Corporate Social Responsibility

Introduction

Organizations all over the world have a new common objective of meeting the needs of the contemporary world without compromising the capability of future generations to sort out their needs. Corporations are being urged to be accountable for their effect on the society and the natural environment (Berkhout, 2005). In this context, sustainability refers to the activities of the organization that are particularly considered voluntary. These are activities that exhibit inclusion of environmental and social concerns in running of business in relations with stakeholders (Kotler & Lee, 2005). This paper seeks to look into corporate social responsibility (CSR) of organizations, and outlines the effectiveness of corporate ethics programs in dealing with misconducts of organizations.

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In order to succeed, an organization needs to maintain quality relationship with its employees and other major stakeholders. The most important stakeholders include investors, customers, public and governmental officials, communities, and activists. This will automatically necessitate the organizations to undergo transformations that will allow them to approach their business in terms of sustainable development. Organizations which have declined CSR in their policies have suffered lose of their reputation. They have been forced by activists to protect the interests of all stakeholders and the environment (D’Amato, Henderson, & Florence, 2009).

Organizations fall between two categories considering their operations and approach to social responsibility. On one hand are corporations that do not acknowledge any responsibility to the environment and society, and on the other hand are those corporations that see their operations as possessing an important effect as well as dependence on society at the social, economic, and environmental levels. The result is a sense of accountability beyond the traditional confines of the organization. Most organizations all over the world fall in between the two boundaries (Berkhout, 2005). Corporate accountability or sustainability is an outstanding element of the business and school literature. Education in management is a significant source of new ideas about changing towards the meaning of socially responsible leadership. This meaning also needs to be updated with the emerging global trends (D’Amato, Henderson, & Florence, 2009).

Implementation of Corporate Social Responsibility

Corporate social responsibility (CSR) is an important part of the business strategy and business identity. According to some authors, it can be used as a defensive policy. The second application is used more often by organizations targeted by environmental and social advocates. Some studies views organizations’ level of CSR as being influenced by factors such as financial capability of the company, economy of the country, and state regulations from concerned authorities (Blowfield, 2005).

Some studies suggest organizations take on corporate social responsibility in terms of the definite initiatives under which it may fall. Means of recounting these rationales differ, from the more doubtful view of cause associated marketing to a generous acknowledgment of real socially accountable business practices. To show how corporate social responsibility is implemented in corporations, a developmental framework is applied to depict change in awareness, strategy, and action over a period of time. Some organizations apply a principle-based framework to master what they refer to as the news rules of the game. For instance, harnessing invention for public gain, distribution of economic opportunity and putting the public at the center (Blowfield, 2005).

Commitment can originate from either economic self interest like a concrete business case. It can also come from ethical grounds like the moral significance of sustainable growth (Blowfield, 2005). Both of these are applicable when the value addition is taken as important and positive, the business case is then applicable. Positive corporate social responsibility has been linked to improved financial gain. There is a growing believe that taking care of the people and the environment is pertinent to survival of the organization (D’Amato, Henderson, & Florence, 2009).

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To a considerable number of companies, CSR yields business success. However, some studies in CSR outcome reflect the fact that there are doubts and skepticism. Some studies present an instance of the contrast between corporate social responsibility as business case and CSR as ethical matter. Cross-cultural examination has been done on communication of social responsibilities activities in American and European organizations. The results show that American organizations justify corporate social responsibility using economics or bottom-line terms. On the contrary, European organizations depend more on language or the theories of citizenship, moral commitment, or corporate accountability. This study also shows that European firms do not value sustainability to the omission of financial features (Kotler & Lee, 2005).

Project continuity commit­ment and financial obligation is valued instead. To justify CSR, American organizations concentrate more often on financial justifications. On the contrary, European organizations incorporate both financial and sustainability features in justifying their corporate social responsibility. According to studies European organizations posses a leading position in the corporate social responsibility movement as an opportunity for sustainable growth. A lot of publications have urged the corporations to be actively involved in efforts geared towards curbing poverty. This has called for more open acknowledgement of poverty existence in the corporate citizenship field. In addition corporate leadership has been urged to name the issue of poverty and frame it in such a manner as to speed its reduction (Werther & Chandler, 2006).

