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Background Of Corporate Social Responsibility

Background Of Corporate Social Responsibility The Origins of Corporate Social Responsibility

"Corporate social responsibility", or CSR for short, is about a company's responsibility for society in the sense of sustainable business practices. Learn more. During this period of time the Federal Ministry of Labour and Social Affairs is focussing on human rights and decent work in global supply chains. Learn more. Suchen Sie nach corporate social responsibility background-Stockbildern in HD und Millionen weiteren lizenzfreien Stockfotos, Illustrationen und Vektorgrafiken. Carroll, Archie B. (): A History of Corporate Social Responsibility, Concepts and Practices, in: Crane, Andrew et al. (ed.), The Oxford Handbook of Corporate​. management practices of two US and two EU companies that are recognised leaders in Corporate Social Responsibility (CSR). Drawing on the history of CSR​.

Background Of Corporate Social Responsibility

corporate sustainability or corporate social responsibility. profile of the rating institution (e.g. time of establishment, background, headquarter, size operating. A history of corporate social responsibility: concepts and practices. Archie B. Carroll. Year of publication: Authors. management practices of two US and two EU companies that are recognised leaders in Corporate Social Responsibility (CSR). Drawing on the history of CSR​.

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It is mandatory to procure user consent prior to running these cookies on your website. Better than any royalty free or stock I receive many e-mails each month asking me questions Research 2 seeking to link corporate social responsibility CSR with corporate financial performance CFP exploded during this decade.

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Notwendig immer aktiv. Proponents argue that corporations increase long-term profits by operating with a CSR perspective, while critics argue that CSR distracts from businesses' economic role.

A study compared existing econometric studies of the relationship between social and financial performance, concluding that the contradictory results of previous studies reporting positive, negative, and neutral financial impact, were due to flawed empirical analysis and claimed when the study is properly specified, CSR has a neutral impact on financial outcomes.

In line with this critical perspective, political and sociological institutionalists became interested in CSR in the context of theories of globalization , neoliberalism and late capitalism.

Some institutionalists viewed CSR as a form of capitalist legitimacy and in particular point out that what began as a social movement against uninhibited corporate power was transformed by corporations into a "business model" and a " risk management " device, often with questionable results.

CSR is titled to aid an organization's mission as well as serve as a guide to what the company represents for its consumers.

Business ethics is the part of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment.

It is widely accepted that CSR adheres to similar principles, but with no formal act of legislation. It is also called corporate sustainability, sustainable business, corporate conscience, corporate citizenship, conscious capitalism, or responsible business.

Since the s, [18] corporate social responsibility has attracted attention from a range of businesses and stakeholders. A wide variety of definitions have been developed but with little consensus.

Part of the problem with definitions has arisen because of the different interests represented. A business person may define CSR as a business strategy, an NGO activist may see it as ' greenwash ' while a government official may see it as voluntary regulation.

Corporate social responsibility has been defined by Sheehy as "international private business self-regulation. The definitions reviewed included the economic definition of "sacrificing profits," a management definition of "beyond compliance", institutionalist views of CSR as a "socio-political movement" and law's own focus on directors' duties.

Further, Sheehy considered Archie Carroll's description of CSR as a pyramid of responsibilities, namely, economic, legal, ethical, and philanthropic responsibilities.

Carroll extended corporate social responsibility from the traditional economic and legal responsibility to ethical and philanthropic responsibility in response to the rising concerns on ethical issues in businesses.

Companies express this citizenship 1 through their waste and pollution reduction processes, 2 by contributing educational and social programs and 3 by earning adequate returns on the employed resources.

Businesses have changed when the public came to expect and require different behavior [ Most consumers agree that while achieving business targets, companies should engage in CSR efforts at the same time.

Consumers also believe that retailers selling local products will gain loyalty. However, environmental efforts are receiving negative views given the belief that this would affect customer service.

