Corporate Responsibility

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Description of Corporate Responsibility. Explanation.

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Corporate (Social) ResponsibilityCorporate Responsibility. Description.

Corporate Social Responsibility ("CSR") is a form of corporate (self-) regulation integrated into a business model.

A CSR policies function as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with these policies, in addition to upholding the (spirit of) the law, ethical standards, and international norms.

 

Purpose of Corporate Responsibility

The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere.

Furthermore, CSR-focused businesses would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality.

CSR is the deliberate inclusion of public interest into corporate decision-making, and the honoring of a Triple Bottom Line: people, planet, profit.

 

Origin of Corporate Social Responsibility. History

A survey on the history of CSR reveals evidence of CSR as early as the 1800s, mainly in the form of donations by companies (Sethi, 1977), although Barnard. C., (1938) ‘The Functions of the Executive’, Clark. J., (1939) ‘Social Control of Business’, and Kreps. T., (1940) ‘Measurement of the Social Performance of Business’, specifically addressed the subject of CSR, which are quite commonly used foundations for CSR theories

In-depth notion of the CSR concept is found in 1953, where the economist Bowen addressed the topic in his book ‘Social Responsibilities of the Business Men’. Bowen argues that “entrepreneurs have the responsibility to orientate on expectations, aims and values of a society”, creating the bridge to expansion of the corporate purpose beyond economic growth.

Walton, C. (1967) addressed a more detailed CSR concept in which companies needed to voluntarily acknowledge and accept that their responsibilities exceeded the corporate barriers and that cost are involved. These theories find correlation with the Committee for Economic Development (CED) presented ‘code of conduct’ (1971) that outlined a three-leveled model for CSR. This model demonstrates the interdependency of corporations and their community in relation to profit creation.
 

The term "corporate social responsibility" came in to common use in the early 1970s. During this period many multinational corporations (MNC’s) acknowledged the term stakeholders, (signifying those affected by an organization's activities), to describe corporate beneficiaries beyond shareholders. This was partly driven by the influential book by R. Edward Freeman, Strategic Management: a Stakeholder Approach (1984).

 

Proponents argue that corporations make more long term profits by operating with a perspective, while critics argue that CSR distracts from the economic role of businesses.

Others argue CSR is merely window-dressing, or an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations.

 

The latter is imaginable when economies permits companies to have revenues eclipsing various midsize countries GDP’s, leading to assumptions that great forms of (corporate) wealth should shoulder similar responsibilities, hence solving issues not necessarily inherent to these company’s activities.

Often, under-developed or emerging countries, with less influence on large organization, are faced with dilemma’s to enforce social behavior on corporations, as Newell (2000, p. 121) signified that, “… frequently the presence of large transnational corporations appear to wield powers without responsibility, [and that] they are often as powerful as states and yet unaccountable”.

Because of fear to loose these companies, governments become reluctant to irresponsible corporate behavior, “partly due to their fear that such regulations will discourage domestic investment and make their economies less competitive” (Lipschutz, 2005). Hertz, (2002) and Monbiot, (2001) brand these phenomenon’s as ”… the silent take-over of government by corporations, [resulting in the] excessive dependency of governments upon big business”.

Occasionally in such situations, public’s demands, frequently voiced by various groups e.g. NGO’s, stakeholders, governments, etc. are capable to sink a companies reputation, its products, and if not addressed in time, its liveability!
Companies are required to stay within the rules and guidelines opposed upon them through legislation and (self) regulations, nevertheless, society may still prosecute them when they exercise these rules to their own advantage and benefit substantially.

Companies initially did not embraced CSR voluntarily, many did not even realize various public issues as there responsibility, i.e. “Pharmaceutical companies discovered that they were expected to respond to the AIDS pandemic in Africa, even though it was distant from their primary product lines and markets” (Porter & Kramer, 2006).

The first company that published a social report was Ben and Jerry’s (1989) followed by Shell as the first major company in 1998 (corporate watch, 2006). Shell followed mainly because of the 1995 ‘Brent Spar’ debacle. The mentioning of Shell marks a remarkable moment, because Shell recognized its mistake in the management of its Corporate Responsibility and incorporated these lessons by CSR throughout its organization and started reporting these. This action helped “institutionalize” (Zadek, 2004, p.12) legislation and self-regulation in its industry.

Today there are various rating agencies which track and report corporations’ social behavior, e.g.; The Dow Jones Sustainability Index, FTSE4Good Index, etc. The rating criteria’s vary widely and have become meaningless since there is no standard. Although, the ‘Global Reporting Initiative’, have a high likeability to become the global standard soon.
 

ISO 26000 is the recognized international standard for CSR (currently a Draft International Standard). Public sector organizations (the United Nations for example) adhere to the triple bottom line (TBL).

