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What is CSR? To what extent is there a business case for CSR?

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    In the late 1960s and early 1970s, the phrase ‘Corporate social responsibility’ (CSR) came into public view. This essay will describe that what CSR is and how much profits will be taken in business for CSR. Nowadays, companies not only sell their products but also give back to the society such as being active in the charity drive, solving environment problems, spending money to making infrastructure and helping other people achieve their dreams. There are two sounds about whether a company should engage in CSR. Some people argue that money cannot be put into CSR because the only factor of business must be to maximize profits.

    However, on the other hand, other people state that social responsibility is a very important part of business activities. Because they believe companies cannot just make money without give back to the society. For example, Carnegie (1835-1919) believed that companies had an obligation to give back to the society, so he donated to the education and peace. The purpose of this section is to further the meaning of what is CSR. As McWilliams, Siegel and Wright (2006) believed, CSR refers to the enterprise bears legal responsibility to the shareholders and make profits at the same time.

    Furthermore, it has to be responsible for employees, consumers, community and environment. With the economic and social progress, the enterprise is not only responsible for profit, but also to the environment, and bearing corresponding social responsibility. For these reasons, it is argued that first of all, the enterprises should undertake their economic responsibilities, such as expanding products and reducing the cost as much as possible. Moreover, the enterprises should make the correct decisions also protect the rights and interests of their stakeholders.

    Consistent with McWilliams and Siegel (2001), CSR could be defined as conditions where the firm eradicates obedience and participates in ‘actions that appear to further some social good, beyond the interests of the firm and that which is required by law’. After that, enterprises have to abide by all the laws and regulations, including environmental protection, consumers’ rights law and the labourers’ protection. Thus, companies should accelerate industrial technology upgrade, making optimization of the industrial structure, developing the environmental enterprises, increasing their employment bilities. Finally, it is the responsibility to charity, such as supporting community education, healthy and humane care, culture and art, urban construction and the project development, and, in addition, helping communities to improve public environment and voluntary works for the community. For example, McDonald’s, which is one of the biggest companies in the world, shows that they recognise their responsibility to ‘Protect and preserve the environment for future generations to come’ on the official website (McDonald’s UK, 2012).

    Website visitors could find the information clearly that McDonald’s do CSR by four parts such as Environment, RMHC (Ronald McDonald House Charities), McDonald’s Piccadilly sign and Open farm. For instance, McDonald’s collect the used cooking oil and recycle it into their delivery fleet runs on. Furthermore, they state that all their restaurants use low energy lamps and have light level sensors installed to control external lighting. This case indicates that company realize that CSR is an important part in their daily operations. There are some advantages and disadvantages about CSR in business.

    To the extent that there are some benefits could be realized through enterprises engage in CSR. CSR is company gives back to the society, for instance, at the football match 2010 Italian Cup Final, NIKE decided to use the red match ball to support efforts of fight HIV in Africa (NIKE, INC. , 2010). Before that, Didier Drogba, the famous football player, have had taken part in such activities in Africa with the U2, which had been launched by NIKE, used for preventing of HIV deterioration and controlling it spreads in the mainland Africa.

    This activity was raised to establish fund, being used to provide prevention education and drug distribution, have invited the football players to strengthen participation on the pitch pass love and fight HIV out. However, the first goal of all the companies is make maximize profits, how much benefits can they get back after they do these CSR issues? By the NIKE-shareholder-letter (NIKE, INC. , 2010), it shows that ‘Revenue from direct to consumer – our NIKE-owned stores and online business – increased 12 percent to nearly $2. billion – that’s a record’, it cannot be argued that there are not positive influence about what public welfares they have done. There are, such as Vogel (2005, p. 2) stated, ‘many reasons why some companies choose to behave more responsibly in the absence of legal requirements. Some are strategic, others are defensive, and still others may be altruistic’. There is a basic believe that it could be good for business drives companies profit in CSR (Kotler and Lee, 2005), comparing themselves with competitors, in addition, setting up good images and popularity (Fombrun and Shanley, 1990).

    Thus, CSR could create customer business reputation and make employee behaviour and attitudes positive (Brammer, 2007; Maignan, 1999; Rupp, 2006; Valentine and Fleischman 2008). Carroll and Shabana state “which identifies four categories of benefits that firms may attain from engaging in CSR activities: (1) cost and risk reduction; (2) gaining competitive advantage; (3) developing reputation and legitimacy; and (4) seeking win–win outcomes through synergistic value creation. ”(2010). These four points mean even then sometimes companies could not obtain economic return immediately, however, it could be given back to them through other routes.

    Then achieve the purpose of creating economic profits. There is an example of CSR, which in allusion to develop reputation is cause marketing. Cause ‘marketing is a strategy where, in addition to emphasizing product advantages, product benefits are linked to appeals for charitable giving’ (Smith and Alcron, 1991). For example, General Mill Inc. have donated $1. 5million to placed breast cancer (2009) though their subsidiary Yoplait USA Inc. , their particular way was every consumer buy a bottle of their products, they would donate 10 cents, this activity was a win-win result, General Mill Inc. old the products and gave back to the society at the same time. However, some people consider that CSR is no benefit to business, there are some disadvantages when companies engage in CSR. As Henderson believed, CSR establish on a wrong view of events and factors, enterprises adopts it would result in the loss of welfare and destruction of market economy (2001, p. 28). The reasons why they argue should be that CSR have to cost much money of companies and if they cannot reach the expected effect, it would be a big impact on financial to the companies.

