Corporate Social Responsibility
Corporate social responsibility (CSR) has become prevalent in the recent years. The concept proposes that companies should have responsibilities that extend beyond making a profit by voluntarily incorporating environmental, social and ethical concerns in their business operations and interaction with their stakeholders (Coyle, 2015). Such companies should seek to align their values and behaviors with those of their stakeholders. Corporate social responsibility can also be referred to as corporate citizenship where companies view themselves as citizens within the society and as such they are expected to be good citizens towards its neighbors (Coyle, 2015).
Corporate Social Irresponsibility
The concept of corporate social irresponsibility (CSI) is opposite to that of corporate social responsibility. It is the reactive response towards organizational issues and the broader society as opposed to being proactive (Tech, Sun, " Jones, 2012). It reflects the traditional view of a company’s sole purpose which is to maximize shareholders wealth only. The sustainability of a business can be linked to its corporate social responsibility hence, to be successful; companies should seek to continuously cultivate a good relationship with their internal and external environment.
Impact on Business Performance
In the corporate industry, there is a relative comparison in business and financial performance. Socially responsible actions may invariably have an impact on its reputation, but it would be challenging to show them having a direct effect on its profitability and market price (Simpson " Taylor, 2013). In the dynamic business environment, organizations are not static about corporate social responsibility and corporate social irresponsibility. They tend to move between the two concepts as a result of external environmental factors such as legislation, politics, cultural changes, economy, and finance among others.
Stakeholder Alignment
Stakeholders in a corporation include employees, suppliers, customers, government, and environmental groups among others. Corporations align their interest with those of its stakeholders, for example, by ensuring that they treat their employees fairly and with respect, production of quality products and services, abide by the rules and regulations that govern it and protect the environment from pollution. A company can also assume philanthropic responsibility to improve the lives of others such as donating to charitable organizations, sponsoring sports among others. By doing so, a business is considered to be socially responsible.
Social Responsibility Investment
Investors may combine their social, environmental and ethical concerns with their financial objectives and their investment decision which in turn has a strong influence on the way a company responds to its social responsibilities. It is known as social responsibility investment. A company will seek to incorporate socially responsible strategies to its business strategies for it to be attractive to such investors.
Benefits of Corporate Social Responsibility
Corporate social responsibility has other potential benefits for a company including that of being attractive to socially responsible investors. Financial benefits may accrue due to a corporate reputation which will raise its consumer awareness, earn customer loyalty and eventually reflect in the company’s profitability. It will have dedicated employees hence increasing its overall productivity and reducing contingencies on legal suits arising from environmental pollution, human rights or even the government.
Conclusion
Companies should undertake social responsibilities to all their stakeholders to preserve their short and long-term bottom line. Failure to do so may harm its credibility towards potential investors and consumers, and this reputational risk may have a damming effect on the company’s profitability. Therefore as illustrated above, we conclude that corporate responsibility should be observed at all times for the benefit of the company.
References
Coyle, B. (2015). Corporate governance.
London: ICSA Publishing Ltd.
Simpson, J., " Taylor, J. (2013). Corporate governance, ethics, and CSR. London: Kogan Page Limited.
Tech, R., Sun, W. X., " Jones, B. (2009). Corporate social irresponsibility: A challenging concept. Social Responsibility Journal, 5(3), 300-310.
