Abstract Benefits Of Corporate Social Responsibility Commerce Essay

Abstract Benefits Of in corporald amicable indebtedness Commerce Essay bodied Social Responsibility is a term that has been very popular recently. It represents the obligation of an individual, or in this law of naturesuit an entity, to benefit to family. in that respect is no longer affection for profit only. Today society demands from companies to take c be of them and the environment in which they operate. In simple words, Corporate Social Responsibility is a mien of doing concern by combining economic benefit with sustainability of the environment. Companies whitethorn contri neverthe slighte to environment in m whatsoever ways among which there be protection of the environment, by investment funds in favorable, educational or cultural programs or by getting the return on employed human resources. This base analyzes the concept of CSR and it explains benefits that association whitethorn get if it pursues Social Corporate Responsibility.Key words business, political party, corporate affectionate obligation, corporate strategy, environment, profit, society.CHAPTER 1INTRODUCTIONCorporate Social Responsibility (CSR) is a slice of business ethics. Ethics represent the process of doing things that are morally correct. By CSR, companies are trying to maximize their positive impact on society and to disparage the bad one. CSR is very meaning(a) to consumers all over the world. Increase in engage the products with green characteristics is one fact that proves it. Previously, in time of communism (social economy), social state and increase of living standards were basically the government make loves. By accepting the open (market) economy and privatization of the companies, this also became the issue of those who operate in the market. An opposite intellectual is that tribe demands are much higher nowadays and government can non deal with all of it. Companies also saw their chance of being different by pursuing original so called socially p rudent policies. Today, CSR represents a way of differentiation, a way of gaining competitive advantage in the market. Two chief(prenominal) questions for the companies that apply corporate social duty are the quality of the management and the degree of impact of their operations on the society.The general social belief is that companies are the ones who created environmental and social problems by their tenure of people and nature by dint of the centuries. This is the reason why they are perceived as those who are responsible for these issues. Francois-Marie Arouet known as Voltaire (1832) was a writer, and according to certain evidences, he was the first one that used well known phrase with the great power comes great responsibility. Later on, many artists, politicians and other people used this phrase in their speeches and it became a normal phrase for responsibility. In modern economy companies have the power so they should be responsible behavior toward the society in which they operate.CSR whitethorn be nattern as topic that is a new one, but this concept was get outing through many years. afterward the Second World War, people started to put attention on the issues of environment and social situation. From several influences, companies also started to think around this concept. through the years, this concept became essential not on the nose for people in society, but also for the companies. Today, they see it as way of diversification on the market. It is become a tool to bring in and retain the customers. Being socially responsible also gives trust to investors, and more of them are entrusting to invest in corporation with ethical principles.In the surface early, it is expected for this tool to become a divide strategy by which corporations willing be guided.1.1 Objectives of the studyThe CSR is a very important topic and issue in today world. Many conferences are through with(p) on these issues in assemble to raise awareness and to make programs and mechanisms to deal with it. For the wellbeing of not just certain societies, but also for the whole planet, it is out of essential impressiveness that companies start to use the concept of Corporate Social Responsibility in come out to make the environment sustainable. The core of this paper is to reach several preys.First one is define concept of CSR and those related with it. The paper will provide the instruction about development of this concept and what does it mean to today business world.Second objective is to analyze benefits that company gets by having social responsibility towards its community. Furthermore, it yields the potential threats when applying the CSR and it show negative the consequences that whitethorn come from avoiding social responsibility.Final objective of the paper is to show the challenges that societies and corporation are facing in the modern economy.1.2 Significance of the paperThe main significance of this paper is that it sho ws the reasons why to apply CSR and why it is important to the consumers. Further, this paper provides several real examples related to the concept. It represents a quality literary productions on the topic and whitethorn be used for other researches in the future. The main findings and information that are provided may be useful for students, academic staff and businesses.1.3 bodily structure of the paperThe paper is constructed out of nine chapters. First chapter, which is introduction, explains the topic, reasons and purpose of the paper. Chapter 2 deals with previous literature on the topic. Literature is based on definitions of CSR and relationship among CSR and business performance. In chapter 3, historical data has shown. By this chapter, paper provides information on how development process of CSR was done, which events have influenced people to start thinking about it and what obstacles it faced in its way toward the concept that is known today. Information about the sa lutees, principles and types of modern CSR are provided in chapter 4. Chapter 5 shows how CSR can be implemented as a strategy and additionally this concept shows the corporate passenger vehicle tasks. Comparative assessments about potential benefits and costs of this CSR are provided in Chapter 6. In chapter 7, paper shows the main reasons