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5 Examples of Corporate Social Responsibility That Were Successful

• 06 Jun 2019

Business is about more than just making a profit. Climate change, economic inequality, and other global challenges that impact communities worldwide have compelled companies to be purpose-driven and contribute to the greater good .

In a recent study by Deloitte , 93 percent of business leaders said they believe companies aren't just employers, but stewards of society. In addition, 95 percent reported they’re planning to take a stronger stance on large-scale issues in the coming years and devote significant resources to socially responsible initiatives. With more CEOs turning their focus to the long term, it’s important to consider what you can do in your career to make an impact .

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What Is Corporate Social Responsibility?

Corporate social responsibility (CSR) is a business model in which for-profit companies seek ways to create social and environmental benefits while pursuing organizational goals, like revenue growth and maximizing shareholder value .

Today’s organizations are implementing extensive corporate social responsibility programs, with many companies dedicating C-level executive roles and entire departments to social and environmental initiatives. These executives are commonly referred to as a chief officer of corporate social responsibility or chief sustainability officer (CSO).

There are many types of corporate social responsibility and CSR might look different for each organization, but the end goal is always the same: Do well by doing good . Companies that embrace corporate social responsibility aim to maintain profitability while supporting a larger purpose.

Rather than simply focusing on generating profit, or the bottom line, socially responsible companies are concerned with the triple bottom line , which considers the impact that business decisions have on profit, people, and the planet.

It’s no coincidence that some of today’s most profitable organizations are also socially responsible. Here are five examples of successful corporate social responsibility you can use to drive social change at your organization.

5 Corporate Social Responsibility Examples

1. lego’s commitment to sustainability.

As one of the most reputable companies in the world, Lego aims to not only help children develop through creative play, but foster a healthy planet.

Lego is the first, and only, toy company to be named a World Wildlife Fund Climate Savers Partner , marking its pledge to reduce its carbon impact. And its commitment to sustainability extends beyond its partnerships.

By 2030, the toymaker plans to use environmentally friendly materials to produce all of its core products and packaging—and it’s already taken key steps to achieve that goal.

Over the course of 2013 and 2014, Lego shrunk its box sizes by 14 percent , saving approximately 7,000 tons of cardboard. Then, in 2018, the company introduced 150 botanical pieces made from sustainably sourced sugarcane —a break from the petroleum-based plastic typically used to produce the company’s signature building blocks. The company has also recently committed to removing all single-use plastic packaging from its materials by 2025, among other initiatives .

Along with these changes, the toymaker has committed to investing $164 million into its Sustainable Materials Center , where researchers are experimenting with bio-based materials that can be implemented into the production process.

Through all of these initiatives, Lego is well on its way to tackling pressing environmental challenges and furthering its mission to help build a more sustainable future.

Related : What Does "Sustainability" Mean in Business?

2. Salesforce’s 1-1-1 Philanthropic Model

Beyond being a leader in the technology space, cloud-based software giant Salesforce is a trailblazer in the realm of corporate philanthropy.

Since its outset, the company has championed its 1-1-1 philanthropic model , which involves giving one percent of product, one percent of equity, and one percent of employees’ time to communities and the nonprofit sector.

To date, Salesforce employees have logged more than 5 million volunteer hours . Not only that, but the company has awarded upwards of $406 million in grants and donated to more than 40,000 nonprofit organizations and educational institutions.

In addition, through its work with San Francisco Unified and Oakland Unified School Districts, Salesforce has helped reduce algebra repeat rates and contributed to a high percentage of students receiving A’s or B’s in computer science classes.

As the company’s revenue continues to grow, Salesforce stands as a prime example of the idea that profit-making and social impact initiatives don’t have to be at odds with one another.

3. Ben & Jerry’s Social Mission

At Ben & Jerry’s, positively impacting society is just as important as producing premium ice cream.

In 2012, the company became a certified B Corporation , a business that balances purpose and profit by meeting the highest standards of social and environmental performance, public transparency, and legal accountability.

As part of its overarching commitment to leading with progressive values, the ice cream maker established the Ben & Jerry’s Foundation in 1985, an organization dedicated to supporting grassroots movements that drive social change.

Each year, the foundation awards approximately $2.5 million in grants to organizations in Vermont and across the United States. Grant recipients have included the United Workers Association, a human rights group striving to end poverty, and the Clean Air Coalition, an environmental health and justice organization based in New York.

