For many years the general perception was that the business sectors would only be fulfilling their economic responsibilities, i.e. generating employment and profit and for completing the economic cycle. But with time the complexity in the way of running a business has changed and side by side competition has increased. With the change in these dimensions, now more is expected out of a business unit or in other words a corporation. Now the responsibilities include, the ethical practices that the firm must follow, how environmentally conscious is the firm, and over and above how they are responding to the stakeholders of the firm. Change in views now demands a firm to be looked upon as a corporate citizen rather than just a business unit. So like a citizen the firm is now equally responsible for the welfare of the society as well as the organization itself. This means when the firm starts operating from the first day onwards they are making a contract with the society to follow the above mention obligations. These responsibilities are called Corporate Social Responsibility. Now the degree or extent to which a firm will indulge it in these activities depends upon various aspects like, how critical or important is the role of the stakeholders, what is their financial strength, how had been their past economic performances and also most importantly what is the true intent of the firm towards the social issues. In brief, the practices of Corporate Social Responsibility (CSR) programs are viewed as a marketing strategy by the companies as the main focus of the business remains the same that is to retain and increase their current level of consumers. So CSR as a tool in the hands of the firms is serving dual functions like fulfilling their social responsibilities as well as generating indirect or direct awareness to the consumers.
Profit Maximization and Social Needs, and Obligations
Every corporate has an underlying objective of cost reduction or profit maximization in the way they implement corporate social responsibility. But to look in the economic viewpoint the soul responsibility of a business is to generate profit and thus by doing this it becomes socially responsible because its profit will be ploughed back to the household sector in ways of income. But this economic profit and social welfare merges only in the long term (Reich 2008).So when a company totally ignores its social responsibilities and commitments it is usually being unnoticed by the consumers and investors in the short run. Also according to Porter and Kramer in their article Strategy and Society states that many companies though putting efforts in social activities but they are failing to implement it successfully, as according to them, they are putting business against society when two of them are independent entities and secondly they are unable to merge firms appropriate overall strategy with these activities (Porter & Kramer 2006, p.1). It surely shows that companies are not indulging in CSR activities all voluntarily. They are being forced sometimes with the rise in consumer response to the bad labor practices or environmental issues like in the case of enhancing global warming etc. many companies like Nike, Nestle are victims of such incidents. (Porter & Kramer 2006, p.2) So for this most activities were not gelled to the core strategy of the organization but more promotional in nature. Now Pirsche, Gupta and Grau (2007) in their study A Framework for Understanding Corporate Social Responsibility as a Continuum have tried to classify to ways of corporate social responsibility practices adopted by firms. They have tried to find out through their findings and statistical tests which of these two practices are more accepted by consumers as well as the investors. They have tested directly which practice leaves greater effect in the consumer’s mind against which practice motivates the consumer to immediately purchase.
Government policies, advertising and corporate social responsibility
Government policy plays an important part in creating a legislative framework in support of the shift to socially responsible business practice. The market orientation of the government has accelerated the use of advertising as an information and persuasion tool to communicate. This implementation of advertising has influenced the communication of the company with its stakeholders and consumers. Through this media companies have successfully communicated their policies of social welfare to a wide range of the population. So it is evident that due to these government policies corporate social responsibility practices are enhanced, though some disregard this fact and support the view that government regulations and policies disturb the flow of corporate social responsibility activities of a firm. (Kerr and Johnston 2008 p. 3)
Advantages and Disadvantages
It is the tendency of disbelief or question by the consumers when there is any corporate social responsibility practice adopted by the company. They question or sometimes remain clueless about the company’s motivation for such practices. (Pirsche, Gupta and Grau 2006, p.130) These may affect adversely as consumers may perceive a genuine attempt of social well-being to be mostly because of related marketing. We can take an example of an athletic shoe manufacturer’s initiative to improve public health by introducing athletic shoes for the youth. But many may view this attempt to increase the consumer base. So the actual initiative may be overlooked and the brand valuation the manufactures were looking at is totally ignored. This is not in the hands of the firm but it’s the consumer’s perception of being deceived.
There are other motivations for the firm to indulge in corporate social responsibility activities. One of them is definitely the Rating Games (Porter & Kramer 2006, p. 4). Firms get motivated when there is a quantitative measurement of their corporate social responsibility performances. As this provides a third persons view to their performance in the eyes of the consumers. But are few loopholes in this process. As the criteria on which the judgment is being made is very difficult and critical to evaluate. This is due to the fact that social impacts are very difficult to quantify. Also in these ratings there are instances of biasness and false data being given.
The principle of sustainability involves the firm’s ability to perform in the long run. Porter and Kramer has mentioned about the triple bottom line concept of economic, social and environmental performance. By ensuring the stable working of these three elements the firm ensures its stability. We can link this argument for corporate social responsibility with the corporate social responsibility practice stated by Pirsche, Gupta and Grau in their study where they have stated about the Institutionalized Programs which aims at long run stability and growth of the firm. For example McDonald’s just by changing the material to wrap its food reduced costs by 30% also it reduced wastes. Yet, it should be noted that long term commitments should be matched here by the short term cost incurred.
