The Background-CSR Expenditure Analysis of Manufacturing and Service Industries
Corporate Social Responsibility is a form of competitive edge provided to the enterprises and/or manufacturing companies which merge environmental and social variables with business functionalities. The corporate social responsibility practice is undertaken at manufacturing and service units to manage the brand image. This is done at the local community’s level.
Corporate Social Responsibility is practiced through manufacturing and service industries in a developing world. There are private manufacturing and service industries which are set up as the result of CSR activities. The term CSR has been derived by the Merrick Dodd. This activity has been made compulsory for the manufacturing and service organizations which have a turnover of Rs.1000 Crores or more (Trong Tuan, 2012). The concept behind corporate social responsibility is voluntary charitable actions which are undertaken beyond the legal requirements. There are a number of firms those are involved with CSR activities. For instance- Infosys and Tata are two companies which have set up environmental preservation schemes. The manufacturing companies are making expenditure for a clean environment. Corporate social responsibility must act as the strategic plan for the enterprise, but shall not be considered the charity (Onkila, 2013).
The corporate social responsibilities are set up to meet with the legal obligation as decided by the Governmental bodies. The manufacturing companies are implementing growth models which can sustain the business continuity and renewable energy resources (Harjoto, 2017).
One of the major challenges faced by the manufacturing and service industry is water management resources. The companies need to bind with legal implications to overcome the different causes. Water is one of the most essential components of life and it is a top-rated entity which is facing risk globally (Setó-Pamies, 2013). There are a number of companies which are undertaking environmental management systems as a legal responsibility. The corporate sectors need to undertake the corporate social responsibility of providing water in the rural areas. The rural areas are facing prominent challenges of hunger and high mortality. Year wide budget needs to be allocated by the private sector in ensuring the supply water in rural areas. The prime areas of concern are irrigation facilities, farming, mining and other manufacturing activities. The variables which are identified in CSR expenditure of manufacturing and services industry include-pollution control expenditure and community welfare (Michaels and Gruning, 2018). The companies are required to spend two percent of annual revenue generated in the past three years on social corporate responsibility. The stakeholder responsiveness are a significant concern to align the objectives of community and employers. The corporate social responsibility identified by the companies must reduce the risk and cost associated with the implementation water irrigation projects in the rural areas. The revamping of financial performance of a given rural area depends on the labor market, investors and supply pressure.
The legal Implication-Water Management Resources
The key ethical issues are enumerated below-
- Corporate Governance-Corporate governance is a set of rules and systems that involves balancing the interests of management and society at large. In the present article on CSR expenditure analysis made by manufacturing and services industry focuses on the attainment of water management projects in rural areas. This is a CSR activity which requires streamlining the objectives of government and service industry (Hinson and Ndhlovu, 2011).
- Corporate Social Responsibility-This is a self-regulating model which helps the manufacturing and service enterprises to be socially accountable towards its stakeholders and community. In the present context, companies need to spend 2 percent of total annual revenue on corporate social responsibility special projects like water management resources (Huang and Zhao, 2016)
- Corporate Citizenship-Corporate citizenship is an identification of a business entity which has certain social, environmental and cultural responsibilities towards the public. The business enterprises need a license to operate economically and financially. The manufacturing and services industry needs to specialize in corporate social responsibility and sustainability (Ott, 2017). The companies can engage in brand recognition and organizational growth. The principle of business states that a business must have physical infrastructure by which corporate social responsibility functions are aligned with the financial performance of the company.
- Leadership-The leadership style involves providing direction, implementation of actions and motivation of people. This is achieved through the personality, philosophy and leader experience. The entrepreneurs need to come forward and take leadership in the management of water management projects in rural areas. The leadership skills are defined how effectively a company engages in the management of a given rural area and generating employment. The project schemes launched must be within the jurisdiction of companies Act, 2013. The manufacturing companies must contribute towards reducing the negative impacts and enhance the profitability and financial competitiveness of the industry (Tilt, 2016).
The concept of corporate social responsibility has been evolved from many years. The streamlining of philanthropic activities with accountability objectives is the prime concern of manufacturing businesses. The corporate law has listed few decisions like –water resource management, environmental and pollution control, eradication of poverty in rural areas. The business projects must implement central funds and other schemes which are formulated for the poor. Corporate social responsibility is an ethical relationship that ensures transparency within the enterprise. The preservation of cultural and environmental resources is mandatory for the manufacturing companies. This can be illustrated through example- Shell is a Dutch company, which operates in Nigeria. The company is in the business of oil and gas. The company has undertaken mandatory corporate social responsibility and listed out a wide number of activities (Nguyen, Bensemann and Kelly, 2018).