The foundation’s work earned it a National Committee for Responsive Philanthropy Award in 2014, and it continues to sponsor efforts to find solutions to systemic problems at both local and national levels.

Related : How to Create Social Change: 4 Business Strategies

4. Levi Strauss’s Social Impact

In addition to being one of the most successful fashion brands in history, Levi’s is also one of the first to push for a more ethical and sustainable supply chain.

In 1991, the brand created its Terms of Engagement , which established its global code of conduct regarding its supply chain and set standards for workers’ rights, a safe work environment, and an environmentally-friendly production process.

To maintain its commitment in a changing world, Levi’s regularly updates its Terms of Engagement. In 2011, on the 20th anniversary of its code of conduct, Levi’s announced its Worker Well-being initiative to implement further programs focused on the health and well-being of supply chain workers.

Since 2011, the Worker Well-being initiative has been expanded to 12 countries and more than 100,000 workers have benefited from it. In 2016, the brand scaled up the initiative, vowing to expand the program to more than 300,000 workers and produce more than 80 percent of its product in Worker Well-being factories by 2025.

For its continued efforts to maintain the well-being of its people and the environment, Levi’s was named one of Engage for Good’s 2020 Golden Halo Award winners, which is the highest honor reserved for socially responsible companies.

5. Starbucks’s Commitment to Ethical Sourcing

Starbucks launched its first corporate social responsibility report in 2002 with the goal of becoming as well-known for its CSR initiatives as for its products. One of the ways the brand has fulfilled this goal is through ethical sourcing.

In 2015, Starbucks verified that 99 percent of its coffee supply chain is ethically sourced , and it seeks to boost that figure to 100 percent through continued efforts and partnerships with local coffee farmers and organizations.

The brand bases its approach on Coffee and Farmer Equity (CAFE) Practices , one of the coffee industry’s first set of ethical sourcing standards created in collaboration with Conservation International . CAFE assesses coffee farms against specific economic, social, and environmental standards, ensuring Starbucks can source its product while maintaining a positive social impact.

For its work, Starbucks was named one of the world’s most ethical companies in 2021 by Ethisphere.

The Value of Being Socially Responsible

As these firms demonstrate , a deep and abiding commitment to corporate social responsibility can pay dividends. By learning from these initiatives and taking a values-driven approach to business, you can help your organization thrive and grow, even as it confronts global challenges.

Do you want to gain a deeper understanding of the broader social and political landscape in which your organization operates? Explore our three-week Sustainable Business Strategy course and other online courses regarding business in society to learn more about how business can be a catalyst for system-level change.

This post was updated on April 15, 2022. It was originally published on June 6, 2019.

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Corporate Social Responsibility (CSR): An Essential Strategy for Successful Businesses

Table of contents, introduction, the evolution of corporate social responsibility, embracing corporate social responsibility: best practices, corporate social responsibility in international companies, corporate social responsibility in local companies: the case of saudi arabia, discussion: balancing profit and social responsibility, literature review.

• Creating Products, Jobs, and Contributing to Economic Growth: Companies need to create products and services that benefit society, generate jobs, and contribute to economic growth.
• Sensitivity to Dynamic Social Values: Businesses should be aware of and responsive to the evolving social values of the communities they serve.
• Dealing with Emerging Responsibilities: Companies should be proactive in addressing emerging social responsibilities that arise due to changing societal needs and demands.
• Bowen, H. R. (1953). Social Responsibilities of the Businessman. Harper & Brothers.
• Doshi, R., Gunny, N. M., & Mello, A. S. (2012). CSR Reporting: The Battle for the Narrative. Harvard Business School Accounting & Management Unit Working Paper, (12-009).
• Friedman, M. (1970). The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine.
• Garriga, E., & Mele, D. (2004). Corporate Social Responsibility Theories: Mapping the Territory. Journal of Business Ethics, 53(1-2), 51-71.

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CSR, Essay Example

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Introduction

As important as profits and growth are to businesses, corporate social responsibility (CSR) has become just as important for companies who seek to improve beyond dominance and monetary gains. To become a better corporate citizen, CSR is the momentum behind which business seek to have a greater social impact on the environment in which they thrive. To do so, CSR is built into the business plan, which drives innovation and boost performance; examples and details of which are discussed herein.