why companies decide to implement CSR and how do they act in the market. Chapter 8 deals with new challenges that are present in the market. Here, it may be seen how globally herculean company may use weak economies in order to gain benefits for themselves. Conclusions about the topic are given in the final chapter.CHAPTER 2 books REVIEW2.1 Definitions on CSREven if concept of CSR is a modern one that started to create a real shape few decades ago, some initial literature and papers that were including art objects of this concept are dating from an earlier period. Barnard (1938) defined this concept as analysis of five aspects of environment ec onomic, legal, moral, social and physical. consort to Carroll (1983) gainfulness and obedience to the law are foremost conditions when discussing the firms ethics and the extent to which it supports the society in which it exists with contributions of currency, time and talent. He assumes that corporate responsibility goes far beyond the consummate(a) profit and that therefore it should take into con aspectration other aspects, mainly the social ones.Because it includes corporate citizenship, corporate sustainability, business ethics, shareholders management, environmental management, and corporate social performance, Visser (2005) defined CSR as an umbrella concept.According to Waldman (2006), company that practices CSR is the one that invests in employee development and empowerment. It is a company that shares information with its employees in order to give them better friendship, so they could get along at the change state.Guthey, Langer, Morsing, (2006) called CSR as late st management fad, which is referred to the fact that this concept should be developed even more in the future.2.2 Relationship between CSR and business performanceAs a time passed, and concept has been developing and started to be used the relationship among the CSR and business performance has been ever-changing. Previously, due to different economic regimes in the world, it was unassailable to find the evidence on relationship among these concepts. Even in certain cases, there was a negative relationship meaning that the money that company invests does not give returns. However with open economy and open competition positive relationship is the one that researches find in general. Nicholas Overton (2009) in his dissertation wrote the following even though some studies postulated a negative relationship (e.g., Vance 1975) or no relationship (Aupperle et al, 1985) between the Corporate Social Responsibility (CSR) and business performance, more recent studies provided the verifia ble evidence that there is a positive relationship between those two constructs (Abratt and Sacks 1988, Russo and Fouts 1997, Waddock and Graves 1997).Miles and Munilla (2005) explained the reasons of using CSR model through the table which holded Van Marrewijk (2003) framework and Carroll (1991) pyramid. There are many benefits that can be obtained from applying the concept of CSR. Detailed information are provided in the main stir up of the paper.CHAPTER 3DEVELOPMENT OF CSRCorporate Social Responsibility is often interchangeable with corporate ethics, corporate accountability or corporate responsibility.3.1 Historical facts on CSRHistory of CSR is closely related to the history of the companies. most specialists in the field of social responsibility, link the origins of concept of CSR with an superannuated times. According to them, countries that were dealing with alternate such as ancient China or Egypt, were move importance on wider public interests. Through the time, this concept was evolving and magical spell companies were establishing themselves as market driving forces, importance on social responsibility was slightly growing.Through the years many slaves were used. Children, women and men were all operative for many hours in order to produce resources that owners needed. Many people died and got injured on their work places, plot of ground others were tortured. Among the first biggest events that showed that CSR is important is related to the end of 18th century and British riot against British West Indian Sugar Company. The reason was the slave trade and more than 400.000 of people signed petition against it. The first legislative body that made decision about ending the slave treatment was British coarse House in 1792.Certain advance in the field of CSR was started in 19th century, simultaneously with Industrial Revolution. This was a time when many people started to work and being paid for it. This period may be described as the one of tr ansition in people life both in working and demographic conditions. However, CSR still was not represented as it should. In this time, the leaders of corporations were the leaders of societies. Most of them were using Social Darwinism as a constitution to rule. This policy is related to selection and survival of the strongest. That was the way how companies acquired workforce. People were used up to the limits and certain social giving were done by subjective beliefs or will of the owners. From this, it can be concluded that approach to the society was not the company ones, but rather the individual.With the new (20th) century, the situation was starting to change. Many riots were happening and mostly the reason was dissatisfaction with working conditions. Large corporations were perceived as exploitative ones. These riots were resulting in new laws that were aimed to protect workers, societies and consumers. These were the first significant facts that were indicating to the future CSR model. In the following period, companies strategies were changing from purely profitable one to the strategies that were now looking to society and taking into consideration some other responsibilities toward the environment in which they were operating.The mid of the century was characterized by civil right movements throughout the world. The results were not the same in each country, but what is common for all is that these actions lead to certain improvements in laws. The focuses of people dissatisfaction in that period were once again the large corporations. From them, it was demanded to be more socially responsible. This was mostly related to the two facts that corporations were mostly the cause of