The law is very significant from the beginning and companies need to create physical and human capital for investment and employment prospects. The bureaucratic inefficiency is one of the major causes behind scheme leakages and non-deliver y of goods and services to the concerned business enterprise. The manufacturing industries must undertake environmental sustainability and bring down emissions of greenhouse gases and other hazardous materials. The CSR activity within an enterprise must be in correlation with domestic and international norms.
The government needs to pass the acts which can disclose the corporate social responsibility activities and expenditure. This is one of the measures by which companies can compile the environmental reporting system. Corporate firms need not criticize the CSR expenditure stated in the companies Act. Firms need to focus on strategically differentiating the products from the competitors and involved with community development. The companies need to reduce the risk and engage in increasing the stability and returns. Corporate social responsibility and profit have a positive correlation and probability of expenditure is higher on CSR.
Ethical decision process refers to choosing the set of alternatives in a procedure which are consistent with the moral principles. The elimination of necessary unethical options and selecting the best alternative. The ethical decision making process with respect to corporate social responsibility is as follows-
- Statement of Problem
- Checking facts
- Identification of significant factors
- Developing the list of alternatives
- Testing the alternatives
- Selecting a choice
- Review
The manufacturing and service companies need to engage in ethical decision making where in the problems with respect to the scarcity of natural resources can be resolved.
- Goodness-The intrinsic concept of Goodness involves a promise and commitment towards society through which a difference can be made in people’s life.
- Monism-Monism refers to one thing which is considered good and Pluralism refers to more than two things. In the above context, the sustainability practices must be good enough to resolve environmental concerns (Abukari and Abdul-Hamid, 2018).
- Hedonism-Hedonism can be defined as the acceptable or right behavior which maximizes the outcome. In the above context, hedonism refers to a company must not go beyond the requirements of law while protecting the environmental concerns.
- Pluralist-A pluralist will take the opposite position and think nothing is good in this world. The evaluation of corporate social responsibility with context of political parties and set of recommendations required for the assessment of CSR in manufacturing companies.
- Instrumentalist-Instrumentalist reject the idea of the ends are inseparable from the means. The rise of vast approaches during the past decade has been instrumental in corporate performance and measuring the financial results of the companies.
- Teleology-Teleology has been derived from the Greek word- Purpose or end. This is concerned with moral philosophies which are considered acceptable or right and can produce desired results like career path, knowledge or pleasure. The moral obligations or actions which are required to be fulfilled by the CSR companies.
- Teology- Teology refers to the actions which are undertaken by an individual which are right and acceptable for the self-interest. This is a new concept and must be understood from the religious point of which and can benefit the corporate governance and people understanding of CSR. The manufacturing companies need to engage in practices those are acceptable by the society and not particularly for the self-interest. The legal dimension assesses moral responsibility and collective actions of a corporate entity (Herbas Torrico, Frank and Arandia Tavera, 2018).
Conclusion
The Corporate social responsibility activities undertaken by manufacturing and service companies involve an industry level analysis. The cost of production must be minimized to undertake social protection. The CSR expenditure must be taken for the welfare of common public and generate goodwill.
References
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Harjoto, M. (2017). Corporate social responsibility and corporate fraud. Social Responsibility Journal, 13(4), pp.762-779.
Herbas Torrico, B., Frank, B. and Arandia Tavera, C. (2018). Corporate social responsibility in Bolivia: meanings and consequences. International Journal of Corporate Social Responsibility, 3(1).
Hinson, R. and Ndhlovu, T. (2011). Conceptualising corporate social responsibility (CSR) and corporate social investment (CSI): the South African context. Social Responsibility Journal, 7(3), pp.332-346.
Huang, H. and Zhao, Z. (2016). The influence of political connection on corporate social responsibility——evidence from Listed private companies in China. International Journal of Corporate Social Responsibility, 1(1).
Michaels, A. and Grüning, M. (2018). The impact of corporate identity on corporate social responsibility disclosure. International Journal of Corporate Social Responsibility, 3(1).
Nguyen, M., Bensemann, J. and Kelly, S. (2018). Corporate social responsibility (CSR) in Vietnam: a conceptual framework. International Journal of Corporate Social Responsibility, 3(1).
Onkila, T. (2013). Pride or Embarrassment? Employees’ Emotions and Corporate Social Responsibility. Corporate Social Responsibility and Environmental Management, 22(4), pp.222-236.
Ott, S. (2017). Corporate Social Responsibility and the Impact of Executive Compensation on Corporate Social Responsibility Performance. SSRN Electronic Journal.
Setó-Pamies, D. (2013). The Relationship between Women Directors and Corporate Social Responsibility. Corporate Social Responsibility and Environmental Management, 22(6), pp.334-345.
Tilt, C. (2016). Corporate social responsibility research: the importance of context. International Journal of Corporate Social Responsibility, 1(1).
Trong Tuan, L. (2012). Corporate social responsibility, ethics, and corporate governance. Social Responsibility Journal, 8(4), pp.547-560.
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