General Overview Of Corporate Social Responsibility

Abstract:

Institutions in India had a long tradition of being engaged in social activities beyond the financial objectives. Corporate social responsibilities (CSR) activities had gained increasing its importance in the corporate world since the nineties. This study is made to understand the concept of Corporate Social Responsibility and the challenges faced during implementation.

Introduction

The concept Corporate Social Responsibility (CSR) means companies integrate social, environmental and health concerns in their business strategy (policy) and operations. Corporate Social Responsibility can be said as a commitment made by businesses to society that they behave ethically and contribute to economic development along with improvement of the quality of life of the workforce as well as the local community and society This paper is subjected to analyze and understand the need and importance for Corporate Social Responsibility in our society.

According to European Commission (EC) CSR means “the responsibility of enterprises for their impacts on society”. To completely meet their social responsibility, enterprises “should have in place a process to integrate social, environmental, ethical human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders”

The activities undertaken by a company that are voluntary in nature to operate in an economic, social and environmentally are included in corporate social responsibility. The programs undertaken for social responsibility should be connected to the business policy and strategies of the firm.It need to address the well-being of all stakeholders and not just the company’s shareholders. It is the duty of the company to ensure that whether the society is benefitted through their activities

Objectives:

1. To understand the concept of Corporate Social Responsibility.
2. To highlight the challenges in the implementation of Corporate Social Responsibility.

Review Of Literature:

Various research papers have been presented and published under the theme of Corporate Social Responsibilities. The review on some of the papers are as follows:

Gond, Crane (2008), made an analysis on the distortion of corporate social performance concept. The research analyzed that the past research and found some reason of emerging fall in the interest of corporate social performance research among the scholars. The paper also suggested models on the basis of which the researcher explained that why the CSP concept has lost its importance and development. Further, the researcher depicted some model which the researcher can use in their research related to corporate social performance. The paper argued that tensions and contradictions are the starting point to develop the CSP concept. CSP has an umbrella of activities which need to measure differences in order to move the researches from a simple concept to development

Brammer, Jcakson & Matten (2012), study entitled as “Corporate Social Responsibility and institutional theory: new perspective on private governance” in Social-economic review depicted that CSR is not only a voluntary action but beyond that. In this study, CSR had defined under institutional theory. The institutional theory stated that corporate social activities are not only voluntary activities but it is a part of the interface between business and society. Regulation/ governance are necessary for enhancing the corporate performance of businesses through CSR. The theory also suggested that in what form companies should take its social responsibilities whether historical, political or legal form.

Agunis, glovas (2012), Paper entitled “what we know and don‟t know about corporate social responsibility: A review and research agenda” in Journal of management, based on 588 journal articles and 102 books. The study provided a framework of CSR actions that affects external as well as internal stakeholders and outcomes of such actions. The paper also enhanced the knowledge regarding levels, forms of CSR; need to understand CSR with outcomes etc. further the researcher also suggested a framework of research design, data analysis and measurement for future research of CSR

Bibhu Parshed (2012), article presented that CSR is the face of industry face of doing trade. Bibhu said that today, corporate houses took CSR as a medium fulfillment of profit greed of corporate houses. Further, the article explored that companies today invests in a lot of areas like child labour, groundwater, food, education, employment etc. but nobody is aware of the essential need of world‟spoor. The article suggested that profit earning is a natural fact of companies but CSR is beyond the natural and statutory obligation of the companies. At last it was concluded in the article that sustainable development is the development of society as well as the company in a balanced way

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The Rationale of CSR:

To understand the best activities done under CSR by firms in developing countries and the considerations that have possibly dictated the imposition of mandatory CSR in India, it is important to understand the merits and demerits of socially responsible activities from the viewpoint of both the society and the corporation. It is necessary to look into the need for regulatory oversight of such activities. At the societal level, there has been an increasing recognition that the economic activity of a corporation needs to be embedded in societal concerns in terms of CSR and social activities. In fact, much of the discourse on CSR is conducted in terms of the relationship between business and society, of the moral and ethical imperative of business that goes beyond legal compliance, to contribute positively to society. One of the first academician Bowen (1953), draw attention to the social responsibility of corporations, He argued that private corporations should be evaluated purely through its “demonstrable contribution to the society’s welfare” in terms of the production of social goods for example higher standards of living, spreading economic progress and security, survival of the free enterprise system etc . A similar argument was forwarded by Steiner (1971) who argued that while businesses are primarily economic institutions, they are also expected to contribute towards achieving social goals, and such responsibilities should increase with the size of the business. This line of thinking, evolved over the years culminating in the stakeholder perspective that argues that a corporation’s goal should go beyond maximising profits for its shareholders and should instead be defined with respect to all its stakeholders (customers, suppliers, employees, community, etc.) including the society at large.