societal problems and that they had the possibility to involve themselves in solving those problems. People were demanding equal job opportunity and safety for environment, products and workers.All these initiatives are representing the large set forth of today phenomena know n as Corporate Social Responsibility. In this period the line between traditional and modern approach to CSR started to be drawn. From traditional approach, that was representing the interests of the owners and stockholders, CSR started to represent wider public interests such as stakeholder (workers, consumers, inhabitants, and environment.3.2 sustainable DevelopmentThe important thing that happened in the following period, and is hugely important today is Sustainable Development. In 1987, UN committee defined sustainable developmentas a pattern of growth in whichresourcesuse aims to meet human needs while preserving the environmentin the way that these needs can be met not only for flow rate situation, but also for generations to come (UN, 2012).It represents holding the balance among consumption, savings and regeneration of all our resources because not only current but also coming generations will be dependable on them. Sustainable development is a process of change and it has to start from each individual and it continues by transmitting it to each area of our lives.International Institute for Sustainable Development (IISD, 2012), states that all definitions on sustainable development require that we see the world as system a system that connects space and system that connects time. According to this institute, process of SD is constructed around two key concepts.First one represents the needs of poor share of the world, low budget people and those who live in regions where there is no or very little life resources. In year 1970, World lead countries made an agreement to allocate 0.7% of their total gross national income in order to help those countries which were struggling.Second concept represents ability of planet to meet future generations needs. Sustainable development represents a system of interrelated global issues that in future could threat to total collapse of the planet if people do not act in the present.On this definition, all internatio nal polices related to protection of environment are built. Since 1992 and a conference in Rio de Janeiro sustainable development became a leading term in field of politics about environment. From this point there is much clearer relationship among environmental, economic and social problems.Sustainable development implies fused use of resourcesConsolidated investmentsConsolidated technical developmentConsolidated institutional changesDuring the process the understanding of sustainable development has been spread to two more handle economic and social. All three are making so called magic triangle of the process.From the figure above, it can be seen that only in a case when all three dimensions are satisfied, or that problems are being solved at the same time, country can reach sustainability.Corporate Social Responsibility (CSR) is an issue that is working its way into many policy debates and corporate agendas. CSR is an evolution in the approach towards sustainable development wh ile the 1992 Rio Earth Summit pore on environmental management, the 2002 World Summit on Sustainable Development (WSSD) focused on a broader set of issues, including poverty reduction and social development. (IISD, 2012). Here, it may be seen how issue become important for the countries and how much importance is given to the topic. Now, people are aware of potential threats to the earth and they are trying to develop programs that may help in sustainable development of the world.CHAPTER 4CONCEPT OF CSR4.1 Approaches to CSRThere are several perspectives from which people, organizations and governments look at CSR. According to Marrewijk (2003), there are three basic approaches to the CSR that were developed through the time.Shareholder approach refers to the one that is based on economic reasons. Main idea behind this approach is to maximize profit and to prong benefits to those who own the company. The centre of the approach is the company and its future. Those who manage should f ocus on well being of the company, to strength it and to find the way for improvement and expansion.Stakeholder approach refers to the approach that includes certain others parts of the company that are also important. This approach does not see its owners as the only ones that are important, but also puts importance on other stakeholders such as employees, customers, partners and others. It is taught that each actions of the company does not affect just the company itself, but also other entities that are committed to it.Societal approach refers to the wider approach of all. It puts importance of companys responsibility toward the society, because without society approval company could not operate. This modern approach shoes that company is fundamental part of the society so they should support and invest in it.When summing all, it can be distinguished that Shareholder approach is the oldest and the strongest one. If there is no will for profit neither of the other two approaches m ay be used. So, company should apply all of three approaches in order to satisfy each side that is affected by its actions.4.2 Principles of CSRCSR is among top issues in the current corporate world. As already stated there are two sides of public view regarding this concept one side is the one which supports it and the other one is against it. In order to evaluate CSR activities, in most cases, three principles are used.Sustainability as a principle deals with the effects that current actions have on future. Resources should be used in a way that they satisfy the current needs and that they will be there in a future. The best way to explain this principle is the example of forestry. For each action of cutting trees there should be an action of planting the new ones, in order to have those resources in the future. The big issue with this principle is related to the resources that cannot be planted such as coal, silver and others. Sustainability dictates that those resources should b e used dofully and that programs should be developed in order to find substitutes that