But all four arguments have the same weakness. They concentrate more on the tension existing between society and business rather than their interdependence. (Porter & Kramer 2006, p. 5) And also none of these studies can stand alone in the ethical practices of any organization. The result is often an unorganized corporate social responsibility and Philanthropic activity by the firm. This is considered as loss of opportunity as none of the dual purposes are being fulfilled. Rather if the company works keeping in mind the interdependency of the society and business these anomalies could have been reduced. In this way the firm can focus on a particular corporate social responsibility activity which is best suited for the firm. While establishing the infrastructure of a firm it may adhere to the government practices, timely financial reporting etc. In the human resource management the firm’s main focus should be on safe and healthy working conditions, removing practices of diversities, providing proper remuneration and obeying laws of the government. In its marketing polices the firm must also follow clear cut ethical practices. This is how without going for a disintegrated strategy a firm can first ensure it sound and ethical running by adjusting its practices to the social norms and by matching society to business.
A study by Castaldo, Perrini, Misani, and Tencati (2008) reveals the interdependency of corporate social responsibility activity and customer perception. According to them there is a positive relation between the consumer perception and the CSR activities. It is because more often bad companies, the companies which disregard their social obligations are punished in the long run by the consumers. The study reveals that active corporate social responsibility practices on average ensures more customer faith and gives a better image of the brand. So corporate social responsibility is not only seen as an immediate marketing benefit but also as a long term brand building process. No matter how much we believe on the fact that constant promotion of a company through activities like corporate social responsibility are bound to give positive results to the company and build its brand, but still there is no direct results available. This may be due to the fact that social welfare or the culture the company is trying to build is very far fetching and as mentioned earlier very difficult to quantify. Logsdon and Burke (1996) in his study have pointed out five critical parameters to evaluate the strategic nature of corporate social responsibility promotional activities that the company goes through. These parameters are centrality- it is the closeness of fit between the firms corporate social responsibility policy and its mission objective on a whole, specificity- it is the ability of the firm to capture the benefits arising out of the corporate social responsibility activities, Proactively- it is the degree to which the program is planned in anticipation of the social trends which are yet to come, Voluntarism- it is the scope of unforced decision making and the last one is Visibility- it is to create observable recognizable profit for the stakeholders.
A business unit can only do well for the people by generating profit legally, which is again matches the classical school of belief. A business should act economically and reasonably which is sure to generate better set of results for the society. Also a different unrelated corporate social responsibility activity is distracting the main motive of the business which is harmful for both the society and the organization. (Stoll 2007, p.2)
Perhaps the best example to illustrate the doctrines and values of social responsibility is the Aviation industry and the social responsibilities of individuals involved in it. The employees in the Industry regard improvisation and presence of mind as important traits of social responsibility in the continuously changing situations. The force regards it a great challenge to understand the changing aspects of social responsibility and believes that ignorance may take them to a lesser position.
Today the world has become a difficult place to live in, very much due to the competitiveness and rivalry that has crept into the society. Apart from personal responsibility that every individual has, society responsibility is one critical element that is becoming extremely necessary for every individual to adapt to these fluctuating social and political environments.
Protecting and nurturing personal health and emotional well being by communicating the necessities and requirements assertively in all relationships is an important part of taking self-responsibility for one’s actions. Personal responsibility is different from other responsibilities. Responsibilities are generally perceived as burdens or unnecessary obligations. But social responsibility is more a blessing than a burden. It idealizes a life that is fully satisfied with the way it is. When man realizes that he is not very happy with the way things are going for him at the moment, he should recognize the causes for the unhappiness and try to incorporate the values into his social surroundings, rather than complaining and doing nothing about it.
Taking the initiative or reacting in response to the opponent is critical for all individuals in the Aviation industry, as defined by the doctrine. Focus can be achieved through cooperation towards the accomplishment of goal that applies to all elements of the force, involving every marine of the force. The group also regards boldness to be a prime quality, based on strong situation awareness, to first weigh the situation, and then act.
Though there would be change and difference in outlook and constant modification of idea and theories, but no one can ignore the fact that corporate social responsibility as a practice is gaining its importance. A company’s role is becoming more important and prominent in the society. One may say a company is using its corporate social responsibility practices as an effective direct marketing tool or to create brand awareness, but the fact is there is an effort on the part of these firms to indulge itself in social and philanthropic activities. The companies have realized that their performance cannot be judged by a single yardstick. Corporate performance, especially for the global companies are measured in different dimensions. Their contribution to the society, the environmental issues and their participation in the global development and welfare are also strictly scrutinized now. As we have observed from the various theories that in the short run though consumers and investors look at the economic performance of a company but in the long run, the other performance comes into picture. So with the increase in competition and expectation from a company, it’s about time they should start acting. It is not necessary that the companies have to invest a huge amount in these activities or do something which does not match their present business scenario, but what is expected is very simple. They should be environmentally and socially responsible in whatever way its suits their business.
List of References
Burke, L, &Logsdon, JM 1996, “How Corporate Social Responsibility Pays Off” Long Range Planning. 4, August 1996, Volume 29, pp. 495-502
Castaldo, S, Perrini, F, Misani, N, & Tencati, A 2008, The Missing Link Between Corporate Social Responsibility and Consumer Trust, Journal of Business Ethics. Issue 84, pp. 1–15
Kerr, G, & K. Johnston, K 2004, A framework of Corporate Social Responsibility for advertising accountability: The case of Australian government advertising campaign, Journal of Marketing Communications. pp. 2,155 – 169
Pirsche, J, Gupta, S, & Grau, L 2007, A Framework for Understanding Corporate Social Responsibility as a Continuum, Journal of Business Ethics. Pp. 70:125–140
Porter, M, & Kramer, M 2006, ‘Strategy & Society’, Harvard Business Review, December
Reich, R 2008, Responsible Capitalism and Democracy, Web.
Stoll, MR 2008 Backlash Hits Business Ethics: Finding Effective Strategies for Communicating the Importance of Corporate Social Responsibility, Journal of Business Ethics 78:17–24