Definitions Of Corporate Social Responsibility Business Essay

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Corporate Social Responsibility is mostly understood to be the way firms combine social, environmental and economic concerns into their values, decision making, culture, strategy and operations in a transparent and accountable way. CSR refers to the general assumption which is believed by many, that modern businesses have a responsibility to society. That responsibility, of course, is to make money or profits. The CSR concept applies to organizations of all sizes, but discussions tend to focus on large organizations because they tend to be more visible and have more power. And, as many have ascertained, with power comes responsibility.

2.2 Definitions of Corporate Social Responsibility

Corporate Social Responsibility is an emerging concept that presently does not have a universally approved definition. To begin with, according to (Bowen, 1953) "It refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are described in terms of the objectives and values of our society".

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Another definition is that "Corporate Social responsibility is a commitment to improve community well being through discretionary business practices and contributions of corporate resources. In businesses, CSR is done in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business."(Source: Carly fiorina, Hewlett Packard, CSR Annual Conference 2003)

The World Business Council for Sustainable Development in its publication "Making Good Business Sense" by Lord Holme and Richard Watts, used the following definition. "Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large"

On the other hand, The European Commission defined CSR as "a concept whereby a company integrates social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis". (European Commission, 2001)

Furthermore a noteworthy theoretical contribution extracted from the triple bottom line approach by John Elkington (1997) is the idea that for an organization to be sustainable it must be financially secure, it must minimize, or ideally eliminate, its negative environmental impacts, and it must act in conformity with societal expectations.(Corporate Volume 4 Number 3 2004 p.20-31).

(Carroll, 1983) defined CSR as, "Corporate social responsibility involves the conduct of a business so that it is economically profitable, law abiding, ethical and socially supportive; to be socially responsible means that profitability and obedience to the law are foremost conditions when discussing to firms ethics and the extent to which it supports the society in which it exists with contributions of money, time and talent".

An interesting twist to the argument is provided by Tuzzolino and Armandi (1981) who provide a motivational theory of organizational social response based on Maslow's hierarchy of needs. CSR is the fulfillment of a firm's "internal and external self-actualization needs" which are located and the top of their organizational needs pyramid. According to this view, firms adopt CSR after they have satisfied three earlier layers of needs (which includes: physiological, safety and affiliation needs).

2.3 Evolution of CSR

What does it mean for a corporation to be socially responsible? Academics and practitioners have been striving to constitute an agreed-upon definition of the CSR concept for 30 years. In 1960, Keith Davis proposed that social responsibility refers to businesses "decisions and actions taken for reasons at least partially beyond the firm's direct economic or technical interest." At about the same time, Eells and Walton (1961) argued that CSR refers to the "problems that arise when corporate enterprise casts its shadow on the social scene, and the ethical principles that ought to govern the relationship between the corporation and society."

In 1971 the Committee for Economic Development used a "three concentric circles" approach to characterized CSR. The inner circle included basic economic functions such as growth, products and jobs. The intermediate circle indicated that the economic functions must be executed with an acute apprehension of changing social values and priorities.

The outer circle outlined newly stemming and still amorphous responsibilities that business should consider to become more actively involved in improving the social environment.

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The attention was altered from social responsibility to social responsiveness by many other writers. Their principal argument was that the emphasis on responsibility should focus completely on the awareness of the business commitment and motivation and those activities or performance that were being excluded. The social responsiveness movement consequently emphasized corporate action, probation, and operation of a social role. This was certainly an important improvement.

However, the question of harmonizing the firm's economic orientation with its social orientation still remained. A step in this direction was taken when a comprehensive definition of CSR was developed. In this aspect, a four-part conceptualization of CSR included the idea that the corporation has not only economic and legal obligations, but ethical and philanthropic responsibilities as shown in the pyramid below (Carroll 1991).

Figure 1.0: Caroll's pyramid of social responsibility

The pyramid of CSR as shown in figure 1.0 portrays the four part social responsibility model. The four aspects by Caroll(1991) are:

Economic responsibility

It starts with the main building block of economic responsibility at the base, the beginning of a fair and just social responsibility. In the early establishment of society, businesses were solely conserved as an economic structure. The exchange of money for goods and services was the basic objectives of a business. Later on the idea of the profit aim got transformed into a notion of profits maximization, and since then this has been an enduring value ever. Carroll also argued that all other business responsibilities are predicted upon the economic responsibility of the firm.

Legal responsibility

Why do companies engage themselves in CSR?

Nowadays companies want to give a good image of their activities. CSR has integrated the day to day running of any business. Today, organizations are not merely seen by the results they achieved but how they achieved it. CSR practices have become a backbone for contributing towards the success of a company. So participation in Corporate Social initiatives impacts key performance factors such as:

Increase in sales and market share

Firms with good business practices have clear advantages in persuading investors. People are rather keen to buy from a socially responsible company rather than from one who does not.

Enhance brand image and reputation

Increasingly, corporations are trading not on products and services but on their reputations. As Bernstein (2001) pointed out, businesses should engage in CSR because the public strongly support it today, the public believes that in addition of its pursuit of profits, businesses should be responsible to their workers, communities and other stakeholders.

Increase ability to attract, motivate and retain employees

In recent years many human resource analysts observed that the most competent and skilled workers would want to be linked with companies that have good business practices and reputation. This is the possible explanation why even large corporations whose reputation of being tax cheaters, involved in corruption, products and practices that are harmful to the environment, non- involvement in responding to social issues and concerns, have hard time getting good quality, or highly skilled employees. Moreover a company with social initiatives can have a positive impact on prospective and current employees. Employees working in such organizations are proud of their company's social responsibility values.