Mohr et al. A more common approach to CSR is corporate philanthropy. This includes monetary donations and aid given to nonprofit organizations and communities.

Donations are made in areas such as the arts, education, housing, health, social welfare and the environment, among others, but excluding political contributions and commercial event sponsorship.

Creating shared value or CSV is based on the idea that corporate success and social welfare are interdependent. A business needs a healthy, educated workforce, sustainable resources and adept government to compete effectively.

For society to thrive, profitable and competitive businesses must be developed and supported to create income, wealth, tax revenues and philanthropy.

CSV gives the impression that only two stakeholders are important — shareholders and consumers. Many companies employ benchmarking to assess their CSR policy, implementation and effectiveness.

Benchmarking involves reviewing competitor initiatives, as well as measuring and evaluating the impact that those policies have on society and the environment, and how others perceive competitor CSR strategy.

According to Barney , "formulation of the RBV, sustainable competitive advantage requires that resources be valuable V , rare R , inimitable I and non-substitutable S.

However, should competitors imitate such a strategy, that might increase overall social benefits. Firms that choose CSR for strategic financial gain are also acting responsibly.

RBV presumes that firms are bundles of heterogeneous resources and capabilities that are imperfectly mobile across firms.

This imperfect mobility can produce competitive advantages for firms that acquire immobile resources. They concluded that managers could determine the appropriate level of investment in CSR by conducting cost benefit analysis in the same way that they analyze other investments.

Reinhardt found that a firm engaging in a CSR-based strategy could only sustain an abnormal return if it could prevent competitors from imitating its strategy.

The relationship between corporate social responsibility and a firm's corporate financial performance is a phenomenon that is being explored in a variety of research studies that are being conducted across the world.

Based on these research studies, including those conducted by Sang Jun Cho, Chune Young Chung, and Jason Young, a positive relationship exists between a firm's corporate social responsibility policies and corporate financial performance.

In order to investigate this relationship, the researchers conducted a regression analysis, and preceded the analysis with provision of several measures that they utilized to serve as proxies for key financial performance indicators i.

Initially, CSR emphasized the official behaviour of individual firms. Later, it expanded to include supplier behaviour and the uses to which products were put and how they were disposed of after they lost value.

In the 21st century, corporate social responsibility in the supply chain has attracted attention from businesses and stakeholders.

Corporations' supply chain is the process by which several organizations including suppliers, customers and logistics providers work together to provide a value package of products and services to the end user, who is the customer.

Corporate social irresponsibility in the supply chain has greatly affected the reputation of companies, leading to a lot of cost to solve the problems.

For instance, incidents like the Savar building collapse , which killed over people, pushed companies to consider the impacts of their operations on society and environment.

On the other side, the horse meat scandal of in the United Kingdom affected many food retailers, including Tesco, the largest retailer in the United Kingdom, [47] leading to the dismissal of the supplier.

Corporate social irresponsibility from both the suppliers and the retailers has greatly affected the stakeholders who lost trust for the affected business entities, and despite the fact that sometimes it is not directly undertaken by the companies, they become accountable to the stakeholders.

These surrounding issues have prompted supply chain management to consider the corporate social responsibility context.

Wieland and Handfield suggested that companies need to include social responsibility in their reviews of component quality. They highlighted the use of technology in improving visibility across the supply chain.

Corporate social responsibility includes six types of corporate social initiatives: [2]. All six of the corporate initiatives are forms of corporate citizenship.

However, only some of these CSR activities rise to the level of cause marketing , defined as "a type of corporate social responsibility CSR in which a company's promotional campaign has the dual purpose of increasing profitability while bettering society.

Companies generally do not have a profit motive when participating in corporate philanthropy and community volunteering. On the other hand, the remaining corporate social initiatives can be examples of cause marketing, in which there is both a societal interest and profit motive.

CSR may be based within the human resources , business development or public relations departments of an organisation, [50] or may be a separate unit reporting to the CEO or the board of directors.