could be used in the future, when there are no more supplies of certain resource. Companies that do not care about sustainability will not survive in the future. If company represents the vital part of current economic system, it therefore should use the resources in the amounts that can be generated.Accountability refers to the principle by which company shows that they are aware of the effects that their actions may cause in internal and external environment. The most appropriate way of using this principle is to give knowledge to the parties which are part of environment (both internal and external) about the possible consequences of companys actions. Further, this principle may be described as a system of evaluating and reporting of measures taken regarding the actions done in the environment. In any case, benefits that are gained from those actions must be above the costs, for the company an d society. Report should be understandable and available to all parties included and they should represent the situation as it is (information should be correct). Information should include quantitative and qualitative data and it should be explained in a way that ordinary citizen may understand it.Transparency refers to the process of providing the information to the society about companys business, results and others. This is especially important for the actions that affect the society. This principle may be described as the one that follows the previous two principles. It represents the process of societys familiarization with business of the company. If company uses transparent policies and ways of reporting, it is easy for people to get knowledge about sustainability and accountability of the company. As already stated, all principles are taken from CSR framework and that is why there is importance on corporate governance.4.3 Types of CSRAs the companies see CSR as diversificat ion tool, they engage in many different areas by which they try to get more benefits. Carroll (1979) argued that companies have to look outside of their core responsibilities (economic and legal). In his work from 1991, he added two more responsibilities that each of the company has to take into consideration. Based on this, and further discussions, today Corporate Social Responsibilities is constructed out of four main responsibilities.4.3.1 Economic areaThrough the history, the main responsibility of each company was to maximize the profit which means that they must reach their fiscal goals. This responsibility is called economic or financial one. It represents the most important responsibility of the company. Everything is dependent on this process (produce and sell). In order to be able to fulfill any other of the responsibilities, this one has to be satisfied, either company faces crisis, which may results in many negative events in the society. Based on everything stated, eco nomic responsibility is at the bottom of the pyramid, since business which does not gain profit, does not lodge in the business for long.4.3.2 Legal responsibilitiesEconomic responsibilities have to be reached in accordance to the law and regulations of the society in which company operates. So, corporations are operating in accordance to the rules imposed by the governments. Those companies who gain economic benefits with obeying laws are perceived as socially responsible. Customers perceive those companies responsible in the way that they believe that those companies use quality materials and production processes that pass minimum legal requirements and that their final goods are safe and will not harm the environment.4.3.3 Ethical area of responsibilityThose companies who are believed to be ethical are expected to do the right things for the society. Society expects them to reach their financial goals by doing it in a right way. Companies should avoid the actions that are agains t the society norms even if they are not forbidden by law. If we take an example of less developed countries that have not strict laws about environment protection, it is still not good for the companies to use it and harm society.4.3.4 Philanthropic responsibilityThis area of responsibility represents the one where investments are made in society in which company operates. Philanthropic responsibility gives big credibility to the company. Society expects from those successful companies to invest the money in projects that brings benefits to them. Most investments are done in educational and scholarship programs, cultural programs, renovation of certain institutions, green fields, parks, sport centers and clubs and others. Based on these types it may be assumed that there are two forces that drives social responsibility company and society. Economic and legal responsibility are more important for the company, while on the other side, society perceives ethical and philanthropic respo nsibility as the important ones. However, all of them combined make one important part of the society and each should contribute to the other.CHAPTER 5CSR AND MODERN BUSINESSStrategy is a Greek word that has meaning of command or generalship. This term is known from ancient times, where battles between empires were done. This is mainly known as military strategy that is even used today. On the other hand, strategy is used in any other part of life.Corporate strategy is referred to the overallscopeanddirectionof acorporationand the way in whichitsvariousbusiness operationswork unitedly toachieveparticulargoals. (Business dictionary, 2012) Those who are charged for implementing of these types of strategies are managers of the corporations.Drucker (1986), sometimes called as a father of manager, defined the management as independent of ownership, rank, or power. It is objective function and ought to be grounded in the responsibility for performance. It is profession management is a fun ction, a discipline, a task to be done and managers are the professionals who practice this discipline, carry out the functions, and discharge these tasks.5.1 Principles of business processDrucker (1954), in his book Practice of Management, defined five main principles of management that are widely used today. According to him, manager or group of managers as leaders in implementation of a corporate strategy should deal with following five