CSR IN HOSPITALITY INDUSTRY

Multinational Hospitality Industry and Corporate Social Responsibility

Multinational Hospitality Industry and Corporate Social Responsibility

Corporate Social Responsibility

Corporate social responsibility is defined by Carroll as the “economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time” (Carroll & Buchholtz, 2003, p. 36). The notion of corporate social responsibility means that firms have moral, philanthropic and ethical responsibilities besides to their usual goal of earning a return on investment and obey the law. A purpose of a traditional organization is that the firm is a fundamental responsibility lies towards its stakeholders and shareholders. When integrating corporate social responsibility with the firm's strategy, the focus of firm's objective widens to integrate other stakeholders including employees, the society, state, local, customers, and federal governments, suppliers, and other interest groups (Marquez & Fombrun, 2005). All these various groups who are affected, directly or indirectly by the firm's activities are called “stakeholders”. Business ethics is linked but not same as corporate social responsibility. CSR initiatives include legal, ethical, economic and discretionary responsibilities of corporations, while, business ethics focuses on morality of society, individuals and groups. Business ethics is a sub part of broader CSR initiatives (Barnett, 2006).

There are two ways in which businesses respond to needs of social responsibility. At one end, CSR initiatives are seen as business initiatives, which result in generating goodwill for the company. By undertaking CSR initiative, companies tend to expand markets as customers perceive such firms as socially responsible. In such cases, CSR investment is same as any other business investment. The CSR effectiveness is calculated in terms of contribution to firms' earnings. On the other hand, many organizations undertake CSR initiatives in order to save face. Here, CSR is a necessity not social obligation in order to save brand image by undertaking supplementary activities.

In the past, various oil companies have undertaken oil extraction activities with no regard for environmental damages. Similarly, many pharmaceutical firms have set expensive prices for patented medicines, even in times of emergencies. Finally, various firms undertake CSR initiatives to avoid customer backlash or government regulations (Jain, 2008). For the hospitality industry, CSR is a natural obligation as hospitality firms reflect the image of its country's hospitality and social norms. The main reason for undertaking CSR initiative should be giving back to society after extracting from it.

Arguments for CSR

The notion of modern business has continuously created many social issues. Therefore, it is the primal responsibility of organizations to address these issues. It is in the best interest of the organization to cater social responsibilities. By doing this, corporations reduce the chance of any future government regulations. Today, bigger corporations have a huge amount of financial and human resources; therefore, it should not be problems form these firms to devote part of resources to CSR.

Arguments against CSR

It is argued that social responsibility activities require financial sacrifice and are not always feasible. Another argument is that goal of the company is maximization of shareholder's ...