Corporate Social Responsibility-Drivers and Consequences

CORPORATE SOCIAL RESPONSIBILITY-DRIVERS AND CONSEQUENCES

1.1. INTRODUCTION

Corporate social responsibility (CSR) is one of the most commonly used phrase in international business arena specially considering the increased concern of negligence by large multinational companies in regards to social and ethical impact they bear on society where they operate (Onishi, 2002). Such intensifying social attention towards consequences such as global environmental disasters and globalization pressures has necessitated the firms to create a corporate policies and agenda which would help them identify as an accountable entity. This broadens the concentration of an organization from mere shareholder's wealth maximization to overall development and well-being of any stakeholders directly/indirectly related to firm (Nwanji and Howell, 2006). Quite clearly, it has financial implications and therefore presents a daunting task for firms to balance between profitability objective and creating social harmony. A detailed assessment of the same is presented in the section below:

1.2. DISCUSSION

The concept and importance of corporate social responsibility (CSR) is well renowned in business world today but yet there are significant difference in views of how it should be defined and what it would incorporate. One of the pioneer advocates of CSR, Bowen (1953) views CSR as a voluntary social obligation of firms to contribute a proportion of its economic wealth on the favour of values/ objectives shared by society. However, on the other hand, Mitchell and Sikka (2005) presents an intellectual dimension of CSR and defines it as designing of business processes which create positive impact on society in order to create increased interest on products/services offered by firm.

Despite such implicit difference, the core theme of CSR activities is to create a social harmony with all stakeholders involved as it needs to survive within its perimeter and more importantly its success is dependent on the positive response from such entities. The argument of Porter and Kramer (2006) is very appropriate in this regards which states that :

“Corporations receive a broad and moral sanction from society which requires them to operate within the economic, legal, political, and social norms of that society and contribute to the genuine fulfilment and expansion of those norms and regulations”

Porter and Kramer (2006: pp. 305)

It clearly indicates the fact that organization is made for and by people in society and therefore the inability to address their values and norms could have significant reap off on the financial and non-financial intentions of an organization. For instance, considering the fact that McDonalds is third largest source of waste in Britain