CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility

Corporate Social Responsibility

Introduction

Businesses have adopted CSR to support their fiduciary relation with shareholders (ww.article13.com) If a firm projects itself as being socially responsible, and avoids embarrassing exposures of malpractice, it can deepen and strengthen its reputational capital and preempt risk. That is, it can help avoid short-term reputational risk related to exposure of a firm's malpractice, which often carries financial sanctions. For instance, after the 1999 World Trade Organization protests, those firms listed on the Fortune 500 that were perceived as socially irresponsible suffered a 2.7% loss, as Deborah Spar and colleagues noted in 2003. CSR can help accommodate consumer preferences for socially responsible products (ww.casestudyinc.com)

Corporate social responsibility, or CSR, has been adopted as a formal policy goal by many advanced society governments and businesses. A flavor of its meaning can be gained by looking, especially at some of the governmental Web sites. For instance, CSR has been defined formally by the British government in the following general terms: It is the business contribution to collective sustainable development goals, concerning how business takes account of its economic, social, and environmental impacts in the way it operates—maximizing the benefits and minimizing the downsides. More broadly, there is the issue of why business should bother (ww.tescohsc.com).After all, as neoclassical economists have long argued, business owes abstractions such as “society” nothing—shareholders are the owners of business and it is the organization's obligation to do everything legal and legitimate to advance shareholder value, not to squander it on well-meaning but irrelevant CSR projects. On the other hand, the stakeholder model of the firm would insist that shareholders are but one set of stakeholders; that there are plenty of other significant stakeholders, including customers; nongovernmental organizations (NGOs); communities and civil society more generally; as well as activist groups claiming to articulate the interests of the environment, animals, or other mute stakeholders (ww.icmrindia.org). Looked at in this broader way, the question becomes one of temporality: If businesses serve only shareholder value interests in the short term and do so in such a way as to jeopardize other interests that might claim representation or be represented, and these then boomerang back onto the business by attacking its legitimacy or reputation, then it becomes a matter of shareholder value to attend to broader stakeholder interests. As David Vogel suggested in 2005, it may well be the standard business case that the primary responsibility of companies is to create wealth for their shareholders (ww.casestudyinc.com). But the emergence of CSR and activists associated with it adds a twist: In order for companies to do well financially, they must also be good, ethically, by acting virtuously (ww.article13.com).

Cynics might say that it becomes a matter of shareholder value for business to appear to be concerned about CSR issues, leading to a common critique that CSR is often seen as a tool of corporate greenwash, a rhetorical device employed by corporations to legitimize the corporate form and accommodate the social consciences of its ...