Corporate Social Responsibility, Essay Example

Society and business representatives have managed to give different interpretations of corporate social responsibility. It is evident that CSR meaning is managerial and more practical in scope. The interest of stakeholders’ gives CSR different definitions in the society and business-centred way, frequently related to sustainability concept. According to Organisation for Economic Co-operation and Development (OECD), CSR is involved in the development of business ‘fit’ within the society they operate in (2003). They augment that the societal function of business is to be able to yield adequate returns to owners of capital through the identification and development of promising opportunities of investment. As a result, in the process they provide jobs, produce goods and services for consumption by consumers. Moreover, businesses need to obey various laws applicable to them and should respond to the expectations of the society not recognised as formal law. CSR Europe defines CSR as the way a company improves and manages its impact on the society and environment with the aim of generating value (2003). This is for both its stakeholders and shareholders through innovating its operations, strategy, and organisation. Unilever defines CSR as the interaction or impact we have with the society in: (i) impact of business’s (direct) operations, (ii) voluntary contributions and (iii) value chain impact (2003). Corporate social responsibility is the commitment laid down by a corporation to do things in an ethical manner and contribute to economic development. The corporation also decides to contribute voluntarily to a better society by attending to social and environmental concerns in their business operations and their interactions with their stakeholders. Corporate social responsibility can also be how a corporation manages its business processes to produce an overall positive impact on society.

In every corporation there must be people, who have a particular interest in the business, be it investment, ownership or job opportunity. We call these people stakeholders, and their actions determine the outcome of the business decisions. These stakeholders have different roles in the business. In corporations, extensive duties key to stakeholder groups encompasses employees, suppliers, communities, and customers, among others (Heath & Norman, 2004).

The employees of a corporation are responsible for carrying out tasks specified in the corporation’s strategic plan in an efficient manner. Employees interact directly with customers and work directly on a corporation’s product. The corporation’s responsibility to the employee is to provide protective gear where need be, reasonable salaries, and a conducive working environment. The working environment should encompass ethical standards that look into the welfare of employees. This will give the employees to raise their problems in an organized manner and help the corporation run in a systematic way. Eventually, employees will be able to meet their physical and psychological needs.

Stakeholders provide capital to start up a company or make it grow and expand. In some cases, they provide guidance and advice to the management of the business. Decision making processes in corporations has helped stakeholders in running the organization and thus, no decision goes past them. As a result, stakeholders are aware of the corporations’ motive and will be in a position to offer them the necessary tools to counter attack the problems and circumstances facing the stakeholders. The corporation’s responsibility towards the stakeholders is to ensure that the business is making a good profit so that it awards them bountifully.

The customers are the reason for a corporation’s existence. Customers choose which business to fail and, which to succeed by choosing where to purchase their products. They also provide priceless feedback to the corporation about its products and client service level. Customers are the most important stakeholders of any business venture because they contribute towards the general growth of a corporation. It is important for businesses to look into the needs and wants of their customers because they play a very important role in the building of solid relationships within the business transaction procedure. The corporation’s responsibility to the customer is to avail the products in time, good quality and at a reasonable price. They are also to provide customer care services in case of queries from the customers.

The vendors or suppliers are the people who avail raw materials and other products to the business. These also important people contribute to the well being of organizations because they complete the chain of distribution by providing the raw materials. Their role is to avail the supply when need and at a reasonable price. They also introduce new applications or solutions to the corporation so it can become more efficient, more productive and eventually increase its margins and profits. The corporation’s responsibility to the vendors is to make payments in good time.

In political environments, Business in the Community (BitC, UK) is an example of industry bodies that work anxiously in improving the member impact on the local communities. The CSR has helped in improving the social performance of members, since it is a benchmark tool providing the company with a systematic process for comparison of the process of management and performance against others in the sector. Hence, companies are able to improve their performance among their peers. The government plays the role of regulating laws that a business must operate. They ensure a business is operating legally by issuing a licence. The license gives boundaries to businesses on where to operate and this helps them operate their business in their restricted areas without causing conflict with their neighbours. Additionally, rivalry groups target business entities by causing conflicts in order to steal their clients, but government regulations gives them the opportunity to defend their rights and privileges and work in a professional manner. It also makes sure that the business does not affect the community and environment in a negative way. The community and environment contribute greatly to the success of the business entity and it is important for the government to set up rules and regulations governing businesses. The corporation’s responsibility to the government is to ensure that they pay taxes and not to be involved in any unlawful activities. The tax helps in the running of government activity and covers the legal fees for business entities to be in existence. This fees is important because it helps in the smooth running of activities, which contributes positively to the employees standard of living.

The community provides the skilled workforce that a corporation depends upon to maintain its competitive edge. The added advantage that communities provide corporations is important in this digitized age because corporations are able to embrace the new forms of technology. This helps business and community interact easily because they have different avenues to communicate together. They also ensure the corporation is a good resident with fair business practices and is willing to contribute to charitable and social causes. These functions help in the smooth running of the organization and helps individuals interact with each other in a professional way. The corporation’s responsibility to the community is to ensure an environment conducive and provide employment.

Corporate social responsibility has a hierarchy, and it distinguishes the organizational responsibility in the different levels. The levels are:-

Economic responsibility is the first level. This is where the corporation produces goods and services that are desired by customers. In addition, the corporation is required to sell products and services at a sensible price and make a profit.

The second level is the legal responsibility. It states that there are laws that exist to govern how corporations conduct their business affairs. This law includes; regulation of taxes and employment laws, and are established nationally and locally.

The third level is the ethical responsibility. Ethics deal with ensuring that the corporation operates in a way that is fair and just. Ethical responsibility also encourages corporations to uphold the ethics and norms of the society they are based.

The last and final level in the hierarchy is the discretionary/philanthropic responsibility. This means that corporations should not meet their economic needs as their sole objective, but also they are required to consider the society they are located. Under this level, the corporation is required to donate finances, provide technical resources and help the community when afflicted by natural disasters.

In social pressure, the two major areas are living standards and competition. A corporation might be situated in an area where majority of the residents are poor. This would affect the corporation because very few people would afford their products. However, the corporation providing employment for the society can reduce this. This would help the people financially.

Competition is also a very significant problem to a corporation. If a competitor is providing better goods and services, the corporation can be affected to the point of bankruptcy. This problem can be solved by improving the product’s quality, introducing services that the competitors do not have and lowering the prices. In addition, social pressure regards to the style and preference of individuals, which affects the movement of goods in a corporation. The services are also affected since there will be those that are fast moving and those that are slow. This will affect the finances and resources available for a corporation. Therefore, it is the responsibility of the corporation to provide their consumers, with goods and services, that meet their taste and preference. This is in order to have a stable and continual working relation.

Under environmental pressure, the area focused on is pollution. In most corporations, the most common issue is noise pollution where the machines used are too loud and affect the society. The corporation can overcome this problem by going for an expensive, but silent machine for the sake of the society’s health. The other problem is air pollution, where fumes emitted in the open air affect the ozone layer, which in return causes global warming. This whole aspect of air pollution is a hindrance to the employees of a corporation because they have health issues related to the pollution. Corporations need to put in place measures that take into consideration the heath of their stakeholders (employees) who are important individuals for the corporation to exist. This can be reduced by coming up with air filtration systems.

References

Heath, J. & Norman, W. (2004). Stakeholder theory, corporate governance and public management. What can the history of state-run enterprises teach us in the post-Enron era? Journal of Business Ethics 53, 247-265.