The Concept of Social Responsibility - Essay Example

Business Law Assignment INTRODUCTION Social responsibility refers to the duties, responsibilities or obligations shared by every social entity wherein they must behave in an ethical way and remain sensitive towards the cultural, social, economic and environmental issues. As the business organisation operates in the social environment, it has to take into consideration various factors, which may assist the organisation towards attaining its ultimate objective. The concept of social responsibility is of significance for business organisations, as the objective of every business is to promote and make improvements in the community by improving their image in the society. This can be attained by solving various issues and meeting social requirements of the people living in the society, considering them as the end users of the product/services (Kapoor, “Corporate Social Responsibility: Mandating Companies to Contribute towards Society”). The paper intends to address the social responsibility of businesses, and identify the need of social responsibility by the organisation to sustain in the competitive environment along with the objective to evaluate shareholders profit that the organisation makes by implementing the Corporate Social Responsibility (CSR). The paper also indentifies the responsibility that a business organisation possesses even if they are not directly linked with the issues witnessed in the society. DISCUSSION CSR ensures that businesses conduct their operations and activities in order to attain its ultimate goal in an ethical way. The definition herewith reveals that social responsibility of the business is not limited to a particular definition but operates in a wider context of the society in order to meet the different expectations of its internal and external stakeholders. In precise, CSR is the relationship between various businesses, governmental bodies and individual entities in the society wherein it is important in order to meet the business and social objectives in an ethical manner. In other words, it can be stated that CSR implies strong relationship between the corporation and the society in which the business operates. Therefore, it can be stated that the concept of social responsibility is not only related with its business but also its stakeholders (Crowther and Aras, “Corporate Social Responsibility”). According to Mandelbaum (2007), most of the social enterprises in the USA have implemented the concept of sustainable corporate policy in there enterprises. From a comparative perspective, sustainable policy incorporated is better known as CSR, which is implemented for benefiting the society and the environment in which the business is operating (Mandelbaum, 27). From the various scientific research conducted, it can be stated that in order to obtain long-term sustainability, it is important to act responsibly for the benefit of the society. In this regard, it can be stated that business organisations that blindly and intently work for profit maximisation, with minimum or no concern about their role towards various stakeholders and the society, are unlikely to survive in the long run and gradually, suffer lack of sustainability. Firms must always connect and focus on the stakeholders and their needs in order to satisfy the various challenges they are being encountered (Waldman, Kenett and Zilberg, “Corporate Social Responsibility: What It Really Is, Why It’s So Important, And How It Should Be Managed”). To be precise, CSR is not solely about doing things in the right manner. However, it involves the direct and the indirect advantages that the company will receive by applying the concept of CSR in its business practices. These advantages and benefits in turn help the business to accelerate loyalty of the employees towards the customers, augment employees retention, serve high quality of products and services and create a responsible image in the public by enhancing the brand value (Chetty, “Corporate social responsibility contributes to organizational development”). The activities in the CSR involve the following: Eradicating problems related to poverty, promoting health care Promoting education, and employment by enhancing various skills, especially those related to women, disable, child, and elderly people Promoting equality in the gender, setting up industrial units and care centres in order to empower women and orphans, setting homes for old age people and various other facilities for the senior citizens and remedial measures so as to remove the inequalities faced by the backwards groups Ensuring sustainability in the environment by way of protection of flora and fauna, with animal welfare, ecological balance and conservation of non-renewable resources Protecting national art and culture, heritage including sites, which are of historical significance Building various public libraries along with development and promotion of traditional belongings In many organisations, CSR activities include training to various sporting events Contribution by the way of charity, such as National Relief Fund or recognised funds set up by the Government for development of minorities, backward classes and women (Kapoor, “Corporate Social Responsibility: Mandating Companies to Contribute Towards Society”) Implementing CSR in the business practice helps the firm to manage and anticipate risks, improve competitiveness in order to have proper access of capital, improve relationship with various regulatory bodies, enhance the business reputations, innovation, cost savings, operational efficiency and improve the market position overall (Hohnen, 10-12). Accordingly, Murillo and Martinek (2009) concluded that organisations have been engaged in social responsibility related activities in order to increase their private profits substantially. In this regard, firm’s stakeholders value the social efforts, as it enables them to obtain additional advantages from such activities, assist in enhancing the reputation, and generate profits by attracting qualified personnel simultaneously. It is to be noted in this regard that one of the prime social responsibilities of every business is to maximise their profit, as referred by Friedman (Friedman, “The Social Responsibility