Business Plan Description

When integrating CSR into a business plan, there are a number of factors that need to be considered. Firstly, the type of approach that the company takes to CSR, be it strategic, incremental or mission-oriented, determines the implementation of CSR into the business. For example, this company will be most suited to an incremental approach to CSR, considering that it does not have any prior experience in the social responsibility aspect of business. As the business continues to expand, the shift of focus from profits to people has become increasingly important, especially in regards to every part of the business’ functionality.

Often, CSR can be tied into all aspects of the business, including human resources, marketing, operations, etc. Firstly, the employees of the company will be rewarded with increased remuneration and mutual benefits. This will include bonuses and commission for achievement of early targets, as well as recognition for fundraising and community work, which will be promoted throughout the company.

Secondly, CSR can also become a unique selling proposition for the company, in terms of building customer loyalty and highlighting ethical practices. As a sign of integrity of employees and best practice, a national marketing campaign that highlights the company’s increased interest in CSR will be able to differentiate the company from competitors.

Thirdly, CSR can improve the operational process of the company, by increasing the quality of goods and services provided to customers and clients. Some of the elements that will be introduced as part of the new operational process include continuous improvement and price reductions, which will be able to improve the business on a short to medium term timeframe.

Benefits of CSR

By incorporating CSR into a company’s business plan, the flow-on effects, in regards to the benefits that it produces to the company, are numerous. For example, when BMW introduced CSR into the company, it was able to introduce value orientation into the supply chain, corporate volunteering, increased diversity amongst employees, higher operational standards, safety programs, intercultural learning, social engagement projects, and the like. As a result, employee satisfaction rose and the public voted BMW in the top 3 best luxury car automakers in the world. Such CSR initiatives are shown to strengthen stakeholder relationships and increase functional aspects of the business (Bhattacharya, Korschun and Sen, 2009). Not only did the customer base of BMW increase, but the employees of the company were also able to find more innovative ways to fine-tune vehicles, leading to increased production and sales as well.

The primary reason as to why CSR is introduced into a company’s operation is to seek a way to move beyond maximising the financial well-being of the business alone, and to assume responsibility to society beyond profit-seeking (Carroll and Shabana, 2010). Despite being a business which focuses on placing customers first, the company has done little to reinvest back into the community and improving the ethical vision of the company. In order to build a new company image centred around the concept of being socially responsible, the company must be able to identify opportunities within the business community and society at large in which to make a difference.

For CSR to become an important facet of the company, its benefits should be seen throughout the workplace. The distinctive features of CSR can be seen in the perceived influence in the eyes of stakeholders, managers’ perceptions on performance, and organisational activity (Lindgreen, Swaen and Johnston, 2009). Company partners and suppliers relationship should take on added meaning, as well as placing customers on a pedestal, which should become a priority. Senior management must be able to see differences in both company and employee performance, in regards to increased involvement in community affairs and greater emphasis on healthy work ethic. As a result, the company will be able to experience growth in more ways than one.

The company can engage in corporate social responsibility, and reap the benefits in terms of better facilities, employment opportunities and additional company standards (Du, Bhattacharya and Sen, 2010). This reinvestment for the short and medium term will be able to improve the company’s position in the corporate marketplace. For instance, improvement in ergonomic workstations will allow employees to work smarter, not longer; the addition of health programs and community volunteer events will increase employment opportunities; and the company’s interest in promoting ethical and social outlooks will create a rejuvenised corporate culture.

By placing an emphasis on the social aspect of the company, in terms of what is being done to improve our ‘business space’ and the environment around us, the economic aspect of the business will fall into place as a backdrop for what the company is to achieve. Business is all about serving the needs of customers and clients, while doing so in such a way that everyone can be proud (Cavico and Mujtaba, 2012). After all, the company is not founded on the principle of money, but on the dedication to its people; and such dedication should be realised in order for a company to become truly successful.

In summary, the company should introduce CSR into the business plan, in order for the business to reinvest back into the community and highlight its dedication to become more ethically and socially accountable. In doing so, all departments of the business will embrace a new corporate culture dedicated to placing customers at the top, improving supplier relationships, and giving back to society at large. This will ensure that the company can strengthen its position in the marketplace, and move beyond monetary gain to making an impact on the environment in which it operates.

Reference List

Bhattacharya, C., Korschun, D. and Sen, S. (2009). Strengthening Stakeholder Relationships through Mutually Beneficial Corporate Social Responsibility Initiatives. Journal of Business Ethics, 85 (2), 257-272.

