A Review Of Corporate Social Responsibility Commerce Essay

A large number of the corporate social responsibility definitions have been published in order to define the closest meaning of the corporate social responsibility as well as define in the different dimensions. For instance, the Google search of the corporate social responsibility definitions indicated that the definitions that are most found in various articles and web pages are often referred by the organizations like BSR, the Commission of the European Communities and CSRWire (Dahlsrud, 2006). Also, Dahlsrud found that the most founded corporate social responsibility dimensions are the stakeholder dimension, the social dimension, the economic dimension, the voluntariness dimension, and the environmental dimension (Dahlsrud, 2006). The following are the sample of the corporate social responsibility definitions.

McGuire (1963) argued that the social responsibilities should not include only the economic and the legal obligations, but also some responsibilities to the society that go beyond these obligations. He also mentioned that the economic and the legal responsibilities are required, the ethical responsibilities are expected, and the discretionary/philanthropic responsibilities are desired.

Carroll (1979, 1991) defined the corporate social responsibility into four categories, which is the firms’ fulfillment of economic, legal, ethical and philanthropic responsibilities. Carroll mentioned that the economic and legal responsibilities are required, the ethical responsibilities are expected, and the philanthropic responsibilities are desired.

Kenneth (1998) stated that social responsibility is the foundation of the sustainable development. And CSR is welfare of the society preventing the destructive activities and leading the positive improvement of a man.

Bloom and Gundlach (2001), based on Freeman’s stakeholder approach, mentioned that CSR is the firms’ commitment toward the stakeholders. The firms’ commitment is beyond the legal and corporate responsibilities to the shareholders. By pursuing the commitment, the firms could not only reduce the firms’ risk and harm, but also the firms could enhance the firms’ long-term positive response to the firms.

Davis (2003) defined CSR as the framework of the business’ role in the society. He also stated that CSR is self-development of the firms’ behavior that could lead the impact on the society.

Kotler and Lee (2005), another two significant business scholars, perceived CSR as ‘a commitment to improve community well-being through discretionary business practices and contributions of corporate resources.’

2.3 Review of Literature on Models in Determining CSR

2.3.1 CSR Stages Model (Zadek, 2006)

Zadek (2006) described the corporate social responsibility into five stages, which are defensive, compliant, managerial, strategic and civil stages. Similar to Carroll (1979), Zadek believed that every firm must go through these five stages in order to reach the citizen model. In this model, the firms would reach the strategic level when it comes to the fourth level. Most of the firms do still not reach this strategic level yet. Each stage would have their own behavior and attitude toward the corporate social responsibility.

STAGE

WHAT ORGANIZATIONS DO

MOTIVATION AND PURPOSE (WHY THEY DO IT)

Defensive

Deny practices, outcomes or responsibilities

To defend against attacks to their reputation that in short term could affect sales, recruitment, productivity and the brand

Compliance

Adopting a policy-based compliance approach as a cost of doing business

To mitigate the erosion of economic value in the medium term because of ongoing reputation and litigation risks

Managerial

Embed the societal issue in their core management process

To mitigate the erosion of economic value in the medium term and to achieve long-term gains by integrating responsible business practices into their daily operations

Strategic

Integrate the societal issues into their core business strategies

To enhance economic value in the long term and to gain first-mover advantage by aligning strategy and process innovations with the societal issues

Civil

Promote broad industry participation in corporate responsibility

To enhance long-term economic value by overcoming any first mover disadvantages and to realize gains through collective action

Figure: 5 Stages of Corporate Social Responsibility (Organizational Learning)

Source: Zadek, 2006

The defensive stage represents the firms have no interest in the corporate social responsibility practices. The compliance stage represents the firms would follow the industry standard. Normally, the code of conduct would be employed in this stage. The managerial stage represents the firms that concern and embrace the social issue in the core management. The strategic stage represents the firms that integrate the social issues into the core business activities in order to increase the economic value as well as seek to create and communicate the firms’ identity and image. The civil stage, the last one, represents the firms that advocate for the corporate social responsibility and the stakeholders, including the external stakeholders and issues. If the civil stage is embedded efficiently, the firms could be role model or benchmark in the industry.

2.3.2 RDAP Scale

RDAP Scale stands for reactive, defensive, accommodative, and proactive. This model is followed the idea of Carroll.

