Business Social Responsibility: Creating Value for Society - Essay Sample

Introduction

Social responsibility, also referred to as corporate social responsibility (CSR) refers to a set of commitments of different forms, social, economic, and environmental, adopted by organizations, businesses, and public and private establishments. Such establishments generate value to realize their legal obligations, supporting both economic and social development within the outline of sustainable development. Businesses have the responsibility to formulate policies and strategies that aims to enhance social, environmental, labor, and human rights concerns arising from their operations and the interactions with its shareholders, taking the responsibility regarding consequences and effects arising from their operatives. The purpose of this paper involves an analysis of the management of small and medium enterprises (SMEs) concerning social responsibility.

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Social Responsibility

Social responsibility means that industries, coupled with increasing shareholder value, must operate in a way that benefits society. Social responsibility has become progressively vital to consumers and investors who seek investments that contribute to the welfare of the community and the ecosystem besides generating revenue. Thus, social responsibility means that individuals and organizations have the responsibility to operate in the best interest of their society and environs. Companies must sanction methods that support an ethical balance between the twofold obligations of pursuing profitability and enhancing the livelihood of the organization. These approaches involve commission (entails humanitarian actions, such as donations of resources, money, or time) or omission (requires sustainable initiatives, such as the green initiatives like minimizing the effects of greenhouse gases or reducing environmental pollution).

Social responsibility entails the activities of an organization that influences the wellbeing of the people living within the jurisdiction in which the company operates. Besides, it impacts on the ecosystem of the region in which the organization runs its activities. The significance of social responsibility has increased in corporate practices, along with the globalization of markets. The desire to remain competitive in the emerging international setting has placed social responsibility as a means of gaining a competitive advantage. The opportunity for better placement against the competition remains a goal of every venture, not just for large corporations but also small and medium enterprises, putting effort into realizing a good market share in which they function. Compared to the present perspective that has reflected on the CSR as an approach only focused on large firms, the presence of SMEs which undertake such activities and the provision offered by some advanced projects, verifies that also SMEs have aligned towards social responsibility.

Most companies design their practices in such a way that aims to enhance environmental and social conditions. In the contemporary world, most organizations pursue three different and corresponding purposes that comprise of social, economic, and ecological goals, and they transform each of the formulated practices and processes to get implemented. Social responsibility intends to integrate competitiveness and growth. The current environmental and human rights concerns have led to the enactment of several legislations forcing most companies to align their operations with guidelines on social responsibility.

Positive(s) of Social Responsibility

As more and more companies and consumers embrace social responsibility initiatives before launching a business project or undertaking a purchase helps in benefiting the primary objective, which involves optimizing the stakeholder value. Besides, there exists an ethical imperative. Small and medium enterprises that embrace social responsibility practices good businesses, and a failure to practice ethical commerce can harm the balance sheet.

Social responsibility remains effective when an organization carries out a voluntary exercise instead of a forceful requirement from government agencies through regulations. Social responsibility can improve an organization's confidence, such as when the company involves its workforce in its social responsibility initiatives. Corporate social responsibility has many positives that apply to any commercial venture regardless of its size. Social responsibility helps companies' brands to enjoy full recognition, receive positive commercial reputation, and grow sales and customer trust. Besides, it assists organizations in saving on operational costs, enhances financial performance, and advances organizational development. Furthermore, corporate social responsibility helps companies to attract topmost talents and retain their workforce. The fact remains that social responsibility improves a company's profitability and value.

The presentation of useful green energy and waste management programs reduces operational expenses and benefits the ecosystem. Besides, social responsibility grows an industry's liability and transparency with stock analysts and the media, stakeholders, and society. Corporate social responsibility, therefore, improves a company's reputation among financiers, such as mutual resources that encompasses their stock procurement. As a result, the organization realizes a trend in which the firm's stock value improves and its access to financiers' resources considerably eases. Furthermore, most of the customers hold the belief that organizations need to remain socially responsible. Such perspectives require companies to attract these kinds of consumers by incorporating social responsibility practices within their business operations.

Negatives of Social Responsibility

The major negative of social responsibility remains its costly implementation on small and medium enterprises. Big companies can meet the costs of carrying out social responsibility activities and events. The expenses involved in communicating a company's participation in social responsibility activities remains high, and most small and medium enterprises lack the funds to either create the required awareness and needed a publication to indicate their commitment to undertake social responsibility initiatives. Besides, it takes a lot of time to assess feedback and entail recruiting a new workforce that the company may have difficulty spending its resources. Scholars argue that when a company intends to institute strategies that differ from the standard way of practice, to achieve the social responsibility needs, they must incur exceptional expenditures for executing such differed means of operation, which becomes taxing for the company.

Companies must incur costs, such as training of staff, supporting competent programs for the enhancement of the society, and the protection of the environment that increases the overall expenditures and costs for the company. The sole responsibility of executives involves the generation of revenue to its shareholders. Therefore, managers who forsake the responsibility of creating profits may get fired. Friedman's theory on the social responsibility of managers maximizing revenue at the expense of supporting social responsibility has received many critics. Besides, consumers have become more aware of greenwashing. Greenwashing refers to corporate procedures that look environmentally responsible without really presenting a shift in the company's manner of operation. Some companies may label their products as green, clean, and healthy to lure customers into purchasing their products.

Corporate social responsibility can also result in conflict in the business venture objectives while making essential decisions. For example, deciding on a business investment that may not seem beneficial to society may create conflict in finance. Besides, embracing corporate social responsibility in the list of the business entails an increase in costs of operations that get paid by shareholders' funds. The shareholders thus get disadvantaged since they do not realize the maximization of the profit. Furthermore, companies that embrace social responsibility have to offer their products at a higher price in the market, lowering their competitive advantage, which in turn may create several losses in the market in both the long and short term period. Besides, organizations become vulnerable to their social responsibility initiatives within the society as a result of the negative impacts in the market environment.

Conclusion

Corporate social responsibility remains one of the most debated topics in the business environment with varied advantages and disadvantages in the global market. Besides, embracing the concept of social responsibility in small and medium enterprises becomes a difficult choice for several organizations. Social responsibility remains an essential aspect of business practices that uplift people's wellbeing and the environment in which an organization operates. The costs of implementing such sustainable initiatives continue to hinder the full execution of such noble ideas across the globe.

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