Carroll, A. and Shabana, K. (2010). The Business Case for Corporate Social Responsibility: A Review of Concepts, Research and Practice. International Journal of Management Reviews, 12 (1), 85-105.

Cavico, F. and Mujtaba, B. (2012). National and Global Perspectives of Corporate Social Responsibility. International Journal of Management Sciences and Business Research, 1 (3), 1-24.

Du, S., Bhattacharya, C., and Sen, S. (2010). Maximizing Business Returns to Corporate Social Responsibility: The Role of CSR Communication. International Journal of Management Reviews, 13 (2), 8-19.

Lindgreen, A., Swaen, V. and Johnston, W. (2009). Corporate Social Responsibility: An Empirical Investigation of U.S. Organisations. Journal of Business Ethics, 86 (3), 303-323.

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Essay on Corporate Social Responsibility

This report provides information on whether the benefits of CSR outweigh the drawbacks. The report shows that the benefits of CSR are more than the drawbacks and managers should consider implementing the strategy. The research utilizes the use of secondary resources to conclude. Most of the authors used in this report show that CSR has more advantages such as consumer satisfaction, financial performance, productivity, and promotes relationships among the companies, the stakeholders, and society. This research informs the managers on the benefits of executing CSR in their companies. More so, it provides information on few drawbacks that the managers should be prepared to experience. The study adds new information concerning the comparison of advantages and disadvantages of CSR which makes it easier to determine if the strategy should be implemented in companies.

Corporate Social Responsibility

Introduction

Corporate social responsibility (CSR) is a self-controlling model of business that helps business organizations to be socially accountable to the public, stakeholders, and self. Through CSR, companies have conscious of how that affects society environmentally, socially, and economically as they do their businesses (Basuony et al., 2014). Engaging in CSR means that companies are operating in ways that improve society and its environment. As much as CSR influences companies to translate the principles into practical activities, some of the researchers show that CSR may harm companies, stakeholders, and consumers.

Research Questions

Do the positive impacts outweigh the negative effects of CSR among the companies?

Despite some of the researchers revealing the negative impacts of CSR, there are many positive influences that companies, stakeholders, and consumers experience. Companies should ensure that they are responsible for themselves, society, stakeholders, and consumers. This promotes the positive impact of business in society without other people suffering the implications of unethical business activities. However, it is linked to few drawbacks such as costs, conflicts in the profit motive, and “green washing” of customers.

Methodology

This report will utilize secondary sources for review to come up with conclusions. Articles that are less than 10 years old will be used to develop conclusions on whether CSR is effective among companies and if the benefits outweigh the drawbacks.

Literature Review

Based on a substantiation from Mena country, Basuony et al. (2014) state that CSR promotes the performance of business organizations. The stakeholder theory suggests that organizations have to manage relationships with other groups and stakeholders which influences the effectiveness of business decisions. Despite making entrepreneurship progress, businesses that pay attention to the needs of society are successful. For example, branding is effective when a business organization protects the environment and takes part in social activities such as the construction of schools. Most of the researches in this article show that CSR influences business performance through market orientation and consumer satisfaction and financial performance. In research done by Newman et al. (2018), shows that CSR has an independent positive influence on the level of firms efficacy- increased productivity influenced by high effective business engagement. Increased company involvement in community initiatives is a great influence for success in business due to customers’ and stakeholders’ trust.

The concept of the future of CSR presented by Archie Caroll shows that as companies continue to apply CSR, benefits such as stakeholders engagement, increased productivity due to employees being the driving force of business and the enhancement of power among ethically sensitive customers and the client will be experienced (Agudelo et al., 2019). The concept influences effective governance criteria, environmental responsibility, corporate citizenship, the establishment of shared business values, and social performance. However, CSR is linked to various negative impacts. Mahmood et al. (2020) suggest that CSR influences negativity through abusive supervision while valuing employees’ conducts. As much as CSR influences minimization of negative employees’ behavior, it also influences negative conduct when there is abusive supervision. More so, the implementation of CSR needs money. Especially for small businesses, CSR is not affordable to be allocated in the budget. The conflict of the profit motive is also established in CSR as the focus on societal benefits may influence losses to companies. Greenwashing of consumers is linked to CSR. For example, labeling products to be organic to attract consumers.

