The Concept of Corporate Social Responsibility

Contents

I. Introduction        

Summary (Case B)        

Ethical Dilemma        

Affected shareholders        

II. Questions 1        

III. Question 2        

IV. Question 3        

V. Question 4        

VI. Question 5        

VII. Question 6        

VIII. Conclusion        

IX. References        

I. Introduction

"The concept of corporate social responsibility (CSR) refers to the general belief held by many that modern businesses have a responsibility to society that extends beyond the stockholders or investors in the firm"(Sagepub, n.d.). According to McWilliams and Siegel(2001) CSR  is defined "as situations where the firm goes beyond compliance and engages in ‘actions that appear to further some social good, beyond the interests of the firm and that which is required by law’"(McWilliams, Siegel and Wright, 2006). However, since all businesses are profit driven and stakeholders satisfaction is crucial to an organization, businesses' have been working on strategies to link engagement in CSR and commitment to the businesses' long term goals such as profit maximization. Nevertheless, in the modern era contribution to the welfare of the society through charities (donations) and other contributions is called "corporate philanthropy" and is undertaken by many businesses to act socially responsible.

Summary (Case B)

Purpose: This paper shows how corporate social responsibility can affect a business positively and negatively directed by corporate philanthropy, how, how much and to whom they contribute is very important to maintain effectiveness of the contributions made.

Corporate Philanthropy, it is seen that there is a downward trend of strategic corporate philanthropy. This trend needs to be reversed and CP should be seen as an investment rather than an expense. For instance, Companies like Grand Mills donate 5% of their pre-tax income which more than the minimum 1 percent but yet, some businesses solely contributes with the selfish intension of improving their bottom line and hence, the business and the society is deviated from the real performance being a good corporate citizen. For instance, contributing to "pet-projects" of senior executives will only benefit the businesses' members and not the society as a whole. Therefore, a good management of contribution program is very vital to develop the responsibility that a business has towards the society and act on it.

Ethical Dilemma

According to Case B, nowadays businesses' corporate philanthropy is in decline in spite of the heavy advertising used to paint an image to the society how organizations are contributing to the society at large. Senior executives are not emphasizing on its importance as a result, there is no existence of an effective contribution program within businesses. Organizations just contribute enough to meet legal obligations towards the society to avoid bad publicity whereas their intentions selfish and are mostly towards increasing their profits and this does not mean the business is being a good citizen to the society.

Affected shareholders

All shareholders internal or external, top management or line management or employees are affected by a businesses' decision. According to the ethical dilemma mentioned above, in the short run the employees, investors and shareholder's will not be affected financially due to decreased contribution of pre-tax earnings for corporate philanthropy and also, shareholders will probably gain by the funded " pet- projects". However, in the long run employees and socially responsible investors  might be dissatisfied because they feel that their effort and money is not used for right purposes. And the society as a whole will be affected as the business is not contributing to the welfare of the other people.

II. Questions 1

why would companies choose to inflate their image?

Social responsibility directly affects the reputation of the company and according to Business week, "Business has a huge stake in the way the rest of society perceives its ethical standards". If a business showed one negative thing, people will talk about it and black list the company for a long time which will have a negative impact on the business.

Also,  workers are attracted to a company's who conducts ethical behaviours and serve a company socially responsible even if it means they might have to forgo some of their financial paybacks.