Executive business operations would be in a good position

Executive
Summary

Corporate Social Responsibility is a
business approach that contributes to sustainability through economic, social
and environmental benefits to both the external and internal stakeholders. Dr.
Archie N. Carroll, a business management author, and professor, developed
Carroll’s pyramid of CSR, which contained legal, economic, ethical, and
philanthropic responsibilities. The CSR pyramid affirms that corporations have
to take part in decisions, activities, and policies that satisfy the four components of the pyramid. The three
fundamental principles that comprise the CSR include transparency,
accountability, and sustainability. Moreover, the integration of CSR into
strategic management needs familiarity with the kind of social responsibilities
that a company may deal with. Strategic
management helps to give a corporation the competitive lead in the market since
a corporation that includes social responsibilities into its business operations
would be in a good position to sell more
of its products that its competitors.         

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Introduction

Corporate Social Responsibility (CSR) is a
company’s initiatives to assess and take charge for its impacts on the social
and environmental wellbeing. CSR usually applies to the effort that surpasses
what would be needed by the environmental
regulators and protection organizations. CSR is often referred to as ‘corporate
citizenry’ and involves the sustenance of short-term costs that may not
necessarily offer instant monetary
benefits to a firm but rather promote constructive
social and environmental changes. Therefore, CSR operates as a self-regulatory mechanism
that firms use to monitor and ensure that
their business operations comply with the law, ethical standards, and federal or global norms.

            A company’s implementation of the
CSR may transcend the compliance and statutory
necessities as it may involve activities that seem to further some social good
that is beyond the business welfare of the company and what the law requires of
them. In realms like environmental or labor regulations, business owners can
decide to comply with the laws, transcend
what the law requires, or not to comply with the law at all. For instance, certain firms can either choose to embrace
gender equality and promote fairness among the male and female workers or hire
the disabled workers as well (Bhaduri
& Selarka, 2016, p. 11).

The main aim of implementing CSR should
thus go beyond increasing the profit margins and shareholder trust in the
company. Companies can take responsibility for their corporate actions to
enhance their public relations with their business partners and external stakeholders
thereby boosting their public image. In addition,
CSR leads to high ethical standards that help companies minimize business and
legal risks that may lead to lawsuits, losses, and a damaged reputation. Therefore,
the CSR strategies help companies to
contribute positively to the environment and both the external and internal
stakeholders such as customers, employees, investors, and the society (Carroll, 2008, p. 20).  

History
of CSR

            The history of CSR dates back
centuries ago as it can be traced back to 1700 BC when King Hammurabi of
Mesopotamia introduced a code that required construction workers and in keepers
to ensure that they erected stable structures, as they would be put to death if
their negligence caused death or injury to other people. Industrialization has impacted
business, environment and the society in several ways. By 1920, the discussions
around social responsibilities of companies had advanced into what was referred
then as the start of the modern CSR movement. However, the Great Depression and
the Second World War contributed to the failure of the concept of CSR becoming
a serious topic of discussion among the business leaders until the year 1950 (Carroll, 2008, p. 21).

 According
to Smith (2011, p.1), the concept of
CSR came into the spotlight after Frank Abrams, who is the Chairperson for the
board for Standard Oil in New Jersey published a piece in the Harvard Business
Review. Abrams claimed that it was his company’s duty to conduct the affairs of
the company to uphold a just and effective
balance amongst the claims of directly interested entities. In addition, Abrams claimed that it his companies mandate to maintain a harmonious
balance amongst the external and internal stakeholders and the community as a
whole. Smith (2011, p.1) noted that in
the year 1953, Howard Bowen made the first noteworthy scholarly contribution in
the modern CSR movement by writing the book entitled “The Social
Responsibilities of the Businessman.”  In the manuscript, Bowen suggested the definition
of the CSR to be the duties of companies to pursue the policies and make verdicts
while carrying out the activities that have desirable objectives and principles
to the society. In the following years, the definitions of CSR, practices tied
to it, and its adoption expanded enormously. The philosophies like management
as a trustee, ethics and the sense of balance between organization and society
became popular (Smith,
2011, p.2)

 Most
commissioned studies into the modern CSR movement helped to recognize that a
balance between the social and economic interests was a crucial factor (Bhaduri & Selarka, 2016, p. 13). After Bowen’s noteworthy contribution, another
significant contribution to the CSR definitions was by William Fredrick. He claimed
that social responsibility infers a public posture towards the community’s
economic and human resources and a readiness to accept that the resources are exploited
for comprehensive social ends and not just for the interests of private individuals
and company (Bhaduri & Selarka, 2016, p. 14).

