In todays highly competitive business world, corporations want to do everything to survive and grow. Corporate Social Responsibility is now part of daily business practice of many companies in the world, but this idea is not shared by everyone. There are still lots of debate about whether Corporate Social Responsibility is merely a cost to the corporation or it can bring competitive advantages. With proper analysis and implementation, Corporate Social Responsibility can greatly enhance corporation’s competitive advantage.
1.Introduction
Corporate social responsibility becomes popular in the late 20th century. As consumers became more and more aware of corporate activities around the world, a growing number of corporations began to consider their impacts on the society and the environment.
Corporate Social Responsibility (CSR) basically means that a corporation does more for wellbeing of others than make more money and obeys the law sense. In depth, CSR (also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business) is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance within the spirit of the law, ethical standards, and international norms. CSR is a process with the aim to embrace responsibility for the company’s actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders [1].
Corporate social responsibility involves marketing philosophies, policies, procedures and actions whose primary objective is the enhancement of the society [2].
To establish a corporate social responsibility program in a company, a description of the program in the company’s mission statement and code of ethics is usually required. Also, company need to making the existence of the program known to the stakeholders and other interested parties. These programs often produce such benefits as improved customer relationships, increased employee loyalty, market place success and improved financial performance. Companies can benefit from their contributions to the society and at the same time minimize social environment impact. Social responsibility demands that organizations accept obligations to give equal weight to profits, consumer satisfaction and social well- being in evaluating their company’s performance. They must recognize the importance of relatively qualitative consumer and social benefit as well as the quantitative measure of sales, revenue and profit by which companies have traditionally measured marketing performance.
Get Help With Your Essay
If you need assistance with writing your essay, our professional essay writing service is here to help!
Competitive advantage is a set of unique features of a company and its products are perceived by the target market as a significant and superior to the competition. It is the factor or factors that cause consumers to patronize a company and not the competition. The purpose of corporate social responsibility as a tool for competitive advantage is to win the fidelity of the community as a result of the intense and keen competition among the industries. The practices of the CSR create a symbiotic relationship between the company and the community within which it operates, therefore giving them the insight about the importance and the need to be socially sensitive.
The following are Corporate Social Responsibility issues:
Employee issues in workplace, health and safety work environment.
Issues with customer in market place
Social development
Risk Management
Brand differentiation
Aspect and well treatments in workplace
Issue in community
There are four Different types of Corporate Social Responsibility:
Environmental CSR: businesses need to operate in ways that are not waste environmentally. Once considered the cost of doing business, encourage corporations to operating procedures to reduce environmental impact, and government has stepped in to apply rules to waste disposal.
Community based CSR: businesses work with other organizations in order to improve people life quality in the community. Also use the most efficient procedures to minimize wasted capital.
HR based CSR: placed corporations in a precarious position that improve the wellbeing of the staff.
Philanthropy: businesses take the form of investments in the community. Common examples of corporate philanthropy include donate money to supporting or fully funding educational initiatives, scholarship programs and community beautification projects.
2. CSR Brings Competitive Advantages
The benefits of CSR for a corporation can vary depending on the business nature of the corporation. There is correlation between social/environmental performance and financial performance [3]. CSR can bring following competitive advantages to the company:
Human resources
A CSR program can be an aid to recruitment and retention, particularly within the competitive graduate student market[4]. Potential recruits often ask about a firm’s CSR policy during an interview, and having a comprehensive policy can give an advantage. CSR can also help improve the perception of a company among its staff, particularly when staff can become involved through payroll giving, fundraising activities or community volunteering. CSR has been found to encourage customer orientation among frontline employees .
First CSR placed corporations in a precarious position that improve the wellbeing of the staff, it satisfied employees. Satisfy employee safety needs. Ensure employees’ job security, provide them their safety needs( physical health, job security ). Employees feel satisfy with physical safety needs. Their medical insurance and financial meet their safety needs. Employees feel more satisfied with a stable work.
1. Satisfied employees.
Employees want to feel proud of the organization they work for. An employee with a positive attitude towards the company, is less likely to look for a job elsewhere. It is also likely that you will receive more job applications because people want to work for you.
More choice means a better workforce. Because of the high positive impact of CSR on employee wellbeing and motivation, the role of HR in managing CSR projects is significant.
