The Role of Corporate Social Responsibility in Sustainable Development

Corporate social responsibility in sustainable development has been extensively studied with volumes of existing literature being available on the subject. The practice has been documented for as long as it has existed. Management specialists have long investigated the centrality of CSR in developing the institution’s business environment (Tai and Chuang, 2014, p. 117). Pundits have pondered over the proverbial giving back to the community and if at all it results in the achievement of strategic external outcomes intended by the corporate players. For a long time, researchers have endeavoured to deconstruct the phenomenon of corporate social responsibility, attempting to understand its underlying concepts to establish its actual impact on the society in which the firm operates. Its use as a social enterprise technique has been evaluated in numerous research expeditions, presenting large caches of secondary literature.

Different perspectives have been fronted with scholars availing varying discourses on the subject. As such abundant literary evidence on the subject exists. The section seeks to examine existing literature on CSR and sustainable development to provide evidential backing to the paper’s research question. It shall offer fact-based arguments to attempt to justify the positions assumed. With the support of scholarly works from previous scholars, the section will offer comprehensive insight into the research subject with the intention of supporting the paper’s hypothesis.

Corporate Social Responsibility and Sustainable Social Development

In their journal article, “Implicit” and “explicit” CSR: A conceptual framework for a comparative understanding of corporate social responsibility, Matten and Moon (2011, p. 407) define corporate social responsibility as a type of industrial self-governing adopted by businesses into their operational models that acts as a supervisory framework to ensure the business satisfies its duties to the public, in addition, to actively complying with the local, regional, national and international ethical and legal standards. In many establishments, the implementation of CSR often goes beyond the fulfillment of statutory obligations and compliance with norms (Tai and Chuang, 2014, p. 117). The institutions embrace CSR as a critical component of their business model and an important investment. The practice is perceived as an avenue of the select firm to satisfy its organizational obligations to their society.

According to Matten and Moon (2011, p. 408), the companies engage in activities that further social benefit and which do not particularly benefit the firm or required by law.  The companies show genuine, unsolicited interest assisting the public to attain certain milestones without expecting much in return. The article notes that while there may not any apparent tangible advantage guaranteed from such ventures, the companies often aim to realize an increase in long-term profitability and establish stakeholder trust through favourable customer and public relations (Tai and Chuang, 2014, p. 117). Engaging in high ethical standards minimizes legal and business risks besides providing accountability for corporate actions. There is limited negative impact resulting from the firm’s decisions as their processes are guided by law or driven by the motivation to exercise goodwill.

Matten and Moon (2011, p. 408) explain that corporate social responsibility has provided a platform for establishments to address some of their society’s gravest challenges or at least attempt to. The firms have endeavoured to meet some of their communities’ shortfalls in human and physical resources consequently improving the welfare of the public. The scope of such operations is often defined by contemporary constraints, including the enterprise’s financial muscle.

Proponents of corporate social responsibility often argue that corporations exploit the CSR perspective for long-term profits while critics observe that the practice distract firms from their economic objectives (Kolk and Van Tulder, 2010 p. 44). The contracting dimensions of this argument often serve to regulate the practice.  Companies appreciate the impact of CSR in establishing better relations with the public and attracting a greater volume of business while being keen so as not to be side-tracked from its major economic obligations. Matten and Moon (2011, p. 411) perceive CSR as a gamble. The authors note companies go beyond their legal expectations to impress a public which they are not certain will reciprocate their overtures in kind. The huge investment placed into ensuring their communities may go unrecognized with no noteworthy impact or may lead to even greater sales numbers guaranteeing the firm, a healthy financial position. Nonetheless, the authors are optimistic that corporate social responsibility will continue to be a regular part of the companies’ organizational models.

Moon (2012, p. 296)’s The contribution of corporate social responsibility to sustainable, presents an interesting perspective on the research topic. The author presents a brief perspective background of CSR and its connection with sustainable social development and enterprise. According to Moon (2012, p. 297), political scientists studied CSR applied in the theories of late capitalism, neoliberalism, and globalization. Early scholar observed the practice as a mere means to a given economic end. Corporate social responsibility was viewed as a quid pro quo arrangement where companies met certain set regulatory requirements or satisfied a given social need with the society being expected to perceive the corporate entity in higher regard or to improve positive interaction with the firm. According to Moon (2012, p. 297), CSR was believed to be some form of capitalist legitimacy that was established in response to concerns of unchecked corporate power. It would later be transformed by companies into a “risk management” scheme or “business model” with debatable results.