            The 1970s marked a momentous growth
in the concept of CSR by incorporating new ideas such as social awareness,
social performance, and social responsibilities. Milton Friedman, an American
economist, argued that the social responsibility of corporations is to utilize its
resources while taking part in activities that enhance its profit margins as
long as they follow the law (Carroll,
2008, p.28). Other philosophical scholars continued to refine the concepts
of CSR and claimed that a socially accountable
company is one whose executive staff manages to balance multiple interests. This implies that rather than focusing on bigger profit margins, the socially responsible
forms can consider the workers, suppliers, dealers, local community, and the
entire nation. Dr. Archie N. Carroll, who is a business management author and
professor, developed the Carroll’s
pyramid of CSR, which was widely accepted in the decades following the 1970s
because it addressed the full range of obligations that businesses have to
society. The 4 areas that made up a CSR
pyramid were legal, economic, ethical, and philanthropic facets (Carroll, 2008, p.28).

Economic
and legal responsibility

The first social responsibility of a business as described by Carroll is the economic responsibility, whereby corporations
produce goods and services that the society requires and sells them at a
profit. While a firm pursues its economic
responsibilities, the society expects them
to fulfill their legal responsibilities
such as operating their activities within the required legal framework (Rahim,
2013, p.27). Even though the economic and legal duties entail
particular ethical and formal standards, other
behaviors and activities are not technically enforced by the law but are still expected of a firm by the community. Complying
with the regulations and legal framework helps in protecting the consumers and
end users who depend on a corporation to stay honest about the goods that it
sells and the stockholders who may lose profit if the firm is reprimanded for illegal undertakings (Rahim, 2013, p.28).

Ethical
responsibility

Most societies hold that laws are
essential for the operation of a business
but not sufficient. Besides abiding the law, a firm’s ethical responsibilities may
include the management of waste through recycling and minimizing their carbon
footprint in the environment
(Gerde, 2013, p. 17). Even though the ethical responsibilities
are often regulated cities, states, and federal governments, a firm can choose
to go beyond what the law requires and introduce policies that help in
sustaining the world for the future generation. Other ethical responsibilities
involve advertisements, whereby companies have to ensure that their customers
make informed decisions when making purchases (Gerde, 2013, p. 18).

 Additionally,
proper treatment of workers also counts as an ethical responsibility that
companies have to uphold. Companies can also offer more than the minimum wages
and minimum safety precautions for the employees, offer other benefits and insurance resources that help in building
a clean and safe workplace for the workers to operate. Therefore, taking on the
ethical responsibilities infer that firms are willing to embrace the norms and
standards that are not coded in the law.
In addition to the community’s expectations on ethical
performance, there also exist universal principles of moral philosophy like
human rights and utilitarianism that guide the decisions made by a company
along with the practices and undertakings (Gerde, 2013, p. 19).

Philanthropic
responsibility

            Philanthropic responsibility involves
the promotion of the welfare of other human beings by being a good corporate
citizen. Corporate philanthropy comprises all the forms of business giving and
embraces a firm’s voluntary and discretionary activities. Philanthropy may not actually be a company’s responsibility, but it is usually expected of firms
in the world today and is also part of the daily expectations of the public (Amaeshi, Nnodim & Osuji, 2013,
p. 41).
The philanthropic activities are guided by a company’s desire to take part in
the social activities that are not delegated,
not stipulated the law, and are not usually
expected of corporations in an ethical perspective. Some companies
readily take part in the philanthropic activities out of an ethical motivation because they want to do
the right thing for the society. Some of the philanthropic
activities may include gifts of financial resources, donations of either goods
or services, volunteering by workers, and community development (Amaeshi, Nnodim & Osuji, 2013,
p. 41).

            Most companies, unfortunately,
participate in philanthropical activities as a practical way of demonstrating
their good citizenry in a bid to improve their reputation. However, the main
difference between the philanthropic and ethical categories in the model is
that philanthropy is not necessarily expected
in the ethical sense. The community
expects gifts from corporations but would not label companies as unethical on
the basis of their philanthropical patterns or whether the companies are donating
gifts at the required level. Therefore, philanthropy is more of a voluntary
initiative on a business’ part (Madrakhimova, 2013, p. 113).