It is widely accepted that CSR adheres to similar principles but with no formal act of legislation. The UN has developed the Principles for Responsible Investment as guidelines for investing entities.
 

Advantages of Corporate Social Responsibility. Benefits

  • Discourages government regulation
  • Stimulates long-term orientation and profits for business
  • Balances corporate power with responsibility
  • Improves relationships with stakeholders
  • Improves corporate reputation

Disadvantages of Corporate Social Responsibility. Drawbacks

  • Decreases economic efficiency and financial returns
  • Interferes with equal competition between firms
  • Imposes hidden costs and passes them on to (financial) stakeholders
  • Places responsibility on businesses rather than on individuals
  • Results in non-core activities by firms (better left to others)

Two main visions underlying Corporate Social Responsibility

Supporters of a Regulation-based Approach argue that:

  • Corporations care little for the welfare of workers, and given the opportunity will move production to sweatshops in less well regulated countries.

  • Unchecked, companies will squander scarce resources.

  • Companies do not pay the full costs of their impact. For example the costs of cleaning pollution often fall on society in general. As a result, profits of corporations are enhanced at the expense of social or ecological welfare. Note that recent environmental legislation increases the range of risks and responsibilities for companies. To protect themselves against losses from environmental hazards, companies can consider Environmental Insurance.

  • Regulation is the best way to ensure that companies remain socially responsible.

Supporters of a more Market-based Approach argue that:

  • Free markets and capitalism have been at the centre of economic and social development over the past two hundred years and that improvements in health, longevity or infant mortality (for example) have only been possible because economies (driven by free enterprise) have progressed.

  • In order to attract quality workers, it is necessary for companies to offer better pay and conditions which leads to an overall rise in standards and to wealth creation.

  • Investment in less developed countries contributes to the welfare of those societies, notwithstanding that these countries have fewer protections in place for workers.

  • Failure to invest in these countries decreases the opportunity to increase social welfare.

  • Free markets contribute to the effective management of scarce resources. The prices of many commodities have fallen in recent years. This contradicts the notion of scarcity, and may be attributed to improvements in technology leading to the more efficient use of resources.

  • There may indeed be occasions when externalities, such as the costs of pollution are not built into normal market prices in a free market. In these circumstances, regulatory intervention is possible to redress the balance, to ensure that costs and benefits are correctly aligned.

  • Whilst regulation is necessary in certain circumstances, over regulation creates barriers to entry into a market. These barriers increase the opportunities for excess profits, to the delight of the market participants, but do little to serve the interests of society as a whole.

On balance, the concept is strongly related to other concepts such as Corporate Sustainability, Corporate Transparency, Corporate Accountability, and Corporate Governance.


Also called (Corporate) Social Responsibility, corporate conscience, corporate citizenship, corporate social performance, and sustainable responsible business.


Corporate Responsibility Forum
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  What is the Role of Business Education Developing Corporate Social Responsibility Skills?
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  Corporate Social Responsibility Reporting Standards
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Tschopp & Na...
     
 
  Companies Shifting the CSR Paradigm
Which parties are most likely to cause a paradigm shift in CSR?

MULTI NATIONAL CORPORATIONS (MNCs)
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  Classification of CSR Practices (Rangan ea)
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  Taxation and Corporate Social Responsibility
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  Consumer Skepticism About CSR Motives of Companies (Skarmeas and Leonidou)
Businesses nowadays monitor and measure risks to which they are exposed to. One of these risks relate to organizational reputation damage that arise from CSR activities.
If companies engage in CSR initiatives, this may carry substantial risks wi...
     
 
  Corporate Social Responsibility Reporting Standards
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Tschopp & Na...
     
 
  From Reactive to Pro-active Corporate Social Responsibility
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  Unethical Behavior and Child Labor in Supply Chains: Willful Ignorance
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  The Public Function of Commercial Banks: CSR Comes to Rescue
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  Three Types of Socially Responsible Orgnizations
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  CSR does not have to be Strategic
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  Corporate Social Responsibility: Corporate Foundations versus Normal Foundations
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  Should CSR Lead the Fight against Global Inequality?
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  Emerging South-centered CSR Agenda
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  The Meaning of Sustainability as Perceived by Mainstream Consumers is Wrong
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  CSR / CSV ⇒ Value / Values
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Corporate Responsibility Special Interest Group


Special Interest Group

 

Best Practices - Corporate Responsibility Premium
  CSR Communication Should Be More Impactful
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  Four Stages of CSR-implementation (Martinuzzi and Krumay)
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Expert Tips - Corporate Responsibility Premium
 

Two Imperatives on Corporate Social Responsibility

In the past decades there has been increased pressure on companies to incorporate CSR in their businesses.
In fact, the pressure has appeared as ...
Usage (application): Understanding the Foundations of CSR, Trainings and Workshops
 
 
 

How to Develop a Coherent and Coordinated CSR Program

Although many organizations nowadays at least have some form of CSR to contribute to the well-being of society and/or the environment, those programs ...
Usage (application): CSR Alignment, CSR Strategy, CSR Coordination, CSR Theaters
 
 
 

Reasons Why People are Doing Voluntary Work

Voluntary work has long been seen as an activity performed mainly by unemployed individuals –mostly women, both in their youth and retired - because t...
Usage (application): Expectancy Theory, Corporate Social Responsibility, Stakeholder Perspective, Volunteers
 
 
 

Moral Intensity: When Will a Decision Be Seen as Unethical?

