Corporate social responsibility for all sectors to create social difference and enhance reputation/responsibility
It is unfortunate that at this era, some business leaders still support Milton Friedman argument that “the social responsibility of business is to increase its profits.” (1970, p. 1). Supporting such an argument at such a time while the benefits of using corporate social responsibility (CSR) for business sustainability are evident is misguided. In this age, consumer awareness on environmental and social issues is heightened and it only business that are in denial that can afford to ignore this awareness. Consumers today expect business to take responsibility on the manner in which their operations affect society and natural environment. Hill (2001) highlights that the idea behind CSR is that business must adopt CSR principles to promote sustainability. The author defines sustainability as “an organization’s activities, typically considered voluntary, that demonstrate the inclusion of social and environmental concerns in business operations and in interactions with stakeholders” (Hill, 2001, p. 32). The above means that more than ever before organizations will be judged based on their social roles in society and how well they apply social, ethical, environmental, and responsible standards in running their business operations.
In the article The Case against Corporate Social Responsibility, Karnani (2010) argues that companies cannot claim to serve a social purpose and earn profits at the same time. This is because when companies act in the public interest to create sustainable businesses, they go against shareholders interest, which is to increase profits. However, Du, Bhattacharya, and Sen (2007) believe that it is possible to strike a balance between public interest and shareholder interests. CSR strategies are aimed at making the world a better place by ensuring that organizations produce healthier foods, make fuel-efficient equipments, conserve non-renewable energy, and treat their employees in an ethical manner.
Today’s consumer is not just interested at price and quality of goods and services, but they also expect the companies to use some part of the profit to make a social impact. The squabble that correlating public interest and shareholders interest is impossible misses the point that “Corporate social responsibility (CSR) activities have the potential to create several distinct forms of value for customers. It is the customer perception of this value that mediates the relationship between CSR activities and subsequent financial performance.” (Noked, 2011, par. 2).
It is understandable that those against CSR are worried that they may not be able to measure the outcomes from CSR investments on how they enhance the profitability of the firm. Perhaps they should consult tons of research that positively demonstrate that “CSR leads to outcomes such as increased customer loyalty, willingness to pay premium prices, and lower reputational risks in time of crisis.” (Du, Bhattacharya & Sen, 2007, p. 232). Rather than risk a bad reputation that has more impact on a firm’s profitability, it is better to adopt CSR because each of the above outcomes has the potentiality to increase profitability of the firm.
Perhaps the reason why some companies are quick to downplay the effectiveness of CSR on business profitability is that they do not communicate their activities to the public, thus their activities doe not garner the intended benefits. Bortree (2014) emphasizes that CSR communication is as important as activities, but some organizations seems to forget this important step during CSR implementation. The research is clear that communication about CSR “can lead to stronger relationships with publics, more positive attitudes among stakeholders, and increase its legitimacy outlook (Bortree, 2014, p. 5). It is important to note that, CSR activities like the one undertaken by “controversial industry sectors” (sod, beer, gambling e.t.c.) might attract a lot of scepticism in the public, but as Dorfman et al. (2012) argue “how companies communicate their CSR activities may determine the degree to which the public accepts the programs as legitimate (5). In fact, I believe that no company requires CSR programs as the companies in the ‘controversial industry’ to help the companies to revert the negative views among the public. The latter authors also add that engaging in CSR activities demonstrate that the previously mentioned companies accept their ethical and social obligation to society at large (Dorfman et al., 2012). It is obvious that the public image of such like companies is already at risk, and since they have to protect their core business, then CSR becomes the better option as the companies try to pass off their innocence to the consumers.
Factually, even those companies that claim not to engage in CSR are somehow undertaking activities to create a good reputation, so why not engage in corporate social responsibility and create social good in society, while u reap largely from doing good? CSR programs are diverse and they are manifested in many forms including philanthropy, ethical business practices, and product-based activities (Du, Bhattacharya & Sen, 2007). However, organizations do not have to undertake all forms of CSR, for even a little effort will go a long way in enhancing public image and presenting the business as legitimate. CSR is not just for the ‘sinful’ industry, as the activities are for every business that wants to create a social difference by doing well to do good.
Bortree, D.S. (2014). The State of CSR Communication Research: A Summary and Future Direction. Public Relations Journal, 8(3): 1-8.
Dorfman L, Cheyne A, Friedman LC, Wadud A, Gottlieb M (2012) Soda and Tobacco Industry Corporate Social Responsibility Campaigns: How Do They Compare? PLoS Med 9(6): e1001241. doi:10.1371/journal.pmed.1001241.
Du, S., Bhattacharya, C. B., and Sen, S. (2007). Reaping Relational Rewards from Corporate Social Responsibility: The Role of Competitive Positioning. International Journal of Research in Marketing 24, no. 3 (2007): 224-241.
Friedman, M.(1970, Sept. 13) The social responsibility of business is to increase its profits. The New York Times. Retrieved from http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp- business.html.
Hill, J. (2001). Thinking about a more sustainable business: An indicators approach. Corporate `Environmental Strategy, 8(1),30–38.
Karnani, A. (2010, Aug. 23). The case against corporate social responsibility. The Wall Street Journal. Retrieved from http://www.wsj.com/articles/SB10001424052748703338004575230112664504890.
Kotler, P., & Lee, N. (2005). Corporate social responsibility: Doing the most good for your company and your cause. Hoboken, NJ: Wiley.
Noked, N. (2011, Feb. 28). Investing in Corporate Social Responsibility to Enhance Customer Value. The Harvard Law School Forum on Corporate Governance And Financial Regulation. Retrieved from http://blogs.law.harvard.edu/corpgov/2011/02/28/investing- in-corporate-social-responsibility-to-enhance-customer-value/.