Corporate Social Responsibility
Be responsible for their activities in the society and thus, continued operation and success of business activities are dependent on compliance of societal expectations and gaining support for continued existence in the society (Alam, 2006).
Stakeholder theory argues that the Corporate Social Responsibility (CSR) refers to operating a business in a manner that accounts for the social and environmental impact created by the business.
Corporate Social Responsibility means a commitment to developing policies that integrate responsible practices into daily business operations, and to reporting on progress made toward implementing these practices.
In recent years, the popular theories like ‘stakeholder theory’ and ‘legitimacy theory’ have emphasized the importance of ‘social responsibilities of businesses’ in a greater way. These theories are based on the argument that: apart from pursuing the profit maximizing objective, organizations need to corporations should be accountable not only to the shareholders but also to the other multiple stakeholder groups like employees, consumers, government, suppliers, interest groups and the public. In general, a stakeholder can be defined as any group or individual who can affect or is affected by the achievement of the firm’s objectives (Freeman, 1984). Roberts (1992) said:
“..Social responsibility activities are useful in developing and maintaining satisfactory relationships with stockholders, creditors and political bodies. Developing a corporate reputation as being socially responsible through performing and disclosing social responsibility activities are part of a strategy for maintaining stakeholder relationships.”
Another much related theory is legitimacy theory. This theory is based on the idea called ‘social contract’. Legitimacy theory also argues that the business organizations must
Concentrate on the public in total and not just the investors. The society will allow the business organizations to operate only when the organizations will fulfill the expectations of the society.
Dimensions of Social Responsibility Concerns of Business:
The notion of Corporate Social Responsibility has developed very speedily over the last few years in the developed countries. As a consequence, the companies have developed an extensive range of exercises which cover different levels of activities that have an effect on corporate governance, employee relations, supply chain and customer relationships, environmental management, community involvement as well as key business operations. Corporate responsibility covers a number of aspects of the dealings of the business.
Skinner and Ivancevich(1992) argues that consumers, special interest groups, and the general public are aware of business’ impact on the society and demand firms to do more than try to create profits. At present, nearly all managers view social responsibility as a required duty of doing business. Social responsibility provokes many difficult questions for business firms (Skinner and Ivancevich, 1992):
1. To whom are we responsible?
2. How far should we go to satisfy our customers and achieve organizational objectives?
3. Will our decisions affect any segments of our society that we have not considered?
Skinner and Ivancevich also state: “generally we can say that business organizations have an impact on consumers, employees, and the environment and to those who invest in the firm”
According to CPD (Center for Policy Dialogue) Report (2002) on Corporate Responsibility Practices of Bangladesh, the some corporate responsibility issues that are followed by many other countries as well as Bangladesh include Sustainable Development, Business Ethics, Human Rights, Legal Compliance, Corporate Governance, Stakeholders’ Dialogue, Fair Employment, Health and Safety, Labor Standards, Community Relations and, Environmental Responsibilities.
Frost (2001) states that corporate social responsibility can provide opportunities to enhance financial viability and for corporations to be a responsible corporate citizen. This opportunity can be realized through:
Creating new lens for sourcing new business opportunities and in doing so open up new revenue sources from entirely new markets in emerging industries.
- Enhancing company reputation through a much more powerful brand and improved stakeholder dialogue.
- Fostering new partnerships between business, government, investors and civil society.
- Strengthening a position as an employer of choice.
- Increasing productivity of staff as they derive deeper meaning and value from the work that they perform, contributing to higher levels of morale and employee engagement.
- Influencing positive share market valuation through Global Social Investment.
- Allowing innovation in strategies for leadership development and in particular life-long learning, diversity and entrepreneurship.
- Gaining more international exposure and affiliations with organizations such as United Nations, and,Contributing to making the world a better place and achieving long-term sustainability. So, it can be said that, in today’s business world, the social responsibility performance is also getting huge importance along with the financial performance.