Arguments in favor of CSR
Discuss about the Ethics and Corporate Social Responsibility.
Corporate social responsibility is an initiative in which company work to protect the environment and well-being of society. In the current business scenario, CSR strategies are effective for the company because it not only provides profitability but also builds the company’s image. In this way, the company tries to meet the legal standards like an employment contract. But, at the same time, it may increase the cost of company (Drea DeFoe, 2015). This essay discusses the arguments in favor and against of corporate social responsibility. It also supports the arguments with a real example.
It is argued that corporate social responsibility pulls the attention of stakeholders. Labour force makes the unions and create demand to protect their right from the company. Hence, it has become essential for companies to release the duties of employees as a result it helps the company to get the support of workers. For example, Woolworths use caveat emptor strategy which means let the buyer beware and no more holds true because the customer is a key player around whom entire marketing practices are revolved. The consumer does not purchase the products and services which are offered to them instead they only purchase those goods and services that they actually want (Shyamala Sankaranrayanan, 2017). Hence, companies that unable to meet the needs of customers, have the possibility to close down sooner and later.
It is analyzed that Wesfarmers Company uses remedy cells for consumers which protect them against the anti-consumer acts. In this way, consumer control forced the firms to use social responsiveness with respect to them. For example, if Wesfarmers Company uses effective social responsibilities then it may suffer loss for a short period but accomplishing the obligation is effective for a company to survive at long-term (Forbes, 2012). Although, it can be a short-term cost for the company yet, provides long-term profitability to it.
Flammer (2013) is also in the favor of CSR as it discusses that CSR is beneficial for the company to survive in the market at long term. In this way, it is analyzed that business companies are a strong factor for the society because it provides different benefits to them. But, if a customer ignores the social problem then society can deny the acceptance of company’s products and services. Therefore, the company considers social responsibility in its strategy to avoid self-destruction in long-run.
Arguments against CSR
Tai and Chuang (2014) are in favor of the corporate social responsibility as it depicts that CSR is effective for self-enlightenment. It is analyzed that education level and business understanding is increasing in society hence company can encourage the customers to buy the products and services by involving the social activities. Moreover, managers build the public anticipation by considering the social and moral responsibilities. For example, BHP Billiton ensures to pay taxes to the government, fair wages to employees, dividends to shareholders, and quality goods and services to consumers (Joutsenvirta and Vaara, 2015). Moreover, it involves the social responsibility rather than using legislative interference.
CSR is also beneficial for a business to avoid the government regulation. Non-conformance to social standard is used to attract the legislative limits. Government directly control on the corporation by making regulation regarding business functions. As well as, there are different agencies that affect the business activity. For example, central pollution control board addresses the issues associated with environmental pollution and Australia stock exchange focuses on the issues associated with investor’s protection. As well as, Employees State Insurance Corporation highlights the issues associated with the health of employees. Hence, company will be held liable to pay fines and penalties for violating the regulation (Esping-Andersen, 2017). The organization must involve the social responsibility by using the effective policies for their employees and customers.
According to the Husted (2015), the business organization uses different resources that can be partially exercised for solving the social issues. Moreover, business is a creation of society because it works in the interest of society. These interests could be related to economic and social benefits. In addition, it can be evaluated that management is going towards professionalism which contributes towards the social orientation of business. Moreover, increasing professionalism is the main reason for managers to use formal management within an organisation. It is analyzed that managers is proficient to make a plan, organize, lead and control by using their understanding as well as subscribe the code of conduct that is developed by the organization and recognized authority.
In this way, managers are bounded to use social values due to ethics of the profession. This code of conduct enables the employees to gain their awareness about social responsibility. For example, Australian Airlines consider social responsibility by keeping the safe environment for employees and travelers. It is beneficial for the company to grow in the dynamic environment and to get the competitive advantages in the industry. This company also decided that how much social responsibility will be delivered rather than focusing on whether or not to discharge the social responsibility because it enables the company to attain the future targets (Ioannou, and Serafeim, 2015).
It is argued that business is an economic activity and social responsibility is a fundamental function for the company to move towards the economic viability of its operations. Moreover, the government should look towards the society’s interest instead of the business. In addition, the government should be held liable for social responsibility rather than the business enterprises because society expects with the government, not to the business (Schrempf-Stirling and Palazzo, 2016).
In against, Flammer (2013) argued that corporate social responsibility has the limitation that what can measure the social responsibility and at what level, should a company be engaged in it. As well as, there is a limitation to assess what kinds of resources should be integrated to social values and whose interest should hold priority over others such as investors should be prioritized over suppliers or the vice versa. There are several questions which are based on the subjective consideration that states social responsibility is not an easy task for the company.
