Concept of Corporate Social Responsibility

Questions:

1.Analyse the Concept and theories of Corporate Social Responsibility and how it relates to Ethical Business Practices.

2.Identify and Describe the principal trends driving Corporate Ethics and Sustainability.

3.Appraise CSR from the perspectives of Stakeholder Interests at a National and International Level.

4.Describe and evaluate the impact that foreign social norms and standards may have on International Business.

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5.Compare and Contrast the legal versus ethical compliance of CSR from the perspectives of various stakeholders, and the impact on the legislative framework surrounding corporate existence.

6.Critically analyse and judge the relationship between ethical branding and Corporate reputation.

Corporate Social Responsibility (CSR) is a concept that is related to business management, which implores the different ways an organisation operates and says that companies should be incorporating social and environmental concerns within their operational strategies and their interactions with the stakeholders (Crane and Matten 2016). This means that organisations should not limit their functions only to managerial operations, but should also concern themselves about the planet and try to create a sustainable mode of operation so that an overall growth and prosperity can be achieved without harming someone or something in the process.

Business ethics are essentially moral guidelines and a conduct code for business organisations that tries to establish what is right from wrong and requires the organisations to have an operational process based on these guidelines. While most people rely on their own morality and judgmental skills when making a decision, business entities have to consider many more aspects and sides before doing so (Schlierer et al. 2015). In many cases, business owners or the Board has to take decisions that may look to be unethical and this creates a major tension of morality within themselves, for having to deviate from their own ideologies. CSR can be used both as an important component of the business strategy or as a defensive policy, with the latter being more commonly used. Business organisations have to follow a decorum or an operational process that impacts their industry reputation in a good way and ensures that the company is known for their customer interactions and services rather than simply quality of the commodities and the products that they sell. This is a major way which helps organisations to create their brand image in the industry and a loyal customer base (Carroll and Buchholtz 2014). While there are many sellers of the same product or services in the market, strong business ethics helps companies to stay ahead of the competition and ensure the customers are coming back. CSR helps to establish this very sense of ethics in the internal affairs of the organisation so that a basic morale guides the entire operations of the company. CSR also dictates that companies should be maintaining a decorum whereby a sense of ethical practices can be established in all the segments and levels of the organisation, helping it to have a business practice that is ethical in nature (Kolk 2016). In other words, CSR is the company’s responsibility to make sure that their operations and other modes of functioning have positive effects on social and environmental wellbeing. In many cases, organisations may be required to go beyond the norms and guidelines that are provided by social organisations, groups or environmental protection groups.

Importance of ethical guidelines in business operations

Ethical grounding is often the most important driver of business operations, along with economic self-interest of the company. Ethical grounding provides for the base of the importance of sustainable development and how may that be related to the morality of the organisational processes. In recent times it has been implored that looking after the community, the social and environmental protection is a fundamental thing for organisations and it is essential for the long-term existence of a company in the industry (Capaldi et al. 2015). Across the world, many organisations put more emphasis on the social accountability aspect of running a business and rely heavily on the concepts of citizenship and moral accountability. Increasing amount of focus is being laid on project sustainability along with financial success of a company, making sure that the results that are produced have long term positive effects on the society and the environment. CSR has drastically altered the views that guide the business processes and the marked shift has been recorded in terms of the guiding principles (Bowie 2017). Companies should be deciding on their operations that looks at different things that go beyond the simple structure of lowest short-term cost to highest short-term gain. Corporations should take more initiatives to reduce the poverty issues, and this can only be done after poverty is recognised as a major problem in the corporate citizenship field (Schlierer et al. 2015). Poverty reduction and a commitment to protect the environment have beent he two key drivers of organisational operations in the recent years, which have made the organisations to encompass much more than simply running after profits and other traditional marketing norms.

Stakeholders the foundation of any organisation and often the deciding factor of how will the organisation behave in certain situations and also guide the company to prioritise the different operations. CSR is absolutely embedded into the functions and inter-relations among all the stakeholders oft eh company. As business entities are being exposed to new roles and social responsibilities, with sustainable growth and development being the key focus areas, the leadership management of the organisation is also being subjected to newer aspects of running a business (Carroll and Buchholtz 2014). The leading positions of the company is bound to come to contact, and conflict at times, with the stakeholders and CSR plays a pivotal role in this place, which was not recognised before. There are two basic models that try to instruct the organisational leaders on how should they be interacting with the diverse group of stakeholders: the inside-out-approach and a second one that asks the stakeholders to actively participate in the operations of the organisation itself to bring out the best suited profits according to their own needs. In the era of globalisation, many organisations function in many different countries and they all have to bear in mind the different groups of stakeholders and their respective requirements, also the social and environmental responsibilities that may be facing them in different countries.

