Is there a Business Case for CSR – An Analysis?

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An Introduction

Businesses are increasingly getting involved in social activities that take care of the well being of the society and the environment. In this article, we will discuss about the business case for corporate social responsibility. The article is a study about the strategy tools that are used by a company to get pay off of corporate social responsibility. Here, we will learn about the justification of a company to allocate resources for a social cause.

History

The hunt for the business case for corporate social responsibility started in the last decade of the twentieth century. This attitude continued in 1990s and the interest for corporate social responsibility speeded in terms of its global extent. The period of 2000 and beyond became the era of global corporate citizenship. In the initial years of twenty first century, the world experienced the Enron scandal. Though corporate social responsibility continued its interest to search for business legitimacy, the initiation of business ethics faded the development of the theme of social responsibility. However, in US and UK business case slowly became dominant. This was because of the fact that business establishments were trying to validate the activities of the company and were still doing.

Definition

Corporate social responsibility refers to the impact of a company on the society and the requirement to deal with the impact it has on stakeholders (suppliers, customers, shareholders, employees and community).
In spite of the fact that corporate citizenship, sustainability, stakeholder management, corporate social performance and business ethics are trying to replace corporate social responsibility, it is still widely used. The above mentioned expressions are an indication of the practices, policies, and results accomplished by a company while pursuing the interests of its stakeholders.

Benefits

Organizations involve themselves in corporate social responsibility for many reasons as they think that it is going to increase their profit percentage. The business case for corporate social responsibility stresses the advantages of goodwill, consumer loyalty, reputation and many other things that a business might enjoy. The benefits are as follows.

# Risk management

Investors want to make sure that the company in which they are investing is a stable organization. For this reason, investing is considered a gamble by many investors. Corporate social responsibility refers to the fact that organizations have to know about the problems that may make them targets of campaigners. This does not mean that corporate social responsibility infers cleaning up the act performed in the past. It means that the company can take an ideological view point regarding an issue. Corporate social responsibility involves creating position for the CEO of the company and presenting the problem of the company in such a way that the company attracts positive headlines. Companies can fund research programs as part of corporate social responsibility.

# Reputation management

Companies are increasingly trading on their brand value, intellectual capital and goodwill. In other words they are trading on reputation. Organizations have worked hard to earn this reputation and they try to maintain it as well. Reputation and brand value are considered ‘intangibles’ and they have own a numerical value on the balance sheet of companies.

# Access to capital

Investors regard socially responsible organizations as safe bets. Most investors are of the belief that corporate social responsibility has an affirmative effect on business. Moreover, investors are now-a-days maintaining something on the lines of investment portfolio that are supposed to be socially responsible. These investors are aligned to companies that are socially responsible.

# Satisfaction of employees

People want to be part of those companies that have values agreeing with the values of the employees. This shows that those organizations that are considered as fair employers are able to attract and retain efficient customers. However, this can happen only when an organization is careful to treat all employees equally. In many companies, white collar employees are treated well while unskilled employees have poor working conditions. In other words, companies do not always maintain social responsibility. In many companies, unskilled workers are not provided welfare schemes and the facilities that are provided to high end resources are not provided to casual workers.

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# Efficiency in operation

It is believed that corporate social responsibility has the ability to save money. Steps taken by companies to protect the environment such as saving energy and reducing waste diminish operational costs of a company. Companies often prefer taking these kinds of measures. However, organizations have to make sure that the measures taken by the company to protect the environment do not force it to incur high costs.

# Position in the market

If a company invests in corporate social responsibility, there are high chances that it can position itself in the market as a high product or service provider. It can also become a market leader if competitors take up corporate social responsibility as a strategy or if the government introduces regulations.

# Maintain operational license

Off late mistrusting big organizations has become very common and capitalist ventures are blamed for the problems in society. One of the most cited reasons is that wealth gets accumulated in the hands of few very rich and influential people. The rest of the lot remains poor. Since, the society has granted a lot of power to business owners, the latter is always at the gaining end. On the other hand, employees complain about lack of security in job, high work pressure and increased stress. Thus, companies have realized that they are under threat. Companies are trying to convince the society that their actions have a positive effect on the environment and the society at large.

To Wrap Up

From this article, it can be deduced that corporate social responsibility when practiced by companies renders a competitive advantage and they have higher positioning in the market. By practicing corporate social responsibility, businesses enjoy low operational costs and higher efficiency. Community is satisfied with the business that looks after the issues of the society. Employees also feel motivated when they realize that their employer is involved in social welfare activities. Investors tend to invest in companies that practice social welfare activities.

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