DO NOTHING DO MUCH

Davis and Blomstrom (1966)

Withdrawal Public relations Legal approach Bargaining Problem

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approach solving

McAdam (1973)

Fight all the Do only what is Be progressive Lead the

way required industry

Wilson (1975)

Reaction Defense Accommodative Proactive

Figure: Carroll’s Continuum of Corporate Social Responsiveness

Source: Carroll, 1979

2.3.3 CSP Model (Wood, 1991)

Principles of corporate social responsibility

Institutional principle: legitimacy

Organizational principle: public responsibility

Individual principle: managerial discretion

Processes of corporate social responsiveness

Environmental assessment

Stakeholder management

Issues management

Outcomes of corporate social behavior

Social policies

Social programs

Social impacts

Figure: Wood’s Model of CSP

Source: Wood, 1991

Wood (1991) described the corporate social responsibility in three principles, which are legitimacy, public responsibility, and managerial discretion. The institutional principle, legitimacy, is applied to every firm. The organizational principle, public responsibility, is the responsibility to solve the problems that the firms have caused. The individual principle, managerial discretion, is depended on each manager. In this principle, the managers are expected to act morally. For the corporate social responsiveness, the responsive firms need to know about their relevant environment in order to response to it properly in the relation of the environment assessment. The assessment normally includes the political, economic, socio-cultural, and technological developments. By identifying the significant developments, the firms then create the strategies to alter the developments. The stakeholder management is to manage the relationship between the firms and the stakeholders. The firms might minimize the negative surprise by formulating the strategies to handle the interest appropriately. The issue management is that the responsive firms manage the issues that are significant to the society. In this responsiveness, the firms need to minimize the surprise as well as prompt to response to the environmental changes interactively and systematically. For the corporate social performance, the social policies are the direction that the firms aim to develop or deal with the situation regarding the firms in general or a specific issue. The social program is to measure the firms’ effort to deal with the specific issue. And, the social impacts are the actual results of the firms’ actions on the society, intentionally and unintentionally as well as positively and negatively.

By combining Carroll’s CSR model and Wood’s CSP model, the combination seems really interesting. The following figure could clarify and specify both models clearer.

Figure: Possible Outcomes of Linking Corporate Social Policy, i.e., One of the Outcomes of CSP Narrow with the Principles and Categories of CSR

Source: Wood, 1991

2.4 The Study Related to Corporate Social Responsibility

The following content are the literature reviews of the study related to the corporate social responsibility.

2.4.1 International Literature Review

The first literature review is “Towards Understanding Corporate Social Responsibility in Australia” by Leeora D. Black (2001). This paper mainly aimed to explore the corporate social responsibility in Australia. Leeora investigated whether the Australian managers would share the same understanding of the corporate social responsibility with Carroll’s classification (1979). The framework of the article was therefore based on Carroll’s classification (1979), which are economic, legal, ethical, philanthropic responsibilities. This qualitative research article was conducted by the in-depth interviews with the senior managers of large firms, both Australian and foreign owned firms. Consequently, Leeora found out that the corporate social responsibility orientation for the Australian firms could be based on Carroll’s classification (1979). However, the hierarchy and the content of the categories might be revised. Leeora mentioned that the economic and legal responsibilities or the minimal corporate social responsibility had relevant construct for the application in Australia. The corporate social activities that go beyond the minimum were on the other hand. The managers in the study defined the activities that go beyond the minimum as being philanthropic or strategic, rather than the ethical and philanthropic responsibilities. And with the strategic, the corporate social responsibility is perceived as the superior expression or the best practice.

The second literature review is “Do Consumers Expect Companies to Be Socially Responsibility? The Impact of Corporate Social Responsibility on Buying Behavior” by Lois A. Mohr, Deborah J. Webb, and Katherine E. Harris (2001). This paper focused on the consumers’ concern toward the firms’ corporate social responsibility. The researchers collected the qualitative data by conducting semi-structured and in-depth interviews with the forty-eight consumers. The researchers concluded that most of the respondents had the positive thinking and feeling toward the business in general and toward the firms with the corporate social responsibility. The respondents believed that at least some corporate social responsibility were motivated to help others, while some firms perceived the corporate social responsibility as the self-interest. For the buying behavior, the corporate social responsibility normally did not perceived as the purchasing criteria. However, there were some consumers who perceived the corporate social responsibility as the significant criteria. Every purchase could impact the society and the environment. This small, but articulate group would reward and punish the firms that have more or less social responsibility. Moreover, the respondents mentioned that they would like to have the systematic information on the firms’ social responsibility records.

2.4.2 Thai Literature Review

“Corporate social Responsibility Influencing the Loyalty of Advance Info Service Public Company’s Customers” by Wipada Weerasamrit (2010). This article mainly aimed to explore the influential factors of the consumers’ loyalty toward the Advance Info Service Public Company as well as acknowledge the Advance Info Service Public Company’s corporate social responsibility. The independent variables in the article are the demographic characteristics and the corporate social responsibility. The corporate social responsibility adhere are clarified in five respects, which are the good governance, the fair business conduct, the accountability to the consumers, the community and social development participation and the environmental preservation respects. The dependent variable in the article is the consumers’ loyalty toward the Advance Info Service Public Company. The loyalty here were in term of ratio of AIS mobile use period, mobile network switching, word-of-mouth behavior, response to others’ sayings, and pride toward AIS benefits.