The financial crisis of 2008 has been partly the result of managers and executives taking excessive risks. That's why Ferguson (2014) wonders when exp...
Usage (application): Risk Management, Business Ethics, Ethical Decision-making, Crisis Management, Corporate Responsibility
 
 
 

Corporate Responsibility Committee

Even if the interest for and significance of Corporate (Social) Responsibility (CSR) and Corporate Sustainability (CS) has grown a lot over the last d...
Usage (application): Corporate Responsibility, Corporate Sustainability, Strategic Innovation, Corporate Governance
 
 
 

CSR and Ethical Business Practices

Mason and Simmons (2013) argue that one should differentiate between the external drivers of CSR and the organizational (internal) reactions to CSR an...
Usage (application): Corporate Responsibility, Corporate Social Responsibility, Business Ethics, Ethical Business Practices
 
 
 

Strategies for Strategic Philanthropy (Norton)

A lot of companies are trying to use philanthropic activities to improve factors as customer loyalty and brand awareness and thereby increasing sales....
Usage (application): Strategic Philanthropy, Corporate Philanthropy, Corporate Social Responsibility, Customer Loyalty
 
 
 

Three Dimensions in How Global Brands are Evaluated by Consumers

Holt et al. (2004) researched how people evaluate and value global brands. They found out that 3 main characteristics are critical in the evaluation o...
Usage (application): Global Branding, Corporate Reputation, CSR, Globalization
 
 

Resources - Corporate Responsibility Premium

Strategy, Society and CSR

Presentation about the relationship between CSR and Competitive Advantage. It includes the following sections:
- Business and society are interde...
Usage (application): CSR Strategy, Competitive Advantage, Strategic Corporate Social Responsibility, Strategy and Society
 

Exceptional Speech by 13 year-old Severn Suzuki at the UN, 2008 on Environmental and Social Responsibility

At the United Nations Conference on Environment and Development 2008, a 13 years old child, speaking for ECO, the Environmental Children's Organizatio...
Usage (application): Environmental Responsibility, Social Responsibility
 

Creating Triple Bottom Line Awareness: An Introduction

This presentation elaborates on the concept of the Triple Bottom Line. The presentation has many interesting slides with quotes and other materials to...
Usage (application): Triple Bottom Line, Corporate Sustainability
 

The Purpose of Business: Stockholder versus Stakeholder Theories

This presentation elaborates on the objectives and purposes of businesses according to different views: those of stockholders and those of stakeholder...
Usage (application): Stakeholder Analysis; Stakeholder Commitment
 

Corporate Social Responsibility Best Practices

This presentation by Dr. Uwen E. Ite is about Sustainable Corporate Responsibility and its best practices. The presentation includes 2 examples which ...
Usage (application): CSR, Responsible Business, CSR Introduction, CSR Summary
 

Caroll's Pyramid of Corporate Social Responsibility

An important contributor to Corporate Social Responsibility Theory is Carroll (1991) who recognized that profitability should be and remain a componen...
Usage (application): Corporate Social Responsibility Levels, Corporate Social Responsibility Hierarchy, Corporate Social Responsibility Pyram
 

CSR Implementation and Communication Model (Schmeltz)

Because Corporate Social Responsibility is a value-based concept, it is highly connected with an organization’s values and corporate identity. Actuall...
Usage (application): CSR Communication, CSR Implementation, CSR Strategy, Corporate Identity, Corporate Values, CSR Stages,
 

Corporate Social Responsibility Activities and Their Effects on Employees' Engagement

ABSTRACT - Corporate social responsibility (CSR) is a rapidly growing field of attention for corporations keen to succeed in the public arena today. Usage (application): CSR, Employee Engagement
 

Martin's Trust Model: The Trust Matrix

An important determinant of the reputation of your brand, company or sector is TRUST. In the financial sector for example, the abuse of public trust h...
Usage (application): Trust, Corporate Reputation, Corporate Branding, Corporate Image
 

Traditional Investing, Philanthropy and Impact Investing

This presentation is about impact investing, particularly about universities becoming impact investors:
1. Impact beyond financial returns
2...
Usage (application): Impact Investments, Social Investing, Universities
 

