Running head: CORPORATE SOCIAL RESPONSIBILITY 1

Corporate Social Responsibility

Name

Institutional Affiliation
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Corporate Social Responsibility

Business ethics is a vital component of any type of a business. It dictates what is right or

wrong to do in the business world. Thousands of businesses experience issues with ethics since

they do not understand what it all entails. Some tend to think that it is just about employee rights.

Such a perception is wrong since ethics in business also entails corporate governance, ethical

behavior, honesty in advertisements, affirmative action, environmental awareness, product safety

and corporate social responsibility. For purposes of this paper, I will focus on corporate social

responsibility (Du, Bhattacharya & Sen, 2010). Other than engaging with the society and

implementing projects that are central to societal progress and empowerment, there are many

other attributes about corporate social responsibility that are worth understanding.

Often abbreviated as CSR, Corporate Social Responsibility refers to a companys

initiatives that are aimed at assessing and taking responsibility of the social wellbeing of the

people and the state of the environment. It is also often referred to as corporate citizenship and

could involve incurring a couple of short term costs that might not necessarily lead to immediate

financial gains for the company. However, the aim is to promote positive environmental and

social change. A breakdown of the essence of CSR is vital in this discussion (Nan & Heo, 2007).

Large companies are usually very powerful. Other than the effects they have on their employees,

they have enormous effects on the society and the environment. In most cases, companies end up

inflicting harm on the communities around them and the environment. To atone for their actions,

they embrace corporate social responsibility to balance their pursuit of profits with societal

awareness.

Through the adoption of corporate social responsibility, the money and influence that

enables the companies to inflict damage on communities is use to effective some positive
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changes in those areas. A good example is giving money to charity. This also allows companies

to use their high level of influence to pressure other companies and governments to treat

resources and people more ethically. With CSR, companies are therefore able to invest in the

communities to offset any negative impacts their activities might be posing (Du, Bhattacharya &

Sen, 2010). For instance, a company that operates in a poor setting can build a school, offer

medical services or improve sanitation in the locality. There is simply quite a lot that a company

can do to improve its image within the society. The adoption of corporate social responsibility is

a sure way of guaranteeing societal acceptance.

The main idea behind corporate social responsibility is the assurance to boost societal

wellbeing and increase the connection that exists between companies and the communities they

reside in. Therefore, CSR holds a prominent place in the modern day business and corporate

agenda. Companies are now devoting substantial amounts of their resources towards a myriad of

social initiatives. They engage in different areas like community outreaches, environment

protection, and a range of other socially responsible practices. A good example is Target which

contributed 5%, or $150 million, in the year 2007, to programs that were related to education,

arts, promoting community safety and health awareness. By making this contribution, Target

appealed to its customers with the idea that the company cares about them and not just geared

towards making profits. It is not easy to come across companies giving out such amounts of

money since most of them tend to think that CSR is a waste (McWilliams, Siegel & Wright,

2006). Those who have reaped from the positive brand image that comes from corporate social

responsibility are however better placed to appreciate the approach. The best businesses in the

world today are the ones which have immensely invested in corporate social responsibility.
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The increased corporate social responsibility efforts are largely driven not just by

ideological thoughts but by business returns that are expected from such endeavors or projects.

Academic research and marketplace polls have already demonstrated that investors and

employees are likely to take certain actions to reprimand bad corporate individuals and

remunerate the good ones. Studies have for instance shown that customers are likely to shift

from one brand to another solely due to a companys commitment to societal wellbeing. This is a

good example of what CSR is able to do to a company. If the approach taken is effective, a

company can radically boost its image, overall appeal to customers and generate more revenues

in the industry (McWilliams, Siegel & Wright, 2006). The use of CSR shows that the company in

context is not just interested in making profits but it also cares about its people and the society.

Therefore, if a company builds schools, provides water and health services in the community,

people tend to perceive it as an added advantage to them. They would thus choose to stick to

such a company so that it can continue serving them.

In that same regard, the body of academic research has shown that there are lots of

benefits that a company can get as a result of investing in corporate social responsibility. A

company that is a good corporate citizen is best placed to foster high levels of consumer loyalty

and even turn customers in to company brand ambassadors. From a stakeholder-driven

perspective, investment in corporate social responsibility can lead to more engagement for the

stakeholders. This includes looking for job opportunities within the business and even investing

in it. Such an approach means more business for the company. When people with relevant skills

in the society become interested in a company, they will want to give their best towards the

realization of company goals and objectives. They can even choose to volunteer their services to

make sure the company operations are not interrupted (Nan & Heo, 2007). If a company deals
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with natural resources, the community is likely to be more open to its operations if it touches

their lives through CSR. There is basically a good feeling that the company is integral to the

existence of the community. The societal touch is what ends up bringing more customers to the

company and thus better business.

