Relevance of Corporate Social Responsibility - Essay Example

Finance and Accounting Finance and accounting Relevance of corporate social responsibility (CSR) I disagree with Adam’s statement that corporate social and financial reporting only enhances corporate image and credibility with stakeholders. The idea is farfetched because corporate social responsibility and environmental answerability facilitates a sustainable business environment. Horrigan (2010) highlights that current accounting emphasizes the company responsibility and often acts as an umbrella term to describe a broad field of research and practice. The practice offers immense business, social and environmental opportunities to the enthusiastic firm. Corporate social responsibility has varied meanings depending on the perception and perspective of a group towards the situation. Likewise, the definition also varies through time. In general, Bansal & Hoffman (2013) define corporate social responsibility (CSR) as roles of multinationals to carry out business in a manner that respects the rights of individuals and promotes human welfare, conserves the natural resources and respects cultural heritage. Hopkins (2007) is of the opinion that CSR is a voluntary corporate driven initiative. In addition, Rahim (2013) stresses that CSR requires firms to perform their operations in compliance and inaugurate programs which further some a noble society. However, the activities should operate beyond the firms’ interests and legal requirements. It includes incorporating social characteristics into products and manufacturing processes, adopting progressive human resource management practices, achieving higher levels of environmental performance through recycling and pollution abatement and advancing the goals of community organizations Benefits of corporate social responsibility Sustainable environment and economic reporting achieves business economic accomplishment through responsible governance and transactions. Unlike the traditional notion by Adam, CSR impetuses firms to improve on handling of manufacturers, suppliers and the society. Community partnerships promoted by CSR enable companies to establish productive relations and kindle economic progress of business surroundings. Currently, corporate social responsibility is becoming a key initiative and an essential tool in the growth of multinational corporations and the development of companies throughout the globe. Brockett & Rezaee (2012), claim that the concept of corporate responsibility and firm’s growth complement one another. Moreover, it provides benefits for all the involved parties like stakeholders, consumers, environment, and the society. Up to date, Gossling (2011) identifies various economics theoretical frameworks justify the importance of CSR. The theories educate the public and business entities about importance of accountability by the government. Stakeholder theory Stakeholder theory accentuates the significance of ethical business practices in the pursuit of customer loyalty and maximizing profits. Lee & Kotler (2013) emphasizes that corporate social and financial reporting strongly influences a particular company’s public record in different ways. An unpremeditated contributory relationship usually occurs between CSR presentation and companies’ estimates of fundamental business value. Thus, constructive corporate accountability and financial reporting meaningfully increase the investors’ approximations of important value. Furthermore, Zu (2009) effective monetary and corporate participation increases the relevance and performance of a company. Thus, managers have a critical role to address wants of constituents for example customers, staff, and local organizations. Corporate responsibility as stipulated by stakeholder theory enhances respectable relationship with the between stakeholders and the business. The congruence that results influences profit margins, success of the business, stakeholder loyalty and promotes smooth business operations. According to this concept, managers should not selectively focus on benefits to stakeholders. Engagement in CSR activities can either facilitate either support or withdrawal consumers for the firm. Importantly, market partakers who contemplate about a syndicates CSR practice and the financial report, make less dangerous approximations of the establishments central value compared to individuals who consider financial results only. Institutional and classical economic theory Companies that practice appropriate corporate social responsibility and community engagement based on trust and cooperation are motivated to be trustworthy, ethical, and honest. CSR offers high returns for the businesses. Structures of institutional approaches also guide establishment’s environmental social responsibility. More specifically, the harmony shapes the consensus within a firms operation that promotes sustainable and efficient organizations. The institutional economic theory promotes strategic leadership skills that enhance corporate and financial reporting. Therefore, the process upholds aspects of transformational leadership, which positively correlate with the tendency of firms to engage in CSR and guide decision-making. Thereby, the resultant use of valuable, non-substitutable, and inimitable resources and capabilities institute a basis for sustainable competitive advantage. Multinationals with an organized leadership structure often tend to experience better revenue returns unlike weak organizations. Furthermore, corporate responsibility ensures efficient use resource allocation and proper planning. The current fiscal status specifies that companies should engage in activities for profit and help the consumers meet their non-business wants. Traditionally, consumers rely on companies for services and good. However, the complexities of product market permit consumers to make choices according to many factors. For example, a current customer value corporation based on outside environment and inside workplace engagements. Therefore, efficient corporate reporting and environmental accountability determines customer loyalty. Firm perspective theory Corporate Social Responsibility attracts socially responsible consumers commonly called strategic CSR. It cultivates a culture in which firms provide a public good in conjunction with their marketing strategy. In this context, the demand and supply perspective imply an ideal and determines cost benefit analysis. Thereby, Urip (2013) offers information that CSR forms an integral element of a firms business and corporate-level differentiation strategies that stimulate strategic investment. In addition to the product market and distribution channel, CSR builds or maintains the reputation of a firm. Equally, engagement in CSR programs generates a set of predictions regarding patterns of investment in CSR across firms and