Principles of Corporate Social Responsibility
Keywords: stewardship principle csr, charity principle vs stewardship principle
CSR can be defined as an organization taking responsibility for the results of its activities upon employees, customers, the community and the environment. Usually organizations voluntarily exercise their improvements, commitments and performance reporting.
CSR is the need for organizations to consider the greater good of their actions and the effect on all those around the organization from within, local community and globally. Often the effects must be thought of in terms of the economic, legal, ethical and philanthropic impact or basically business decision of cost to implement versus return on investment.
CSR is the process that guides company decision making and implementation activities in the areas of human rights, environmental standards, and compliance with legal requirements within its operations.
CSR can be thought of as the challenge organizations face to balance their social responsibilities with that of increased earnings and concerns according to shareholder and stakeholder expectations.
CSR is generally applied to wherever firms operate encompassing both domestic and global economy.
CSR applies to both the private sector commitments and activities then stretches beyond the just compliance with laws.
Many organizations believe that focusing on new opportunities in interrelated economic, societal, or environmental demands in the marketplace provides a competitive advantage and stimulates creative solutions.
CSR activities usually address many aspects of a firm’s behavior and key elements like health and safety, environmental community development, human rights, human resource management, community development, consumer protection, labor protection, supplier relations, business ethics, and stakeholder rights.
Organizations are motivated to have stakeholders involved in their decision making process. A CSR approach is to promises the following.
- Improved financial performance.
- Improved accountability to investors.
- Improved employee commitment.
- Improved community relationships.
- Improved product branding.
Bristol-Myers CEO Peter Dolan- His company has emerged from recent trouble due to issues stemming from the drug Plavix which is a blood thinner. Because of these and other past mistakes, Bristol-Myers has emerged a stronger company. An example is in the area of its environmental impact on the world, Bristol-Myers has reduced their greenhouse emission by 10% and worked towards obtaining a U.S. Green Building Council certified facility.
Merck CEO Richard Clark- his company had problems with Vioxx, but has managed to solve those problems with programs that include a Corporate Responsibility Council that works to increase the number of employees involved. Transparency has been the major improvement within his company.
HIP Investor CEO Paul Herman- is a corporate social responsibility consultant who believes grass roots produce the best solutions. One method is reaching out to the employees through an intranet that will give them a chance to express what improvements can be made and what community programs they will volunteer for.
Korn-Ferry CEO Jay Millen- recommends a social; responsibility is not just a policy, it is a philosophy. A corporation should have a top-down strategy for CSR; if the philosophy and values are correct the rules will follow.
Time period 1800’s- CSR first started during this time period where companies that operated in rural areas build company towns. These towns including housing, stores, schools, and playground for children of their employees.
Time period of 1930’s- As part of President Franklin Roosevelt’s New Deal program, companies received tax breaks for donating money to charities.
Time period of 1960’s- Government steps in to regulate business with the formation of the Occupational Safety and Health Administration(OSHA), Equal Employment Opportunity Commission(EEOC), and the Environmental Protection Agency(EPA). This has compelled some companies to become more politically involved by contributing time and money to non-profits.
Time period 2005- Surveys show that 98% of large corporations apply CSR in their strategic planning and 84% have seen their profits increase because of their actions.
Australia- Established human rights laws that mandated the corporations must practice proper ethical behavior and human rights principals within their country and overseas.
United States- Environmental Protection Agency has enforced the standards established by the federal government for corporations in protection of the environment.
United Nations- This global organization has established policy for human rights throughout the world.
CSR key terms-
Charity principle- The principle that the riches people in the world should donate to the less fortunate.
Stewardship Principle- mangers have an obligation to ensure benefits from their actions in society.
Reputation- The essential characteristics that a corporation that influence their relations with the stakeholders.
Enlightened self interest- The view that a company can be socially aware without losing its own objectives.
Corporate citizenship- Apply CSR into practice.
Legal obligation- The laws a company must follow established by the government.
Iron law of responsibility- In the long run, those that do not use their authority in actions that society consider proper will lose it.
Paul Hawken quote- “If they (companies) believe they are in business to serve people, to help solve problems, to use and employ the ingenuity of their workers to improve the lives of people around them by learning from the nature that gives us life, we have a chance” (Amaeshi, Osuji & Nnodin, 2008, p.223).
Paul Hawken, photo from Http://treehugger.com
Karl-Henrik Robert quote- “Business is the economic engine of our Western culture, and if it could be transformed to truly serve nature as well as ourselves, it could become essential to our rescue” (Iankova, 2008, p.77).
