Corporate Social Responsibility Advantages and Disadvantages

Abstract

The report is endowed with detailed and exhaustive information about the essential for corporate social responsibility and reporting. The report draws from corporate social responsibility and reporting literature in other to conclude and recommend appropriately to businesses and authorities. Different theories (CSR-: Integrative, Instrumental and Ethical; CS-reporting:- Legitimacy, Political and stakeholder) theories were taking into consideration and compared with practices of organisation using case studies and secondary researched information.

One of the most important information emphasised on in the report was the need to understand who organizational stakeholders are, and understanding their needs in other to report legitimately to them. Cases from researched articles were drawn to compare with what authors said, and case of British Airways was also highlighted for its reporting contents. Case studies from Anglo and M&S were also employed to compare with theory.

The conclusion stated that the engaging in CSR is still vital for both economic and social and physical reasons and the benefits of participating outweighs the cost which may involve fines, loss of reputation. The social reporting concluded that it legitimate to report activities as it a huge step towards accountability and more importantly enhances trust. The GRI guideline was recommended as the best reporting guideline to employ for businesses and authorities as it the most widely used standard.

Chapter 1: Introduction

1.1 Introduction to subject

In spite of the vast amount of literature on corporate social responsibility and reporting, this area of study maintains it multifaceted, intricate and constantly developing conception which constitutes of diverse practices and theories. The last 20 years through increase in technology, globalization and global warming as seen more light shed on CSR and reporting.

Globalization has erected diverse kinds of markets for companies and also enhanced competition. Many large organisations today are taking unprecedented move from one country to another with cost been the prime driver. Profitability is the main objective of corporation as they seek greener pastures (cheaper resources and Cheaper Labour). This objective is usually met through large layoffs which arguably can be considered unethical.

Global warming has also played a critical role in enhancing CSR. Many practices of large corporation have come under intense scrutiny. Oil companies, Mining Industry and airline industry are all examples of companies that are influenced by CSR practices. People are becoming more environmentally friendly and this has affected the way many organisations operate. The subject of customer’s needs and satisfaction in many business practices now includes CSR as customer’s daily decision is influenced by this.

The research will tackle the essentials of CSR and reporting and explore the benefits and drawbacks of CSR and its reporting to businesses that engage in this activity.

It highly essential to clarify that the research does not seek to produce a generic right or wrong view to the many questions about CSR but seeks to produce it own argument from relevant empirical evidence which has been carried out by academics.

1.2 Aims & Objectives, structure of project

Aim of this project is to extensively explore the imperatives for corporate social responsibility and reporting and make recommendation to parties such as authorities and businesses who are undecided about his subject.

The objectives are:

• To gain a comprehensive understanding of CSR and it effect on Public Sector, Private sector and Emerging economies
• To explore the case for and against CSR and also discover its effect on organizational performance
• To research in depth previous literature on CSR and reporting and compare with case study, secondary findings and draw appropriate conclusion

Chapter 1:- will give a depth introduction to CSR and how it has involved and some of the factors that has brought this subject to attention. It will also include how CSR is perceived in different sectors such as Private, Public and Emerging country.

Chapter 2:- will draw from academic sources and present the case for and against CSR. It will examine both side of the argument and show how debatable their findings are. It will also use examples to fortify statement or beliefs researched by authors

Chapter 3:- will build on chapter 2 and present theoretical assumption that academics have presented. It will show models, concepts and also argue them against other approaches illustrated by academics. Most significantly it will bring both opponents and proponents together to battle their findings.

Chapter 4: will also build on chapter 3 and will compare practices of organisation to what the theory state. It use both secondary research materials and case study and compare it to what academics have found out

Chapter 5 & 6: this aspect covers the corporate social reporting and examines what authors and academics have stated about this subject using theoretical backgrounds to compare what practices by organisations.

Chapter 7: methodology would show how this research was carried out, some of the resources used to carry out the research and why this research best fit this project

Chapter 8: will evaluate both chapter 3 and 4 and would present an appropriate conclusion and recommendation building from what has been found out in the main report.

Chapter 9: will show the references list from reference in text.

1.3 Corporate Social responsibility

According to Crane, Matten and Spence (2008) CSR is still a debated theme among many businesses and institution. They continue to write that CSR has evolved over the years and has become a key issue in every industry. Many academic hold different views on CSR, some believe that CSR is just a “superficial window dressing”, it just another medium through which large companies hide their mischievous deeds whilst appearing to be responsible.

Matten and Moon (2004) companies are realizing that in other to maintain it operations, they may have to abolish some practices such as Environmental pollution and violation of human rights as a result of growing pressure from media and regulation from government. Typical examples of companies are Oil and Chemical companies.

Crane, Matten and Spence (2008) discovered that other industries such as tourism and retail are encountering a high demand to ensure lawful practices to the environment through their business operation. This industries where previously considered to be sanitary, but face continuous pressure to legitimise their practices.

There are several millions of articles and journals that deal with CSR all giving different definition to CSR. The past couple of years according to McWilliams, Siegel and Wright (2006) have seen an agreement in most definition of CSR compared to previous years where definition has been exceptionally broad. Previous academic Davis (1973) cited in Spence (2008) addressed CSR as “the firm’s consideration of, and response to, issues beyond the narrow economic, technical and legal requirement of the firm”. Years later, Caroll (1979) cite in Spence (2008) took a broad approach to his definition which state “the social responsibility of business encompasses the economic, legal, and discretionary exceptions that society has of organizations at a given point in time”.

Current definition seems to have taken a different route to a generic view such as Brown and Dacin (1997) define it as “status and activities with respect to its perceived societal stakeholder’s obligation”.

As seen above, there are different complex definitions stated by different authors on CSR. In this research, the aim is not to use any of the definition or create another view or definition of CSR, the research will intensely evaluate and recommend to businesses and authorities based on empirical evidence made available by academics.

1.4 CSR & Private Sector

The private sector consists of large organizations to Small medium organizations. Brammer and Pavelin (2005) these organizations also play a critical part in CSR. According to Grayson and Hodges (2004) there is a notion that CSR is accustomed to large organizations who are owned by shareholders; they write that one of the key reasons for emphasizing CSR from the perspective of large organization is that, it raises the question on interest. Should the company be run on shareholders interest or from the perspective of the environment such as communities and customers?

Husted and Allen (2006) argue that large organizations compared to SME face higher scrutiny from public due to their visibility. Therefore, CSR policies may have to be imbibed in the organizational code of conduct to create a structured approach for employees to adhere to.

However SME as illustrated by Graafland, Van de Ven and Stoffele, (2003) present a dissimilar representation. Their study, as shown that 20 of Small Medium size Enterprise detailed their information on CSR operation compared to 62 percent of large organizations.

As further discussed by Spence (1999) chief reason for this is that SME are mostly run between a small number of people whom the manager entrust essential decision to. Therefore an informal approach to CSR will be seen compared to approach by large organization. Compared to large organization who are open to the public as a result of their size, SME are normally small and their relationship (business) are usually between manager, supplier and employees. This relationship as shown by Spence and Schmidpeter (2002), are highly imperative as good personal relation and trust in this context can be identified as CSR.

1.5 CSR and Public Sector

Agencies and government organization are examples of public sector who also encounter similar pressure to act in a socially responsible manner. Such examples according to Seitandi (2004) of this pressure are better equal opportunity and conscientious sourcing. He also noted that both public sector and private sector engage in similar CSR policies.

Gardner (2006) CSR within the public sector has immensely grown over the last few years. Chief to this growth are Schools and Hospitals who are obliged to social objective and needs. This has enhanced the need for greater accountability with the public sector.

Crane and Matten (2007: 488-498) write that government initiative in CSR is steadily increasing beyond it operation as bold steps are being taken to promote CSR related issues within among the public. They also noted that CSR is a voluntary act, therefore incentives and other benefits have been created by government to employ more businesses to get involved and espouse more socially responsible practices. An example of this as written by Moon (2004) is the UK government who have persuaded CSR among the British companies with initiatives such as Academy of CSR (training employees on CSR constantly) and Ethical trade (practicing fair trade).

The European Union has also invested a large amount of effort to promote CSR within the environment. This has met several restrain as CSR in EU can still be considered as an “Anglo-Saxon” idea as noted by Commission of the European Communities, (2002)

Ball (2004) finally, as there has been a continuous demand on private sector to asset more accountability in their reporting towards the public, so as also there has an increase in the public sector using some of the mechanisms for CSR e.g. social reporting to enhance more accountability to the public.

1.6 CSR & Emerging Economies

CSR in some emerging economies tend to take a very different approach. Crane, Laura and Spence (2008) argue that Russia and China are typical examples of economies that possess a classic approach to CSR. They write that Russia regime of privatization and switch to capitalism has stirred a shady and crooked government which has affected the concept of CSR in Russia. Grafski and Moon, 2004) in most popular places Russia, CSR is virtually an unknown concepts. China approach to CSR is quite different to Russia, even though it government still plays an immense role in directing and policing the economy: businesses have made effort significant effort in acting in a socially responsible manner. Some examples of action taking by Chinese businesses are endeavouring to build schools and housing for the less privilege in local communities. Miller (2005) depicted that CSR within the few years in China will rise due to it constantly growing economy.