industries. Thereby, it helps in the maximization of profits and revenue collection. Businesses engage in effective corporate environmental and economic reporting to increase appeal to the public, promote social acceptance and transform a negative conception about a product. Manifestly, corporate reporting serves a bigger role comparable to advertising. Constructive engagement in community issues increases firms and products popularity in the market. Schreck (2009) explains that product popularity leads to more sales and subsequently more profits to the company shareholders. The process of transacting involves interaction with many individuals, suppliers, and buyers. Honest transactions and reporting distinguishes firms from their competitors. Specifically, Paetzold (2009) identifies that suppliers, sellers, and consumers often favor corporations that exhibit responsible policies. Therefore, financial and environmental reporting has a positive contribution on different stakeholder perception. Resource based perception of CSR Multinational corporations depend on the natural resources for productivity. However, the world environmental resources are limited. Therefore, Mullerat & Brennan (2011) underscores the importance of establishing measures for ensuring the sustainability of both the environmental goods and the survival of business through future circumstances. Corporate social responsibility is a proven approach that promotes accord and conservation of the resources by businesses. The tactic facilitates the continued survival of resources, rehabilitation of degraded environments and sustainability of raw materials for the current and projected business activities. CSR supports business or individuals to generate sustainable modest advantage firm that can utilize the resource-based aspect of corporate and financial auditing together with the support of favorable political strategies. Importantly, corporate environmental and financial reporting actively engages the services of specific aspects of managerial skills. Grünewälder (2005) offers the opinion that application and promotion of the skills in turn inspire the prosperity of the firm s with efficient corporate social responsibility structures. Thus far, major companies managed by intellectually stimulating leaders perform most strategic CSR than comparable firms in the market. True to Adams words, it promotes stakeholder satisfaction but also enhances public acceptability and improves company image. Legitimacy theory Horrigan (2010) outlines that corporate (financial, social, and economic) goes beyond legal compliance. Hence, establishing appropriate mechanisms for compliance coupled with business accountability saves on issues of fines, permit withdrawal, and unfair regulations. On the other hand, the business enjoys a free market, enhanced revenue allocation, and maximized profits standard. In some circumstances, the government awards companies that show efficiency in reporting financial and economic issues. Such awards include tax exemption on import of raw materials, tax waiver, and subsidies. Legality standards prompt businesses to operate beyond legal acquiescence. Through ethical practices, firms recognize significance of compliance as an essential role that encourages sustainable business development. CSR also intensifies public preference for goods and products of a particular company. Conclusion Contrary to Adams claim, the discussion evidently demonstrates that corporate social responsibility (CSR) directly or indirectly affects the environment, society, and stakeholders. Socially responsible company plans about environmental and financial are mutually beneficial to the business, consumers, government, and stakeholders. Given the stiff nature of economic environment, firms should establish strategic corporate mechanisms to complement marketing. It does not only entail doing the right thing but also entails behaving responsibly in the pursuit of business goals. Judging from the numerous benefits, companies should strive to embed operative corporate environmental, social, and economic reporting practice in every firm’s policies and visions. Thus, Grünewälder (2009) offers the ideas that managers should embrace corporate responsibility to gain competitive advantage over other service providers. A social, environment, and economic compliant organization advance its credibility and competitive superiority in relations to attracting and holding clients, investors, employees, and suppliers. If a company carefully aligns its core strategies and mission in line with environmental sustainability, it has high chances success. . References Bansal, P., & Hoffman, A. J. 2013. The Oxford handbook of business and the natural environment. Brockett, A. M., & Rezaee, Z. 2012. Corporate sustainability: Integrating performance and reporting. Hoboken, N.J: Wiley. Horrigan, B. 2010. Corporate social responsibility in the 21st century debates, models and practices across government, law and business. Cheltenham, U.K., Edward Elgar. http://site.ebrary.com/id/10404050. Gossling, T. 2011. Corporate Social Responsibility and Business Performance: Theories and Evidence About Organizational Responsibility. Cheltenham: Edward Elgar Pub. Grünewälder, A. 2005. Corporate social responsibility: Implementation in German companies. Norderstedt: Grin Verlag. Grünewälder, A. 2009. Integrating Environmental Sustainability into the Companys strategy: A study of contributing factors to overcome barriers between sustainability and shareholder demands. München: GRIN Verlag GmbH. Hopkins, M. 2007. Corporate social responsibility and international development: Is business the solution?. London: Earthscan. Horrigan, B. 2010. Corporate social responsibility in the 21st century: Debates, models and practices across government, law and business. Cheltenham, U.K: Edward Elgar. Lee, N., & Kotler, P. 2013. Corporate social responsibility: Doing the most good for your company and your cause. Hoboken, N.J: Wiley. Mullerat, R., & Brennan, D. 2011. Corporate social responsibility: The corporate governance of the 21st century. Alphen aan den Rijn: Kluwer Law International. Paetzold, K. 2009. Corporate social responsibility (CSR): An international marketing approach. Hamburg: Diplomica-Verl. Rahim, M. M. 2013. Legal Regulation of Corporate Social Responsibility: A Meta-Regulation Approach of Law for Raising CSR in a Weak Economy. Berlin, Heidelberg: Imprint: Springer. Schreck, P. 2009. Corporate social performance: Understanding and measuring economic impacts of corporate social responsibility. Heidelberg: Physica. Urip, . 2013. Csr strategies: Corporate social responsibility for a competitive edge in emerging markets. Hoboken, N.J: Wiley. Zu, L. 2009. Corporate social responsibility, corporate restructuring and firms performance: Empirical evidence from Chinese enterprises. Berlin: Springer. Read More