The notion of corporate social responsibility of business organizations - Essay Example

?Running head: Corporate Social Responsibility Corporate Social Responsibility- Minimum Legal Requirement Insert Insert Grade Insert ’s Name March 5, 2012 Corporate Social Responsibility- Minimum Legal Requirement Introduction Various business organizations, ranging from small and medium sized enterprises (SMEs) to large corporate organizations, exist across the globe providing some service or products to their clients. Essentially, the businesses engage in some activity like production of goods or delivery of service to generate some revenue to enhance its sustainable development. This becomes the traditional economic role of the business organization. However, the operations of these business organizations are carried out in some societal context involving the human population and the environment. Thus, there is interrelation and mutual interaction between the company and the society (Fontaine et al, 2006). Besides, the business operations have to be carried out according to legislative provisions in a given country in which the organization operates. The governments and other regulatory agencies have legislation stretching across various social sectors including health, environmental, the fiscal policies, and the monetary policies among many others. Ethical considerations also need to be considered in executing the business operations by an organization. Various individuals affect, and are affected by, the operations of a given organizations. These individuals are termed the stakeholders of the organization (Carroll & Buchholtz, 2008; Fontaine et al, 2006). The interrelation has generated debates among academic scholars on the roles that business organizations need to play in the society (Veludo-de-Oliveira, 2006). The societies have their interests and so do the business organizations. There have been heated debates in the recent years as to whether the organizations only need to pursue their economic objectives or they have some social role to perform in transforming the societies (Veludo-de-Oliveira, 2006). The issue of corporate social responsibility has emerged and developed in the past few decades. Earlier on, most individuals pointed out that the sole responsibility of various business organizations is to maximize the financial returns for their stakeholders and nothing else (Fiorina, 2003). Corporate social responsibility involves performing roles that go beyond the legal obligations that prevail in a given region (Fontaine et al, 2006). It involves the organizations’ role in promoting social and economic developments in the communities while working with the employees, their families, the customers, the shareholders, the community members, and the larger society. This paper expounds the notion of social responsibility of business organizations. The rise of corporate social responsibility for business organizations Even though the notion of corporate social responsibility has come into the brighter limelight in the past three decades, the debates on this issue began as early as the 1950s (Heath & Ni, 2008) when scholars began to question the role of businesses in the society. The evaluation has since extended to non-profit and governmental agencies as well. The main point of concern in CSR is whether the business organizations add any value to the societies in which they operate as they strive to achieve their mission and vision (Heath & Ni, 2008). CSR emerged and developed as a realization by the members of the public that the business organizations should no longer belong to their owners or founders (Carroll & Buchholtz, 2008, p.82). The society has developed various new expectations on the business organizations. The major characterization of corporate social responsibility in a business organization is how the organization involves its stakeholders like the customers, the stockholders, the employees, suppliers, the governments, non-governmental organizations, and international organizations in its business operations and strategy development (Fontaine et al, 2006). Business operations are governed by the legal provisions established in a given country or region. Governments develop, and advocate for compliances with, various policies on health, environment, human rights, labor, financial accountability, and trade as the organizations execute their operations (Organization for Economic Cooperation and Development (OECD), 2012). Organizations also need to make some ethical or moral considerations while dealing with the employees and other stakeholders. This is evidenced in the development of organizational values and culture. These are coupled by the fact that organizations have economic roles of preserving the interests of the shareholders through profit maximization. The corporate social responsibility goes beyond these roles and brings in the fourth, philanthropic, role of organization. It is a section of the larger responsible business conduct (RBC) mainly concerned with the organization’s compliance with the established legal requirements (OECD, 2012). Organizations strive to meet the legal, ethical, and philanthropic expectations and demand bestowed on them by the public in order to survive (Carroll & Buchholtz, 2008). They have to execute their operations under the law and produce products that meet the minimum legal requirements (Carroll, 1991, p.40). CSR involves an integration of social and environmental concern in planning the operations of a business organization. It has been described as the ‘commitment [of an organization] to improve community well-being through discretionary business practices and contribution of corporate resources’ (Kotler & Lee, 2006, p.3). This definition stress the fact that CSR is executed on voluntary basis and it goes beyond the legal obligations as well as the ethical or moral requirements of the work environment in a given business organizations. Besides, the well-being of the community will be ensured if both the human needs and environmental issues are addressed by the organization (Kotler & Lee, 2005). For quite a long period in the past, various aspects of social development in the society were considered the roles of the government and charity organizations. Development objectives in the community were entities different from the major objectives of business organizations (Fiorina, 2003). Despite the earlier observations that business should be concerned with profit maximization, businesses have come to realize that corporate social responsibility should be part of their business strategy and operations (Fontaine et al, 2006). How business exhibit corporate social responsibility