Ever since the inception of CSR, there have been many conflicting viewpoints that have either been promoting or discouraging its adoption.
The first argument in favour of CSR looks at the long-term interest of a particular business for being socially responsible. This argument states that if businesses are socially responsible at an early stage, they will ensure for themselvesan environment conducive to their further operation(Usunier, Furrer, & Furrer-Perrinjaque, 2011). In the long-run, the environment within which a business conducts its operations directly influence performance of a business. A market with great social unrest and many social problems is a market that is not conducive for any business. Ultimately, this has a direct bearing on the performance of the business.
The second argument states that a socially responsible business would ward off government regulations. The truth of this claim is apparent as evidence by the simple fact that future governments would tend to avoid imposing strict regulations on a business that is responsible and ethically upright by society’s standards(Benarjee, 2008). Governments aim to protect the social welfare of its citizens. This cuts directly into the expenditure of government as its sole purpose. When businesses takes the initiative to help government on this endeavour, such businesses find favour with government and thus experience much leaner government regulations.
Another argument is that pro-acting is better than reacting. This has to do with businesses anticipating social problems and consequently setting in motion strategies that will help mitigate problems rather than waiting until these social problems require business to react. Social problems affect the performance of a market. When social problems flood the market, businesses experience minimal sales and thus minimal profit. To safeguard the market, it is wise for businesses to undertake measures that ensure the good health of the market.
The final argument is one of public perception and states that the public would rather support a business that is socially responsible and mindful of the welfare of society than one that is not(Golob, 2006). Publicity, however, this is a form of marketing that would generally increase a company’scompetitiveness, marketability and or course profitability. This notion is true as customers are driven by their perception of a product and the company producing the product. When a company is seen to be socially responsible, customers would want to be associated with such a company. Therefore CSR leads to increased sales.
The viewpoint that initiated the anti-CSR movement was fathered by the Late Milton Friedman. Friedman took the stand that the maximizing of profit for shareholders and/or owners is not the concern of management. He believed that social issues were not the responsibilities of people in business. He also believed that these problems should be solved by the untethered workings of a free market(Husted, Allen, & Rivera, 2010). Friedman may have had a valid point at the point in time. The market was not conducive for the institution of CSR into a free market. The free market system that was present at the time allowed for market forces to dictate the free flow of economic events, unbound by social factors.
Another standpoint against CSR is that businesses are not equipped to handle or take care of social problems. This view holds that because social issues are far too complex for them to handle, business managers ought only to deal with finance and business operations. This was also partially true. Most businesses courses in the 60s only taught pure business and economic aspects of the market. The importance of social factors was not considered at the time. Therefore, most businessmen did not consider the importance of a business’ responsibility to the society. As such, businesses at the time did not have the resources to handle social responsibilities to the society as they were purely profit driven. This fact was true but misleading.
The third argument against CSR states that as a concept it seeks to dilute the true purpose of business(Husted, Allen, & Rivera, 2010). This is because CSR places businesses in endeavours and fields unrelated to their true purpose. This notion was not only misleading but also not true, in my opinion. This is because, businesses operate within a given sector. In this sector, there do exist certain social factors that influence the performance of a company in terms of its employees’ output and clientele welfare. All these factors are in direct contact with business operations and performance. Therefore, should a business pursue CSR within its sector, the business does not operate outside of its fields and still fulfils its intended purpose.
The fourth argument against CSR is that the power to influence and control the supply of commodities is enough for business to wield and adding social power to that would be excessive. This is untrue as the ultimate power in business is market share. The only way to achieve this is to wield social power as social power influences the market share a business has.
The final argument against CSR is that it renders business less competitively on a global. This notion is also false and misleading. Competitiveness is measured by the share of the market a business holds in relation to sales and profit. CSR increases competitiveness of a business by improving customer perception of the business as a social responsible and concern entity.
Change to Social Responsibility
Companies and businesses can become socially responsible owing to the facts and reasons named above. As a matter of fact, more and more companies have become socially responsible in the past 5 years, at a faster rate than ever recorded in history. This is evident in the manner in which social issues and problems have become the centre focus of business news and the increased involvement of businesses in mitigating and solving this issues. The following facts clearly depict that businesses are becoming socially responsible and how thay are achieving this.
- In the past 7 years, global warming has taken centre stage in the world of business. This has seen 75% of all energy companies in the world take measures to counteract the effects of GHG emission from their plants including tree planting and installation of new technologies to mitigate GHG emissions.(Block, 2013)
- Automobile manufacturing companies have developed new technologies that enable the use of clean energy and reduce the emissions of GHG from automobile engines. This has involved over 60% of all vehicle manufacturers on the planet.(Block, 2013)
- Due to increased pressure from human rights groups, mining and processing companies in the world have developed benefit packages for their employees including a risk allowance payment. This initiative has been undertaken by 53% of all mining and processing companies in the world.(Merino, 2012)
- In the past three years, media companies have illuminated the problem of human trafficking in third world countries. 80% of international media companies have joined this cause in order to bring to light the underlying problem of modern slavery in the 21st century. This initiative has been ongoing for the past 6 years and continues to grow.(Curran, 2010)
According toBenarjee (2008), despite recession and credit crunches, many shareholders and owners have applied pressure on their companies to institute CSR measures through the development of a CSR department(Benarjee, 2008). This is evidenced by the fact that companies and their shareholders have noticed the importance of businesses being socially responsible. Thus, the benefits of being socially responsible clearly outweigh the costs of becoming socially responsible.(Benarjee, 2008)
An important facet of CSR that has to be considered in the 21st century is the availability of information. The electronic age has made it possible for a company’s labour practices and environmental record to be easily accessible. The customer of the 21st century is more educated than ever and knows his or her rights. This puts businesses that are not socially responsible in a particularly difficult possession regardless of the amount of money spent on marketing(Export Development Canada, 2009). One negative tweet about a company’s labour practices and/or environmental record is enough to damage years of marketing.
Whistle-blowers: As a consequence of Corporate Social Irresponsibility
In cases where a corporate crime or social irresponsibilityis unearthed, there isalmost alwaysa number of employees involved in the exposure of these crimes. It is therefore essential that these employee whistle-blowers be given some kind of incentive to encourage them to fully unearth these crimes(House & Daniels, 1995).
Such sociallyirresponsible acts by corporates usually leads to the companies making supernormal profits. This is probably the only benefit of such crimes. However, a number of negative effects are experienced both within the company and the market:
- Customers (the market) are directly impacted by the negative effects of such crimes. For example oil spills in the ocean would lead to reduced fishing as a result of negative impacts on the ecosystem.
- Government is harmed as it is charged with the responsibility to repair the damages caused. As such government expenditure increases to return the society to its optimal social welfare condition.
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