Corporate Social Responsibility - Coursework Example

Corporate Social Responsibility No: This report represents the interest of business to engage in Corporate Social Responsibility (CSR) and the factors that are considered important for Corporate Social Responsibility, the impacts of CSR on business and the outcome that business achieves due to the implementation of Corporate Social Responsibility (CSR). This paper also discusses the key issues, process and theories through which, globalization took place and the ways in which, Multi National Companies’ (MNC) activity can affect national economies, governments, employees and trade unions. It also discusses the operation and impact of MNCs. The business case for CSR can be considered. Many economists have the view that CSR is not actually the demand of social ones. One of them has the view that it is not socially desired. Milton Friedman mentioned that the only social responsibility of a business is to maximize profits. To what extent is it in the interest of business to engage in Corporate Social Responsibility (CSR)? Before going into the pool of Corporate Social Responsibility, we should be familiar with the term Corporate Social Responsibility, which is abbreviated as CSR. It can be profitable for the businesses and so for businessmen. Corporate Social Responsibility cannot be defined as a specific term. Different researchers and economists gave different definitions to it according to their point of view. Most of the researchers agree that, ‘Corporate Social Responsibility is a process by which, businesses are monitored.’ It has its own standards that are internationally accepted as the rules and regulations through which businesses are monitored. The word ‘responsibility’ describes that it takes the responsibility of concerned companies and appreciates their impact on customers, employees and stakeholders. The history of Corporate Social Responsibility is not as old as business; however, as the business community realised the importance of the Corporate Social Responsibility, the knowledge about the term is continuously increasing. In late 1960s, Corporate Social responsibility appeared as an important pillar in the development of a business. With the emergence of Corporate Social responsibility, different multinational companies (MNCs) started using the term stakeholder. This term was initially used to give explanation of the corporate owners (beyond the shareholders of a company), as a result of an influential book by R. Edward Freeman, Strategic management: a stakeholder approach in 1984 (Freeman, 1984). Corporate Social Responsibility is also accountable for the actions of concerned companies and it answers some questions such as what are their missions, views, and motives? Community anticipated in business willingly to get involved in fixing social issues. The whole idea was that the organizations should go beyond their financial and legal obligations and support the community. This perspective of business social liability is adopted in much of the world these days. CSR involves: Directing businesses towards ethical manner and towards benefits of the community. Responding favourably to growing social significances and opportunities. Willing to perform ahead of controlling confrontation. Balancing investor aims and objectives against the aims and objectives of the community. Being excellent resident in the community. Business Case for CSR Many economists have this view that CSR is not actually required by the socially desired. Milton Friedman argues that the only social responsibility of a business is to maximize profits (Friedman, 1962). He also argues that the stockholders and customers are free to utilize their money and the manager of a company should plans long term projects. The business management scholars are finding arguments for a business case involving CSR (Onkvisit and Shaw, 2009). Cost and risk issue It is clear that the involvement of business in CSR not only lowers the expenses of business but also helps the business to be free from risks. Kurucz, Colbert and Wheeler (2008) have the view that the stakeholders of an organization may present threats to the organization. Equal employment opportunity policies and practices Corporate Social Responsibility provides equal employment according to EEO policies. It also enhances long term profits by lowering the cost and risks. This policy reduces employee turnover (Smith, 2005). Energy saving and environmentally protected production The cost and risk free issue can be achieved using CSR activities which are directed to improve the natural environment. The protective environmental production result in reduction of cost and risk. Data shows that addressing the environmental issues lowers the cost and improves company’s efficiency (Kurucz, Colbert and Wheeler, 2008). One of the important aspects of the CSR is the focus on energy savings and environmental protection during all production processes. Community relations Corporate social responsibility activities which are directed at managing community relations may also result in taking level down of cost and risk issue (Banerjee, 2007). Creating good community relations can play a major role in company’s tax advantages. It also helps in taxes which are being offered by city or country governance. A positive community relationship is very much beneficial may help is addressing cost and risk issues. The cost and risk reduction issues are topics of debate for managers and official authorities concerning CSR. According to a survey, 73% of the respondents pointed costs reduction as one of the big reasons for socially responsible companies. (Price Water House Coopers, 2003). Competitive Advantage Competitive advantage focuses on how well the organizations keep their organization unique. For this reason, the organizations want to address different issues to maintain a healthy environment of competition. It has also been cited as one of the top justifications for corporate social responsibility in a survey of business executives reported in Fortune survey by PriceWaterHouseCoopers (2003). Mallin (2009) has the view that the stakeholders demands are taken as opportunities rather than considering the demands as limits. For this reason, company manages their resources to fulfil these demands. The role of CSR in risk management is important in terms of the business case. With the Globalization, there are new risks for TNCs. In many developed countries of the globe, like the USA and UK, TNCs is now a more important term that is directly related to social, environmental and