In the contemporary business environment, the management of the business organizations constantly receives requests to support various social development initiatives in the society (Kotler and Lee, 2005). The management of the organizations then become under pressure to respond strategically to these calls while pursuing the economic objectives of the organizations. Requests are received that focus on health problems, issues of public safety, community development projects to eradicate poverty, mechanisms to promote education, respecting and protection of the fundamental human rights, as well as environmental protection measures (Kotler & Lee, 2005). Some of these programs fall under the legal requirements. The organizations will be identified by the stakeholders as involving in these roles depending on the contents of their programs. In management of health problems, the organizations can support programs aimed at the prevention and management of HIV/AIDS (Kotler and Lee, 2005). This could also include support for the affected population like the orphaned children. Other interventions would include immunization programs to prevent occurrence or spread of certain diseases in a given community. The organizations can also involve in the management of chronic illnesses like different types of cancer. In ensuring the public safety, the business organizations should be forefront in ensuring road safety by incorporating clearly focused driver programs in its operations (Kotler & Lee, 2005). This is also translated into its work environment. In a production company characterized by highly mechanized system, the employees have to be trained on how to operate the machines as well as how they can be terminated in case of an emergency to avoid further damages. The organizations must ensure that all the tools at the work place are in good condition to avoid cases of accidents. An organization that is out to promote education will be identified by the programs it has towards improving literacy among the employees, and into the community. This can be seen in initiatives like donation of computers and other learning facilities to the learning institutions in the society (Kotler & Lee, 2005). It can also involve provision of free technical training by the organizations to provide these necessarily skills to the members of the society. The corporations can also establish or support programs targeting education of individuals with disability. This can include provision of teaching and learning aids for such and individuals. To understand if an organization has environmental concern, it is necessary to examine the environmental influences of its operations and the measures that it puts in place in order to reduce negative impacts on the environment. An organization will show environmental concern if it has programs to recycle and reuse materials (Kotler & Lee, 2005). This will also be shown by the waste disposal mechanism that is employed by a given organization. Besides, the organization will show concern to the environment if it does not use, or allow for the use of, harmful chemicals. Automobile manufacturer will show this by producing cars that can work on a mixture of bio-fuels and natural fuels. Reduced packaging and reduced use of non-biodegradable package such as plastics will also show some concern on environment. An organization will demonstrate that it has concern for human rights in the recruitment and handling of its employees. The selection process should not be characterized by any form of discrimination or bias based on ethnicity, race, religion, or gender. The employees should be entitled to on-the-job training to help them acquire and cope up with the emerging technological skills. The involvement in other programs like providing food donations to the vulnerable in the community also translates into respecting an individual’s fundamental rights. Finally, organizations can support various schemes to promote economic development in the societies. The organizations can provide low-interests loans to the members of the society for housing scheme and other investments (Kotler & Lee). They can also fund youth development programs or women groups. All these initiatives indicate that an organization has some corporate social responsibility. The organizations can support the above programs through cash donations, provision of grants (for some research and development programs) or through in-kind donations as in the case of donating learning facilities for individuals with disabilities (Kotler & Lee, 2005). Organizations in the communication industry, i.e. the media, can offer their free services like publicity on human rights and public safety, free advertisement of some initiative (such as immunization program scheduled in some area) or through some other promotional sponsorships. The organizations can also volunteer some of their employees to provide some free service or give technical expertise. The organizations can provide these supports independently or in partnership with other organizations depending on their capabilities. It has to be stressed that the fact that a company pursues it economic goals may not necessarily hinder achievement of social responsibilities. It has been pointed out that ‘companies generating cash flows, producing goods, or maximizing stock values may also promote social welfare. If companies exist to serve the society as a whole, it is expected that they pursue economic profitability and have social responsibilities as well’ (Veludo-de-Oliveira, 2006, p.26). This state is, however, difficult to realize in certain instances. The businesses should be profitable in order to allow sustainable operations. The organization should be able to settle its debts, pay the employees, and set aside other resources for continued research and developments. The employees in a given organization will perform effectively to maximize the company output if there are proper incentives and they are satisfied with the working conditions at the organization. These can be achieved through profit maximization. Bankrupt organizations are likely to create other social problems (Veludo-de-Oliveira, 2006). CSR as a strategic positioning tool Corporate Social Responsibility has become an important management tool in the recent past. The customers are among the important stakeholders of any business organizations so that they need much attention from the management of the organizations. In the recent years, business organizations seem to have developed awareness of the importance of listening and paying attention to the customers, and addressing their needs accordingly (Veludo-de-Oliveira, 2006). The customers show varied