Corporate Social Responsibility Dynamic and Complex

Question: Discuss about the Corporate Social Responsibility Dynamic and Complex. Answer: Introduction The nature of present business environment in present days is dynamic and complex. Corporations are required to maintain good relation with stakeholders such as suppliers, customers and shareholders. The companies need to ensure environmental sustainability in business operation process. Different social aspects, environmental aspects, economic aspects come under corporate social responsibilities (CSR) of a firm. In the complex business process, the business organisations take several challenges regarding media pressure, governmental regulation, and maintenance of human rights, environmental standard etc (Navi 2012). After global financial crisis during 2007-08, organisations responsibilities have risen to scrutinize their values, organisational goals and objectives. The concept of corporate social responsibilities emerged in the era of industrial revolution in Europe and US. The essay discusses the advantages and disadvantages of CSR in present context and its importance in the orga nisation. Importance of corporate social responsibilities CSR is defined in many ways from different perspectives. International labour organisation defines the CSR in the form of impact of business operation of an organisation on the society. Companys own values and principles have impact on their internal business process and also on the external environment. Corporate Responsibility Coalition view the CSR as same social responsibilities of firms beyond the organisational profitability. That means a profit making firm also has some responsibilities towards society and the economy. Therefore, in order to maintain good public relation, the company formulate some legal regulations and mechanisms (Aguinis and Glavas 2012). According to World Economic Forum, CSR is nothing but exploration of self interest in the global context for the growth of the business in the social, political and environment context. In the view of World Bank, CSR is the commitment of business enterprise to ensure sustainable environment practices in business. Other aspe ct such as quality improvement of employees standard of living, their family member, social community and environment. It is nothing but commitment of the business organisation to optimise organisation profit and social welfare (Korschun, Bhattacharya and Swain 2014). Figure 1: Characteristics of CSR (Source: Cheng, Ioannou and Serafeim 2014) In the era of globalisation, companies have to face several cultural and regulatory issues. Use of child labour, corruption and bribery are strictly prohibited in business. Health issues of employees, deforestation, violation of human issues are comes under CSR review. Voluntary measures of CSR emphasise responsibilities beyond legal aspects of business (Cheng, Ioannou and Serafeim 2014). The companies such as McDonalds and KFC decided to maintain calorie labelling on the food and beverages item. Managing externalities is important aspect, which depicts that activities of business organisation often generate negative externalities in society such as pollution and other health hazard (Servaes and Tamayo 2013). Those negative externalities are not priced properly due to problem of externality. In order to maintain CSR in this respect, the companies need to reduce carbon emission, maintaining ecological footprint, management of human rights violation in business relating to working hour , minimum wages, work condition etc. Securing interests of the stakeholders such as suppliers, customers, investors, and shareholders is major concern for organisation as the stakeholders contribute ideas, funds into the business operation (Brammer, Jackson and Matten 2012). The organisations have some economic and social responsibilities. Both the private and public organisations contribute to the GDP in terms of output, service and employment. The government organisations in the economy have not full capacity to absorb all the active labour force. Private sector plays important role in this aspect. Beyond the profit motive, the company has some social responsibilities. Many organisations conduct social programmes such blood donation campaign, social awareness campaign regarding out breaking disease, educational awareness, programme against any social evil etc. For example, Microsoft has goal of ensuring carbon neutrality. For this purpose the management team uses Life Cycle assessment of environment impact on society (Dhaliwal et al. 2012). Many organisations donate money for community improvement. Diversified cultural practices, high standard ethical values are given priority as a part of CSR. The practice of CSR in large firm is bureaucratized in nat ure, whereas this practice is quite informal in a small firm. The main actors of CSR in large firms are internal and external shareholders. On the other hand, the actors in a small firm are owner and manager and the employees. The main aim of a large firm CSR is to build a strong corporate reputation and managing public relation (Smith 2012). In contrast, the aim of small company is to build trust and network among the customers and suppliers. Advantages and disadvantages of CSR Main advantages of CSR are improving goodwill in the industry and creating an identity globally. Consumers want to purchase the products, which are clean and environment friendly. The goodwill helps the organisation in creating brand recognition. Brand recognition gives the company a competitive advantage in the market. Good CSR practice helps to retain existing employees in the company and reduces rate of turnover. The employees try to involve themselves in the operation process more intensively. This helps the company in recessionary period or in hard time in labour market. When, labour supply in short in the industry, retention of the existing employees reduces the cost of training to the new employees. Existing employees are more productive compared to a new employee due to having experience and skill (Epstein and Buhovac 2014). In order to retain the skilled employees, the company has to give required incentives to them. Another advantage of comes in the form of funds. The stake holders follow CSR practices of the concerned firm. If the CSR is seemed to be very impressive to the stakeholders, the investors are willing to invest in the business. Use of clean, safer and cost effective energy increases the value of company to the customers and suppliers. The main benefits of CSR accrued by a company are improved financial performance, low operating cost, access to capital, product safety, enhancing brand image etc. The nongovernmental organisation and non profit organisation maintain a high valued CSR in practice. The large company is Australia such as BHP Billiton maintains good CSR practice in business regarding environment and ethical issues in business. The large firms are the pioneer of CSR (Baumann-Pauly et al. 2013). Milton Friedman, an economist, is a well known critic of CSR. According to him, CSR diverted the main objective of the company from profit making to other activities. Maintenance of CSR is costly for a small firm. Diversified activities, ensuring legal, environmental issues incur addition costs to the firm. Creation a wide external network with business is also difficult to maintain. A formalised CSR is difficult to monitor. Sometimes, the CSR projects require changes in the organisation (Korschun, Bhattacharya and Swain 2014). These changes make the business operation process cumbersome. Changes in production time, installing new technology, up gradation of product quality creates additional cost burden on the organisation. For corporate social responsibilities the company requires to publish report about its performance. It has to publish even negative events, which may have opposite effect on the company. During 2003, the Coca Cola Company published its dropping product quality re port, which created negative effect on its sales. Conclusion The essay reflects different aspects of corporate social responsibilities of organisations. The objective of CSR for small and large firms is different according to the nature of the business. In the modern complex business environment, the companies require to perform different social, economic, environmental responsibilities as a part of CSR. CSR has several advantages and disadvantages. The main benefits of CSR are improved financial performance, access to capital, product safety, enhancing brand image, trust of stakeholders. CSR has disadvantages also. It may create financial burden upon firms as monitoring cost is involved there. References Aguinis, H. and Glavas, A., 2012. What we know and dont know about corporate social responsibility a review and research agenda.Journal of management,38(4), pp.932-968. Baumann-Pauly, D., Wickert, C., Spence, L.J. and Scherer, A.G., 2013. 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