Why CSR is essential for business enterprises
What Is The Impact Of Corporate Social Responsibility On Firm Value?
Corporate Social Responsibility can be defined as one of the most important factors responsible for maintaining the public image of the company. It can be defined as the continuous commitment of a business towards the contribution of the development of the communities and societies. The CSR activities of the organization look beyond the profit making aspect and contribute towards the success of communities (Schwartz, 2017).
- Engaging in CSR Activities goes a long way in helping the firm to build trustworthy relations with the various members in a society.
It helps to create awareness in the society. It lays the duty of the firm to ensure that the various members in the society are aware of the environmental concerns which require the attention of the members.
- It also helps the organization to convey a message to people that the organization is concerned about their well being and that although it is perceived to be a profit making venture, the organization cares about the well being of the general public and take initiative for the well being.
- The organization can also gain support from the public if it engages in enough corporate social responsibilities (Tai & Chuang, 2014). Although the organization is often viewed as a profit making machine, it is not so, hence if the company is able to portray that it wants to engage in good deeds, then it will be able to gain the support of the consumers.
- CSR is also considered to be a part of the organization `s duties and policies. The organizations which have a good CSR System, it might go a long way in becoming successful.
- Government intention- Very often government stresses on encouraging the CSRs of the firms so as to ensure welfare. In return they are given incentives.
The Sime Darby Berhad is a rubber estate company and manages various industries including motors, property, plantation and others (Carroll, 2015). The company is committed to sustainability and has invested in various CSR initiatives like the Child Protection act to address the issues of safety, protection and well being of them.
As stated earlier, engaging in a good corporate social responsibility activity is extremely important for a business organization. Given below are some ways in which the corporate social responsibilities are beneficial for the society:
- Helps in brand recognition: When firms engage in social responsibilities then they become more famous and gain the recognition of the customers who can easily relate to the company and its offerings.
- Increased sales and customer loyalty- Engaging in corporate social responsibility activities for the benefit of the society and communities alike help to improve the sales of the company because customers like to purchase from a brand which is fulfilling its responsibilities effectively (Cheng, Ioannou & Serafeim, 2014).
- Easy access to capital- The companies who engage in a good activity for the society often have the favor of the government on their side (Flammer, 2013).That also helps the company to gain the confidence of the banks, which then make it easier for the firm to borrow loans for the company.
- Better financial performance- Particularly to the price of its shares and the performance pertaining to the share market, companies who engage in CSR activities have a good reputation in the market and therefore, the share price of the company remains good.
- Helps in talent attraction- Qualified candidates like to engage in companies which have a good corporate social responsibility as they believe those companies who engage in good for the society would engage in good for their employees as well (Bhattacharya et al. 2017).
For instance, an example of the DiGi Company can be taken which is a gaming company in Malaysia. The company has had the ability to change the game for the gaming industry in Malaysia and has gained the support of over 12.1 million customers in Malaysia. It has also been recognized as one of the most innovative companies in 014 and has created various socio as well as economic developments in Malaysia (Khan, Muttakin & Siddiqui, 2013). It has also helped various companies transfer to the technological domain and empowered teachers and over 40000 students with respect to safety skills. The company has also helped education spread in the urban poor centers.
- Improved their brand recognitions- The Company is a common household name now.
- Improved financial performance- It can easily attain capital and doing good in the market with respect to revenue (Servaes & Tamayo, 2013).
- Government support- Has government aids and supports
Given below are certain ways in which a company can improve its corporate social responsibility and engage in community service:
The present age can be described as the information age where just one single person has the authority of disseminating the entire information of the company and spread it on the internet (Kilkenny, 2014). Hence, nothing can be hidden from the society now (Ruggie, 2017). Hence, it is advisable that the company keeps its operations specifically those related to the social responsibilities open to portray the good deeds.
Benefits of CSR for society
Sustainability can be described as the key essence of future survival. As the society has advanced, customers have become extremely conscious about their choices (Deng, Kang & Low, 2013). Hence, the company must ensure that it offers the customers a responsible product.
The company should take efforts to engage in local community activities which work towards up-liftment of local businesses and companies. They should also be supporting local events and businesses (Clapp & Rowlands, 2014).
Innovation is truly the key to success and the company should see to it that it works actively towards the environment in order to encourage the employees so that they are able to come out with best ideas for the given company.
CSR cannot be just implemented within a certain section of the organization, but has to be implemented from the top of the firm (Saeidi et al. 2015). The top management should take the responsibility of motivating the employees and ensuring that they take active participation n the CSR tasks.
The company is a household name dealing in beverages and dairy products. The company has been engaging in extensive CSR activities like hosting national championship, educational programs, food for children and various others (Emeana, 2013). This has bought about extensive fortune and good name to the company and a significant increase has been observed in its turnover.
Corporate Social Responsibilities can be defined as the responsibilities of the organization towards the welfare of the society. An organization is a social entity and thus, in order to function well within the realm of the society, the company should be engaging in operations that do not cause any harm to the organizations. This can be anything from welfare of employees to helping the poor in the society or even providing education to the children. The given essay will discuss the corporate social responsibilities of Air Asia and reflect on its key areas with reference to the same (Crane, Matten & Spence, 2013).