Increase appeal to investors

Companies engaging themselves in CSR activities give an indication of good management. They reduce their exposure to risk in the event of corporate crisis. They have a strong reputation in the community. This helps to enhance relations with bankers and investors. They have rapidly growing access to capital.

Decrease operation cost

CSR can help in reduce waste, re-use of materials, recycling, and conserve water and electricity. CSR help to reduce advertising expenditures as a result of increased free publicity.

Benefits of Corporate social responsibility

Corporate social responsibility is a model of business which is heavily rooted in responsible ethics. A company that adopts this strategy may enjoy several benefits from a positive consumer image to higher sales and worker output. Corporate social responsibility requires a company's full dedication and resistance to cutting corners on materials and employee benefits, which could ultimately serve to damage the company's image.

Better Brand Image and Reputation

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According to the International Institute for Sustainable Development, a company who adopts a business model involving corporate social responsibility is able to develop a better image for its brands and a more positive company reputation. The image of the company and its products are improved because consumers believe the company to be ethically responsible in creating products with only quality materials and using manufacturing techniques which don't pose a threat to the environment.

Increased Worker Productivity

Corporate social responsibility places an emphasis on taking care of workers in the form of competitive wages and helpful benefits like health care and retirement plans. This leads to increased worker productivity because the employee feel the company cares and supports them and they in turn work harder. The company isn't viewed as the villain in a corporate social responsibility model but the helping hand.

Greater Customer Loyalty

Consumers like to purchase quality products for a fair price. A business that uses corporate social responsibility can build customer loyalty on the strengths of how its products are made and the ingredients which go into them. According to Santa Clara University's Markkula Center for Applied Ethics, an example of this form of brand loyalty is found in the organic food industry where companies readily tell consumers what's in the product to show consumers the quality ingredients and health benefits of buying from them.

Lower Regulatory Oversight

A company that deals with the environment and its business matters in an ethical, responsible way ultimately nets less government oversight than a company looking to shave the edges of what's legal. This leads to a lower chance of expensive fines and sanctions by federal and state regulatory agencies. State and federal government officials may even seek out a company with a socially responsible reputation for opinions on shaping policy in the company's field.

Main reason behind the adoption of CSR in the tourism industry

Sustainability

"Sustainable tourism is about managing tourisms impact on the environment, communications and the future economy to make sure that the effects are rather positive than negative for the benefit of future generations. It is the management process that is relevant to all types of tourism, regardless of whether it takes place in cities, towns, countryside or the coast" (English Tourism Council, 2002).

Kalish (2001) suggested that ecological products and materials are utilized for sustainable development and the way for tourism industry to be socially responsible is to invest part of revenues for public and environmental enhancement. With a growing standing in the world economy, the tourism industry has a moral responsibility in making the transition to sustainable development and it also has a vested interest in doing so (WTTO, 1996). According to the Brundtland Report, sustainable tourism "leads to management of all resources in such a way that economic, social and aesthetic needs can be fulfilled while maintaining cultural integrity, essential ecological processes, biological diversity and life support systems" (McHarry & Gardiner, 2002).

Environmental Impacts

Tourism in natural areas, euphemistically called "eco- tourism", can be a major source of degradation of legal, ecological, economic and social systems. The intrusion of large numbers of foreigners with high consumption and high waste management infrastructure can produce changes to those natural areas at a rate that is far greater than imposed by local residents. These tourism-related changes are particularly deleterious when local residents rely on those natural areas for their sustenance (ICLEI, 1999).

Further study could have been carried out regarding the negative relationship between tourism and environment (Ree et al, 1997), however the many examples across the globe indicate that this scenario is widely recognized emphasizing the need to identify mere mutually beneficial approaches in tourism development. It has been estimated that seventy-five percent of hotels' environmental impacts can be directly related to excessive consumption (Bohdanowicz, 2006).

Hence it becomes important to create a positive effect on the environment. Mason (2008) argued that tourism impact can be considered as positive when measures like the protection of environment, landscape and wildlife, and preservations of national monuments etc are encouraged.

Social and cultural impacts

Increases in the standard of livings, adoption of partly western culture are indications that the tourism industry is directly and indirectly influencing the socio cultural factors. Tourism can bring about host culture destruction and debasement changes in the law and social order. Mathieson and Wall (1982) suggested that the social and cultural impacts of tourism are the ways in which tourism is contributing to changes in value systems, individual behavior, and family relationship; believe lifestyle, safety levels, moral conduct, creative expressions, traditional companies and community organization.

The impacts of tourism requires some monitoring in order to protect community well being, and to ensure the long term viability of the tourism product (Faukner & Tideswell, 1997). Mason (2008b) recognized that tourism can cause congestion of people in resorts, leading to frustration and stress for residents as well as for tourists. Therefore it is very important for operators of this sector to help in preserving the country`s culture by promoting it.

Community

Citizens in many countries are making it clear that corporations should meet the same high standards of social and environmental care, no matter where they operate. In the CSR context, firms can help build a sense of community and shared approach to common problems. Hotels should actively support initiatives for community development in their area. They are in an ideal position to be able to consult with the local community and identify their needs and concerns and then work with them to enable them to benefit from tourism.

The community as host to tourists, is vital for the visitor experience and may affect tourism development by its willingness, or otherwise, to be involved in the tourism industry (Pearce, 1998). Research suggests that it is impossible to sustain tourism to a destination that is not supported by the local people (Lee & Shafer 2002).