Ethics in CSR Activities

An organization’s character in relation to CSR reveals its identity (Cornelius, Wallace, & Tassabehji, 2007). Corporate identity depicts what an organization really represents, rather than what an organization might advocate. Many organizations have formed a corporate identity by means of branding. This has stood out as a pivot of their accomplishments and their competitive advantage. Fair trade and social issues has made some companies to differentiate their offerings and made accountability figure outstandingly in its corporate distinctiveness in the minds of consumers. Corporate ethics programs in an organization are the most important tools in preventing organizational misconduct (Bendixen & Abratt, 2007).

According to studies, a company’s pyramid of corporate social responsibility begins with economic accountability and proceeds to legal, ethical, and discretionary accountabilities in that order. Nevertheless, what was moral or even discretion­ary in such a model is becoming more and more essential nowadays because of the changing environment within which businesses function (Cornelius, Wallace, & Tassabehji, 2007). This is also because the moral responsibilities are more likely to stand in equivalence with economic and legal accountabilities as foundational success in business. Corporate social responsibility can be a means of harmonizing corporate processes with values of the society when these variables are shifting quickly. In that case, ethical behavior becomes a requirement for strategic corporate social responsibility (Bendixen & Abratt, 2007).

Accountability in CSR Activities

Accountability is the processes in which a leader ensures integrity in matters of administration. It is among the major challenges that organizations face in the corporate world. Accountable managers in an organization concentrates on reconciliation and aligning the needs, interests, demands, and values of the workforce, consumers, suppliers, shareholders, communities, non-governmental organizations, and the environment. A firm’s track record in terms of corporate social responsibility will be efficient when suitable CSR actions are taken in its inner and its supply chain activities. Additionally, publications show an increasing requirement for distribution of good practice in accountability in CSR (Bendell, 2005).

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Communities need to take effective strategies to demand corporate accountability. The success of community based approach for corporate accountability requires contribution of state, societal, civil, and corporate factors. Accountability goes beyond making false promises. Despite the CSR promises made by organizations to contribute in development programs and other initiatives, the outcome of the initiatives has been progressively questioned (Bendell, 2005). Factors which impacts on the effectiveness of corporate accountability are numerous and tightly interrelated (D’Amato, Henderson, & Florence, 2009).

Stakeholders and Corporate Social Responsibility

All the stake holders have to be involved for a successful running of a CSR program. Though organizations struggle to engage in corporate social responsibility together with their stakeholders, they are concurrently stressed to comprehend the true association behind this bond. Both academic and business literature, the share­holders are renamed as one of many major stakeholders. They are also viewed as contending for influence with employees, consumers, customers, suppliers, trade unions, competitors, the environment, and the society in general (Werther & Chandler, 2006).

Leadership and Corporate Social Responsibility

Studies identify leadership’s pivotal responsibility in creating corporate social responsibility programs within and across corporations. Leaders in the business world are the first real global citizens, they possess universal potential and accountability, and their decisions have an effect on economies as well as the entire society. Leadership roles in guiding organizations toward sustainable CSR are difficult and wide, and it has been supposed that it needs an exceptional assortment of leadership skills and experience (Pruzan & Miller, 2006).

Studies document accounts of leadership styles and leadership abilities and experiences most established among leaders whose companies have effectively experienced evolution in managerial approach and focus (Cornelius, Wallace, & Tassabehji, 2007). These leaders have transitioned and achieved added socially accountable behaviors. Accountable leaders are people with the highest integrity and profound understanding of complex concepts such as sustainable development. They are dedicated to building lasting corporations in connection with others. They have a profound sense of reason and are honest to their core values (Werther & Chandler, 2006).

