Corporate Social Responsibility

Business organizations in a capitalist economy operate in a fiercely competitive environment. What they believe to be the aims of a capitalist corporation and what they consider to be their duty is defined by two major norms. The “free market” theory claims that the job of any free organization is to maximize profit with a view to the shareholders benefits. In almost direct contradiction, the concept of social responsibility in organizations is taking root. This concept of social accountability shown by large corporations and organization is termed corporate social responsibility (CSR).

CSR refers to the phenomenon whereby large organizations take into account the interests of society at large by talking responsibility for their actions and the effect of their actions on the employees, stakeholders and customers; impact on the environment and the community is taken into effect. Often this is seen to extend beyond legislative obligations; many organizations step into this sphere voluntarily to promote the interests of the employees and their families and overall wellbeing for society.

CSR does not conform to any specific definition. According to Manakkalathll & Rudolf (1995) corporate CSR can be seen as “the duty of organizations to conduct their business in a manner that respects the rights of individuals and promotes human welfare”. Christian Aid (2004, as cited in Pendleton 2004) however defines it as “an entirely voluntary, corporate driven initiative to promote self regulation as a substitute for regulation at either a national or international level.”

There are many proponents for social responsibility in the labor market. No firm has the unquestioned right to operate in a territory. It must realize that its business in any community is intrinsically linked withy the community itself. In fact any socially responsible firm seeks to ally itself with the territory it operates in. Socially adept firms realize that business operations of any organization are a balance of input and output from the community and society at large. The individuals of the society make up its employees, customers and even stakeholders. Taking into account the needs of these vital components is the key to a successful and socially responsible institution.

There is no doubt that ethical businesses have a social conscience but CSR has not a few advantages for it s firms. Socially responsible actions can be very profitable in the long run. For e.g. G.E. has seen an increase in its annual sales ever since it began marketing is “ecomagnetic” range G.E.’s ‘green” initiative not only attracted socially conscious customers but attracted to many investors as well. An improved social environment will benefit the working environment of any firm itself. Any corporation that offers lucrative health and holiday packages for its employees boosts their motivation and productivity. The healthy work climate in turn impresses clients. The firm’s public image is boosted. Some firms may even escape excessive regulations in lieu of their ideal track record.

Many economists and ethical analysts herald the CSR model as the key to success of any organization. A firm that has a good reputation of discharging its due towards employees attracts skilled and dedicated workers. A reduction in cost can be achieved by recycling. An ethically conscious firm attracts an ethically conscious consumer and both reap the benefits, not only for themselves but also for the environment. At any given time, competing firms are always looking for products and ideas that will set them apart form their competitors. In many settings the firm that is seen to actively contribute t social welfare is set apart for its competition by virtue of its ethics in practice. This is no mean feat for any form and is almost a guarantee for high productivity and sales.

The CSR phenomenon can be stratified by and large in four dimensions. First and foremost is the responsibility of the organization to be economically profitable. Earning profit for its owners is the goal for any capitalist organization and one can be socially responsible while at the same time pursuing the economic goal of profit maximization. Organizations have a legal responsibility to comply with the norms of state and society. In fact, the concept of CSR has gained such momentum that legislation has been enacted to ensure that organizations stay bound by law to contribute to the welfare of the people they employ and work for. However the fact remains that most of the social work done by the organizations is voluntary. Apart from the altruistic motives of helping their employees function in a conducive environment, firms have an ethical responsibility to their human resource. Quite simply, they must not always defer to what’s best for the firm but also what’s right and fair. For example