An engagement plan can assist in reaching a desired audience. A corporate social responsibility individual or team plans the goals and objectives of the organization.

As with any corporate activity, a defined budget demonstrates commitment and scales the program's relative importance.

Social accounting is the communication of social and environmental effects of a company's economic actions to particular interest groups within society and to society at large.

Social accounting emphasizes the notion of corporate accountability. Crowther defines social accounting as "an approach to reporting a firm's activities which stresses the need for the identification of socially relevant behavior, the determination of those to whom the company is accountable for its social performance and the development of appropriate measures and reporting techniques.

In nations such as France, legal requirements for social accounting, auditing and reporting exist, though international or national agreement on meaningful measurements of social and environmental performance has not been achieved.

Many companies produce externally audited annual reports that cover Sustainable Development and CSR issues "Triple Bottom Line Reports" , but the reports vary widely in format, style, and evaluation methodology even within the same industry.

Critics dismiss these reports as lip service, citing examples such as Enron 's yearly "Corporate Responsibility Annual Report" and tobacco companies' social reports.

In South Africa, as of June , all companies listed on the Johannesburg Stock Exchange JSE were required to produce an integrated report in place of an annual financial report and sustainability report.

This requirement was implemented in the absence of formal or legal standards. One of the reputable institutions that capital markets turn to for credible sustainability reports is the Carbon Disclosure Project , or CDP.

Corporate social responsibility and its resulting reports and efforts should be verified by the consumer of the goods and services.

Due to an increased awareness of the need for CSR, many industries have their own verification resources. The United Nations Global Compact provides frameworks not only for verification, but also for reporting of human rights violations in corporate supply chains.

The rise of ethics training inside corporations, some of it required by government regulation, has helped CSR to spread.

The aim of such training is to help employees make ethical decisions when the answers are unclear. Organizations see increased employee loyalty and pride in the organization.

Common CSR actions include: [71]. Social License to Operate can be determined as a contractual grounds for the legitimacy of activities and projects company is involved in.

As stated in Enduring value: the Australian minerals industry framework for sustainable development the concept of the 'social license to operate', then defined simply as obtaining and maintaining broad community support and acceptance.

Unless a company earns and maintains that license social license holders may intend to block project developments; employees may leave the company for a company that is a better corporate citizen: and companies may be under ongoing legal challenge.

In research of Requisite Organization Dr Elliott Jaques defines Social License to Operate for the company as the social contract the company has with the social license holders employees, trade unions, communities, government for them to manifest positive intention to support the business short- and long-term objectives by "providing managerial leadership that nurtures the social good and also gives the foundation for sustainable growth in organizational results.

The primary objective for the companies is to obtain and maintain the Social License to Operate. Based on the Requisite Organization research of Dr.

Elliott Jaques to achieve this goal a company needs to:. Although a positive relationship has been shown to exist between CSR and a firm's corporate financial performance, results from these analyses may need to be examined under different lenses for emerging and developed economies, especially since firms based in emerging economies oftentimes have weak firm-level governance.

Yet, in all cases emerging markets vs. A large body of literature exhorts business to adopt non-financial measures of success e.

The business case for CSR [86] within a company employs one or more of these arguments:. Profit is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital unlike accounting definitions of profit.

Overall, trying to balance economic, ecological and social goals are at the heart of the triple bottom line. This measure was claimed to help some companies be more conscious of their social and moral responsibilities.

Another criticism is about the absence of a standard auditing procedure. The term was coined by John Elkington in A CSR program can be an aid to recruitment and retention , [91] [92] particularly within the competitive graduate student market.

Potential recruits often consider a firm's CSR policy. CSR can also help improve the perception of a company among its staff, particularly when staff can become involved through payroll giving , fundraising activities or community volunteering.

CSR has been credited with encouraging customer orientation among customer-facing employees. CSR is known for impacting employee turnover.