Implications

This exploration has implications for both bodies of knowledge and management. The research used in this report shows that as much as CSR may have various drawbacks, the benefits outweighs the disadvantages. It contributes to the existing body of knowledge by showing that CSR has more benefits and companies should consider its application in business. The limitations of the current study are the use of secondary sources and few articles to provide more evidence. More so, the articles used in this report do not include cultural factors such as religion which are significant in understanding CSR and the involved activities in the society. The discussion concerning the link between CSR and corporate governance is not provided. Therefore, further research should be done to evaluate this link and its impact on the performance of the company and the experiences of the stakeholders and customers. More so, the research provides a key takeaway for managers which is mainly the benefits of executing CSR in companies to influence performance. The managers should know that despite the presence of drawbacks linked to CSR, there are many advantages such as consumer satisfaction, effective branding, establishing trust, and financial performance.

Based on the previous research used in this report, it is evident that CSR has many advantages. These pros include consumer satisfaction, productivity, good relationships with society and stakeholders, financial performance, and effective branding. These advantages overpower the drawbacks which include costs, conflicts in the profit motive, and “green washing” of customers. However, the limitations of the research include the inclusion of fewer articles and a lack of cultural factors in the research. Therefore, this study concludes that the benefits of CSR outweigh the disadvantages. The implication of the literature is informing managers to execute CSR which promotes productivity and financial performance.

Agudelo, M. A. L., Jóhannsdóttir, L., & Davídsdóttir, B. (2019). A literature review of the history and evolution of corporate social responsibility.  International Journal of Corporate Social Responsibility ,  4 (1), 1-23.

Basuony, M. A., Elseidi, R. I., & Mohamed, E. K. (2014). The impact of corporate social responsibility on firm performance: Evidence from a MENA country.  Corporate Ownership & Control ,  12 (1-9), 761-774.

Mahmood, F., Qadeer, F., Abbas, Z., Hussain, I., Saleem, M., Hussain, A., & Aman, J. (2020). Corporate social responsibility and employees’ negative behaviors under abusive supervision: A multilevel insight.  Sustainability ,  12 (7), 2647.

Newman, C., Rand, J., Tarp, F., & Trifkovic, N. (2020). Corporate social responsibility in a competitive business environment.  The Journal of Development Studies ,  56 (8), 1455-1472.

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What Is CSR?

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Types of CSR

Company examples, the bottom line.

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What Is CSR? Corporate Social Responsibility Explained

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. 

By practicing corporate social responsibility, also called corporate citizenship , companies are aware of how they impact aspects of society, including economic, social, and environmental. Engaging in CSR means a company operates in ways that enhance society and the environment instead of contributing negatively to them.

Key Takeaways

• Corporate social responsibility is a business model by which companies make a concerted effort to operate in ways that enhance rather than degrade society and the environment.
• CSR can help improve society and promote a positive brand image for companies.
• CSR includes four categories: environmental impacts, ethical responsibility, philanthropic endeavors, and financial responsibilities.

Understanding Corporate Social Responsibility (CSR)

Through CSR programs, philanthropy, and volunteer efforts, businesses can benefit society while boosting their brands. A socially responsible company is accountable to itself and its shareholders. CSR is commonly a strategy employed by large corporations. The more visible and successful a corporation is, the more responsibility it has to set standards of ethical behavior for its peers, competition, and industry .

Small and midsize businesses also create social responsibility programs, although their initiatives are rarely as well-publicized as those of larger corporations.

• Environmental responsibility: Corporate social responsibility is rooted in preserving the environment. A company can pursue environmental stewardship by reducing pollution and emissions in manufacturing, recycling materials, replenishing natural resources like trees, or creating product lines consistent with CSR.
• Ethical responsibility: Corporate social responsibility includes acting fairly and ethically. Instances of ethical responsibility include fair treatment of all customers regardless of age, race, culture, or sexual orientation, favorable pay and benefits for employees, vendor use across demographics, full disclosures, and transparency for investors.
• Philanthropic responsibility: CSR requires a company to contribute to society, whether a company donates profit to charities, enters into transactions only with suppliers or vendors that align with the company philanthropically, supports employee philanthropic endeavors, or sponsors fundraising events.
• Financial responsibility: A company might make plans to be more environmentally, ethically, and philanthropically focused, however, it must back these plans through financial investments in programs, donations, or product research including research and development for products that encourage sustainability, creating a diverse workforce, or implementing DEI, social awareness, or environmental initiatives.

Volunteering

Some corporate social responsibility models replace financial responsibility with a sense of volunteerism. Otherwise, most models still include environmental, ethical, and philanthropic as types of CSR.