            Even though ethical responsibilities
have been shown as a separate category the pyramid of CSR, it is a factor that
permeates through all the other categories
in the whole pyramid. For instance, in the economic responsibility category, the
pyramid indirectly assumes a capitalistic society that where the pursuit for bigger profit margins is seen as a legitimate
quest (Madrakhimova, 2013, p. 114). Capitalism is thus an economic system that deems
it ethically appropriate that business owners value a return on their investments. In the legal responsibility category,
it is noted that laws and regulations
were made using ethical reasoning since most laws
were developed out of ethical issues such as a concern for consumers’
safety, employees’ welfare, and the natural environment. The philanthropic
responsibilities, in the other hand, are always motivated by the corporations
that strive to do the right things and not just to be seen as good corporate
citizens (Madrakhimova, 2013, p. 115).

Tensions
and trade-offs

            As corporations strive to operate
adequately within the required economic, legal, ethical and philanthropical
framework, tensions and trade-offs would eventually arise. This implies that how a company chooses to balance
the various responsibilities would help in defining their CSR orientation and
reputation (Sun, Stewart
& Pollard, 2010, p.96). The economic responsibilities of the business owners would require a careful
trade-off between the short and long-term productivity. In the pursuit of the
short-term goals, a corporation’s expenditure on the legal, ethical, and philanthropic
responsibilities may unvaryingly conflict with the responsibilities and obligations of the shareholders. As corporations would expend the resources on the responsibilities that form part of the primary
interests of the shareholders, challenges to find easy fixes that bring
long-term benefits may arise leading to the principle of trade-offs and
tensions (Sun, Stewart
& Pollard, 2010, p.96).

The
pyramid as an integrated system

            The Pyramid of CSR was intended to be viewed from a stakeholder’s perspective
where the focus would be on the whole system and not the various components. The
CSR pyramid affirms that corporations have to take part in decisions,
activities, and policies that satisfy the 4
components of the pyramid. Therefore, the
pyramid should not be interpreted to mean
that businesses are expected to fulfill their social duties in some successive or hierarchical manner starting from
the base, but rather they are expected to accomplish all the duties simultaneously.
This means that the order of the 4 categories portrays their fundamental nature
to the corporation’s operation in the society. As portrayed in the pyramid, the economic and legal duties are
required while the ethical and philanthropic duties
are merely expected or desired (Carroll, 2008, p.38).

The
Principles of CSR

            The uncertainty revolving around the
nature of the CSR activities, makes it
hard to define the CSR. 3 fundamental principles
comprise the CSR activities and are
employed in its definition. The first principle
is sustainability, which is concerned with the effect of the actions that are
currently being taken in relation to the future. When resources are used in the present day, they would be
depleted leaving limited resources for the future generations. In addition, as the resources get depleted, the cost of acquiring new resources keeps
increasing making the operative costs of
most corporations to rise (Smith,
2011, p.22).

The sustainability principle thus implies
that the society has to ensure that the industries only use the resources to a
level that they can be renewed. Sustainability
can be defined based on the carrying capacity of the environment with
descriptions of input and output models of resource usage. Sustainability
principle requires corporations to reduce their carbon footprint in the environment and engage in activities that help
to replenish the depleted resources. For instance, the paper industry would require all the companies that use trees to
manufacture paper and pulp to plant new trees to replace the harvested ones (Smith, 2011, p.23).

            Using the lens of CSR to view a
corporation as part of a wider socio-economic
system infers that the impacts of its actions have to be considered to measure
costs and the benefits it brings presently and for the future state of the
industry. The metrics of sustainability would thus evaluate the rate at which
resources are used by a company related
to the rate at which they are replenished.
The operations that are not sustainable can thus
be accommodated for by the development of
justifiable operations or by making plans
for the future that do not require the resources that are quickly being depleted. Companies thus aim at
increasing their efficiency to utilize the available resources efficiently with
the future generation in mind (Gerde,
2013, p. 40).

Accountability
principle

            Accountability deals with a
corporation’s awareness of its activities that influence the external
environment and thus being responsible for the impacts of its activities. The accountability principle entails
the quantification of the impacts of the
action undertaken, both internally and externally. The principle involves reporting the quantifications of the effects to
the affected parties. This means that
organizations have to report to both the
internal and external stakeholders the impact of the actions undertaken by the organizations and the manner in which they
affect them. The accountability principle warrants the recognition that the organizations are part of a broader societal
system and thus has a duty of care to every element of the network rather than
just to the business owners of the company (Aras & Crowther, 2007, p.14).

Besides accepting responsibility for their
actions, organizations have to recognize that the external stakeholders have
the authority to affect the manner in which the activities of companies are undertaken and the role in determining
whether or not the actions are justifiable. Therefore, accountability
responsibility requires the development of suitable metrics of ecological
performance and the reportage of actions
of the company. This requires costs on
the part of the company in the development, recording, and reporting of performances that present benefits that surpass
the costs involved (Aras
& Crowther, 2007, p.15).

