The concept of social responsibility has been a concern to humans for several years. However, over the past two decades, it has increasingly become a major concern to the corporate world. The increasing concern has lead to improved interactions between businesses, governments, and the society. Corporate social responsibility (CSR) can be defined as a business strategy that adds up to sustainable development by bringing up social, economic, and environmental benefits for all stakeholders. CSR can also be described as the way businesses manage their operations to produce a generally positive effect on society. However, this concept has various definitions and practices, and the way it is understood and adopted varies with organizations and countries. Previously, businesses majorly focused on the economic outcomes of their decisions, but today, they must also reflect on social, moral, and ethical consequences of their decisions (Holme & Watts, 1999, p. 24). In this paper, we are going to examine the concept of CSR critically. The paper will identify some of the international factors that necessitate the concept, the importance and the impact on society, as well as how it fits with other concepts of strategic management. CSR is not an option but a responsibility for all businesses.
CSR is not defined anymore by the amount of money an organization or businesses contribute to charity, but by their overall involvement in activities that enhance the life quality of the people. CSR came as an important subject matter in the global business community and has gradually become an ordinary action. There is a rising recognition of the significant impact of the private sector activities on governments, shareholders, investors, business partners, competitors, the environment, the society, the clients, and the workforce. It is also becoming progressively more evident that organizations can contribute to their wealth and society wealth by considering the impact they have on the whole world when making decisions (Marin & Lindgreen, 2017, p. 124).
Ethics of several organizations involves morally upright actions. It is well known that most of the activities some corporations engage in may not meet the minimum ethical standards since most of them focus more on making profits rather any other thing. Business ethics is becoming an important issue because of the number of individuals involved. Unethical actions of few individuals may seem safe on a small scale, but extensively, these actions may be destructive or harmful. An example of an unethical action is laying off employees to maximize the profitability of a company. During the financial recession, most employees lost their jobs. Most of whom were civil servants and middle-class people and were laid off to ensure that companies saved money. This move is considered unethical. Ethical corporations would rather live with the losses incurred rather than fire a number of their employees (Marin & Lindgreen, 2017, p. 132).
Business entities are an integral part of the society within which they operate. Good management appreciates the fact that the long-term prosperity of their entities depends on good sustainable interaction with a wide range of individuals, organizations, and groups. Businesses cannot be prosperous operating within unsuccessful societies failing due to either environmental, governance or social challenges. Also, the public has soaring expectations of the private sector regarding ethical and responsible behavior. For instance, consumers expect goods and services at reasonable prices to reflect environmentally and socially responsible business behavior. The investors and shareholders are also seeking improved financial performances that interweave environmental and social elements regarding the opportunities they provide
The History of CSR
The history of environmental and social concern about business can be said to be as old as the business and trade itself. For example, commercial cutting down of trees, together with the laws that protected forests dates back to about five thousand years. Around 1700 BC in ancient Mesopotamia, a code was introduced in which farmers, innkeepers, and builders were killed if their negligence led to major inconvenience to citizens or deaths of others. In Ancient Rome, politicians whined about the lack of business entities to put in enough taxes to finance their military drives. In his study, Schwartz (2017) claims that the concept of social responsibility was already in practice in ancient Greece and that the present day CSR movement is an attempt to re-establish a two-thousand-year-old practice of connecting businesses to the society (p. 42).
At the start of the eighteenth century, business entities began to recognize that having a resourceful workforce was critical for the success of delivering of their activities. It was during this time that the classical economic model was presented for the first time. This model proposed that the public needs and interests would be met if people act in a manner of self-interest. Motivated by self-interests, the people would produce and supply products that would provide them with profits, and at the same time meet the needs of other people. Employees were under pressure from the negative effects of lack of healthcare, housing, and food, and this affected the efficiency of the workforce. To make their employees satisfied and efficient, companies began to invest in healthcare, housing, and food. Hence the emergence of the worker villages, subsidized work canteens, as well as company medical facilities. The actions by these corporations can be seen as the forebear of the present day CSR (Matten & Moon, 2004, p. 332).
According to Lindgreen and Swaen (2010), the modern day CSR came up at the early twentieth century and is founded on two principles: charity and stewardship. Charity is grounded in religious practice, and it provides that the people who are financially able should contribute to those who are financially disadvantaged. The principle of stewardship suggests that corporations must serve society and meet the needs of the public since their power and wealth come up through their operations within the community. This principle influenced how the press, governments, and other groups viewed the business corporations and resulted in the creation of more socially responsible laws. The creation of more societal way of thought and the turn of businesses to society resulted in the organizations increasing their consideration and responsibility for social as well as environmental welfare. This reaction to social and environmental issues is what is termed presently as Corporate Social Responsibility (p. 7).
The Growing Interest of CSR
There exist several factors that explain the reason for the growing interest in CSR. First, there is an emerging concern and expectations of public authorities, consumers, citizens, industrial change and globalization. As earlier mentioned, the public has high expectations of the private sector regarding ethical and responsible behavior. Secondly, there is a rising influence of decisive social factor on the investment decisions of individuals and organizations. In other words, the social criteria influence the investment decision-making processes of individual investors as well as organizations. Thirdly and most importantly is the soaring concern for environmental degradation. This factor is a significant concern because environmental conservation is becoming a priority for everyone today (Matten & Moon, 2004, p. 334). With business corporations making millions in profits, it is justified that they should give back to the community through CSR.
Nevertheless, the reckless disregard of the environment by some organizations is shocking. For instance, some companies do not handle their industrial waste well, do not recycle papers, or are just indifferent to environmental protection. As earlier mentioned, CSR involves activities that ensure fairness in their business operations, or give back to the community.
Environmental protection has become the priority of many humanitarian organizations. The majority of these organizations argue that environmental protection should be the primary concern of every organization since the environment is the sole natural resource that is vital to the survival of humanity. Handling of industrial waste by many companies has always been a burning issue for environmental organizations because most corporations are guilty in one way or another for handling their waste irresponsibly. There are numerous evidences that show that many corporations are not handling the issue of waste disposal seriously (Marin & Lindgreen, 2017, p. 146). For instance, the great pacific garbage is a human heap waste that has ended up in the sea after being disposed of inappropriately. The garbage results in serious problems such as pollution and contamination of water, as well as loss of aquatic life. CSR articulates that it is not ethical for these businesses to be reaping huge profits at the expense of the environment as well as other components of human life. CSR provides that corporations should find alternative ways to handle their industrial waste; therefore it is an emerging control mechanism to ensure that business corporations are responsible for their decisions and actions.
Layers of CSR
As suggested by Matten & Moon (2004), there are four kinds of social responsibilities that make up total CSR, which businesses should take into consideration when conducting business operations. These four responsibilities have been organized into a pyramid model of four layers termed 'the pyramid of responsibilities.' These four layers are philanthropic, ethical, legal, and economical. At the foundation of the pyramid is the economic responsibility. Corporations must first be making profits to satisfy their shareholders, manufacture goods and services to meet the customers' needs, as well as being able to promote innovation and generate new employment opportunities.
The second layer is the legal responsibilities, and it entails abiding by the laws and regulations. The business entities should not just be profit oriented but must also abide by the laws and regulations provided by the authorities and do what is expected of them to maintain their activities within the framework of the law. The bottom line is that the businesses must play by the rules. The third layer is the ethical responsibilities, and this is related to fairness and morality. The businesses must respect the beliefs and rights of the people, and avoid any social and physical harm to the people and prevent any harm caused by others. The top and final layer lay the philanthropic responsibility, which needs the corporations to be excellent corporate citizens. The pyramid demonstrates the strong correlation between the four kinds of responsibilities, meaning that if one layer is missing, the ones above canno...
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