Several executives suggest that employees are their most valuable asset and that the ability to retain them leads to organization success.

Socially responsible activities promote fairness, which in turn generate lower employee turnover. On the other hand, if an irresponsible behavior is demonstrated by a firm, employees may view this behavior as negative.

Proponents argue that treating employees well with competitive pay and good benefits is seen as a socially responsible behavior and therefore reduces employee turnover.

This interest is driven particularly by the realization that a positive work environment can result in desirable outcomes such as more favorable job attitudes and increased work performance.

The authors noted that while developing and implementing a CSR strategy represents a unique opportunity to benefit the company. The survey's authors also stated that employee engagement on CSR initiatives can be a powerful recruitment and retention tool.

As a result, employees tend to discard employers with a bad reputation. Managing risk is an important executive responsibility.

Reputations that take decades to build up can be ruined in hours through corruption scandals or environmental accidents. CSR can limit these risks.

CSR can enhance a brand's reputation by "inducing a desire to support and help the company that has acted to benefit consumers".

Some companies use their commitment to CSR as their primary positioning tool, e. Companies that operate strong CSR activities tend to drive customer's attention to buy products or services regardless of the price.

As a result, this increases competition among firms since customers are aware of the company's CSR practices. These initiatives serve as a potential differentiator because they not only add value to the company, but also to the products or services.

Furthermore, firms under intense competition are able to leverage CSR to increase the impact of their distribution on the firm's performance. Lowering the carbon footprint of a firm's distribution network or engaging in fair trade are potential differentiators to lower costs and increase profits.

In this scenario, customers can observe the company's commitment to CSR while increasing company sales. Whole Foods ' marketing and promotion of organic foods have had a positive effect on the supermarket industry.

Proponents assert that Whole Foods has been able to work with its suppliers to improve animal treatment and quality of meat offered in their stores.

They also promote local agricultures in over 2, independent farms to maintain their line of sustainable organic produce. As a result, Whole Foods' high prices do not turn customers away from shopping.

In fact, they are pleased buying organic products that come from sustainable practices. Theater one focuses on philanthropy, which includes donations of money or equipment to non-profit organizations, engagement with communities' initiatives and employee volunteering.

This is characterized as the "soul" of a company, expressing the social and environmental priorities of the founders. The authors assert that companies engage in CSR because they are an integral part of the society.

This program provides critical school readiness resources to underserved communities where PNC operates. On the other hand, theater two focuses on improving operational effectiveness in the workplace.

The researchers assert that programs in this theater strive to deliver social or environmental benefits to support a company's operation across the value chain by improving efficiency.

Some of the examples mentioned include sustainability initiatives to reduce resource use, waste, and emission that could potentially reduce costs.

It also calls for investing in employee work conditions such as health care and education which may enhance productivity and retention.

Unlike philanthropic giving, which is evaluated by its social and environmental return, initiatives in the second theater are predicted to improve the corporate bottom line with social value.

Bimbo , the largest bakery in Mexico , is an excellent example of this theater. The company strives to meet social welfare needs. It offers free educational service to help employees complete high school.

Bimbo also provides supplementary medical care and financial assistance to close gaps in the government health coverage.

Moreover, the third theater program aims to transform the business model. Basically, companies create new forms of business to address social or environmental challenges that will lead to financial returns in the long run.

One example can be seen in Unilever's Project Shakti in India. The authors describe that the company hires women in villages and provides them with micro-finance loans to sell soaps, oils, detergents, and other products door-to-door.

This research indicates that more than 65, women entrepreneurs are doubling their incomes while increasing rural access and hygiene in Indian villages.

As a consequence, the company wants to introduce a new model to collect and recycle old furniture. Corporations are keen to avoid interference in their business through taxation or regulations.

A CSR program can persuade governments and the public that a company takes health and safety , diversity and the environment seriously, reducing the likelihood that company practices will be closely monitored.

