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This particular research was conducted to identify the role of Corporate Social Responsibility in the current market scenario. In this report it was identified that corporate social responsibility has been evolving significantly, to help understand this particular scenario three theories were utilized namely utilitarian theory, managerial theory, and relational theory. However, the main focus of the report was to identify the impact of CSR on the organization as well as society. It was discovered that the society is impacted more as compared to the organizations, the main reason behind it was that the CSR practices helped the poor people to attain all the necessities that they were deprived of. The report helped to identify all the reasons that have provided enough evidence of why CSR has become important for the operation of any organization throughout the world.
Theories of Corporate Social Responsibility.
2.1. Utilitarian Theories.
2.1.1. Social Cost theory.
2.1.2. Functional theory.
2.2. Managerial theory.
2.2.1. Corporate Social Performance (CSP)
2.2.2. Social accountability, auditing, and Reporting (SAAR)
2.2.3. Social responsibility for multinationals
2.3. Relational Theory.
2.3.1. Business and Society.
2.3.2. Stakeholder Approach.
2.3.3. Corporate Citizenship.
2.3.4. Social Contract Theory.
Impact on Society.
3.1. Poverty and Hunger
Impact on Business.
4.1. Improved Public image.
4.2. Improvement of Profit Margins.
4.3. Attracting Top talents.
Corporate social responsibility has become a major part of the organization's culture, but what are the main reasons why organizations have shifted towards corporate social responsibility. This report will try to identify the reason behind the organization's adoption of corporate social responsibility. Corporate social responsibility refers to the organization's commitment to act in such a manner that it does not adversely impact society as well as the environment (Carroll 2015). In this report, it will be identified whether or not corporate social responsibility should be provided the importance that it has gained over the years, and what were the events that led organizations to enhance or incorporate their CSR practices. Corporate social responsibility has not always been the same that is there were times when the organization only thought about their profits and the market structure was said to be monopolistic. One of the greatest examples of the monopolistic sector in the early 19th century was that of the oil and gas industry that was governed by John D Rockefeller (Josephson 2018). The CSR practices have evolved greatly as compared to the last decade. In this report, multiple theories will be examined which helped to shape the CSR practices that are used currently in the organization. Also, while conducting the research a greater focus will be cast on how corporate social responsibility impacts the corporate as well as the society
These theories are completely linked with the economical system of any organization. The main focus of these particular theories relied on profit maximization (Filosof, Hollinshead & Kurinko 2015). These theories have helped multiple organizations to get an edge over their competitors. The organization identified that to get an advantage over its competitors the organization needs to apply corporate social responsibility in the ethical structure of the company. Utilitarian theories are subdivided into two theories namely
Social Cost theory
This particular theory identified that the socio-economic system that is presented within the society is majorly influenced by the non-economic forces. This particular theory depicted the political relationship of the organization with the society.
The functional theory depicts that the organization is a part of the economic system, whose primary goal is to earn profit. However, the theory also says that a firm is can also be observed as a investment and it is the key role of an investment to bring value to its stake holder. According to the researchers, CSR was put in place as a defensive strategy, so that the external elements such as society cannot hinder the operations of the organization. However, the theory identified that there should be a balance between profit maximization and carrying out a social objective (Ismail 2009).
According to the managerial theory, every external component has to be considered for the decision making of the organization (Galanou & Farrag 2015). The managerial theory is split into three different parts
Corporate Social Performance (CSP)
Corporate Social Performance plays a significant role as its main aims to identify the actual relationship between the economic performance of the organization as well as the society. It has been identified by a number of researchers that CSP is mainly dependent on the society to fulfill its economic and sustainable goals
Social accountability, auditing, and Reporting (SAAR)
SAAR plays a very crucial role in guiding any organization. With the assistance of SAAR, the organization can regulate and control its respected action to fulfill the economical needs of the organization while keeping the society in their mind.
Social responsibility for multinationals
It has been observed that the CSR practices of the multinational organizations are gradually increasing because of the competition and challenges that are faced by the organizations. the CSR tools are an imminent part of the managerial theory in the case of the multinational organization is because the managers had to shoulder the responsibility of the organization's survival in a foreign environment.
This particular theory has been structured on the interrelationship between the firm and its environment to analyze CSR (Mourougan 2015). The relational theory is divided into four parts
Business and Society
Business and society are simply referred to as business in society in this particular theory. CSR becomes an effective tool for interaction between the business as well as society. According to the theory, the social responsibility of an entrepreneur should reflect the social power of the individual.
This particular approach has been developed to enhance the managerial side of the organization. It helps to guide the organization to understand the behavior that is expected by society from the organization.
This particular element of the relational theory strictly depends on the sort of community it is being referred to. In other words, it is the guiding principle that helps the organization to act accordingly.
