Corporate Social Responsibility
Corporate Social Responsibility
There is a question that lingers about corporate social responsibility in todays society. Do corporations have a responsibility to society that extends beyond maximizing profit for shareholders? Corporate Social Responsibility (CSR) can be defined as “activities and initiatives that businesses undertake as a means to connect with or give back to the communities in which they do business. CSR can range from charitable programs and community service, to environmental-impact awareness” (Meranus). Corporations should go beyond maximizing profit and work to achieve a better society through Corporate Social Responsibility. In order for a company to be successful in the future they need to ensure that they are working to make money as well as making their community a better place. Businesses can achieve this through sustainability and, or philanthropic practices.
While it is critical for a corporation to focus on financial gains to ensure their success into the future, it is equally important for them to focus on their perception among stakeholders. According to an article in the Ivey Business Journal, there are two sides to this debate. There are economists who argue that corporations are only responsible to shareholders; if they are not maximizing profits then they are not acting responsibly. The other side of the argument is the ethics side. Corporations are institutions formed to improve society and make it a better place; therefore their activities must enhance social well-being to be responsible (Bansal). If these arguments are balanced and looked at as equally important issues, companies would be more successful in the long run. Many consumers are becoming more conscious on where they are spending their money and choose to only support those businesses that are giving back to society in some way.
“Over the past 15 years, the institutions that have grown most significantly in power and influence are those that can operate effectively within a de facto global economy. They can provide jobs and resources to society, increasing the standards of living and can affect social conditions in a positive way. The need is immense for corporations to take the lead in productive development and to do so by embracing socially responsible practices” (Uccello 413). In the long run a company will prosper if they are working towards financial and social goals collaboratively. If a company grows and makes a profit, they should take some of the money and reinvest it into the community and in turn consumers will be more inclined to buy their products, making their profits continue to increase. If this cycle continues, stockholders will also be satisfied with their gains.
Being socially responsible is growing among companies and the results seem to be positive. “As more attention is being paid by outsiders to the social impact of businesses, corporations have acknowledged the need for transparency regarding their social efforts. In a recent survey, 74 percent of the top 100 U.S. companies by revenue published CSR reports in 2008, up from 37 percent in 2005” (Hernández-Murillo and Martinek 4). There are many reasons that a company might initially engage in CSR, including altruistic, egoistic, and strategic. Most corporations engage in strategic CSR, where they identify social activities that all stakeholders (consumers, employees, and investors) value and integrate them into its business plan of maximizing profit.
According to an article from the Journal of Psychology, one specific reason that CSRs are becoming more crucial for companies is because “consumers are demanding more out of organizations than simply a quality product at a low price” (Uccello 415). Many companies are marketing their products as being environmentally friendly by using less packaging. Another way that companies are ‘going green is by offering discounts or incentives to customers who use their own shopping bags. Offering “green” options for customers is another way that many companies are able to appeal to their consumers.
There are many lists on the internet that list “most admired companies”. Starbucks was a constant on all of the lists this author located. After looking at Starbucks website, several conclusions were made regarding their business practices. They appeared on all of these lists because they are socially responsible in all aspects of their business. From where they get the coffee beans they use, which they call ‘ethical sourcing, to recycling and employing a diverse workforce. A quote taken from Starbucks website summarizes their philosophy, which many other companies could learn from; “From the neighborhoods where our stores are located, to the ones where our coffee is grown – we believe in being involved in the communities were a part of. Bringing people together,