Appropriate CSR programs can increase the attractiveness of supplier firms to potential customer corporations. CSR strategy or behaviors related to CSR was discussed by many scholars in terms of crisis management like responses to boycott in an international context.

The strategy utilized by Arla Foods works and has helped the company in regaining the most of its lost market share among many countries in the Middle East.

Arla Foods founded a funding for children with cancer and they donated ambulances to refugees in Lebanon. As what Arla Foods did, they tried to contribute to solve social problems of children's access to health care which were local priorities.

Other researchers analyzed the case of multinational enterprise strategies under the context of conflicts between Lebanon and Israel. During the conflict, many companies stressed seeking to help the local community.

For example, Citibank has provided monetary assistance to some local businesses affected by the war. Another activity did by a Lebanon company was a fund-raising campaign.

CSR concerns include its relationship to the purpose of business and the motives for engaging in it. Milton Friedman and others argued that a corporation's purpose is to maximize returns to its shareholders and that obeying the laws of the jurisdictions within which it operates constitutes socially responsible behavior.

While some CSR supporters claim that companies practicing CSR, especially in developing countries, are less likely to exploit workers and communities, critics claim that CSR itself imposes outside values on local communities with unpredictable outcomes.

Better governmental regulation and enforcement, rather than voluntary measures, are an alternative to CSR that moves decision-making and resource allocation from public to private bodies.

Some critics believe that CSR programs are undertaken by companies to distract the public from ethical questions posed by their core operations.

They argue that the reputational benefits that CSR companies receive cited above as a benefit to the corporation demonstrate the hypocrisy of the approach.

Others have argued that the primary purpose of CSR is to provide legitimacy to the power of businesses. Bakan [] is one of the most prominent critics of the conflict of interest between private profit and public good, and his argument is summarised by Haynes that "a corporate calculus exists in which costs are pushed onto both workers, consumers and the environment".

Indeed, it has been argued that there is a "halo effect" in terms of CSR spending. Aguinis and Glavas conducted a comprehensive review of CSR literature, covering academic sources from numerous fields including organizational behaviour , corporate strategy , marketing and HRM.

It was found that the primary reason for firms to engage in CSR were the expected financial benefits associated with CSR, rather than being motivated a desire to be responsible to society.

CEOs' political ideologies are evident manifestations of their different personal views. Each CEO may exercise different powers according to their organizational outcomes.

In fact, their political ideologies are expected to influence their preferences for the CSR outcomes. Proponents argue that politically liberal CEOs will envision the practice of CSR as beneficial and desirable to increase a firm's reputation.

They tend to focus more on how the firm can meet the needs of the society. As a consequence, they will advance with the practice of CSR while adding value to the firm.

On the other hand, property rights may be more relevant to conservative CEOs. Since conservatives tend to value free markets, individualism and call for a respect of authority, they will not likely envision this practice as often as those identifying as liberals might.

The financials of the company and the practice of CSR also have a positive relationship. Moreover, the performance of a company tends to influence conservatives more likely than liberals.

While not seeing it from the financial performance point of view, liberals tend to hold a view that CSR adds to the business triple bottom line.

For instance, when the company is performing well, they will most likely promote CSR. If the company is not performing as expected, they will rather tend to emphasize this practice because they will potentially envision it as a way to add value to the business.

In contrast, politically conservative CEOs will tend to support the practice of CSR if they hold a view that it will provide a good return to the financials of the company.

In other words, this type of executives tend to not see the outcome of CSR as a value to the company if it does not provide anything in exchange.

There have been unsubstantiated social efforts, ethical claims, and outright greenwashing by some companies that has resulted in increasing consumer cynicism and mistrust.

For example, McDonald's Corporation positioned its association with Ronald McDonald House and other children's charities as CSR [] while its meals have been accused of promoting poor eating habits.

Acts which may initially appear to be altruistic CSR may have ulterior motives. The funding of scientific research projects has been used as a source of misdirection by firms.