Social Contract Theory
The social contract theory identifies the fundamental issues which might help to justify whether the economic activity conducted is ethically correct or not. This helps the organization to analyze the social relationship between the organization and society.
After rigorously analyzing the three theories it was discovered the CSR theories are as follows utilitarian theory shows the corporate perspective, the managerial theory is said to be organizational oriented, and relational theory is said to be interdependent between the organization and the society.
Corporate social responsibility is a win-win situation for the organization as well as the society, but it has been identified the CSR practices that are taken up by the organizations are much more significant for the society as compared to the organizational gains. The main reason behind it is that, with the small attempts of the organizations, a whole village can be fed, or every child can be educated or even the health care facilities can be amended.
Some of the major issues that have been addressed with the help of corporate social Responsibility are:
Hunger and poverty are the biggest evil that can be faced by humanity and bill gates and Microsoft are trying to help people fight this evil. With the help of the Gates Foundation (funded by bill gates), the farmers in the developing country can use the technology and knowledge which is, in turn, helping the farmers significantly. It was identified using the technology and knowledge the crop yield had increased significantly. Apart from that, the gates foundation is also liable to bring food to the table for many families in the Africa region (Sarrouy 2014). There are times when the government needs the help of the corporate to eradicate poverty, an example of this was seen when the government of Malaysia asked to corporate to help them to increase the livelihoods of people living in poverty. To which Syarikat Faiza Sendirian Berhad (local enterprise) answered. He took the help of the local media and broadcasted a show that clearly showed how the people in the country were living, deprived of all the necessities. He urged people to buy his products as all the money that would be generated from the sale of the product a fixed amount will be utilized to bring food to the tables of the less fortunate (Roja & Sherina 2015).
One of the major issues that can be solved with the help of corporate social responsibility is education. The organizations have worked hard so that the community can get a better education which will help them to have a great career ahead. However, it has been observed that there are biases in the education system and gender inequality plays a major role during the process. Keeping that in mind Coca Cola Australia came up with an initiative, where they partnered with the Beacon Foundation (a nonprofit organization that oversees the youth employment scenario in Australia). It has been observed that women in Australia are still deprived of employment as most of the women are not given the opportunity to work or an opportunity to educate themselves, which poses a major concern for the community.
To overcome this challenge Beacon Foundation and Coca-Cola are working side by side so that they can inspire and empower the Australian female youth. The NGO and Coco-Coal Australia have launched a 5by20 mentoring program. This particular program will be conducted virtually, which will provide the women with the knowledge and support to have a successful future. The best part about this initiative is that the dropout rates will decrease significantly (Tornhill 2016).
It has been identified multiple organizations throughout the world are trying to help to reduce the negative impact on the environment and it has been observed that the organizations have started taking Corporate Social Responsibility more seriously. According to the organizations, if the environmental performance and the financial performance are clubbed together, it will help the organization's growth as well as the image of the organization. The organizations are so concerned about Green CSR or Environmental CSR that they provide a sustainability report each year as part of their annual report where they portray all the actions that will be taken by the organization in the coming years to reduce the pollution caused by the organization.
Google is famous for its eco-friendly initiatives and in the year 2018 they were awarded the highest CSR score. Google has made it a point that the energy consumed by the data-center is far less as compared to the rivals it was estimated that in the year 2018 the data center was using 50 percent less energy as compared to its rivals. In addition to this, the organization majorly focuses on renewable energy, to do so the organization made a flexible budget of $ 1 billion for the renewable energy project. It has been identified that the organization tries to decrease environmental impact by the excessive use of Gmail (Google 2019).
However, there have also been instances where the organizations tried to fool the authorities as well as people. The famous case of Volkswagen fiasco is one such example. It was discovered that Volkswagen was passing the pollution test by using a particular technology. When the cars used to enter the testing chamber there was an inbuilt software present that used to show that the pollutants emitted by the automotive were under the radar, however, in reality, the car was producing large volumes of carbon-di-oxide. This incident was very crucial as well as an eye-opener for the rest of the world this clearly showed that no organization can be trusted only by reading the sustainability report of the organization. Not only did the organization have to pay heavy fines but it broke the trust of the loyal consumers of Volkswagen (Siano et al. 2017).
Corporate social responsibility is being adopted by organizations daily. However, there are times when the individuals gets confused and think CSR only deals with the society, that is, an organization can only work for people who lie outside the boundary of the organizations. This particular scenario is not the reality in the current scenario. For any organization, its employees are its assets, and on top of that, the employees are also a part of the society.
The organizations are working tirelessly to provide their employees to provide a better work-life balance. The organizations have slowly changed their mode of operations just so that their employees can have a work-life balance. It has been also observed that the organizations have become more considerate about their employee, keeping that in mind the organizations have also made amendments to the leave structure in their respected organizations (Kiruthigha 2015).
