>Corporate Social Responsibility
In the Chapter, the key tenets of Corporate Social Responsibility (CSR) are discussed. CSR is essentially the commitment by an organisation to behave ethically, contributing to economic development while improving the quality of life of the workforce, local communities and wider society. The core characteristics of CSR are presented, focussing on the importance of voluntary activities, self-regulation, external interests and stakeholder engagement. A business that can effectively address such aspects is likely to be better able to protect its corporate reputation and ultimately competitive positioning.
Various approaches to CSR are considered including ‘laissez-faire’ (doing the absolute minimum), enlightened self-interest (CSR as a market opportunity), stakeholder interaction (competitive differentiation) and shaping society (social enterprises). This discussion supports an examination of Shareholder Value Theory (SVT) (and the Agency Theory that underpins it) whereby it is argued that maximising profitability should be the overriding purpose of any business. Consequently, CSR activities are viewed more cynically, even though it is generally accepted that meeting certain social interests can contribute to maximising shareholder value. As a result, most modern businesses now view the challenges from a more strategic perspective, seeking to align stakeholders’ CSR expectations to direct business-related benefits.
In contrast, Stakeholder Theory takes a broader view, arguing that protecting the legitimate interests of stakeholders also protects future business competitiveness through a balanced consideration of the corporate operating environment. A number of principles supporting this stakeholder management approach are articulated, including the need to acknowledge the conflicts that can exist between corporate leaders and the broader stakeholder community.
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The Chapter also explores the CSR methodologies that can be applied. These include philanthropy, which can be used to create a binding corporate ethos, developing values shared by all employees. Business leaders with a strong personal commitment to socially responsible causes are more likely to support corporate philanthropy that has no direct business benefit, even where it decreases profitability. Sustainable business approaches are also considered, discussing how the management of economic, environmental and social obligations can build a long-term competitive advantage. This approach - often referred to as people, planet and profit - seeks to meet present corporate needs without compromising the ability of future generations to meet their own requirements. The three core elements of this more sustainable approach to CSR (social, environmental and economic) is described as the ‘triple bottom line’ which is discussed in this Chapter.
The Chapter also seeks to present the benefits of CSR. Ethical perspectives are addressed, focussing on the values, principles and governance required to build a corporate culture of trust, respect openness and integrity. Such an ethical approach supports the evolution of a ‘social contract’ between a company and its stakeholders, which seeks to strike an appropriate balance between different (and often competing) interests. Ultimately, the importance of creating an appropriate business case to support CSR approaches is highlighted.
The Chapter closes with a discussion around CSR criticisms, including how it is used to avoid sector/industry regulation and how CSR can be exploited to develop corporate branding.
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