Corporate Social Responsibility
Corporate social responsibility may also be referred to as "corporate citizenship" and can involve spending finances that do not directly benefit the company but rather advocate positive social and environmental change. The soul in the next economy forum presentation made it evident that achieving corporate social responsibly in a company can reap major benefits in terms of finances, more inspiring workplace and customer satisfaction. In the past, companies mistakenly thought that corporate social responsibility was corporate philanthropy but because of forums like the soul of the next economy, awareness about the real meaning of corporate social responsibility is increasing substantially. Corporate philanthropy is done with no expectation of financial gain but can lead to other gain by engaging employees and more recognition. Jorina Fontelera from Demand Media defines corporate social responsibility by comparing it to corporate philanthropy.
Through globalization of the economy, multinational companies are increasingly involved with suppliers and customers worldwide, especially if they operate in developing countries. The CSR agenda has a close relationship with international development. CSR within multinational companies is seen as a vehicle through which larger, well known corporations can contribute to the well being of developing countries by operating responsibly in terms of social and environmental issues. However, the promoted “CSR” in the developing world by multinationals is “not real CSR”, despite significant contribution to development in some cases. Very little is known about the companies’ CSR policies and practices in an international context, developing countries in particular. As reality shows, most of the larger corporations abuse the CSR and behave unethically and irresponsibly towards both society and the environment. Issues such as unsafe working conditions, unfair payment, gender discrimination, sexual harassment, toxic emissions and the hazardous pollution of water and soil have all raised fair allegations by consumers, non-governmental organizations and the larger society. . Famous global brands like Nike, Coca-Cola, GAP and McDonalds are often under intense pressure from the public. Much of those pressures are due to their unethical behaviour in developing countries, where their main operations take place. Though companies operate in host countries, their reputation extends across numerous national boundaries. The actions of multinational companies in a host country can cause significant loss of reputation in the developed world, where the general public have become more sensitive to environmental issues and social impact. The public have the power to boycott the goods and products of multinational corporations in cases of unethical behaviour where organisations are thought not to fulfil their social and environmental obligations. However, international reputation side effects are not the only reason behind the potential increased level of social and environmental responsibilities faced by multinational companies; there are many drivers for the correct implementation of CSR by business entities. However, for many companies, corporate reputation and brand image are the fundamental components of business success. Corporate Social Responsibility in developing countries represents the formal and informal ways in which multinational business enterprises contribute to improving the social, ethical and environmental conditions of the developing countries in which they operate. However, the rational approach to the CSR in the developing world is different from CSR in developed countries. For example, developing countries represent the ongoing growth of the economy; hence the most attractive growth markets for many foreign companies. They provide cheap labour, an absence of strong regulations and a rich availability of resources; all crucial concerns for multinational enterprises for conducting their businesses in developing world. It has been found that the public and the government are not as critical of unethical business practices within foreign companies. In addition, developing countries are where globalization, economic growth, investments and business activities are likely to have both positive and negative social and environmental impacts. Therefore, developing countries represent a different set of CSR agenda for multinational companies to those operating in the developed world.
Multinational corporations can not afford to ignore CSR in developing their human resource management polices due to the following reasons. First, the competition for talent at the global level is likely to intensify in the future. Empirical studies on human resource management reveal that CSR policies enhance attraction as well as, retention of highly qualified employees (Kiran and Sharma, 2011, pp. 10-15). In the global labor market, a firm is considered a strong employer brand if it is able to align its values and concerns with those of its employees. Employees tend to identify with companies that are highly regarded. Employer differentiation has become a formidable weapon in the structural ‘battle for talent’. Individuals are more willing to work for firms that have ‘conscience’. Individuals prefer working for organizations that are ready to make a difference in the lives of their stakeholders. A company can only build conscience by infusing its corporate values with CSR policies (Schoemaker and Nijhof, 2006, pp. 448-465). Consequently, firms have to align their values with their mission, as well as, vision. This enables firms to demonstrate corporate social responsibility in everything they do, thereby attracting the best talent and winning the support of the community. Second, CSR reduces employee turnover and recruitment costs. A recent study on corporate citizenship conducted in US revealed that 77% of employees consider a firm’s commitment to social issues when they (employees) decide on where to work (Garcia, Tabales and Herradon, 2008, pp. 27-44). Most employees consider the firm’s environmental, as well as, social reputation to be more important than salaries in their job search. The study also revealed that 70% of employees will resign if their employer does not engage in socially responsible behavior.
In summary, Corporation Social Responsibility can come across as an idealistic idea, especially as it is voluntary process and lack regulation and therefore subjected to abuse of power by decision making companies in the social domain, it actually produces favourable results if applied positively. Corporations and governments are powerful and influential institutes and can therefore make a significant difference to society. This difference whether these institutes impacts positively or negatively, will depend on the contribution to better thinking about what is Ethically right or wrong. This knowledge can produce decisions and behaviours that are recognised by stakeholders as unethical and help managers assess the changes needed to manage CSR. A good CSR framework aligns community efforts and charitable efforts with core business strategy, expertise and market needs. This in turn helps build up a company’s social capital and is likely to bring returns including financial returns.
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