Air Asia is a Malaysian low cost airline which has its headquarters in Kuala Lumpur, Malaysia. It is the largest airline in Malaysia and has flights which reach to around 165 destinations in 25 countries (Airasia.com, 2018). The main unique point of the company is that it sells no frills, low cost tickets to the passengers so as to gain the attention of the target audience. The Aircraft Company can be described as the pioneer of low cost travel in the continent. The company has maintained this position since a long time and achieved a latest award in 2017.
Ways to improve CSR and engage in community service
Corporate social responsibility is normally defined as the responsibility of the business whereby it has to give back a certain portion of its earnings to the society in the form of social blessings. These social blessings can be in form of providing education to the needy, providing food to the poor, taking care of the employees in the organization and protecting the environment for a sustainable future (Takkar, 2015).Furthermore, CSR activities are prescribed by the government and there are various laws whereby the companies have to indulge in these activities under law. Air Asia engages in various corporate responsibility activities whereby it fulfills its duties towards its employees and community at large.
There are various key areas of responsibilities towards which the company has certain obligations. The four key areas have been given as follows:
The environment is the area where the company exists. As the company makes use of the various resources in an environment, it becomes very important for them to see to it that the firm gives it back to the environment. In this aspect, the company can contribute by seeing to it that the environment is pollution free and that all resources replenish well. For this reason, Air Asia engages in various social drives and green technology which helps the environment and has an impact on it in a positive manner.
A society comprises of various communities and these communities are greatly affected by the different activities of the firm. Vey often when an organization carries out the various activities, the communities are displaced. For this reason, all organizations must contribute towards the welfare of the organization. For this reason, a firm should see to it that it gives back to the different communities as well. Air Asia does this by engaging in a program called #AirAsiaMAKNA in benefit of MAKNA (Majlis Kanser Nasional) which is a program for the cancer patients. Through this program, the firm ensures that cancer patients are assisted.
It is often stated that the different corporate social responsibility programs of a firm are targeted towards the different stakeholders of the organization. The employees are considered to be the primary stakeholders of the organization and for this reason, it is important for the firm to engage in activities which are beneficial for the employees as well. This can be done through providing various benefits to the employees, providing them a good working environment and ensuring work place health and safety. Air Asia has a diverse workforce which ensures that all the requirements of its employees are met with appropriately.
Examples of companies successfully implementing CSR
In the market place, there are various parties with which an organization deals with. These parties are the suppliers, customers, and business associates. If the company ensures that it engages in ethical business practices while dealing with them, social responsibility is ensures. Air Asia engages in sustainable and ethical relationships with all its employees.
The primary challenges faced by Air Asia in ensuring that it engages in an ethical responsibility towards the society are as follows:
- Financial constraints: The corporate social responsibilities require investment from the firm`s side and therefore, the company may not always be able to do so because of financial restrictions. Hence, financial restrictions comprise of one of the biggest barriers.
- Selecting the right medium-Selecting the right medium is also a problem faced by the companies. It needs to ensure that through its activities the right people receive the help.
The following recommendations can be used:
- The company can ensure that it obtains the funds from various sources the government. Very often the government provides incentives to the firms who engage in CSR Activities and hence, the company can use these incentives to work towards the welfare of the society with reference to the corporate social responsibilities.
- The company can make use of social media to determine the right kind of responsibility area in which the firm can engage in to fulfill its responsibilities.
Conclusion
Therefore from the given analysis it can be stated that Corporate Social responsibility forms an essential part of the organization. This has various advantages at it helps the firm to connect in a stronger way to the consumers and the societies at large. Air Asia understands the importance of this and conducts various activities towards its key areas of responsibility which are the marketplace, workplace, communities and the environment. With its green drives and cancer treatment initiatives, the firm has been successful in achieving various awards for the best CSR Initiative of 2017.
References
Airasia.com (2018). AirAsia and AirAsia X win top CSR Awards | AirAsia.. Retrieved 9 April 2018, from https://www.airasia.com/my/en/press-releases/csr-malaysia-awards-2017.page
Bhattacharya, C. B., Korschun, D., Sen, S., & Routledge, H. (2017). Corporate social responsibility. Journal of International Law, 26(2).
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Cheng, B., Ioannou, I., & Serafeim, G. (2014). Corporate social responsibility and access to finance. Strategic Management Journal, 35(1), 1-23.
Clapp, J., & Rowlands, I. H. (2014). Corporate social responsibility. The Essential Guide to Global Environmental Governance. Routledge: London, 42-44.
Crane, A., Matten, D., & Spence, L. (2013). Corporate social responsibility in a global context.
Deng, X., Kang, J. K., & Low, B. S. (2013). Corporate social responsibility and stakeholder value maximization: Evidence from mergers. Journal of financial Economics, 110(1), 87-109.
Emeana, N. (2013). corporate social responsibility.
Flammer, C. (2013). Corporate social responsibility and shareholder reaction: The environmental awareness of investors. Academy of Management Journal, 56(3), 758-781.
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Kilkenny, S. (2014). Corporate Social Responsibility. Network Journal, 21(3), 24.
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Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of Business Research, 68(2), 341-350.
Schwartz, M. S. (2017). Corporate social responsibility. Routledge.
Servaes, H., & Tamayo, A. (2013). The impact of corporate social responsibility on firm value: The role of customer awareness. Management science, 59(5), 1045-1061.
Tai, F. M., & Chuang, S. H. (2014). Corporate social responsibility. Ibusiness, 6(03), 117.
Takkar, K. (2015). Corporate social responsibility. International Journal of Research in Economics and Social Sciences, 5(8), 297-302.
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