tasks.Set objectives This refers to responsibility of manager to identify what are the objectives of the company. Then, manager determines goals as a part of objectives, it opts for the ways by which those objectives should be accomplished and it introduces the people (workers) that will be part of implementation process with the objectives in order to have efficient work. By this, manager reduces possibility of future misunderstands of employees.Organize This part is related to the analysis of the decisions and activities related to purpose of the company. Further, manager divides work into activities and assigns people for each job. Through classification, these jobs become a part of organizational structure. Good organization prevents time consuming, saves money, makes more relaxed nimbus and it gives more time to managers that can be used in the implementation process, which at the end demands the most commitment.Motivate and communicate This refers to the most difficult part of implementation process. Manager needs to be the one that starts the engine, the one that puts fuel in it. Team of people that were chosen for the job must be motivated. This is done through several ways such as pay, placement and promotion. The important part here is continuous communication with upper and lower levels of the company. Through this, manager gathers information and slightly directs people in a way that he desires. In modern organization, indigence is playing a big role. It is believed that through motivation several benefits ca n be obtained such as increased efficiency, easier way to reach objectives or better relationship among employees.Measure This is a part through which manager follows the process of achieving the goals and objectives. Two main part of process are evaluated the process itself (is it a good one) and employee assigned for the task (are they perform well). So, manager analyzes do and writes reports that are submitted to the parties involved in the process (superiors, subordinates and others). Also, good monitoring process give possibility to managers to react and prevent further damages, in cases when process goes in the wrong way.Develop people Since, especially today, people represent one of the most important part of the company their development is important. Modern, knowledge economy demands from people to upgrade their knowledge and skills each day and that they follow the current trends. This applies to the employees at all companys levels, including managers. Tomorrow, when c ompany needs people for certain position it is much easier and safer to guide from its own pool than to bring someone from outside.The traditional way of management (business) planning is constructed in a very similar way.From the figure above we may see two additional circles to Drucker theory. While FIVE of his principles are sorted in four circles, there are two other paces that are included at the start and at the end of a cycle. First one is to gather information which is mostly related external information (market, law, competition). This step helps managers to assign better and more feasible objectives and goals for the company. On the other hand, evaluation plan refers to the step of having feedback, which is used in order to stop or transform the initial planning process.5.2 Business as corporate strategyToday, CSR is referred as an integral part of corporate strategy. In the future, it is believed that it will be a separate strategy that may be ruled by independent depa rtment. To be profitable each part of business must be carefully measured. CSR gives certain direction, or maybe it is better to say that it gives certain performance indicators which create standards for the business. There are many examples of corporations that integrated CSR as a strategy into their business. some(prenominal) of them are supporting educational programs, some of them cultural some of them are related to the environment. Nestle Company, from Switzerland, deals with production of healthy and nutritional products. Founded in 1866, today this company reports the highest revenues in the world. Among the most known products are Nesquik, Nescafe and KitKat. According to them, they incorporate CSR in order to get best ingredients for their products. It is done through continuous work with their cut chain throughout the world. They try to use the best technologies and practices which give them results of high quality products, loyalty of their suppliers and sustainabilit y.Ethical behavior of top management is very important since it reflects the ethical culture of the company. According to Business Case Studies (2012) ethical behavior mayattract customers to the firms products, thereby boosting sales and profitsmake employees want to stay with the business, reduce labor turnover and therefore increase productivityattract more employees wanting to work for the business, reduce recruitment costs and enable the company to get the most talented employeesattract investors and keep the companys share price high, thereby protecting the business from takeover.Managers represent the company and they behavior reflect companys range of mountains and reputation. Those who avoid this behavior, sooner or later, will face consequences of it such as customer disloyalty or sales and profits decreases.Case provided below shows how corporate wrong behavior can damage the business.From the case above, it may be seen how business ethics should not be applied. Because of this, Enron Corporation went to bankruptcy and if we take the example that somehow they survived this scandal, their reputation would be destroyed, providing them very low possibilities to continue the business (with customers and partners).Similar case, we have with so called Greek crisis, where government officials used so called creative chronicle in order to cover bad countries financial situation.Such frauds and collapses of the some biggest corporations in the world have put even more importance on CSR framework. So, each manager should put attention on his behavior in the business. As ethical behavior is to do what is morally right, every individual in the business should try to maximize its efforts to do it like that. This is not just pure theory, but certain researches have shown positive rela