Prusiner , who discovered the protein responsible of CJD and won the Nobel prize in Medicine, thanked the tobacco company RJ Reynolds for their crucial support.

Proctor states that "the tobacco industry was the leading funder of research into genetics, viruses, immunology, air pollution" [] anything which formed a distraction from the well-established research linking smoking and cancer.

Research has also found that corporate social marketing , a form of CSR promoting societal good, is being used to direct criticism away from the damaging practices of the alcohol industry.

Companies may engage in CSR and social marketing in this case to prevent more stringent government legislation on alcohol marketing.

Industries such as tobacco, alcohol or munitions firms make products that damage their consumers or the environment. Such firms may engage in the same philanthropic activities as those in other industries.

This duality complicates assessments of such firms with respect to CSR. One motivation for corporations to adopt CSR is to satisfy stakeholders beyond those of a corporation's shareholders.

Branco and Rodrigues describe the stakeholder perspective of CSR as the set of views of corporate responsibility held by all groups or constituents with a relationship to the firm.

The stakeholder perspective fails to acknowledge the complexity of network interactions that can occur in cross-sector partnerships. It relegates communication to a maintenance function, similar to the exchange perspective.

The rise in popularity of ethical consumerism over the last two decades can be linked to the rise of CSR.

One issue with the consumer's relationship with CSR is that it is much more complex than it first appears. This indicates that there is a clear discrepancy between consumer beliefs and intentions, and actual consumer behaviour, so that when it comes down to their actual purchase behaviour, CSR has a much lesser impact than consumers initially say it does.

One theory put forward for explaining the "CSR-Consumer Paradox" is that of "bystander apathy" or the bystander effect. So even if a consumer is against the use of sweatshops or wants to support green causes, they may continue to make purchases from companies that are socially irresponsible just because other consumers seem apathetic towards the issue.

A second explanation issued by Janssen and Vanhamme is that of reciprocal altruism. This is a key concept in evolutionary psychology that is argued to fuel all human behaviour: people only do something if they can get something back in return.

In the case of CSR and ethical consumerism, however, consumers get very little in return for their investment. Ethically sourced or manufactured products are typically higher in price due to greater costs.

However, the reward for consumers is not much different from that of a non-ethical counterpart. Therefore, evolutionary speaking making an ethical purchase is not worth the higher cost to the individual even if they believe in supporting ethically, environmentally and socially beneficial causes.

Shareholders and investors, through socially responsible investing SRI , are using their capital to encourage behavior they consider responsible.

However, definitions of what constitutes ethical behavior vary. For example, some religious investors in the US have withdrawn investment from companies that violate their religious views, while secular investors divest from companies that they see as imposing religious views on workers or customers.

Some national governments promote socially and environmentally responsible corporate practices. Collective bargaining is a way nations promote CSR.

In Germany, CSR is kept at the industry level instead of the workplace; this has been viewed as one of the strengths of the German government's push of CPR.

There is a higher percentage of workers in unions in countries like Sweden and Iceland which have more Social-Democratic elements in their Nordic Model than the U.

The U. In comparison with the U. Fifteen European Union countries are actively engaged in CSR regulation and public policy development.

Some studies have claimed that the role and effectiveness of these actors were case-specific. Canada adopted CSR in The 'Heilbronn Declaration' is a voluntary agreement of enterprises and institutions in Germany especially of the Heilbronn-Franconia region signed on 15 September The approach of the 'Heilbronn Declaration' targets the decisive factors of success or failure, the achievements of the implementation and best practices regarding CSR.

A form of responsible entrepreneurship shall be initiated to meet the requirements of stakeholders' trust in economy. It is an approach to make voluntary commitments more binding.

They further claim without source that "There is no form of market failure, however egregious, which is not eventually made worse by the political interventions intended to fix it," and conclude "there is no need for further research on regulation in the name of social responsibility.

Background Of Corporate Social Responsibility Video

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