5.

Corporate social responsibility promotes incompetence by leading managers to involve themselves in areas beyond their expertise -- that is, repairing society's ills. 6. Corporate social responsibility accepts a view of business and society as separable from each other, each with a distinct ethic, linked by a set of responsibilities. 7. The language of rights and responsibilities is, itself, both limiting and often irrelevant to the world of the practicing manager. However, it appears that all of these reasons have been countered by other theorists and made to appear irrelevant.

Through close examination of all chosen material it can be seen that organisational social responsibility has become an increasingly important consideration in modern organisations. This essay has shown how corporate social responsibility has been affected by a definitional progression as well as a rise in complexity. Secondly, how business can meet societies expectations while also meeting demand. Thirdly, the role management plays in the incorporation of socially responsible attributes to an organisation and therefore maximis ing profits. Fourthly, that not all people believe that corporate social responsibility is a viable option as it has failed to create the 'good society' (Friedman 1970: 122-126). It has been clearly outlined that the arguments in support of the incorporation of social responsibility into an organisation have clearly outnumbered those opposing its addition into the business framework.

Thus, suggesting that the introduction of CSR into a business organisation should be a decision that should be made confidently and undoubtedly by business managers in order to bring about the best results for both the company and its customers.

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