Dr. Karl-Henrik Robert, photo from http://word.world-citizenship.org
Mikhail Gorbachev quote – “We need a new system of values, a system of the organic between humankind and nature and the ethic of global responsibility” (Amaeshi, Osuji & Nnodin, 2008, p.223).
Mikhail Gorbachev, photo from
Robert F. Kennedy quote- “The future is not completely beyond our control. It is the work of our own hands” (Pava, 2008, p.807).
Robert F. Kennedy, photo from
David Korten quote- “to achieve true sustainability, we must reduce our garbage index that which we permanently throw away into the environment that will not be naturally recycled for reuse to near zero. Productive activities must be organized as closed systems. Minerals and other nonbiodegradeable, resources once taken from the ground, must become a part of society’s permanent capital stock and be recycled in perpetuity, organic materials may be disposed into the natural ecosystems, but only in ways that assure that they are absorbed back into the natural production system” (Amaeshi, Osuji & Nnodin, 2008, p.223).
David Korten, photo from
Martin Luther King, Jr. quote- “Our lives begin to end the day we become silent about things that matter” (Iankova, 2008, p.77).
Martin Luther King, Jr, photo. from
The European Commission list of benefits for companies that adopt CSR criteria:
“Business ethics, the personal commitment of the company’s directors, improve competitive, strengthen the company’s image, prevent negative publicity, lawsuits or campaigns against the company, increase customer loyalty, stand out from the competition, improve human resources management, strengthen the loyalty of management staff, attract new employees, improve adaptation to change, cost reduction, tax breaks, less worker strikes” (Fuentes-Garcia, F., Nunez-Tables, J. & Veroz-Herradon, R., 2008).
Research conduct my recent surveys have concluded the companies that practice CSR have increase financial success.
A confirm fact from a recent customer survey the 70 % of customers indicated that they were more likely to buy from a socially responsible firm, in turn 50 % indicated that they not buy from a firm that was not socially responsible.
Multinational corporations using operate outside the control of international laws. There is no international forum in which they could be prosecuted.
CSR has limitations.
The major limitation is that most ethical behaviors or charities which come under CSR require financial contributions.
Some mangers feel their propriety should be making a profit for the stakeholders instead of giving money away to charities.
Examples of corporation that practice CSR principles.
Nike has improved working conditions in their operations overseas.
FedEx has begun to use hybrid trucks.
General Electric has built health care centers in Africa.
Employees are a key for CSR; they volunteer for community projects, are loyal to the company which results in increased profits.
An organizations reputation has an effect on CSR; the impact can affect financial performance positively. Philanthropy by CSRs is interpreted positively by the public and organizations are often given the benefit of the doubt resulting steady stock prices.
Sales increase CSR for corporations; cause-related marketing initiatives generates money through increased product sales and at the same time benefit charities.
Poor CSR can negatively affect earnings and stock prices because of potential lawsuits and fines.
Amaeshi, K., Osuji, O. & Nnodim, P. (2008). Corporate social responsibility in supply chains of global brands: a boundaryless responsibility? Clarifications, expectations and implications. Journal of Business Ethics, 81 (1), 223-234.
Fuentes-Garcia, F., Nunez-Tables, J. & Veroz-Herradon, R. (2008). Applicability of corporate social responsibility to human resources management: perspective from Spain. Journal of Business Ethics, 82 (1), 27-44.
Iankova, E. (2008). From corporate paternalism to corporate social responsibility in post communist Europe. Journal of Corporate Citizenship, 29 (1), 75-89.
Iyer, A. (2009). Corporate social responsibility and farmer suicides: a case for benign paternalism? Journal of Business Ethics, 85 (4), 429-443.
Lawrence, A. & Weber, J. (2008). Business & Society: Stakeholders, Ethics, Public Policy (12 ed.). New York, New York, United States of America: McGraw-Hill Irwin.
Pava, M. (2008). Why corporations should not abandon social responsibility. Journal of Business Ethics, 83 (4), 805-812.
Pfau, M., Haigh, M., Sims, J. & Wigley, S. (2008). The influence of corporate social responsibility campaigns on public opinion. Corporate Reputation Review, 11 (2), 145-154.
Ubius, U. & Alas, R. (2009). Organizational culture types as predictors of corporate social responsibility. Engineering Economics, 61 (1), 90-99.
Valentine, S. & Fleischman, G. (2008). Professional ethical standards, corporate social responsibility, and the perceived role of ethics and social responsibility. Journal of Business Ethics, 82 (3), 657-666.
National Directory of Corporate Giving. Directories Table HV80.N26. Columbia University Libraries database. http://www.columbia.edu/web/indiv/ business / refservices.html
Web Sites and Internet Resources: