Corporate Social Responsibility

Corporate Social Responsibility

Introduction

The formal definition of social responsibility, according to Paul Reynolds, is "management's obligation to make choices and take actions that will contribute to the welfare and interests of society as well as the organisation." (Fields 2002). However, it is not as straightforward as it may seem. Having social citizenship means putting managerial ethics to practice and work. So how can we measure social responsibility if one company's ethical decision might be viewed as unscrupulous to another? With the competing demands from different stakeholders, CSR is becoming more important in an organisation. Most of the companies are starting to recognize that they have a wider responsibility to the communities within which they operate. Research has shown that by implementing social responsibilities, a win-win situation can be achieved between the company and its stakeholders.

Discussion

It is said that there are two kinds of responsibility in a company - commercial and social (Fialka 2006). Commercial responsibilities involve running a business successfully, generating profit and satisfying shareholder expectations. Social responsibility on the other hand is being aware of the issues being presented in the community and the working environment. CSR is not a new concept. Some companies have always acknowledged a "wider responsibility towards the community" (Brand Strategy 2007). Such activities in the past have tended to come under "paternalism" and "philanthropy". However, as Richard Welford suggests that corporate social responsibility tends to be much more far-reaching than paternalism or philanthropy. He states that "social responsibility requires us to look at ethics, stakeholder accountability and also our own value systems" (Brand Strategy 2007).

In order for a company to be a social citizen, they must hold a strong belief for ethical decisions and behaviour. Normative ethics uses various of styles to describe the values for directing ethical decision making. As Fialka (2006) identifies that four of these styles are relevant to managers. They are the utilitarian approach, individualism approach, moral rights approach and justice approach. The approaches require an organisation to be just and moral in its methods, in order to produce and promote "the greatest good for the greatest number" (Catalyst Consortium 2002). CSR takes on this positive approach. It allows the company to satisfy more of its stakeholders if CSR is adopted by the organisation.

Corporate social responsibility is not solely about doing the right thing, but it also offers direct business benefits. Having a reputation as a responsible business places a halo over organizations, because many consumers prefer to buy from ethical businesses (i.e.: business to business, business to supplier, business to customer). Moreover, a good reputation makes it easier to recruit good employees as well as reduces the risk of sudden damage to reputations and sales.

From a social responsibility perspective, organisations view their internal and external environment as a variety of stakeholders. A stakeholder is anyone who has a stake in the organisation's performance (Brand Strategy 2007). They can affect or get affected by the company, so it is very important to keep them in mind ...