Apart from this, a cost-benefit analysis is another limitation of using corporate social responsibility within an organization. In this way, corporation cannot be executed any social benefit acts where initial cost exceeds the benefits in the short run. Moreover, professionally trained managers may not have the skills to resolve the social concern (Hopkins, 2016). Hence, inadequate skills and competencies are key issues for executing the social responsibility within the corporation.
It is stated that transfer of social cost is another limitation of using corporate social responsibilities. Costs associated with social programs can be adjusted through business concerns in a different manner. For example, the cost is passed to the customer by increasing the rate of products and services. Another example is that if managers keep the price then they deduct the few amounts from wages of employees as a social cost. Along with this, if wages are constant and profits are declining then the company will decline the dividend amount of shareholders. In this way, low profits will decline the interest of managers to further engage in CSR activity. It is also evaluated that sub-optimal utilization of resources is another limitation of CSR (Glavas and Kelley, 2014). Because, when limited resources are utilized for meeting social objectives then this can violate the purpose of company’s existence.
It is argued that every business deal in the larger operating system. Hence, CSR cannot come in that system and transform the society. Further, the company is only responsible for creating the products and services rather than dealing with welfare and societal activities. In addition, corporations do not have the proficiency and understanding to handle the social concern. It can also be stated that if a manager focuses on the social responsibilities which means they have not performed the primary responsibilities of the company with full capacity (Hopkins, 2016).
It is also stated that being socially responsible, can lose the company’s financial position in the global marketplace. There are different activities has involved in social responsibility which creates a high cost for the company. These activities are donating money, ensuring product safety, cleaning up the atmosphere, and spending time for welfare issues. In the ending level, these expenses will be passed on the customers in terms of final prices of goods and services (Flammer, 2013). In such case, some customers can wish to pay more prices for products and services that are socially responsible but, at the same time, some customers cannot pay the high amount for products and services. As a result, it can provide the economic disadvantages to the company.
Conclusion
It can be concluded that there are different companies in Australia which use social responsibility. Because, the company has realized that CSR is beneficial to gain financial performance. It can also be evaluated that company can gain sustainable advantages via using the CSR activities within the organization such as it can invest in good employment practices and proper labor standards. But, there is some limitation of using CSR activities such as it does not addresses that what consumer is willing and pay for ethical approaches. There are certain examples of business that are willing to adopt socially responsible activities because it may affect its profitability. Woolworths and BHP Billiton is one of the examples of the company that involved in the CSR activities and gained its profitability.
References
Drea DeFoe (2015) Arguments for and Against Corporate Social Responsibility. [Online]. Available at: https://toughnickel.com/business/Arguments-for-and-Against-Corporate-Social-Responsibility (Accessed: 19 September 2017).
Esping-Andersen, G. (2017) Politics against markets: The social democratic road to power. USA: Princeton University Press.
Flammer, C. (2013) Corporate social responsibility and shareholder reaction: The environmental awareness of investors. Academy of Management Journal, 56(3), pp. 758-781.
Forbes (2012) Six Reasons Companies Should Embrace CSR. [Online]. Available at: https://www.forbes.com/sites/csr/2012/02/21/six-reasons-companies-should-embrace-csr/#2c8813613495 (Accessed: 19 September 2017).
Glavas, A., and Kelley, K. (2014) The effects of perceived corporate social responsibility on employee attitudes. Business Ethics Quarterly, 24(2), pp. 165-202.
Hopkins, M. (2016) The planetary bargain: corporate social responsibility comes of age. Berlin: Springer.
Husted, B. W. (2015) Corporate social responsibility practice from 1800–1914: Past initiatives and current debates. Business Ethics Quarterly, 25(1), pp. 125-141.
Ioannou, I., and Serafeim, G. (2015) The impact of corporate social responsibility on investment recommendations: Analysts’ perceptions and shifting institutional logics. Strategic Management Journal, 36(7), pp. 1053-1081.
Joutsenvirta, M., and Vaara, E. (2015) Legitimacy struggles and political corporate social responsibility in international settings: A comparative discursive analysis of a contested investment in Latin America. Organization Studies, 36(6), pp. 741-777.
Schrempf-Stirling, J., and Palazzo, G. (2016) Upstream corporate social responsibility: The evolution from contract responsibility to full producer responsibility. Business and Society, 55(4), pp. 491-527.
Shyamala Sankaranrayanan (2017) Arguments For and Against Social Responsibility! [Online]. Available at: https://www.fibre2fashion.com/industry-article/5638/arguments-for-and-against-social-responsibility (Accessed: 19 September 2017).
Tai, F. M., and Chuang, S. H. (2014) Corporate social responsibility. Bu
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