Corporate social responsibility defines an organization’s mission and is an immortal exemplification of what the firm epitomizes for its consumers. Companies embody CSR as part of their identity and a critical part of their public image. As Visser (2008 p. 39) notes, firms exercise CSR as a means of continuing a tradition of partnership with the society and improving their market footprint. Visser (2008 p. 42) notes that the perception of companies towards CSR has changed tremendously. The view that society’s regard for a given company can be procured through various social initiatives is slowly being abandoned. Corporate social responsibility is being redefined. Firms are steadily embracing the perspective that CSR should encompass the influence of their processes on the environment and in society at large. They are departing from the traditional approach of supporting matters of public interest to engaging in activities that do not harm society (Tai and Chuang, 2014, p. 117). The companies are abandoning direct engagement with the communities instead choosing to conduct themselves in ways that do not offend the masses. The new dimension has been made popular by the reality that there is no consensus that the “generous” form of CSR increases profitability (Garriga and Melé, 2014, p. 53). Economists have attempted to provide financial justification for such activities but have not achieved a middle ground. While some reported positive gains, others commented that the impact of CSR on revenue volumes was neutral and in some cases, negative. Others noted that “a firm engaging in a CSR-based strategy could only sustain an abnormal return if it could prevent competitors from imitating its strategy (Jamali and Mirshak, 2010, p.445).”

Traditionally, the study of the impact of CSR tends to be limited to the benefit that companies tend to receive from the practice. The research focuses heavily on the increases or lack thereof of profits by the establishments practicing CSR. Rarely is there an inquisition into its overall impacts on the general business environment. Scholars tend to overlook the cumulative effect of CSR on other firms (Du, Bhattacharya and Sen, 2013, p. 16). Their decision not to centre their investigations on the market is perhaps majorly informed by the reality that the exercise was originally meant to soften the public’s perception of the viciously capitalist corporate elite. It was designed to present businesses in a more favourable light and not to relish any actual impact on society or the economy. However, its change in mission resulted in inadvertent benefit the public and in extension, the marketplace.

How Can CSR Contribute to the Development of a Competitive Marketplace?

In the journal article, How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction, Saeidi, Sofian, Saeidi, Saeidi and Saaeidi (2015, p. 341) explain the impact of CSR in the development of a competitive marketplace. The authors note that the integration of CSR as a business model has made the practice mainstream. Corporate social responsibility has become an operational approach where firms embrace participation in civil and public affairs to gain greater visibility. The establishments are hopeful that the improved brand involvement in matters of interest to society will serve as good advertising. Saeidi et al. (2015, p. 341) demonstrate that while the impact of CSR is elusive, is the net contribution to the general economic establishment is not.

The adoption of the framework by many enterprises all who hope to improve their net financial position has led to an interesting situation in the marketplace (Garriga and Melé, 2014, p. 51). Industry players jostle for a chance to engage the public in a flurry of activities they believe will be critical in endearing their brands more to the already selective public. The companies seize every opportunity they can get to engage in CSR undertakings. The completion of one projected is succeeded by the inception of another, all to acquire long-term consumer partnership (Kolk and Van Tulder, 2010 p. 44). However, while the efficacy of social initiatives in ensuring a better financial position is arguably, that of the alternative CSR approach is not. The most prominent application of corporate social responsibility as a risk management strategy. CSR is utilized by many establishments as a means of checking against statutory overreach. In the contemporary capitalist economic environment, corporations have been awarded an especially expanded political space.