behaviors when it comes to purchase and use of certain products and services. They always perform some evaluation on the different products available in the market before deciding on which products are best in serving their needs (Veludo-de-Oliveira, 2006). The organizations need to be aware of these changing patterns and develop products that meet customer needs and the legal requirements. Since the customers will always perform a comparative analysis of products and brands to influence purchase decision, the role of social responsibility as a strategy tool emerges. Organizations that are to survive attempts to show the customers that they do understand and they are ready to respond, to their needs. The organizations strive to position themselves above others by developing positive institutional image of their company in the minds of the customers. The organizations also struggle to develop strong positive relationship with the other stakeholders through different strategies. They are under pressure to engage in the social activities and display to the clients their involvement in these activities. As such, they have shown increasing trends towards philanthropic programs to give back to the communities. The kind of good image that the customers will develop of the companies that have chosen to give back to the society will have positive impacts on the operations of the organization. Previous researches have indicated that there is a strong relationship between the customer’s perception of an organization and the product responses (Veludo-de-Oliveira, 2006). The knowledge that the customers have about the organization will affect how they react to its products. Organizations with positive CSR associations will have their products received positively in the market unlike the organizations that do not involve in these social responsibilities. The development of positive image of an organization cannot be just achieved by a mere acceptance by the organizations that they have social responsibilities. Rather, it has to be put into action and shown to the customers and others stakeholders. For instance, a hotel or restaurant will demonstrate its environmental concern through its established mechanism of proper waste disposal. Moreover, the business organizations need not to advertise to the stakeholders their involvement in corporate social responsibilities (Veludo-de-Oliveira, 2006). The stakeholders will get to know about them as long as they have been put into place. The positive image that needs to be developed by the customers cannot be developed within a short period. It develops over time. The companies rely on resources from the stakeholders like the suppliers in order to have sustainable development. The suppliers will develop good relationship with the company if it (the company) operates according to the rules and values that have been developed and recognized in the society (Fontaine et al, 2006). The suppliers will develop good will of working with the organization if it does not appear to be out to exploit the environmental resources all to its benefit. Similarly, the employees are important stakeholders in an organization since their productivity is reflected onto the overall performance of the organization. Researches have indicated that employees also prefer to work in socially responsible organizations (Fontaine et al, 2006). They will be satisfied with an organization that considers their (employees’) needs and extend to consider the needs of the families and the entire society. The researches also indicate that customers will prefer products that are produced in a work environment that takes into account the fundamental human rights (Fontaine et al, 2006). With these observations, positive association with corporate social responsibility becomes a good strategic tool that enables an organization to position itself well above the competitors. In as much the legal provisions can call for environmental management initiatives and proper working conditions to the employees, the extended measures that an organization takes towards these directions will be of long-term benefit to the organization. The measures may seem costly under unrealistic at the beginning, but this should not demoralize the management. Nonetheless, the concept of corporate social responsibility has not been received uniformly as an effective role of business organizations. While some theorists support the social responsibilities of businesses, others (critics of CSR) observe that corporate social responsibility distract the economic roles of a given business entity (Heath & Ni, 2003). The critics point out that involving in corporate social responsibilities may make the organization unable to have sustainable development if it has excessive payback to the society. The shareholders may decide to withdraw their stake in the investment if it has much focus on the needs of the members of the society. This is detrimental to the survival and future operations of the business organization. Conclusion Corporate social responsibility has become part of the roles of the business organizations as the expectation of the society change from the earlier perceptions. Members of the society have legal, ethical, as well as philanthropic expectations for the business expectations as opposed to the earlier case in which businesses belonged to the owners and founders. Understanding this position of the society and responding accordingly will enable the business organization to develop good image in the society to gain competitive advantage. An organization will demonstrate its corporate social responsibility through its operations, the products offered or the services delivered. The products and services as well as the operations should follow the legal provisions. An automobile company will demonstrate its commitment to environmental management through conducting research and developing models that use bio-fuels as opposed to the use of traditional fuels. Reference List Carroll, A., 1991. The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders. Business Horizons. (Online). Available at: http://cf.linnbenton.edu/bcs/bm/gusdorm/upload/Pyramid%20of%20Social%20Responsibility.pdf [Accessed March 5, 2012]. Carroll, A & Buchholtz, A., 2008. Business and Society: Ethics and Stakeholder Management. South-Western: Cengage learning. Fiorina, C., 2003. Hewlett- Packard. Business for Social Responsibility Annual Conference, Los Angeles, California. (Online). Available at: http://www.hp.com/hpinfo/execteam/speeches/fiorina/bsr2003.html [Accessed March 5, 2012]. Fontaine, C. et al. 2006. The Stakeholder Theory of the MNC. 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