Role of stakeholders in business behavior

In case of international stakeholders, many different platforms and entities may get involved in the operational process of the companies. The legal aspects and jurisdiction are the two most important things that need to be adhered to by the organisations when it comes to operating overseas. This means that international laws must be acknowledged and foreign functions need to be conforming to the needs of the foreign stakeholders as well. Domestic and foreign stakeholders mostly have different kinds of needs and necessities and it is the responsibility of organisations to make sure that these requirements are fulfilled.

International labour laws are of paramount importance and these must be paid close attention by the companies if they wish to operate within the legal framework of any country. The social standards of every country are also different (Lakshman et al. 2014), and organisations must understand that they have to respect and comply with this to be able to function in overseas countries. Without giving paying heed to these may result in adversities which may be difficult to entertain. Social norms and standards often are driving force of the work culture in the country where the organisation is stepping in, and if these are not given any importance, there is a fair chance that the company itself shall not be accepted by the customers of the specific countries. Conflicting ideas and cultural backgrounds must be analyzed and operations have to be changed accordingly. Same issue also lies with the environment. CSR encourages the organisations to be operating within the legal bounds and conform to the international norms. Environmental needs and responsibilities must be met by the organisation if they wish to be a sustainable organisation which can operate in the industry in the long riun.

It is often the case that organisations are faced with scenarios that require them to take hard decisions which are tricky in nature. In many cases, ethical and legal grounds seem to clash with each other and it may be very possible for a possible solution to be ethical but not legal or vice versa. These situations have to be handled with the utmost care and CSR can be of help to keep a perfect balance between the two. It must be kept in mind that solutions must ensure that every stakeholder who is involved in the case are benefited. Sustainable development cannot be achieved if even one of the stakeholders are found to be at a worse off condition after the decision is implemented.

Adherence to international norms and standards

For example, a heavy engineering plant may be economically beneficial for the development of a community or region, but it may be harmful for the surrounding environment and the ecology. In this case, CSR can be used by the company to reach to a solution that would allow for the company to maintain a balance. CSR would enable the company to operate in an ethical manner that would not harm either the community or the environment of the region. Or in another case, where the possible outcome of a certain situation may be legal but not the desired ethical outcome. CSR helps in these regards to make sure that the solution is both legal and ethical, so that a sustainable development is achieved.

In traditional norms, the brand image of the organisation is created within the industry base on their economic performances and is dictated by holistic marketing rules. However, legal and ethical aspects are missing from this framework, and hence does not make this particular profit driven model an all-encompassing one when it comes to branding of an organisation (Capaldi 2013). The organisation must be both legal and ethical, so that it looks into all aspects of the society and the environment and not merely run after profit margins and better annual reports. Conventional branding methods mostly focus more on products rather than the companies, which needs to be altered, and the ethical side of the organisations must be projected to the customers (Spence 2016). In the modern day, many customers opt for products and services of organisations which they feel runs in accordance to their own beliefs and ideologies. In a market with such customers, it is of paramount necessity for the organisations to successfully promote themselves to bring maximum focus upon themselves.

Conclusion

From the above discussion it can be concluded that CSR of an organisation is primarily driven by the interest of the stakeholders of the company and an urge to meet the ethical requirements that face every institution. CSR is a basic necessity for any company in the modern age where mere production and manufacturing are not the only responsibilities of an organisation and CSR is also one of the key drivers for sustainable growth. CSR is going to be the major driving force for organisational operations in the years to come and this is projected to only keep increasing in the future.

References

Bowie, N.E., 2017. Business ethics: A Kantian perspective. Cambridge University Press.

Capaldi, N. ed., 2013. Encyclopedia of corporate social responsibility (Vol. 21). New York: Springer.

Capaldi, N., Schmidpeter, R., Zu, L. and Fifka, M.S., 2015. Dictionary of corporate social responsibility CSR, sustainability, ethics and governance.

Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.

Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.

Kolk, A., 2016. The social responsibility of international business: From ethics and the environment to CSR and sustainable development. Journal of World Business, 51(1), pp.23-34.

Lakshman, C., Ramaswami, A., Alas, R., Kabongo, J.F. and Pandian, J.R., 2014. Ethics trumps culture? A cross-national study of business leader responsibility for downsizing and CSR perceptions. Journal of Business Ethics, 125(1), pp.101-119.

Schlierer, H.J., Hoivik, H.W., Garriga, E., Signori, S., Rossem, A., Werner, A. and Fassin, Y., 2015. CSR and Related Terms in SME Owner–Managers’ Mental Models in Six European Countries: National Context Matters.

Spence, L.J., 2016. Small business social responsibility: Expanding core CSR theory. Business & Society, 55(1), pp.23-55.