Companies have expanded freedom with their operations being arguably beyond reproach, many of their processes are covered in a network of obscure laws making them fairly powerful and difficult to challenge. However, this often comes at a great task public relations price (Carroll and Shabana, 2010, p. 85). As much as companies would like to exploit their customers without any consequences due to their massive influence, they must often be keen to ensure they maintain a good rapport with the public in which they operate. Assuming corporate social responsibility as a risk management approach is critical for a couple of reasons (Kolk and Van Tulder, 2010 p. 44). For one, it can be easily interwoven into the company’s business module. The company easily bases it expected operational, financial, administrative outcomes on select CSR prospects.

Companies develop their short, medium, and long-term plans based on the society’s expectation. They examine the regulatory framework and legal environment and constitute guidelines along which the companies must be managed to minimize liabilities as much as is possible. The firms do not typically exceed what is required of them. They do not go out of their way to engage in social initiatives meant to better the public. The companies believe that as long as they operate within the established legal bubble, their activities do not adversely impact the public or antagonize law enforcement (Kolk and Van Tulder, 2010 p. 44). Adverse conditions such as pollution and environmental degradation are consequently avoided. Additionally, established economic doctrines are adhered to. Companies do not participate in financial malpractice out of respect for the established guidelines and the fear of increasing the operational risk. They do not pursue underhand dealings as they understand that such practices only serve to put their wellbeing in jeopardy. Many companies engaging in CSR practice concurrently limit the expression of poor adherence to policy. When industry players diligently follow rules the general business environment is sanitized (Kolk and Van Tulder, 2010 p. 44). No wrongdoing occurs. However, when adhering to the regulations result in more public esteem, companies increase their attentiveness observing the law. The engage in comprehensive activities meant to improve the customer’s experience. As Saeidi et al. (2015, p. 344) explain, the companies streamline their processes the consumer’s benefit inadvertently resulting in competitiveness.

In his article, The business case for corporate social responsibility: A company-level measurement approach for CSR, Weber (2016, p. 249) explores the various ways in which CSR leads to the development of a competitive marketplace. The author explains that CSR presents a unique situation in the contemporary environment. The practice opens up the space for competition to impress the customer through the participation in comprehensive activities purported to be for social good.

Triple Bottom Line

According to Weber (2016, p. 250), corporate social responsibility results in the expansion of competition in the marketplace by underlining three major external environmental factors: profit, people, and planet. The entire business sphere is centred on the realization of outcomes pertaining these three elements (Kolk and Van Tulder, 2010 p. 44). The entire premise of CSR is to improve profitability. Corporations spend huge sums of money on social enterprising with the expectation that over time, the investment will result in revenue growth and present decent returns. These establishment’s obsession with profits has led to immense competition among the different players (Carroll and Shabana, 2010, p. 85). The marketplace is overrun by firms seeking to establish themselves as the most progressive and pro-consumer brand and pulling all stops with along with it. The companies are incessantly endeavouring to improve the experiences of their interactions to make the community feel adequately welcome to buy into its operational plan and consequently increase profits.

Another key way in which CSR results in the development of a competitive economic environment is the pandering to the interests of consumers and the public. Businesses are inherently predisposed to mind the welfare of their customers to ensure their own perpetuity and growth. People are the most important resources for any corporation they are the primary reason the existence of the firms (Carroll and Shabana, 2010, p. 85). Customers provide a constant flow of business hence, ensure liquidity critical to the survival of the business. They provide the justification for the continuity of the enterprise by providing the monetary resource needed to satisfy the company’s most important obligations. As a consequence, the companies suit their corporate social responsibility undertakings to take care of the interests of this group (Dahlsrud, 2008, p. 2). Each firm attempts to address their customers’ CSR needs in the most unique and satisfying way they can resulting in heightened marketplace competitiveness.

The planet is a major motivation for corporate social responsibility initiatives. Brands all over the world often desire to appear sympathetic to the realization of a friendlier physical environment. Every consumer seeks a clean and liveable surrounding. They strive to earn an income so that they may dispose of some extent of it in acquiring a serene setting devoid of the conventional physical pressures. While many may not realize this dream, they would at least prefer that the verve of the modest environment they are able to eke for themselves is not defiled by others, more so by large corporations. Big companies often exhibit an equally large degree of effluence (Carroll and Shabana, 2010, p. 85).

