CORPORATE SOCIAL RESPONSIBILITY
Consumers, governments, and public interest group alike are increasingly expecting the business sector to go far beyond their traditional economic focus and to pursue more environmental and social responsibilities. “For the first time in many years, the right of business to simply do business is being widely questioned” (Bolton et al.). There is a growing body of knowledge and literature surrounding CSR and with that comes a growing expectation for all businesses to develop responsible practices. The trend towards socialbly responsible practices among the business sector is long overdue and the discussion and implementation of this topic is imperative for all businesses to consider strategically.
WHAT IS CSR? Consensus on the exact definition of Corporate Social Responsibility is debatable to say the least. However, a core theme exists that “firms have responsibilities to society beyond profit maximization.” (Shum et al.) Otherwise stated, firms practicing CSR not only have a responsibility to their shareholders but also to employees, suppliers, communities, governments, the natural environment etc. The responsibilities of firms are now being referred to as the Triple Bottom line or “3BL”; the bottom lines being People, Planet, and Profit. For example, to demonstrate CSR towards employees (people) firms may adopt humanistic management practices or higher than average salaries, and towards communities by making contributions to health and education facilities. The term Corporate Social Responsibility is often ambiguously replaced by Corporate Philanthropy; but they are very much so different. Some argue that Corporate Philanthropy is a part of CSR and others that is of its own category of social influence. Corporate Philanthropy, like CSR, does not have a concise definition but the essence of its definition is a firm going beyond ethical CSR by “helping alleviate public welfare deficiencies, regardless of whether or not this will benefit the business itself.”(“Collective Responsibility”)
Regardless of the motives of CSR or Corporate Philanthropy, it is an imperative part of the modern corporation’s public duty.
STRATEGY VERSUS PHILANTHROPY Firms engage in Corporate Social Responsibility for diverse reasons including: caving to pressure from the government, market, or consumers, to draw a wider consumer base, to provide positive public relations, to increase sales, as well as to have a positive social influence. But is CSR a form of selfish corporate greed? An effort to help the bottom line rather than to actually benefit society? This accusation leads to critiques “accusing CSR as a public relations exercise to build positive corporate image.” (Shum et al.) There are inconclusive and insufficient findings correlating CSR activities to a firm's bottom line. Despite all of the positive influence CSR can bring, firms with a strong sense of economic responsibility do not “wholeheartedly believe that CSR is an activity worth pursuing.” (Shum et al.) Voluntary CSR can bring about many fair advantages for the company as well as society in such ways as: “increasing brand recognition among ethical consumers and productivity among employees, reducing costs, and avoiding regulation.” (Shum et al.) By performing CSR, firms will “bridge the gap between shareholder interests and social needs.”(Shum et al.)
One commonly used strategic utilization of CSR is cause-based marketing; a means of promoting a firm’s products and services through CSR activities. Examples include sales-related donations, fair-trade and organic product labels etc. that firms have utilized to not only raise social awareness and help a cause, but also to raise prices of the particular products, to increase sales and brand recognition. On the other hand, firms can also be motivated by “normative reasons such as a sense of moral responsibility and duty” (Aguinis et al.) which would align with a firm's philanthropic mission and