human rights issues (Berman, et al., 1999). The structural changes in the production are managed on international level. The different types of CSR initiatives such as code of conduct, monitoring, auditing, certification and labelling can facilitate such controls (Banerjee, 2007). Globalization and Multi National Companies/Corporations Since the world is globalizing, international businesses are becoming increasingly popular. MNCs are considered as to attain huge profits. Globalization is one of the major developments in the business world and it is backed up by the economy of the country. The impacts on human life due to globalization are positive and help organization to boost the profits and enhance the lifestyle of the community. According to Geiersbach (2010), the process of Corporate Social Responsibility is linked up with the MNCs and Globalization. There was a strong opposition to globalization under the rules of free trade in Seattle. The things that happened in Puerto Rico are the result of the same process. This is the country where the free trade model of development was used many years ago before it became the dominant global paradigm. The history of Puerto Rico has been dominated by the economic imperatives of the US who lived under an evolving colonialism that has always manifested itself in significant socio-political movements against it (Geiersbach, 2010). The strikes were the result of movements in 1998, which made changes in relation to international market. Hence, the new international businesses were not allowed to take place in markets (Schinke and Hostetler-Diaz, 2001). The Brattle group’s wide experience in natural gas industry provided opportunities in order to achieve excellence in this field. They also helped clients in UK, Europe, and Australia and in other countries in the debates on privatization. They assured their regularity in prices, terms and conditions and on over contract performance (Geiersbach, 2010). In 1490, there was not much development and therefore, the result was Colonialism. In 1890, as time proceeded, there came much improvement in stages and hence the result was Imperialism. In 1990, which is the third stage, there were a lot of advancement, as MNCs started in 1970s, highest level of civilization, cultural ideological effect, regional and economic integrations, as compared to the first two stages which were not good enough with respect to all aspects impulse, process, medium, political structure and result, third stage showed the transitions which were rapid in the third stage as depicted in the table (Schinke and Hostetler-Diaz, 2001). Looking for Win-Win Results through Complete Value Creation Synergistic value development justifications concentrate on taking advantage of possibilities that reunite varying stakeholder requirements. Companies do this by “connecting stakeholder passions, and developing pluralistic explanations of value for several stakeholders at the same time.” In other terms, they can merge many potential interest categories. Corporate philanthropy Business philanthropy may be a device of legitimization. Companies that have adverse public performance in the places of ecological problems and product protection use non-profit efforts as a means for building their authenticity. Creating Popularity and Legitimacy Companies may also rationalize their CSR projects on the reasons for creating, protecting, and retaining their authenticity and powerful standing. A company is recognized as genuine when its actions are congruent with the objectives and principles of the community in which the company functions. In other terms, a company is recognized as genuine when it satisfies its social obligations. Impacts of MNC It changes consumption habits and behaviours favouring the pace of consumption, changing the scale from national to international in the production, distribution, consumption and marketing of resources. Also make developments in ICT. It makes effective use of high technology in the production of goods. There seems rapid development in technology, increasing competition, increasing R&D activities, human resources and trade freedom with these MNCs. Moreover, MNCs makes good use of technology, fund new industries which strengthens the economy of a country. Also it has linkage effects and knowledge base. MNCs provide employment and foreign direct investments. Besides these advantages, there are some drawbacks too, such as these are profit oriented, relatively few jobs, costly and selling junk foods which is not healthy (Mallin, 2009). Abbreviations Used: CSR: CSR is used as abbreviation for Corporate Social Responsibility. Words like Corporate Social Responsibility and Corporate Citizenship have become buzz words of today’s business. TNCs: TNC refers to the Transitional Corporations. TNCs are those corporations that run their business in more than one country and they put a vital impact on the Globalization. MNCs: MNCs are the Multi-National Corporation running their business worldwide. EEO policies: A policy of “Equal Employment Opportunity.” R&D: R&D refers to the Research and Development department or activities of a corporation. ICT: an Information and Communication Technology. Conclusion From the above discussion, it is clear that Corporate Social Responsibility has pros and cons on business, and on what extent it is in the interest of business. The business case for CSR can be considered. Many economists have the view that CSR is not actually the demand of social ones. Globalization enhances long term shareholders by lowering down cost and risk. There is no doubt that globalization is an important leg but it is considered as either a cure for all problems or the main cause of problems. The role of CSR in risk management is an important aspect of the business case. The key thing is to make right use of the factors affecting CSR and MNCs in order to improve the economy while most of the researchers do not regard it as beneficial but that is a separate issue. As for each businessman, a positive community relationship is very much beneficial for reducing its expenses, cost and risks related to the clients and employees of the company. That is why; a company becomes sacred to costumers due to good community relationships. Lastly, some recommend that companies should believe in public obligations. (Wal-Mart, for example, has yearly earnings that surpass the yearly GNP of some nations.) Thus, companies should implement some of their human and economical investment in order to "make the globe a better place." 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