Socially responsible corporations are made by charismatic leaders with a style that communicates an innovation vision. They energize others to be creative, and speeds innovation processes and corporate social responsibility. They possess transformational leadership style that is able to communicate passionately that the result is heartening people to commit to the dream of the leader on sustainability. Other leadership qualities related to sustainable social success include courage, integrity, respect, and teamwork (Pruzan & Miller, 2006).

Limitations and Challenges of CSR on Organizations

Organizations are faced with limitations and challenges as they put CSR into practice. Limitations and challenges are related to political factors and to organizational factors. The challenges are often rooted in culture of the organization. The difficulty of working in a global society demands a lot on corporations and their leadership (D’Amato, Henderson, & Florence, 2009). Business leaders are facing a lot of challenges although the roles and accountabilities of government are taking shape and the lines between business and government are becoming less clear. The new era of corporate social responsibility requires all the stakeholders to be satisfied (Cornelius, Wallace, & Tassabehji, 2007).

Some of the challenges relating to implementation of CSR are associated with the business image, the legal background of the organization, and the situation of the job market, corruption, and economic stagnation. The most significant challenge of implementation of CSR is the development of leaders for a sustainable global society. According to studies, responsible leadership is the art of creating and supporting relations with all relevant stakeholders. These kinds of leaders need to be socialized and not personalized in nature in order to satisfy all the parties concerned with their business (Kotler & Lee, 2005).

Conclusion

Current trends require an organization that can manage its relationship with the wide society. Managers or leaders should take the responsibility of the behaviors exhibited by their corporations. The organization should be aware of its impact on society and the natural environment. Corporate social responsibility has become a foremost strategy of top management and effective leadership. Organizations need to re-examine the patterns of their operations and begin to pursue a sustainable approach that should be incorporated in their business strategy (Kotler & Lee, 2005).

In contemporary world, it is not acceptable for a company to achieve business success while isolated from the subjects affected by its actions (Berkhout, 2005). Organizations have been forced to redesign their business models, regulations and frameworks in order to keep up to date with the global trends, and to maintain their commitment to financial obligations. To stay ahead of competition and the rapidly changing world, the most socially responsible corporations continue to redesign their short and long-term objectives. Additionally, organizations are forced to understand themselves relative to both local and worldwide stakeholders to satisfy their domestic, international and global markets.

References

  1. Bendell, J. (2005). In whose name? The accountability of corporate social responsibility. Development in Practice , 15(3-4), 362–374.
  2. Bendixen, M., & Abratt, R. (2007). Corporate identity, ethics and reputation in supplier-buyer relationships. Journal of Business Ethics , 76, 69–82.
  3. Berkhout, T. (2005). Corporate gains: Corporate social responsibility can be the strategic engine for long-term corporate profits and responsible social development. Alternatives Journal , 31(1), 15–18.
  4. Blowfield, M. (2005). Corporate social responsibility: Reinventing the meaning of development. International Affairs , 81, 515–524.
  5. Blowfield, M., & Frynas, J. G. (2005). Setting new agendas: Critical perspectiveson corporate social responsibility in the developing world. International Affairs , 81, 499–513.
  6. Cornelius, N. N., Wallace, J., & Tassabehji, R. (2007). An analysis of corporate social responsibility, corporate identity and ethics teaching in business schools. Journal of Business Ethics , 76, 117–135.
  7. D’Amato, A., Henderson, S., & Florence, S. (2009). Corporate Social Responsibility and Sustainable Business: A Guide to Leadership Tasks and Functions. Greensboro, North Carolina: Center for Creative Leadership.
  8. Kotler, P., & Lee, N. (2005). Corporate social responsibility: Doing the most good for your company and your cause. Hoboken, NJ: John Wiley & Sons.
  9. Pruzan, P., & Miller, W. C. (2006). Spirituality as the basis of responsible leaders and responsible companies. In T. Maak & N. M. Pless (Eds.), Responsible leadership (pp. 68–92). Abingdon, Oxon: Routledge.
  10. Werther, W. B., & Chandler, D. A. (2006). Strategic corporate social responsibility. New York: Sage Publications.
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