When intentionally or accidentally disposed irresponsibly, the waste disrupts the wellbeing of individuals within its immediate surrounding. The effluence results in varying degrees of injury from mild irritations to severe reactions, the development of terminal diseases, and in severe incidences death. The destruction of the environment by companies may also result in dereliction of the area which makes it an eye sore and likely to cause physical injury (Dahlsrud, 2008, p. 4). Therefore, corporations endeavour to fulfil their environmental protection responsibilities. The firms frequently engage in initiatives that seek to preserve the natural state of their surroundings. Some of them explore better ways of waste disposal to comply with the tenets of their legal and ethical obligations. The seemingly endless desire to observe the environmental protection perspective of CSR has resulted in increased competitiveness of the marketplace as corporations jostle to outdo each other’s efforts.

Brand Differentiation

As had been mentioned by Matten and Moon (2011, p. 408), corporate social responsibility is extensively utilised by businesses to as a form of branding. Select companies are often renowned for their adherence to CSR conventions or their engagement in social enterprising exercises (Tai and Chuang, 2014, p. 117). Companies that embrace CSR as part of their business model tend to be far more favoured than those that do not. It has an unprecedented ability to build consumer loyalty purely on moral values. Many companies exploit the CSR’s ability to marshal public support to facilitate increased profitability. The companies appear to be exceedingly concerned to be furthering social good. They are leveraging on people’s desire to contribute to the betterment to further their sale. The business model has been known to work exceedingly well, prompting many businesses to pursue it and ultimately result in the development of a competitive marketplace.

Conclusion

Organisations should view CSR as a solution to their social engagement challenges interact with the public. Companies must appreciate the value of the practice and its significance in the promotion of their own key initiatives and values.

For organizations to fully embrace corporate social responsibility and perceive it as an avenue to implement their own key initiatives and values, they must have limited financial expectations of the CSR practice (Dahlsrud, 2008, p. 5). Companies must understand that CSR merely offers an opportunity for the firm to connect with the public and to advance social progress. The need to increase profitability as a consequence of the exercise must exist but only to a limited extent. The firm should place greater focus on establishing a culture of participation in matters dear to the community. CSR should be viewed as a solution to the indifference of the public towards the firm and what it represents. The activities will allow the public to understand the companies’ values and share their operational agenda, prompting them to have a more favourable view of the firms. Organisations should view CSR as a means of satisfying their debt to the society, nation, and the world at large as it contributes to the betterment of the welfare of humanity.

References

Carroll, A.B. and Shabana, K.M., 2010. The business case for corporate social responsibility: A review of concepts, research and practice. International journal of management reviews, 12(1), pp.85-105.

Dahlsrud, A., 2008. How corporate social responsibility is defined: an analysis of 37 definitions. Corporate social responsibility and environmental management, 15(1), pp.1-13.

Du, S., Bhattacharya, C.B. and Sen, S., 2013. Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication. International Journal of Management Reviews, 12(1), pp.8-19.

Garriga, E. and Melé, D., 2014. Corporate social responsibility theories: Mapping the territory. Journal of business ethics, 53(1), pp.51-71.

Jamali, D. and Mirshak, R., 2010. Corporate social responsibility (CSR): Theory and practice in a developing country context. Journal of business ethics, 72(3), pp.243-262.

Kolk, A. and Van Tulder, R., 2010. International business, corporate social responsibility and sustainable development. International business review, 19(2), pp.119-125.

Matten, D. and Moon, J., 2011. “Implicit” and “explicit” CSR: A conceptual framework for a comparative understanding of corporate social responsibility. Academy of management Review, 33(2), pp.404-424.

Moon, J., 2012. The contribution of corporate social responsibility to sustainable development. Sustainable development, 15(5), pp.296-306.

Saeidi, S.P., Sofian, S., Saeidi, P., Saeidi, S.P. and 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), pp.341-350.

Tai, F.M. and Chuang, S.H., 2014. Corporate social responsibility. Ibusiness, 6(03), p.117.

Visser, W., 2008. Corporate social responsibility in developing countries. In The Oxford handbook of corporate social responsibility.

Weber, M., 2016. The business case for corporate social responsibility: A company-level measurement approach for CSR. European Management Journal, 26(4), pp.247-261.