People have identified that the wage policy does not come as a part of the CSR practices within the organization. However, they are completely wrong. Wage policy is directly linked to the standard of living of an individual; an organization should make it a point that the employees are being remunerated according to their designated positions and their work. They should make it a point that the wage that is paid to the employee should be adequate so that the individual can fulfill his/her basic needs.
According to Eweje & Sakaki (2015), many Japanese organizations have tried to make the amends in the organizations, but it is more complex than it looks. The major reason behind it is the whole structure of the organization has to be changed. But, it is surprising to see that even after knowing the challenges associated with the task, the organizations are still willing to work on their policy.
It has been witnessed that CSR is a two way process where the business as well as the society gets rewarded. With every positive step the organization takes towards making the earth a better place, the organizations earn a reward as well. It does not matter what the size of the organization is or what are the product and services it deals in, if the organization has indulged in the act of CSR they will be rewarded handsomely.
All the organization act keeping in mind their target market, all the organizations try to impose a positive image in the minds of their consumers. It is evident that the organization have to satisfy their consumers with their product and services then only will the organizations will be recognized. It has been discovered that the organizations that have a corporate social responsibility as a prominent policy within their organization, are liable to attain better media coverage (Saurage-Altenloh & Randall, 2020). With the help of their activities, they can easily promote their product to their target market. if the organizations keep on working for the betterment of society, they will constantly be the target of the media houses for all the good reasons.
However, media can easily shatter the image of the organization in a matter of hours with negative publicity. Many organizations have witnessed this particular phenomenon personally. But according to many researchers, BP was always shrouded in controversy. In the year 2010 British Petroleum was liable for one of the biggest oil spills in the history of the oil and gas industry. The accident took the life of 13 people and left 17 people injured and destroyed the flora and fauna in the Gulf of Mexico (Bishop, et al. 2017). However, after the incident the organization tried to change the image by providing a set of policies in the name of future CSR practices, however, skeptics think that the organization is trying to clean up the mess they have created.
From this incident, it is clear that even for giants like British Petroleum brand image matters and they were able to identify this can only be achieved with the help of Corporate Social Responsibility.
By incorporating Corporate Social Responsibility, an organization can implement ethical practices to its working environment. It has been discovered that the consumers are becoming aware of the current sustainability issues that the world is facing, and it has been observed that the buying decision of the consumers is majorly controlled by the sustainability issues (Blomgren 2011). The organization's corporate social responsibility practices can majorly impact the profit margins of the organization.
It has been identified by many organizations that with implementing technology that is suitable for the society had a positive impact on the organization as well, with the usage of the renewable sources of energy the organizations profits margins have also increased. It has been observed that the organizations are investing heavily to enhance their profit margins.
According to Wang (2014), if the organizations can understand that the organization's survival is solely dependent on the society, they will automatically change their perspective of Corporate Social Responsibility from negative to positive.
It has been identified that the current generation is directly connected to the changes. This can be done by providing the employees with tools that can help them produce a positive change. If the organization is providing the employees with specific tools, more and more people will be willing to join the organization. If the organization can provide a glimpse of the potential opportunity that an employee can achieve using the CSR practices, the organization can easily retain the loyal employees of the organization.
According to Ohlrich (2015), there is still no clear indication about how CSR helps organization attain and retain talented employees, as it has been observed that the talent management system has become more and more personalized, that is, every employee have their particular demand. But still, the organization tries to create a CSR strategy that can help the organization to link the right talent to the company.
It can be concluded that report focused on different aspects of Corporate Social Responsibility. The report identified the three theories that helped to understand the CSR practices namely, utilitarian theory, managerial theory, and relational theory. In addition to this, the report also focused on the impact of CSR practices on the organization as well as society. It was identified that the positive impact of CSR is far on society as compared to the organization. It was discovered that the organization and the society are interdependent if an organization had to succeed they needed the help of the society the same way if the society wants the product and services they need the help of organizations. While researching the report it was identified that CSR has helped thousands of people throughout the world and organizations are working tirelessly to provide the society, with the common amenities that are crucial for the survival of any individual. On the other hand, society helps organizations to attain the brand name or brand value. To sustain the brand value the organization tries to enhance its CSR practices, one such incident was of British petroleum where the organization had to re-develop the complete CSR policy of the organization and in addition to that, the organization paid a lot of money just to maintain its brand image.
With the help of the report it became clear, that how important it is for organizations to practice CSR if an organization wants to get a competitive edge, the organization needs to enhance its CSR practices. Corporate social responsibility has become such a significant part of the organization functioning that there are countries where the organization must practice CSR.
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