of Business is to Increase its Profits”). Apparently, CSR helps the business to maximise profit and provide satisfactory returns to their shareholders having a direct impact on the sustainability and efficiency of the organisation in the long run. This implies that modern corporation emphasise using a portion of its profit on the CSR activities and focus towards wider goals (Kolstad, 137). Organisational contribution towards CSR improves the company’s performance by allowing them to earn more profit by enhancing their reputation and increasing the productivity of the workers. Various findings herewith revealed that contribution towards the CSR expenditures is insufficient in generating the returns, which may in turn diminish the shareholders’ value largely. In accordance to Freidman’s views, it can be stated that expenditure on CSR does not provide direct value to the shareholders’ return (Lys, Naughton and Wang, “Pinpointing the Value in CSR”). Business units are responsible for the problems in society, even if they are not directly related, owing to the fact that the concept of business organisation is not to stand-alone but is to work for the welfare of the society. It comprises of various people and groups working with the prime motive of distributing goods and/or services to maximise profit by interacting with others, which may refers to society or stakeholders (Fitzgerald and Cormack, “The role of business in society”). As various resources in the process of production and distribution are driven by the society, any unethical practice in the operation may create multiple effects in the society as whole. Furthermore, evidences have also revealed that rise in the modern business activities is creating continuous social problems like degradation of resources and environmental hazard along with various other problems. Therefore, corporate entities must consider such issues and subsequently, take measures to mitigate the issue for the improvement of the overall society and the business (Fitzgerald and Cormack, “The role of business in society”). In the today’s business environment, creating balance between the companies and communities throughout the supply chain has emerged as an important aspect, wherein performing strategies linked with CSR plays a crucial role. The major factors due to which, the attention of business towards the social responsibility increases include: Sustainable Development: CSR helps in understanding various sustainable development issues and helps developing the strategies in alignment with social issues associated with poverty alleviation and human rights Globalization: Globalization has facilitated cross broader trades, which further gave rise to the CSR concept related to environmental protection, human resource management and health and safety among others Ethics: Any unethical practice in the organisation may result in damaging the morale of employees, involvement of community participants and shareholders’ confidence. In this context, CSR approach will help in ensuring proper corporate governance, accountability, transparency and ethical standards within the organisation for greater efficiency Business Tool: CSR approach helps in reducing the social risks opening new opportunities, rejuvenating innovation scopes and enhancing the reputation in the consumers mind (Hohnen, 6-8) CONCLUSION From the above discussion, it has been comprehended that owing to the complexities accompanied with the changing business environment, CSR is about how the business unit manages their operational processes to produce a positive impact on the entire society. Hence, businesses should consider the interests towards the society by undertaking various responsibility in their activities for employees, suppliers, end-users, shareholders, society and others stakeholders. To be noted in this context, legislation has strict regulations towards various CSR approaches regardless of the size of the organisation and voluntarily takes part towards social responsibilities. As a result, organizations are stepping forward in order to improve the quality of life for the workers, their families as well as the overall societal status at large. Correspondingly, it can be concluded that companies practicing CSR, will have to integrate ethical concerns in various activities and create positive relationship with all stakeholders involved in the process. This implies that the businesses involved in implementation of CSR activities will be more beneficial for the society. Notably, the concern as to whether CSR increases the shareholders’ wealth is still a debated issue, subjected to further studies. Nevertheless, studies have been quite fruitful in revealing and providing evidences thereon that in the long run, CSR activities are likely to help in increasing the wealth of the organisation, as the firm creates a positive impact in the overall society. Works Cited Chetty, Priya. Corporate Social Responsibility Contributes To Organizational Development. 2012. Web. 14 Jul. 2014. Crowther, David and Aras, Gular. Corporate Social Responsibility. 2008. Web. 14 Jul. 2014. Friedman, Milton. The Social Responsibility of Business is to Increase its Profits. 1970. Web. 14 Jul. 2014. Fitzgerald, Niall and Cormack, Mandy. The Role of Business in Society. 2006. Web. 14 Jul. 2014. Hohnen, Paul. “Corporate Social Responsibility An Implementation Guide For Business.” International Institute for Sustainable Development (2007): 1-104. Print. Kapoor, Mega. Corporate Social Responsibility: Mandating Companies to Contribute Towards Society. 2014. Web. 14 Jul. 2014. Kolstad, Ivar. “Why Firms Should Not Always Maximize Profits.” Journal of Business Ethics 76 (2007): 137–145. Print. Lys, Thomas., Naughton, James and Wang, Clare. Pinpointing the Value in CSR. 2013. Web. 14 Jul. 2014. Mandelbaum, David. G. “Corporate Sustainability Strategies”. Temple Journal of Sci. Tech. & Envtl. Law 26.1 (2007): 27-41. Print. Murillo, Ruben. Hernandez and Martinek, Christopher. J. “Corporate Social Responsibility Can Be Profitable.” The Regional Economist (2009): 4-5. Print. Waldman, David., Kenett, Ron. S. and Zilberg, Tami. Corporate Social Responsibility: What It Really Is, Why it’s So Important, and How It Should Be Managed. 2010. Web. 14 Jul. 2014. Read More