Benefits of CSR

According to a study published in the Journal of Consumer Psychology, consumers are more likely to act favorably toward a company that has acted to benefit its customers. As a company engages in CSR, it is more likely to receive favorable brand recognition . Additionally, workers are more likely to stay with a company they believe in. This reduces employee turnover, disgruntled workers, and the total cost of a new employee .

For companies looking to outperform the market, enacting CSR strategies may improve how investors view the company's value. The Boston Consulting Group found that companies considered leaders in environmental, social, or governance matters had an 11% valuation premium over their competitors.

CSR practices help companies mitigate risk by avoiding troubling situations. This includes preventing adverse activities such as discrimination against employee groups, disregard for natural resources, unethical use of company funds, and activity that leads to lawsuits, and litigation .

CSR programs can raise morale in the workplace.  

In its 2022 Environmental and Social Impact Report, Starbucks ( SBUX ) highlights taking care of its workforce and the planet among its CSR priorities through stock grants and additional medical, family, and educational benefits. The company's goals include achieving 50% reductions in greenhouse gas emissions, water consumption, and waste by 2030.

Home Depot ( HD ) has invested more than 1 million hours per year in training to help front-line employees advance in their careers, aims to produce or procure 100% renewable energy to operate its facilities by 2030, and has plans to spend $5 billion per year with diverse suppliers by 2025.

General Motors won the Sustainability Leadership Award from the Business Intelligence Group in 2022. The automaker provided $60 million in grants to more than 400 U.S. nonprofits focusing on social issues, and it has agreements in place to use 100% renewable electricity at its U.S. sites by 2025.

Why Should a Company Implement CSR Strategies?

Many companies view CSR as an integral part of their brand image, believing customers will be more likely to do business with brands they perceive to be more ethical. In this sense, CSR activities can be an important component of corporate public relations. At the same time, some company founders are also motivated to engage in CSR due to their convictions.

What Is ISO 26000?

In 2010, the International Organization for Standardization (ISO) released ISO 26000, a set of voluntary standards to help companies implement corporate social responsibility. Unlike other ISO standards, ISO 26000 provides guidance rather than requirements because the nature of CSR is more qualitative than quantitative, and its standards cannot be certified. ISO 26000 clarifies social responsibility and helps organizations translate CSR principles into practical actions.

What Are the Benefits of CSR?

CRS initiatives strive to have a positive impact on the world through direct benefits to society, nature and the community in which a business operations. In addition, a company may experience internal benefits through the initiatives. Knowing their company is promoting good causes, employee satisfaction may increase and retention of staff may be strengthened. In addition, members of society may be more likely to choose to transact with companies that are attempting to make a more conscious positive impact beyond the scope of its business.

What Companies Have the Best CSR?

Since 1999, Corporate Responsibility Magazine has ranked the top 100 Best Corporate Citizens each year among the 1,000 largest U.S. public companies. Rankings are based on employee relations, environmental impact, human rights, governance, and financial decisions. In 2023, the top-ranked companies include Hewlett-Packard Enterprise Company, Accenture, and Hasbro.

Companies striving to measure success beyond bottom-line financial results may adopt CSR strategies that target environmental, ethical, philanthropic, and fiscal responsibility that extend beyond the products they sell.

Society for Consumer Psychology. " Good Guys Can Finish First: How Brand Reputation Affects Extension Evaluations ."

Boston Consulting Group. " Your Supply Chain Needs a Sustainability Strategy ."

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Corporate Social Responsibility

Business ownership – a view from stakeholders perspective, only a few corporations take the csr seriously, economic hard time and core business focus, role and responsibility conflict, environmental management and corporations’ profitability.

Long periods of time have seen businesses sustain success in the visibly competitive world of trade. This success is linked to good governance from the board of management, with support from the shareholders. Similarly, businesses that have performed poorly in the past are connected to the weaknesses of the boards of governors, who in one way or another failed to address specific issues that confront their business venture. The management of corporations is in most cases under the leadership of a chief executive officer (CEO), who is given the opportunity to manage the corporation by the shareholders (Mallin, 2007). The CEO reports directly to the board of directors. While the board plays a critical role in ensuring that the management and the CEO of the organization get everything right, the board is normally answerable to the shareholders (Monks & Minow, 2007, p.126).