Mutual respect create a welcoming company culture, it can satisfy employees’ belonging needs (ex. friendship, social integration, family and romantic relationships). Giving employees the freedom to socialize. Allow employees to build relationships at work but provide guidance by implementing workplace discrimination policies and leading by example when it comes to avoiding workplace politics.
Reward high performers publicly and provide employees with personally rewarding challenges to satisfy their esteem needs. Esteem needs include respect from others, a sense of achievement and confidence in one’s abilities. Set the tone in your organization by speaking personally with as many of your employees as possible. Encourage employees and recognize rising stars in your company for their outstanding achievements. Make sure everyone has a chance to earn rewards and receive encouragement to maintain a sense of fairness among employees.
Institute comprehensive employee development programs and provide ample opportunity for career growth in your company to satisfy employees’ self-actualization needs. Self actualization is the highest order of needs in Maslow’s hierarchy. Self actualization has to do with discovering one’s identity, which includes developing a career that fully leverages one’s strengths and experience while providing a sense of accomplishment and inner fulfillment. Nonprofit organizations can satisfy employees’ self-actualization needs more readily than for-profit companies, as they provide employees with opportunities to use their skills to help people in need. For-profit businesses can satisfy this need as well, however, by placing top performers in positions of leadership, responsibility and accountability.
Risk management
Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These can also draw unwanted attention from regulators, courts, governments and media. Building a genuine culture of ‘doing the right thing’ within a corporation can offset these risks. Consumers increasingly don’t accept unethical business practices or organisations who act irresponsibly. Advances in social media (giving everyone a voice) mean that negative or destructive practices quickly fuel conversations online. Organisations are accountable for their actions like never before.
Brand differentiation
In crowded marketplaces, companies strive for a unique selling proposition that can separate them from the competition in the minds of consumers. CSR can play a role in building customer loyalty based on distinctive ethical values.[20] Several major brands, such as The Co-operative Group, The Body Shop and American Apparel[21] are built on ethical values. Business service organizations can benefit too from building a reputation for integrity and best practice.
2. Satisfied customers
Research shows that a strong record of CSR improves customers’ attitude towards the company. If a customer likes the company, he or she will buy more products or services and will be less willing to change to another brand.
Relevant research:
IBM study ‘Attaining Sustainable Growth through Corporate Social Responsibility’: The majority of business executives believes that CSR activities are giving their firms competitive advantage, primarily due to favorable responses from consumers.
Better Business Journey, UK Small Business Consortium: “88% of consumers said they were more likely to buy from a company that supports and engages in activities to improve society.”
3. Positive PR
CSR provides the opportunity to share positive stories online and through traditional media. Companies no longer have to waste money on expensive advertising campaigns. Instead they generate free publicity and benefit from worth of mouth marketing.
4. Costs reductions
Yes, you read this correctly. A CSR program doesn’t have to cost money. On the contrary. If conducted properly a company can reduce costs through CSR.
Companies reduce costs by:
More efficient staff hire and retention
Implementing energy savings programs
Managing potential risks and liabilities more effectively
Less investment in traditional advertising
5. More business opportunities
A CSR program requires an open, outside oriented approach. The business must be in a constant dialogue with customers, suppliers and other parties that affect the organization. Because of continuous interaction with other parties, your business will be the first to know about new business opportunities.
6. Long term future for your business
CSR is not something for the short term. It’s all about achieving long term results and business continuity. Large businesses refer to: “shaping a more sustainable society” (Vodafone 2010 report):
License to operate
Corporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps, they can persuade governments and the wider public that they are taking issues such as health and safety, diversity, or the environment seriously as good corporate citizens with respect to labour standards and impacts on the environment.
Win new business
Increase customer retention
Develop and enhance relationships with customers, suppliers and networks
Attract, retain and maintain a happy workforce and be an Employer of Choice
Save money on energy and operating costs and manage risk
Differentiate yourself from your competitors
Generate innovation and learning and enhance your influence
Improve your business reputation and standing
Provide access to investment and funding opportunities
Generate positive publicity and media opportunities due to media interest in ethical business activities
First CSR placed corporations in a precarious position that improve the wellbeing of the staff, it satisfied employees. Satisfy employee safety needs. Ensure employees’ job security, provide them their safety needs ( physical health, job security ). Employees feel satisfy with physical safety needs. Their medical insurance and financial meet their safety needs. Employees feel more satisfied with a stable work.