CSR and the Firm:

Stakeholder-oriented CSR is driven by the motivational desire of the firm to serve the interests of all stakeholders of the corporations beyond those of its shareholders. While the shareholder primacy view predominantly focuses on the profit motive, the stakeholder perspective is seen as reconciling the social and economic goals of an organization driven by a motive, which can be said as a moral, of serving the interests of the society at large (Van der Wees, 2009). Many times, a Corporation’s motivation to serve stakeholder interests through CSR, are a reaction to pressures exerted from stakeholders at large (Frynas, 2005). The stakeholder-oriented CSR activities entail a trade-off with profit maximization, which Elhauge (2005) refers to as “sacrificing corporate profits in public interest.”

Issues & Challenges:

Most of the companies have a view that corporate social responsibility is a peripheral issue for their business and customer satisfaction is more important for them. Now they have an attitude that customer satisfaction is only about price and service. So they fail to point out important changes taking place worldwide that could blow the business out of the water. The change is social responsibility which is a greater opportunity for the business. Some of the drivers who drive business towards CSR may include demands for Greater Disclosure. The demand for corporate disclosure from stakeholders, including customers, suppliers, employees, communities, investors, and activist organizations is growing day by day.

The Shrinking Role of Government: The Government, in the past, has been dependent on legislation and regulation to ensure social and environmental objectives in the business sector. However, the reduction of government resources, coupled with a distrust of regulations, has led to the exploration of voluntary initiatives.

The CSR Guidelines that are available is not easily understandable. There are no clear statutory guidelines or policy to give a definitive direction to CSR initiatives of companies. The company’s business size and profile determine the scale of CSR initiatives.

Competitive Labour Markets: In order to hire and retain highly skilled employees, the companies are now ensuring better working conditions. The employees are increasingly looking beyond paychecks and benefits, and seeking out from employers whose philosophies and operating practices match their own principles

Growth of Customer Interest: There is evidence that the ethical conduct of companies exerts a growing influence on the purchasing decisions of customers. The customers also tend to purchase the products of those companies which opt for social responsibility, as they think that it provides them with a platform to contribute to society.

Excess pressure to Investors: Investors are changing the way they assess companies' performance and are making decisions based on criteria that include ethical concerns. The report of Social investment forum states that in the US in 1999, there was more than $2 trillion worth of assets invested in portfolios that used screens linked to the environment and social responsibility

Besides these the problems of implantation of Corporate Social Responsibility include:

1. Issues of Transparency:.
2. Non-Availability of Well Organized Non-Governmental Organizations:
3. Narrow Perception Towards CSR Initiatives
4. Lack of Consensus on Implementing CSR Issues:

Conclusion:

Corporate sustainability is an evolving process and not an end, a process that would benefit all the stakeholders, and society as a whole. Hence implementation of Corporate Social Responsibility is of utmost significance. However, the challenge for the companies is to determine a strong and innovative CSR strategy that should deliver high performance in ethical, environmental and social areas and meet all the stakeholders‟ objectives

References:

1. Corporate Social Responsibility in India - An Effort to Bridge the Welfare Gap: Jayati Sarkar and Subrata Sarkar
2. Amaeshi, K. M., B.C. Adi, C. Ogbechie and O. Olufemi, 2006. “Corporate Social Responsibility in Nigeria: Western Mimicry or Indigenous Influences?” Journal of Corporate Citizenship, 24 winter, pp. 83-99
3. Basu, K. and G. Palazzo, 2008. “Corporate Social Responsibility: A Process Model of Sensemaking,” Academy of Management Review 33(1), pp. 122-136
4. Besley, Timothy and Maitresh Ghatak, 2007. “Retailing Public Goods: The Economics of Corporate Social Responsibility,” Journal of Public Economics, Vol. 91, No. 9, p. 1645–1663
5. Blowfield, Michael, and Jedrzej George Frynas: 2005. ‘Editorial: Setting New Agendas - Critical Perspectives on Corporate Social Responsibility in the Developing World,” International Affairs 81(3), 499-513
6. Bowen, HR 1953, Social Responsibilities of the Businessman, New York: Harper & Row. Carroll, AB 1979.
7. “A three-dimensional conceptual model of corporate social performance, Academy of Management Review, vol. 4, pp. 497-505. Connelly, J. T and P. Limpaphayom, 2004.
8. “Environmental Reporting and Firm Performance: Evidence from Thailand,” Journal of Corporate Citizenship, 13, Spring: 137-49.
9. Davies, R., 2002. “Corporate Citizenship and Socially Responsible Investment in Asia,” unpublished paper delivered at the Conference of the Association for Sustainable and Responsible Investment in Asia, Hong King, 10 June 2002.