It is noted that the test of any effective governance and management is reflected in the degree to which an organization achieves its purpose and set goals (Jensen, 1976, p.4). However, another phenomenon has emerged in the world of business where the roles of business entities have been billed to go beyond shareholder satisfaction. This is Corporate Social Responsibility (CSR) which has been linked with the responsibility of caring for stakeholders in a wider perspective of the global or regional community (Carroll, 1999). Others refer to it as corporate citizenship, with the common belief that it influences all the aspects of the business on a global or regional scale. This belief is pinned on the notion that businesses matter since they create a lot of wealth, which they are required to share with the community under the banner of “stakeholders” (Atkinson, Waterhouse & Wells, 1997, p.25). In other words, the concept of the CRS is a state in which an organization decides where it fits in social fabrics, by addressing the ethics of business, corporate governance, environmental issues, and any other issue within the social context of the society (Bushman & Smith, 2003). But is CSR necessary for the success of a corporation? Or is CSR an obligation of the Corporations? This paper critically analyzes whether the corporations have the role of Corporate Social Responsibility as part of their duty in the wider aspect of their roles.

According to some business pundits, business is principally owned by stakeholders, and that any money spent on Corporate Social Responsibility is a waste of corporation’s resources and ‘polite robbery’ from the rightful owners of the business (Bushman & Smith, 2003, p.14). The case against CSR can be traced back to a statement by scholar and business leader, Laisser-Fair. Supporting his position are people like Elaine Sternberg, who argues that practicing CRS is basically going against human rights; the right of owners to enjoy the right to reap from their efforts, hence they are denied the right to property ownership (Werther & Chandler, 2006). Stating that the objectives of every contemporary view are ridiculous, she argues that the right to own a property is earned fairly in a business environment and thus should be respected at all costs (Werther & Chandler, 2006, p.39). However, a view that “ordinary decency, honesty, and fairness” should be at the forefront of every corporation is also paramount in many ways (Jensen, 1996).

It is also argued that corporate social responsibility undermines the very base of a free society (Grossman & Hart, 1982). This is because of the acceptance of the corporate leaders that they have a social responsibility to satisfy the needs of those who have not contributed directly to the success of the corporation. It thus means that the responsibility to make more profit to the shareholders is jeopardized.

The past surveys of the most respected companies in the globe show that corporations that have not concentrated much on the topic do better than the ones which have concentrated much on CSR activities (Freeman, 1994). The survey revealed that the position of “The Most Respected Business Leaders” has been occupied by those executives or business leaders who do not play nice in the market, hence creating a belief that being good to the stakeholders at large is not

the way to go for success in business (Freeman, 1994). For instance, business leaders like Bill Gates are known to have not played the business game fairly, but still emerge with honors on their achievements (Monks & Minow, 2007). In fact, Microsoft is associated with some of the highest-profile cases of playing ‘big brother’ in the business environment hence jeopardizing the success of other firms in the same line of business (Monks & Minow, 2007, p.172). In fact, Bill Gates has used his huge financial achievements in the market to give away huge sums of money to the needy, at the expense of the competing firms.

Another notable case is that of Jack Welch of General Electric. He played nasty in the business world by a memorable and anti-social downsizing in his corporation and cases of environmental pollution that led to a lot of criticism from the society members, including the fellow business leaders (Monks & Minow, 2007, p.173). However, Alchian & Desmetz (2002) argues that Welch played his part in a manner that would be considered social responsibility activity, especially through his restructuring of the employee status through empowerment. Welch is in records as to have said that making a profit and paying taxes should not be the sole agenda that occupies the minds of the corporation leaders (Alchian & Desmetz, 2002).

In the dimension of core business and the need to focus on it, especially during this period of economic hardship, many scholars have argued that one should not lose focus of core business in the name of spending money unnecessarily. Colley (2003, p.213) states that “you cannot go round spending extravagantly” on unimportant issues while you are retrenching workers and the reputation of the company is headed downhill. From this argument, it is easy to argue that the reputation of the company may not be easily redeemed when the very society that is supposed to respond positively towards their activities are skeptical about everything they do in the name of CSR.

Fombrun (1996) on the other hand argues that the process of managing CSR depends on the aspect of managing a business. In this dimension, one can handle it poorly or well depending on whether the managers keep a firm focus on the business goals and objectives. It is, therefore, possible to reason out that time and again it is the corporation’s responsibility to keep off those activities that would attract the attention of pressure groups, especially the environmentalists or to avoid carrying out activities that may lead to prosecution and paying of regulatory charges (Fombrun, 1996). He states that through such an initiative, there would be no need for splashing out money for CSR activities. After all, many observe that CSR can lead to withdrawal of attention towards the improvement of quality, as the corporation will be spending a lot of time and money on building the image through CSR at the expense of improving product quality (Freeman 1994).