Mutual respect create a welcoming company culture, it can satisfy employees’ belonging needs (ex. friendship, social integration, family and romantic relationships). Giving employees the freedom to socialize. Allow employees to build relationships at work but provide guidance by implementing workplace discrimination policies and leading by example when it comes to avoiding workplace politics.
CRS care about employee’s Esteem needs, corporate reward high performers and provide employees challenges personally rewarding. It satisfied employee’s esteem needs with respect from others, achievement feeling and confidence. Encourage rising stars with outstanding achievements from employees in the company. CRS make sure business has a fairness environment for employee; everyone has a chance to earn rewards and encouragement.
Find Out How UKEssays.com Can Help You!
Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.
View our academic writing services
CSR provide employee training programs and provide opportunity for career growth in your company. It satisfies employees’ realization needs. Organizations provide opportunity to help them developing a career keep them use their strengths and experience to reach accomplishment. Corporate Social Responsibility can satisfy employees’ self-actualization needs more than non CRS companies, as employees get opportunities to use their skills to help people in need.
Employees like to work in a Corporate Social Responsibility; they feel proud of the organization they work for. They receive respect and help in needs from CSR. Employee work in CRS Company always has positive attitude towards the company, they are less likely to look for a job in the other place. By the other side, CSR Company receives more job applications because people want to work for CRS. Because of the advantage of CSR with employee satisfaction on wellbeing and motivation, the HR managing of CSR is significant. Businesses with social responsibility also get in better workforce.
Second, Corporate Social Responsibility enhance Customer Satisfaction
Customers are god of business. Customer satisfaction is not only social responsibility issue and also profitability issue! Put time and resource to understand the customer perspective to build strong and effective customer relations is important to build long term success. Corporate social responsibility business try to listening to customers to building good customer relations, Many businesses put their customers’ satisfaction as their expectations, and also include those factors in service, price, quality, value, product in order to improve their customer relations, build goodwill and keeping continuous improvement of the customer experience. With effectively listening to customers and acting upon their feedback to meet customer needs and build customer loyalty. With satisfied customers can gain more repeat business.
Build Trust, advertise Honest, tell the Truth, make honor Promises, Responsive, commitments with integrity can help business build customer trust and loyalty. It is a major success factor to build corporate reputation as the quality of products and services building customer trust on products and services in the company is the critical idea to build a successful business. Since CRS have more satisfied employee, they build customer confidence with stronger customer-employee relationships. Bring in more business benefits, build brand and reputation. Building market share with customer attraction and retention Engaged and loyal customers can help position your business for growth and profitability. Resources research shows that a strong record of CSR improves customers’ attitude towards the company. It customer likes CRS company; customer would like buy more products or services from company with CRS, and will be less willing to change to another brand.
Relevant research:
IBM study ‘Attaining Sustainable Growth through Corporate Social Responsibility’: The majority of business executives believes that CSR activities are giving their firms competitive advantage, primarily due to favorable responses from consumers.
Better Business Journey, UK Small Business Consortium: “88% of consumers said they were more likely to buy from a company that supports and engages in activities to improve society.”
3. CRS equals PR
The short answer is PR can be both a blessing and a curse to CSR. It is a matter of which comes first and what is the intention.
Done properly and with a company that embraces the strategic and integrated nature of CSR, PR is a vehicle of sharing with the world the progress they are making, or what the world may not know about them. Done improperly, for example when CSR is seen by the company as a marketing problem, the latest market fad, or a PR fix – PR is tantamount to “greenwashing” the “sins” of a company. True CSR guides the company away from making the “sins” or mitigating them in the first place.
CSR should be an integrated, sustainable, and systematic approach to business. It belongs as a core component to the strategies and structure of companies. CSR is about being good corporate citizens to all stakeholders – stockholders, employees, customers, community, supply chain, and the environment. It is the old social contract idea, the right to exist as a company. It is about the sustainability of the business through integrity and smart business decisions that recognize and integrate the impact on and influence of all stakeholders. I like CSR International’s reworking of the CSR acronym as Corporate Sustainability & Responsibility as it speaks to the integrational aspects of CSR. They are calling it CSR 2.0.
