Corporate Social Responsibility

Posted: March 19, 2024

Detailed Analysis of issues/Challenges Why CSR is important?

1. The shrinking role of government

            Of late governments have depended on legislation and regulation to convey societal and environmental goals in the business sector (Ajmal and Lodhi 2015).  Depleting public resources, tied with mistrust of control has contributed to the examination of voluntary and non-regulatory process initiated.

2. Demands for greater disclosure

            There is an increasing demand for corporate revelation from the stakeholders, including suppliers, customers communities, investors and employees, and activist organization (Ajmal and Lodhi 2015).

3. Increased customer interest

            There is confirmation that moral conducts of an organization wield a growing effect on the purchasing resolution by the customers. In the recent research by Ajmal, and Lodhi (2015) at least one in five customers reported that they had have either incentive or castigated corporation based on their apparent social performance.

4. Growing investor pressure

            Investors have altered the way they evaluate the organization’s performance and are making a decision depending on the approach that involves ethical concerns. Coles, Fenclova, and Dinan, (2014) reported that there is over $2 trillion value of assets which are invested in the portfolios which utilized screen associated with the environment as well as social responsibility separate research by Patwardhan, and Bardhan(2014) found out that more than a quarter of the shares possessed by the Americans considered ethical concerns while buying and selling the company.'

5. Competitive labor markets

            Employers are continuing to cast their eyes beyond paychecks and benefits and need managers who have philosophies as well as practices that equal their principles (Ajmal and Lodhi 2015). In order to employ and maintain skilled workers, organizations are forced to develop better-working conditions.

6. Supplier Relations

            With the increase of stakeholders’ interest in business issues, a lot of companies are taking initiatives to regulate the manner in which their competitors carry out their activities in a socially responsible way (Patwardhan, and Bardhan 2014). Some stakeholders have come up with the code of conducts to those who supply them with production inputs to see to it that other organizations do not taint their reputation.

Triple bottom line

            The bottom line accounting frame model uses three dimensions of presentation which is social, environment and financial. It is not similar to conventional since it composes of environmental and social mitigation measures which are easy to assign correct means of dimensions (Patwardhan, and Bardhan 2014). 

            The concept behind this theory is that organizations are accountable to their stakeholders and is inclusive of every individual who is involved in the activities of their company directly or indirectly.   Thus, this theory considers stakeholders as part of their group (Patwardhan, and Bardhan 2014). Companies are critically relying on success by hiring, training and motivating good employees.

            Triple bottom line organizations take pains to minimize or get rid of their environmental foot print.  The struggle for sustainability, acknowledged the fact that going green could be more lucrative in the long run (Patwardhan, and Bardhan 2014). However, it is not just about finances, Triple bottom line organization considers the whole life circle of their activity and tries to establish the exact cost in terms of the environments.

Resourced based view (Creating sustainable competitive advantage) in relation to CSR

            The resource base view is an approach of viewing an organization in terms of approaching strategy.  Basically, this approach formulates the company to be a collection of resources hence it is these inputs and the manner in which they are put together which differentiate a firm from others (Coles, Fenclova, and Dinan 2014).

            When talking about responsibility, the concept of corporate social responsibility (CSR) has increasingly been the centre of attention. Inimitable   Resources can be sources of sustained competitive advantage if competing firms cannot obtain them (Coles, Fenclova, and Dinan 2014).

            When carrying out a talk on social responsibility the concept of CSR has more and more been the center of focus since it helps companies to create competitive advantage.

            It ensures that there are valuable resources.  When resources are capable to assign the firm some value, thus they can be basis of competitive advantage to. Many organizations have made several attempts to meet the demand as well as the attention to CSR approaches in their strategies.  This therefore means that CSR has emerged to be the recognized business parameter and getting involved in the CSR assist the companies attain the stakeholders’ demands (Coles, Fenclova, and Dinan 2014)). However, it can never achieve competitive advantage solely but should be involved with regards to resource base view.

            When company is using rare resource on its production process to deliver exclusive strategies to attain competitive advantage besides, Gupta (2015) says that about 80% of the US consumers are very keen on CSR which an imperative factor that influence their buying decision.  Hence, many companies have understood the significance of integrating Resource based view approach and CSR in communicating policies.

            The concept of corporate social responsibility enhances a vision of company’s accountability to a broader range of stakeholders, in addition to shareholders as well as investors.  The primary areas of concern are wellbeing of workers, environmental protection and the community and civil community in the present and in the future.