Justification of CSR to Key Stakeholders - Essay Example

Justification of Corporate Social Responsibility to Key Stakeholders Corporate social responsibility refers to the obligations that a business has towards the community, employees, society, and customers that move beyond their profit maximization goal. It is a concept that companies ought to adopt in an attempt to lure more customers and develop customer loyalty. Over the years, there have been increased debates on this topic that has continued to divide renowned economists. In his statement, Friedman asserts that the business of the company is the business of the enterprise. In saying this, he attempted to show that corporate social responsibility is not desirable at all. Moreover, he argued that the only CSR of a company is to maximize profit and any use of its resources for the benefit of the other stakeholders is a waste of resources by the management. However, there are several ways in which corporate social responsibility can be justified to the key stakeholders of the company as outlined below. One of the ways in which CSR can be justified to stakeholders is on the benefits that accrue to the consumer before they are eventually transferred to the company. CSR enables the company to provide quality products to customers. The products are also measured in their right quantities, appropriately packed and are fairly priced. In doing this, companies observe corporate social responsibility to their consumers (Carroll & Shabana, 2010 pg 26). On the other hand, benefits are accrued to the firm in the form of customer loyalty and increased demand for the products produced by the company. CSR to the customers translates into increased sales in the long run (Chatterji & Toffel, 2009 pg 12). Secondly, CSR to the suppliers also benefits the company. Companies regularly deal with many suppliers hence the need to observe CSR with these suppliers. One way of doing this entails offering fair chances in tender allocation, prompt payment and also avoiding default in payments. The emergent benefits can be used to justify the need for CSR in any business. One of the advantages of this is that a firm can receive goods on credit from the supplier due to the good relationship attributed to CSR (Dhaliwal, Yang, & Li, 2011 pg 34). Also, the providers tend to offer quality supplies to their best customers and hence the business would immensely benefit. Notwithstanding, the market is likely to receive services from providers at a subsidized rate when it observes corporate social responsibility towards them. In this light, there is need for any business to be socially responsible to its suppliers (Du & Sen, 2010 pg.67). The benefits to the community are another justification for the use of CSR. One of the CSR of the business to the community and society is conserving and preserving the environment. To achieve this, businesses are expected to deviate from any form of activities that would pollute the environment or make it unfavorable for the community to live. For instance, the pollution of water catchment areas by the emission of effluents into water channels should be avoided (Godfrey & Hansen, 2009 pg 46). Also, the conservation of natural resources is a core aspect of the CSR of the business to the community. The enterprise then benefits by receiving cheaper raw materials from the community, support from the community, as well as cheap labor from such communities due to the great relationship built on the foundations of corporate social responsibility (Garriga & Mele, 2013 pg 48). The CSR of the company to the government entails several issues that eventually benefit the business. Companies have a social and legal responsibility to pay taxes to the government. Besides, the company is expected to support the projects that are initiated by the government. By doing this, a business in turn benefits from a perfect relationship with the government. It can be seen by the reduced regulations that states set for such a business (Lindgreen & Swaen, 2010 pg 43). Moreover, some of the corporate activities enable the government to carry out its functions for the sake of the business. The government can provide security for such companies and develop infrastructure that eases the movement of raw materials and finished products of the same enterprise. In this light, there is need for businesses and stakeholders to embrace the concept of CSR as it has immense benefits to the firm in the long run (Godfrey & Hansen, 2009 pg 41). Helping stakeholders understand the role of corporate social responsibility against competitors can help justify its use. A business that observes CSR issues has a better reputation than one that does not (Suvanto, 2010 pg 32). As such, most customers prefer to purchase goods from businesses with good reputations than those with a limited practice of CSR. CSR can, therefore, be used by enterprises to develop an edge over other companies that produce the same type of commodity. Furthermore, good corporate social responsibility helps attract investors to finance the operations of the company that goes a long way in helping expand the operations of the company. The easiest way for a company to build its reputation is to engage in CSR (Maon, Lindgreen, & Swaen, 2009 pg 57). CSR to the employees also benefits the business. Developing sensitivity to the needs of the workers helps cement their relationship. In cases where the health and safety of the employees are considered before they are assigned duties, the production is bound to be better. (Tusker, 2009 pg 40). However, in cases where companies do not care about the wellbeing of the workers, there is reduced productivity. Employees perform better when business are concerned about safety and welfare. Moreover, employees are less resistant to change in organizations that observe their corporate social responsibility towards them. In this light, to ensure the efficient performance of the employees, business ought to adopt the concept of corporate social responsibility (Maon, Lindgreen, & Swaen, 2009 pg19). Observing CSR helps ease the recruitment and retention process for employees. Employees readily apply for work in firms that have built up their reputations. For any business to develop its reputation to the public, it must engage in corporate social responsibility issues. As such, it becomes easy to attract highly skilled employees if the reputation of a business is above par than when it is below. Also, the company does not have to worry about retaining such employees and the risk of loss to competitors as good CSR helps build on its reputation to employees (Du & Sen, 2010 pg 18). Notwithstanding, such companies can subcontract high-level management staff from bigger companies as their reputation precedes them. Employees of such an organization with a good reputation are also always productive and motivated by the need to make the business the best it can ever be owing to the benefits it confers on them There is, therefore, a need to embrace corporate social responsibility for the overall benefit of the business (Garriga & Mele, 2013 pg 23). The role of corporate social responsibility in the development and expansion of any business cannot be overlooked. There is a need to embrace the concept as it helps ensure the growth of different sectors of the economy hence making the world a better place. Besides, the concept of CSR has helped create a more sensitive business world where every action that a company engages in is scrutinized to ensure that it does not only benefit the company but the society as a whole. Profit maximization cannot be achieved at the expense of the losses conferred on society. However, there is a need to develop a common ground that will benefit the society and the business. Arguments by major economists that CSR is not desirable cannot be accepted and ought to be revoked. Summative, the business of the enterprise is not just the business of the enterprise but also of the society. References Carroll, A. B., & Shabana, K. M. (2010). The business case for corporate social responsibility: a review of concepts, research and practice. International Journal of Management Reviews, 12(1), 85-105. Chatterji, A. K., Levine, D. I., & Toffel, M. W. (2009). How well do social ratings actually measure corporate social responsibility?. Journal of Economics & Management Strategy, 18(1), 125-169. Dhaliwal, D. S., Li, O. Z., Tsang, A., & Yang, Y. G. (2011). 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