Increasing Importance of Corporate Social Responsibility (CSR)

Nowadays Corporate Social Responsibility (CSR) has become an essential part of big, multinational corporations without which any corporation of a substantial size would face difficulties from various fronts – non-government organizations, governments, public (including existing and potential customers), and even workforce itself. People justifiably reason that since global multicultural corporations are earning revenues which are calculated at millions, or even billions of pounds, they are expected to give something back to the community they are operating in or to the wider community to compensate for a wide range of inconveniences and difficulties the operation of the business is causing to local community, nature or the wider area.

However, if it is expected from big companies in UK and everywhere to exercise social responsibility in addition their primary function, which is profit maximisation, what should be, the stance of small and medium business in UK regarding giving back something to the community. Opinions differ regarding whether it is expected from small and medium businesses in UK to engage in CSR. Some argue that since small and medium business in UK do not possess large amount of funds that could be spent for the purpose, and even if the business is making any negative impact on local community, be it damaging the nature, exploiting natural resources, or anything else, such an impact would not be substantial enough for the business to reimburse it. Others, on the other hand, insist that corporate social responsibility has to be practiced by all business in UK– small, medium or big, and since a business is making money it should give back.

“A business that accepts Corporate Responsibility will be prepared to be responsible for and willing to justify its actions. It will also consider the impact of its actions on a variety of individuals and groups, both inside and outside of the organization”. (Hall et al, p.789) The importance of CSR to both society and the businesses have been acknowledged by scholars in the field long ago, and nowadays there is no such an argument if companies need to engage in CSR, but there is a still an argument among some authors of the field as regard what forms of CSR nedds to be focused at etc.

CSR is closely related to the credibility of the company. Credibility with stakeholders is specified as a determinant of an efficiency of a company by Davis(2005, p.108).

Fombrun and Shanley (1990, p.239) consider engaging in CSR as important elements of product differentiation and building a reputation. Forwarding a specific course some companies associate themselves with the solution of that problem and it adds to their popularity and the goodwill of the public towards the brand. Corporate Social Responsibility (CSR) continues to be an important business concept and in a world of increased globalisation is to be found among large companies in most countries around the world (Welford, 2004).

Kotler and Nancy (2005, p.22), identified six major initiatives for social responsibility related activities:

1. Cause Promotions. Companies can spend money to forwards a cause and at the same time can bring the attention of other businesses and organizations for the same course as well. Cause promotion initiatives should not be limited for big, multinational companies. Small and medium enterprises inUK can also participate in a cause promotion on their community level.

2. Cause-Related Marketing. It involves a marketing campaign initiated by a company and its widespread form is that if anyone buys a product or service of a company a certain percentage of money from the sale goes to support a cause. For example, Volvic, water manufacturing brand helps to provide 10 liters of water in Africa for every bottle of water sold in UK. Nevertheless, the cause-related marketing potential of CSR has not  been recognized and utilised by small and medium businesses inUK so far.

3. Corporate Social Marketing. This aspect of CSR involves businesses promoting social causes. Companies promoting healthy lifestyle, or lobbying against smoking are the examples of corporate social marketing. Again, the application of this form of CSR is very rare among small and medium enterprises inUK.

4. Corporate Philanthropy. It is one of the most common forms of CSR practiced by businesses. Corporate philanthropy involves companies donating, money, products or services to good causes. Corporate philanthropy is the only one in the present list of CSR activities which is occasionally practiced by small and medium enterprises inUK.

5. Community Volunteering. This form of CSR related activity often involves donating some staff hours for some charitable cause often within the community the company operates in. community volunteering is not popular with small and medium enterprises in UK. The possible reason is that small number of employees work in small businesses, therefore the business cannot afford to pay for staff for community volunteering.

6. Socially Responsible Business Practices. Buying fairtrade products from suppliers is the common form of socially responsible business practices.

Lawrence et al (2005) consider the task of blending the responsibilities into efficient corporate strategies to be the most challenging aspect of CSR. However, that challenge can be eliminated if the management of the companies can see the benefits of CSR in many levels. Companies don’t only promote social responsibility because they have to comply with some written and unwritten rules in corporate world, but also for the following reasons as stated by Crane and Matten (2007):

• Corporations perceived as being socially responsible might be rewarded with extra and/ or more satisfied customers, whilst perceived irresponsibility may result in boycotts or other undesirable consumer actions. An example for this can be a recent case of BP, oil giant which had oil leakage in Gulf of Mexico that nearly destroyed the whole area infrastructure, resulting huge hatred and disagreement both by public and the government of theUnited States. Or another example mentioned by Crane and Matten (2007) is the case of another oil giant Exxon Mobil that has experienced an international consumer boycott throughout the 2000s, coordinated by Greenpeace. The campaign initially raised by Greenpeace showed the worlds number one oil giant as the “worlds no.1 criminal” that is affecting the environment more than any other multinational company.
• Or employees may be attracted to work for, or even more committed to corporations perceived as being socially responsible (Greenberg and Turban 2000).
• Voluntary committing to social actions and programmes may prevent legislation and ensure greater corporate independence from government.
• Making a positive contribution to society might be regarded as a long-term investment in a safer, better educated and more equitable community, which subsequently benefits the corporation creating an improved and stable context in which to do business.

Hopkins(2008) mentions about the role of multinational companies on CSR as he states that governments and their international arms, the agencies grouped under the umbrella of the United Nations (UN), have failed in their attempts to rid the planet of under-development and poverty. Large corporations with their power and economic strength have taken a dominant position in society. And he further suggests that these large multinational companies must take much more responsibility for their development than ever before.

References

Crane, A, McWillialms, A & Matten, D, 2008, “The Oxford Handbook of Corporate Social Responsibility”, Blackwell Publishing

Davis, I, 26 May 2005, “The Business of Doing Business”. The McKinsey Quarterly, Issue 3

Hill, R.P., Stephens, D.  & Smith, I.2003.  Corporate Social responsibility: An examination of individual firm behaviour.  Business and Society Review.  108(3):339-364

Kotler, P & Lee, N, 2005, “Corporate Social Responsibility: doing the most good for your company and your cause”, Wiley Publications

Lawrence, M, Cohen, L & Keith Morrison, 2007, Research Methods in Education, p. 247