Companies who do not understand that CSR is about business sustainability and integrity as much as it is about social programs, often make the mistake of making CSR a marketing or PR program/problem. By doing so they essentially “green-wash” their company. In my opinion, PR should lightly handle CSR initiatives until the CSR program has momentum and there is something to actually celebrate and brag about. Celebrating decency and expected behavior is not good PR on CSR. It is artificial and could cause more harm than good. PR should let the public know that there is a CSR program, that there will be a report, and what some of the programs are that are under development, or highlight ongoing/historical CSR efforts. Report on the activities but not out of proportion to the other activities of the company.
As a career long change agent, I know that steering change in organizations takes time, embedding, and momentum. New CSR programs take time to mature and years to yield significant, sustainable results though quite often there are substantial shifts that occur in the first year. What you measure gets paid attention to. So often the first steps of CSR is measurement – taking an inventory on where the company stands with respect their impact on society, economy, and the environment. This is often accomplished through a GRI (Global Reporting Initiative) checklist report or a GHG (Green House Gas) report. This is merely a starting point. The true test of sustainability and a company committed to CSR is history of improvement and performance. Unfortunately these initial documents tend to be fodder for PR and Marketing departments, which in their need for short term results and fantastic figures tend to overstate or understate the findings as they try to make the company look good. In CSR, however, the proof is in the year-to-year changes, the response from stakeholders, the integrity of the companies actions and words.
CSR is about smart business practices. It is about constant improvement and integrity. PR is about reporting on the events as they occur or showcasing a history of events and trending. The danger is when the showcasing precedes the actual work.
Copyright ©2009 Matthew Rochte, Opportunity Sustainabilityâ„ – Share with attribution
Opportunity Sustainabilityâ„ is a Midwest-based sustainability and corporate responsibility consulting firm specializing in green innovation and seeing opportunities where others see burdens. Matthew Rochte, an experienced, operations-based sustainability consultant, works with company management to navigate and realize the opportunities in taking their company green and growing sustainably.
CSR provides the opportunity to share positive stories online and through traditional media. Companies no longer have to waste money on expensive advertising campaigns. Instead they generate free publicity and benefit from worth of mouth marketing.
4. Costs reductions
Yes, you read this correctly. A CSR program doesn’t have to cost money. On the contrary. If conducted properly a company can reduce costs through CSR.
Companies reduce costs by:
More efficient staff hire and retention
Implementing energy savings programs
Managing potential risks and liabilities more effectively
Less investment in traditional advertising
5. More business opportunities
A CSR program requires an open, outside oriented approach. The business must be in a constant dialogue with customers, suppliers and other parties that affect the organization. Because of continuous interaction with other parties, your business will be the first to know about new business opportunities.
6. Long term future for your business
CSR is not something for the short term. It’s all about achieving long term results and business continuity. Large businesses refer to: “shaping a more sustainable society” (Vodafone 2010 report):
Will CSR bring Competitive Disadvantage?
There is argument against corporate social responsibility states that corporate social responsibility cause competitive disadvantage since it cost company money and time but didn’t bring any profit. They argues that social responsibility works should be carried out by government. Or all corporations or industries should be subject to same requirement. Most companies reluctant to practice CSR complaining the disadvantage CSR causes against companies that do not practice. In other words, if company A pay for environmental programs, employee training and efficient waste management programs and company B does not, company B retains its resources, including money, for other business pursuits. Therefore, without strict industry wide standard, some companies argue that they are not willing to put money into CSR programs. But any expenses on CSR are ultimately covered by stronger relationships with key customers.
Conclusions
In today’s fast paced world, each business needs to have a CSR program. If CSR is not yet used in business daily practice, it is easy to lose the trust of the business important people. The expectations of your staff, customers and will be changed. Consumers don’t accept unethical or irresponsibly business behavior. Negative or destructive practices are very easy to spread in social media (everyone know it). Carefully implemented CSR policies can help organization. Increase customer retention; develop and enhance relationships with customers, suppliers and networks; maintain a happy work force ; save money on operating costs and manage risk; differentiate yourself from competitors; improve business reputation and standing.
In today’s digital, fast speed world, each business, small or big, needs to have a CSR program in place. If CSR is not yet part of your daily business practice, you must act fast. Or else you’ll loose the trust of the people who are important to your business.
Believe it or not but the expectations of your staff, customers and the wider community have changed. You are no longer in control. They are.
Cite This Work
To export a reference to this article please select a referencing style below:
