Impact of CSE on Decision Making Strategies of Fast Fashion Companies

2506 words (10 pages) Business Assignment

17th Apr 2020 Business Assignment Reference this

Tags: Business AssignmentsCSRFashionZaraH&MDecision Making

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The ways in which Corporate Social Responsibility (CSR) can impact on the decision-making strategies of fast fashion companies (e.g. Zara and H&M.) What are the most effective ways of incorporating CSR into decision making strategies in the sector?

In spite of the phenomenon of academic dissertation within fast fashion industry is lack of research relatively(Barnes and Lea-Greenwood, 2006; Sull and Turconi, 2008, Bruce and Daly, 2006; Doyle et al., 2006, Sheridan et al., 2006), there is Corporate social responsibility (CSR) which is the focus of most fashion, investors, customers

and commercial media. Especially, the fast fashion fields, companies like Zara, H&M and Gap is a quite interesting area of research; Corporate social responsibility(CSR), which is like ethical implications, has no standard definition(Erbschloe,2019, p.7).A study from Jones et al.(2000) shows that methods cover “the managers may be obligated to be responsible for both social and interested parties’ welfare. In the last few decades, Corporate social responsibility (CSR) has been discussed, even Peter Drucker used to note that there are three missions in the business management (cited in Phillips, 2006, p. 69): Enhance economic performance, improve the productivity of employee and undertake social impacts and a sense of responsibilities. Corporate social responsibility is mainly manifested in the clothing industry, which is supply exceeds demand and intensely competitive. This means a wide range of strategic innovations in supply chain management (Barnes and Lea- Greenwood, 2006). This essay will examine what sociological evidence there is for the approaches in which Corporate Social Responsibility (CSR) can influence the decision-making strategies of fast fashion companies, and will then go on to analyze the reasons for its occurrence. The final part of the essay will answer the most available ways of incorporating CSR into decision making strategies in the sector. According to research by H&M claimed that ‘to keep a strong growth and simultaneously implement sustainability is the biggest challenge it faces to maintain successful in business operations, due to the issues regarding environmental pollution, impact on the water resource used by the textile supply industry, and unfair treatment of workers in supplier factories’(Li et al.,2012).

The studies of corporate social responsibility concentrate on the corporate financial activity primarily, there are three kinds of links between corporate financial activity and corporate social responsibility, namely, the relationship of positive and the relationship of negative and the relationship of mixed (Brammer & Millington, 2008). On the one hand, a positive relationship shows that a great percentage of social responsibility behaviors can contribute to enhance the financial performance, this is because the customer who pay close heed to social responsibility are willing to select products with sustainable property at higher prices. On the other hand, a negative relationship illustrates that on rare occasions, a company is not in a position to profit from CSR behaviors. Also, a mixed relationship demonstrates that appropriate social behavior can facilitate financial performance but reduces the social performance. By providing honest data to the public, companies can modify the perception of its social responsibility held by stakeholders and consumers.‘ In addition, in comparison to conventional customer focused orientations, multi-stakeholder orientations can significantly improve financial performance’ (Murphy et al., 2005; Weber, 2008,cited in Li,2014). Eventually, the company creates a strategic long-term competitive advantage by establishing a wholesome and open company figure (Hooghiemstra, 2000). Therefore, to obtain the maximum interest, companies like ought to choose an optimum level of investment in CSR (McWilliams, Siegel, & Wright, 2006).

Enterprises overextend themselves to undertake non-economic social responsibilities, which may bring disaster to enterprises. For example, entrepreneurs waste enterprise resources or assets to do various social charity activities for their own reputation. In order to solve the employment problem of a group of employees, an insolvent enterprise is still struggling to borrow money. The former is irresponsible to social investors and shareholders, while the latter is actually a needless consumption of a large number of labor and resources, which is really irresponsible to the society.

From the point of view of economics, the enterprise within the depth range to perform some of the social responsibility of the enterprise investment although in the short term this may be at the expense of enterprise operating performance, but in the long run, this kind of investment due to improve the enterprise’s social image and production environments, attracted a large number of talented people and reduce the government regulation, etc., can increase the profitability of the enterprise social responsibility and business performance measurement is difficult, but there is no hard evidence of a company’s social responsibility behavior will hurt its long-term performance. In fact, many foreign scholars, such as McWilliams et al. (2006, p. 4) conducted, a majority of empirical analysis and research on the relationship between enterprise social performance and enterprise economic effect. A study by Arrigo (2012) claimed that the main benefits of CSR have been empirically investigated are : better profitability; the attraction of employee, retention and satisfaction; enhance the corporate image; and positive consumer reactions. Although the relationship between corporate social responsibility and financial performance is not clearly established, this is because a specific trend has not been discovered,as a study (Orlitzky et al., 2003, Margolis and Walsh, 2003, cited in Arrigo) encouraged, long-term positive linked between them. Especially, CSR’s impact on human resources that a responsible company has benefits in attracting highly skilled employees (Bhattacharya et al., 2008) and the motivation, upgrading and retention of actual staffs (Huselid, 1995). Furthermore, CSR activities can help promote the social workers and the masses in this industry identity (Turban and Greening, 1997).

Arrigo (2012, p.186) indicates that it is necessary to comprehensive evaluation of enterprise financial environment and the social performance of the company social responsibility activities allow them according to the company know how to solve the social problems to fulfill stakeholder expectations ability to define the CSP excellent social and environmental performance of intangible assets created difficult to replicate, improve the company’s competitive advantage. This is because corporate responsibility management processes will align the need to generate revenue and efficiency with the creation of many key partnerships that make it possible to improve the social and environmental conditions in the different markets in which global companies operate and enable them to achieve sustainable development.

The most effective mode of incorporating CSR into decision making strategies in the sector is that through corporate social responsibility, the enterprise to some extent, showed an altruistic values of the characteristics of the brand personality, as a result, consumers begin to cognitive process, although very simple, but the main goal is: in order to ensure the company’s commitment to the social good faith, to ensure that the company through the way of corporate social responsibility programs to show their true enterprise in accordance with company values (Forehand & Grier, 2003). Interestingly, this process of cognitive is based on a great deal of judgments about the credibility of organization. In addition, consumers’ satisfaction with CSR activities can be roughly divided into the following aspects :In the first place, brand interaction with CSR activities to satisfy consumers’ interest in participating in social welfare (Bhattacharya & Sen, 2004; Bhattacharya, Korschun, & Sen, 2009, cited in Rivera, J.J, et al.,2016), the second is consumers reward CSR geneses as a attract for future geneses in the same direction, because the company will see customer satisfaction as a way to develop more CSR initiatives or increase current CSR initiatives. Based on the above reasoning, He & Li believe (2010) that there are two mechanisms to achieve consumer satisfaction. The first path is directly composed of cognitive processes triggered by perceived CSR activities (Garcia DE los es, Herrero, & Rodriguez del Bosque, 2005). In essence, this means that consumers must understand and be convinced of their CSR plans and intentions through communication tools such as social reporting. Secondly, through an indirect approach of attitude (He & Li, 2010), social consumers create an identity to companies participating in CSR initiatives, which must have a direct and positive impact on consumers’ attitudes towards brands(Currás, Bigné, & Alvarado, 2009).

In conclusion, to answer my two initial questions of the ways in which Corporate Social Responsibility (CSR) can impact on the decision-making strategies of fast fashion companies (e.g. Zara and H&M.), there are three influences in this area, the positive influence is that CSR can improve the financial revenue,though the negative effect is that enterprises overextend themselves to undertake non-economic social responsibilities, which would bring disaster to business enterprises. Most importantly, I have shown and stated that is the most effective ways of incorporating CSR into decision making strategies in the sector is that better profitability; the attraction of employee, retention and satisfaction; enhance the corporate image; and positive consumer reactions.

References

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