Design Thinking for Innovation

This presentation is about design thinking and the connection to social entrepreneurship. The presentation includes the following sections:
1. Th...
Usage (application): Innovation, Entrepreneurship, Design Thinking, CSR, Social Entrepreneurship, Social Innovation
 

Pursuing Corporate Responsiblity Through Fair Trade

Presentation about Fair Trade, one of the many forms of Corporate Social Responsibility and achieving Sustainability. The presentation includes the fo...
Usage (application): Corporate Social Responsibility, Corporate Sustainability, Fair Trade
 

Philanthropy as a Strategy

This presentation elaborates on the concept of strategic philanthropy and includes the following sections:
1. Strategic philanthropy definition Usage (application): Strategic Philanthropy, Corporate Social Responsibility, Marketing Strategy
 

Introduction to Business Ethics. Concept Overview

This presentation is about ethics in business, and includes the following sections:
1. Introduction
2. Question
3. Business ethics
...
Usage (application): Business Ethics, Ethics in Business, Corporate Social Responsibility, Code of Ethics, Unethical Business Practices
 

The Dawn of Conscious Capitalism

This presentation provides an introduction into the concept of conscious capitalism, and includes the following sections:
1. Introduction
2....
Usage (application): Conscious Capitalism, Value-driven Consumer, Socially Responsible Investing, Corporate Responsibility
 

Introduction to Collective Impact

Collective Impact is about diverse companies and across sectors are coming together to solve a complex social problem. The efforts have 5 conditions:<...
Usage (application): Initial Understanding of Collective Impact
 

Social Impact of Investments: Impact Investing and Impact Rating

This presentation is about impact investing, and includes the following sections:
1. Learning objectives
2. Why impact investing
3. Inc...
Usage (application): Corporate Sustainability, Corporate Responsibility, Socially Responsible Investing
 

CSR and Ethics

This presentation is about Corporate Social Responsibility (CSR) and Ethics. The presentation starts with elaborating on the concept of CSR. Later on,...
Usage (application): Corporate Social Responsibility, Corporate Responsibility, CSR, Ethics, Responsible Business
 

Why is Corporate Social Responsibility becoming more important?

William Marré explains that historically, companies have been reluctant to move into CSR in a bold way. It was merely about PR and being a good c...
Usage (application): Importance of CSR, CSR Introduction, Corporate Social Responsibility, CSR Strategy
 

Fundamentals of Business Ethics

Presentation about business ethics, including an explanation of its relation with economics and the law. It also includes three important ethical mana...
Usage (application): Business Ethics, Corporate Ethics, Ethical Behavior, Corporate Responsibility, Stakeholder Management
 

Nestlé Chairman on Shared Value

Nestlé Chairman Peter Brabeck-Letmathe says that the concept of Creating Shared Value has evolved out of the idea of corporate responsibility. It reco...
Usage (application): Best Practice How to Implement Creating Shared Value
 

Consumer Power in Developing versus Developed Countries

This presentation provides a comparison between developed and developing countries in terms of customer awareness and interests, but also in terms of ...
Usage (application): Responsible Business, Customer Interests, Educated Consumers, Customer Awareness
 

Voluntary Activities of Employees | Employee Volunteerism

Presentation about employee volunteerism, including the following sections:
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2. Employee volunteerism is gro...
Usage (application): Employee Motivation, Employee Volunteerism, Employee Commitment, Shared Value, CSR, Corporate Reputation
 

Introduction Into Welfarenomics

This presentation elaborates on the concept of welfarenomics. The presentation includes the following sections;
1. Contents
2. Welfarenomics...
Usage (application): Welfarenomics
 

Creating Inclusive Business Models

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Usage (application): Business Models, Corporate Sustainability, International Development, Investing in Africa
 

CSR in the Public Sector

CSR for Central Public Enterprises
Presentation about CSR in Central Public Enterprises, including the following sections:
1. Changes in App...
Usage (application): CSR, Public Sector
 

Introduction to Corporate Social Responsibility

Corporate Social Responsibility, also named Sustainable Business, Community Investment, Cause Marketing, or even Triple Bottom Line is becoming hugely...
Usage (application): Understanding CSR
 

A Consumer Perspective of Cause Related Marketing

Delanie Nielsen explains that for consumers not only the price, quality, brand loyalty determine the purchases they make, but also the company associa...
Usage (application): Initial Understanding of Cause Marketing
 
 

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Compare also: Shareholder Value Perspective  |  Stakeholder Value Perspective  |  Triple Bottom Line  |  Stakeholder Mapping  |  Stakeholder Analysis  |  Public Relations  |  Non-Governmental Organization  |  Whistle Blower  |  Globalization

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Ismael Bena - MBA
Management Consultant

 

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