    Friedman stated that “The discussions of the ‘social responsibilities of business’ are notable for their analytical looseness and lack of rigor” (the New York Times Magazine, 1970), he argued that the main goal of business is make their profit maximum, he also considered that if a company takes part in CSR, the stockholders must lost out. It is believed that, the first thing companies should ensure is the survival, and then is profit. In China, the public welfare advertisements on TV cannot show the name of companies.

    For example, a company spend much money to product advertisement, after it shows on TV, if people do not search on the internet, they would not know which company sponsor it. Thus, it is few benefit even then no benefit for the company if they engage in CSR. However, for business reason, these kinds of CSR cannot take profit to companies, so people assume that there are more drawbacks than benefits for CSR in business. ‘The development of the Internet has opened up new possibilities for NGOs to engage in effective worldwide campaigns against what they see as threats, abuses or non-responsible conduct on the part of businesses or others. (Henderson, 2001), through such speech, it is not hard to find that many enterprises are not active to take part in CSR, but influencing by public opinion and outside interference. Based on these viewpoints, it could be argued that there are several disadvantages about CSR to companies’ economic interests. There are always two sides to everything, and it is without exception for CSR in business case. After introduced these two views of CSR in business cases, although CSR may bring some disadvantages about companies’ profits, I suggest there are more benefits than drawbacks for CSR in business case.

    Even though sometimes companies cannot get any profit back when they engage in CSR such as Chinese commonweal on TV adverts, it must have a long-term plan on doing CSR, though some of them are no profits, but the companies won the public praise. It is very important for a company’s operation and sells products. Furthermore, it could be considered that companies can earn many interests in addition to get the direct profit return. Because when the companies engage in these behaviours of CSR, they establish good relationship with the society and large amount of potential customer intangible.

    From these considerations, enterprises realize that it could offered a ‘win-win’ position for themselves and its community by developing CSR programs and implementation of them, (Lindgreen and Swaen, 2010). Lindgreen and Swaen also stated that ‘A systematic and interdisciplinary examination of the business case for CSR should detail different studies which identify potential positive and negative effects of CSR on business performance in its broadest conception, not just in financial terms. ’(2010).

    For instance, as Carroll and Shabana suggested, the economic profits of companies could be brought by different channels, for example reducing cost, building a good image to public and attracting potential consumers. CSR strategies have been developed by effective CSR requirements, and ‘effective CSR activities are those directed at improving both stakeholder relations and social welfare’ (Lindgreen and Swaen, 2010). Above to these viewpoints that I regard as on the appropriate way, CSR could take the positive economic influence to companies.

    In conclusion, CSR is ‘Corporate social responsibility’, it means companies should have responsible to the society in their sales and daily management, include environment protection, how to choose the workplace and marketplace, do some charities and other things they can give back to the society. Moreover, there are two noises about advantages and disadvantages for CSR in business. This essay shows some examples about companies engaged in CSR and then make profits for them, such as the sports market leader NIKE, they got large profits on their way of give back to the society.

    In addition, it also described about something for CSR with no profit such as Chinese public service adverts. However, I state that there are more advantages than disadvantages for companies engage in CSR in business case, because profits can be made from a variety of ways. For example, companies can save adverts expenses, establish good relationship with the market and society, get good word of mouth and build a better foundation for the future products sell. These are the mainly express statements of this essay.

    References

    Carroll, A. B. and Shabana, K. M. 2010) International journal of management reviews. London: Blackwell Publishing Ltd. Fombrun, C. and Shanley, M. (1990). What’s a name? Reputation building and corporate strategy. Academy of Management Review, 33, 233–258. Freidman, M. (1970) ‘The Social Responsibility of Business is to Increase its Profits’, The New York Times Magazines, 13 September. Henderson, D. (2001). The Case Against ‘Corporate Social Responsibility’. Business Source Complete, 17, P28. Kotler, P. and Lee, N. (2005). Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. Hoboken, NJ: Wiley.

    Lindgreen, A. and Swaen, V. (2010). Corporate Social Responsibility. International Journal of Management Review, 12, pp. 1-7. McDonald’s UK (2012) Available at: http://www. mcdonalds. ac. uk (Accessed: 30 August 2012) McWilliams, A. , Siegel, D. and Wright, P. M. (2006) Corporate Social Responsibility: Strategic Implications. Journal of Management Studies, 1, pp. 1-18. McWilliams, A. and Siegel, D. (2001). ‘Corporate social responsibility: a theory of the firm perspective. Academy of Management Review, 26, 117–27. Nike shareholders letter (2010) Available at: https://materials. roxyvote. com/Approved/654106/20100726/SHLTR_64165/HTML1/nike-shareholder_letter_2010_0002. htm (Accessed: 1 September 2012) Smith, S. M. and Alcron, D. S. (1991) Cause marketing: a new direction in the marketing of corporate responsibility. Journal of Consumer Marketing, 8, pp. 19–35. Vogel, D. J. (2005). Is there a market for virtue? The business case for corporate social responsibility. California Management Review, 47, pp. 19–45. Yoplait (2009). Available at: http://www. yoplait. com/slsl/HowItWorks. aspx (Accessed: 3 September 2012)

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