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Corporate Social Responsibility

Essay by review  •  December 8, 2010  •  Research Paper  •  2,452 Words (10 Pages)  •  2,388 Views

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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 maximisation. 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 minimising 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).

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