Historically, businesses have moved beyond morality and public policy, hence the need to do what is needed; create an environment for sustainable profit and growth (Millstein, 1998). By doing this, the government is benefiting through taxation, hence the need to create a favorable framework for the proper and fair game in society. Millstein (1998) argues that it is not logical to insist that smoking remain legal and adding a huge tax on it at the expense of consumers, and still act in the name of CSR. In fact many have argued that such activities or actions are purely not in the interest of the wider stakeholders, hence the call for the wholesome illegalization of tobacco.

It is indeed becoming extremely challenging as it is getting extremely hard to sustain the impact of such negative perceptions. In fact, taking an example of the tobacco industry still, they are actually global players, a big corporation that does continuously grow in its global networks at the expense of other locally based corporations. This makes it possible to take a global look at the scenario thus assuming the roles played by the locally based corporations. In essence, this may be the point behind many organizations hiding in the blanket of “small impact group” of corporations (Alchian & Desmetz, 2002).

Several studies have indicated that almost every business idea or a business venture that one may think of has the ability to “shift 1% of its overall turnover straight into its bottom line”, only if proper environmental management is undertaken in a way that would minimize wastes (Bushman & Smith, 2003). However, a lot of business leaders do not positively conceive the idea of spending money on environmental conservation or minimizing waste through specific environmental initiatives (Bushman & Smith, 2003). According to Bushman & Smith, business leaders do not like the idea of preventing the on-coming problem, but like acting after the disaster so that they can rebuild their name through CSR activities. In principle, the solution to the problems only comes after the need to solve an already existing problem rather than acting to clear the looming one.

There is considerable evidence that good governance cannot be replaced by activities of CSR. It must also be noted that the governance of corporations relies on the internal means through which their performances are accomplished (Colley, 2003). There is also little debate that good corporate governance will definitely impact the overall performance of the corporation. Again, while governance of a corporation is comprised of the internal relationships amongst shareholders, boards of directors, and managers, it must be acknowledged that such relationships are a result of respective roles of the government and private sector. This is seen in the way governments manage the laid down regulations, the general perception of the public as well as voluntary private initiatives. It is therefore important to note that CSR is basically an image-building initiative that in most cases can be avoided at the initial stages of company development. Again it should therefore be acknowledged that the primary role of corporate governance is to ensure the shareholders get their rightful control and benefit of the corporation rather than venturing into the image-building exercise through CSR.

Alchian, A., & Desmetz H. (1972) Production, Information Costs and Economic Organization. American Economic Review , 62, pp. 777-795.

Atkinson, A., & Waterhouse J., & Wells R. (1997) A stakeholder approach to strategic performance measurement. Sloan Management Review , Spring [38(3)]: 25-36.

Bushman, R., & Smith J. (2003) Trasparency, Financial Accounting Information and the Corporate Governance. FRBNY, Economic Policy Review , April.

Carroll, A. B. (1999) Corporate social responsibility: Evolution of a definitional construct. Business and Society 38(3), 268-295.

Colley, J.L. (2003) Corporate Governance . London. McGraw-Hill Professional.

Fombrun, C., J. (1996). Reputation: Realizing Value from the Corporate Image . Boston, MA: Harvard Business School Press.

Freeman E. R. (1984) Strategic Management: A Stakeholder Approach . Chicago. Pittman Books Limited.

Grossman, S., & Hart O. (1982) Corporate Financial Structure and Managerial Incentives. The Economics of Information and Uncertainty . Chicago. University of Chicago press.

Jensen, M. C. (1976) Theory of Firm: Managerial Behavior, Agency Costs and Ownership Structure. Working Paper , No 3 (1).

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Millstein, I.M. (1998) Organization for Economic Co-operation and Development : Business Sector Advisory Group on Corporate Governance . London. OECD Publishing.

Monks, R. G. & Minow, N. (2007) Corporate Governance , 4 th Edition. New York. Wiley Blackwell.

Werther, B.W., & Chandler, D. (2006) Strategic Corporate Social Responsibility: Stakeholders in a Global Environment . Miami. University of Miami Publishing Press.

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