Transparency
principle

As a principle, transparency means that
the external influence of the activities of a company can be determined from its reportage and relevant
facts that are not hidden within that commentary.
Therefore, all the impacts of the activities
of the firm inclusive of the external ones should be open to all by using the
information offered by the firm’s reporting mechanisms. Transparency is
especially crucial to the external users of information provided by other firms, as they do not have the knowledge accessible to their internal users. Transparency thus stems from the accountability
and sustainability principles and is also a part of the processes of recognizing
responsibility on the company’s part for the external impacts of the actions
undertaken (Aras &
Crowther, 2007, p.15).

Arguments
against CSR

            Most critics claim that organizations
have to focus on accumulating profits while letting the government or
non-governmental organizations handle the
social and environmental problems. Therefore, the first argument against CSR is
that the primary function of a
corporation is to probe into the economic viability of its business operations
and let the government and other concerned parties look after the society.
Secondly, another argument against CSR is that firms are meant to create and
provide products and services rather than handling the welfare activities (Zu, 2008, p. 41). This is because it is argued that the corporations do not have the expertise required
to handle the social problems because the more managers get engrossed in the
performance of social responsibilities, the more they ignore their managerial
duties. Moreover, skeptics argue that engaging in social responsibilities
incurs much cost for companies and so would have to increase the price of their
products or services. This presents a
problem because while some other customers may be ready to pay more money for goods
from a socially responsible company, other customers may not be (Zu, 2008, p. 42).

Arguments
for CSR

The main argument
for CSR is that it is the correct thing to do since corporations have created most of society’s issues such as pollution and
low wages that lead to poverty. Furthermore, corporations have the resources that are required to solve the
society’s problems and so should put them to good use. Secondly, scholars argue
that corporations should adopt CSR
because it protects the interests of the stakeholders (May, Cheney & Roper, 2007, p.
155).
The workforce in all nations around the world has become united into labor
unions that demand the protection of the rights of their members from the
business enterprises. Therefore, to gain
the support of its workers, it has become necessary for the organizations to
cater to the welfare of their employees using CSR. This implies that the firms that assume their social
responsibilities suffer huge losses in
the short and long-term while the firms that
fulfill their social obligations benefit from the possibility of a long-term
survival (May, Cheney
& Roper, 2007, p. 155).

               The third argument for CSR revolves around
self-enlightenment, whereby the increase in the level of awareness that
companies are makings of the society, they get driven to work for social good. Managers
and executive members of corporations thus create public prospects by willingly
setting and following their social responsibilities and standards that guide
them (Rendtorff, 2009, p. 155). Fourth,
CSR helps corporations avoid the government’s regulations since non-conformance
to the social norms attracts legislative restrictions. Fifth, corporations have access to resources that they
can utilize for resolving social problems because they are the making of a society and thus have to serve interests of
the society. Sixth, the management of
most companies is shifting towards professionalism that contributes to the
social orientation of the businesses. The ethics of professionalism often binds
the managers to social values and the growing concern for the society (Rendtorff, 2009, p. 155).

CSR
and strategic management

            The integration of CSR into
strategic management needs proper awareness of the kinds of social
responsibilities that a corporation may deal with.
The economic responsibilities form a major part of the social responsibilities, and so the corporation is required
to offer products at affordable prices to the society. Strategic management
helps to give a firm the competitive lead in the market since a company that includes
social responsibilities into its operations would be in a good position to sell more of its products that its competitors. The
mission statement is one of the most crucial
outputs of a strategic management process and helps to find out what the corporation
offers to the market. The mission statement is also a reflection of the ethical
and moral values of the corporation. Therefore,
in the formulation of the mission statement, the genuine concerns of both the
internal and external stakeholders have to be considered (Werther & Chandler, 2010, n.p).

            There are numerous stages in the
integration process of CSR in the strategic management process of companies. First,
the managers have to incorporate the ethical principles into the shared organizational
culture. Secondly, an analysis of the corporation’s current status would be
carried out to determine the type of social responsibility that is more attuned
to its main activities, both internally and externally. CSR is relevant to
today’s business challenges because it helps provide long-term permanent solutions.
For instance, a company’s success in the market depends on its public image,
which also depends on its social
responsibility programs. Secondly, media visibility comes from the benefits
that corporations give to the community using their CSR. The media coverage
would help to build the company’s public image that helps in the sale of its products and services (Werther & Chandler, 2010, n.p).