An important aspect worth noting is that the business returns that come as a result of

corporate social responsibility are linked to stakeholder awareness of the company CSR

operations. That is why it is important to communicate clearly so as to minimize the occurrence

of stakeholder skepticism. Whereas stakeholders are interested in getting to know a lot more

about the companies they associate with, they might also become leery of their CSR motives

when the companies become too aggressive with their efforts. That is why stakeholder attribution

of a company corporate social responsibility motives might be of two categories: extrinsic and

intrinsic. The former implies that the company is seeking to increase profits whereas the latter

shows that the company is acting due to actual concern of the issue at hand (McWilliams &

Siegel, 2001). The perception of intrinsic and extrinsic rests with the consumers. The manner in

which a company communicates its CSR activities or motives will determine whether it will be

viewed as extrinsic or intrinsic. Extrinsic perspectives will mostly be ignored since they are

aimed at benefiting the company alone rather than the community. In any case, corporate social

responsibility should be all about the society and overall societal wellbeing.

A major challenge that comes up during CSR communication is generating favorable

attributions. Unlike the case is with company ability information like new innovations and

product superiority, a companys corporate social responsibility tends to reveal a range of aspects

related to its identity. These aspects are not only integral and enduring but also tend to be rather

distinctive due to their disparate bases. The main characteristic related to corporate social
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responsibility is that stakeholder attributions of the motives that underlie the CSR activities are

very important. This is because stakeholders are more apt to desist from making optimistic

inferences if they suspect that there are some self-serving or ulterior motives in the arrangement.

Communicating details about CSR is a very delicate issue (Dahlsrud, 2008). A major challenge

to corporate social responsibility communication entails minimizing stakeholder skepticism and

conveyance of intrinsic motives behind the activities being undertaken by the company. It is

always important to ensure that the messages being sent across are targeted and geared at

resolving a certain issue that faces the community.

That is why it is vital to know what to communicate and this entails the message content.

The corporate social responsibility message of a company can entail a myriad of aspects. It could

pertain to a certain social basis or business participation in that social reason. It is important for

the company to craft its messages well within these lines. In an instance where the message is

mainly about the social issue of interest, most consumers tend to get suspicious of some ulterior

motives since this type of advertising does not directly serve their interests. In that case, the

company should focus on communicating the essence of the social concern or issue and make

sure it chooses those issues that are not directly connected to the daily functions of the company.

Other than the message that is being passed across, there are other factors that ought to be

brought to the fore. These include CSR commitment, impact, motives, and societal fit. There

should be a high level of commitment from the company in context (Jamali & Mirshak, 2007). It

should also communicate clearly about the impact of their CSR activities. The motives that drive

their actions should also be made categorical and the reasons why they feel that their activities

will be suitable to the given society.

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There are major concerns in corporate social responsibility with relation to financial

performance. Hence, some organizations invest a lot of resources towards corporate social

responsibility with the view that it generates enough revenues in the process. Others argue that

this extra investment is inconsistent with the efforts they are making to increase profits and

therefore it is a costly venture for them. There are different studies which have been undertaken

to find the exact details of these endeavors. They have however led to varied outcomes. That is

why it is vital to understand the relationship that exists amid corporate social responsibility and

monetary performance of a company. An aspect worth noting is that studies that have been done

concerning the association linking CSR and financial performance have been inconclusive. They

have reported negative, positive and neutral results in the process. This is mainly due to flaws in

the empirical analyses (Matten & Moon, 2008). One of these flaws is the econometric

estimations of various unspecified models of financial analysis. The approaches that companies

use to demonstrate whether or not their CSR arrangements are successful are also varied and thus

they cannot be expected to yield consistent outcomes.

In conclusion, the subject of corporate social responsibility has been researched and

documented in various studies and academic research. This has been the case due to the

increased investment in CSR that companies have been making in recent times. By investing in

social responsibility, companies know that they will be able to generate better stakeholder

attitudes, and be able to build a brand image over the long run. However, there might be some

instances where stakeholders could be skeptic about company motives in their CSR activities.

Therefore, communicating corporate social responsibility is a delicate matter that ought to be

treated with the seriousness that it deserves. Even if companies might assume that CSR is good,

it might experience stakeholder backlash if it is not executed effectively. That is why it is

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advisable for companies to explore various aspects that are related to corporate social

responsibility communication so as to make sure their messages are not being misinterpreted.

The mode of communication they adopt can also impact on the overall efficiency of the CSR

actions.
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References

Dahlsrud, A. (2008). How corporate social responsibility is defined: an analysis of 37 definitions.

Corporate Social Responsibility and Environmental Management, 15(1), 1-13.

Du, S., Bhattacharya, C. B., & Sen, S. (2010). Maximizing business returns to corporate social

responsibility (CSR): The role of CSR communication. International Journal of

Management Reviews, 12(1), 8-19.

Jamali, D., & Mirshak, R. (2007). Corporate social responsibility (CSR): Theory and practice in

a developing country context. Journal of Business Ethics, 72(3), 243-262.

Matten, D., & Moon, J. (2008). Implicit and explicit CSR: A conceptual framework for a

comparative understanding of corporate social responsibility. Academy of Management

Review, 33(2), 404-424.

McWilliams, A., & Siegel, D. (2001). Corporate social responsibility: A theory of the firm

perspective. Academy of Management Review, 26(1), 117-127.

McWilliams, A., Siegel, D. S., & Wright, P. M. (2006). Corporate social responsibility: Strategic

implications. Journal of Management Studies, 43(1), 1-18.

Nan, X., & Heo, K. (2007). Consumer responses to corporate social responsibility (CSR)

initiatives: Examining the role of brand-cause fit in cause-related marketing. Journal of

Advertising, 36(2), 63-74.