The article is the quantitative research article, in which the data are collected by the scale response questionnaire and analyzed by useful tools like Independent t-test, One Way Anova and Multiple Regression Analysis. The sample group is four-hundred consumers of the Advance Info Service Public Company with the age of eighteen and above in Bangkok.

The findings were based on the demographic characteristics. Gender, age, education, and career all had the impact on the consumers’ loyalty toward AIS. The female gender would likely to have more loyalty than male. The age between 15-25 years tended to have less loyalty on AIS, while the above 50-year-old tended to have more loyalty and concern on the social responsibility. Another important demographic characteristic, the education above the bachelor’s degree would have more loyalty than the bachelor’s degree and below. Also, the student tended to have less loyalty than other careers. Besides, the good governance, the fair business conduct, the accountability to the consumers, the community and social development participation and the environmental preservation respects all could reflected on the consumer’s loyalty toward AIS as well.

Another literature review is “Corporate Social Responsibility Management Strategy of Business Corporation” by Sumet Kanchanapan (2008). The researcher was interested in three respects. First, the researcher aimed to examine about the corporate social responsibility management strategies of Thai firms. Second, the researcher would like to explore the insight understanding of the corporate social responsibility. Third, the researcher would like to study about the corporate social responsibility trend in Thailand in the near future. The data were collected by two ways, which are in-depth interviews and documentary research. The findings are stated as follows.

From the study, the researcher demonstrated that the firms in Thailand have facing the change in the strategic management in relation to the corporate social responsibility. The changes could be perceived through the decision-making process evaluating both the internal and external factors in order to achieve success. Also, the firms have the right understanding about the corporate social responsibility that the corporate social responsibility could yield the sustainability. However, some firms still could not cover the three respects, economic, social, and environment. Despite the strong corporate social responsibility understanding, the corporate social responsibility communication is still not right. Moreover, the corporate social responsibility in the future would be more concerned and strategic in planning. There would also be the department fully responsible in the corporate social responsibility encouraging the employees and partners in the corporate social responsibility as well as the report showing the corporate social responsibility activities.

2.5 Conceptual Framework

CSP Model

Corporate Social Responsibility – emphasizes obligation, accountability

Corporate Social Responsiveness – emphasizes action and activity

Corporate Social Performance – emphasizes outcomes and results

The framework of the study would embrace the corporate social responsibility model, the corporate social responsiveness model, and the corporate social performance model by the corporate social performance model (Carroll). Various models in the CSP model are utilized in the study to scope the CSR definition down as well as to create the standard CSR variables’ definition for the investigation. The variables and operational definitions below are served as the standard checklist or the guideline to the firms’ evaluation.

Figure: Three-Dimensional Conceptual Model of Corporate Social Performance

Source: Carroll, 1979. P. 46

2.4.1 Variables and Operational Definition of Corporate Social Responsibility

Carroll (1979, 1991) classified the corporate social responsibility into four categories of the responsibilities, which are the economic, the legal, the ethical, and the discretionary/philanthropic. These responsibilities are the stakeholders and the society’s expectations to the firms. Based on Carroll model, these responsibilities are depicted as the pyramid.

TYPE OF RESPONSIBILITY

SOCIETAL EXPECTATION

EXPLANATIONS

Economic

REQUIRED of business by society

Be profitable. Maximize sales, minimize costs. Make sound strategic decisions. Be attentive to dividend policy. Provide investors with adequate and attractive returns on their investments.

Legal

REQUIRED of business by society

Obey all laws, adhere to all regulations. Environmental and consumer laws. Laws protecting employees. Comply with the Sarbanes-Oxley Act. Fulfill all contractual obligations. Honor warranties and guarantees.

Ethical

EXPECTED of business by society

Avoid questionable practices. Respond to spirit as well as to letter of law. Assume law is a floor on behavior, operate above minimum required. Do what is right, fair, and just. Assert ethical leadership.

Philanthropic

DESIRED/EXPECTED of business by society

Be a good corporate citizen. Give back. Make corporate contributions. Provide programs supporting community – education, health or human services, culture and arts, and civic. Provide for community betterment. Engage in volunteerism.

Figure: Four Components of CSR

Economic Responsibilities

The firms would focus on the economic perspective. The firms would then show the responsibility to the firms’ shareholders. If the firms could not contribute the profit, the firms then do not have the responsibility (Bansal, 2005). Also, the firms’ principle role and objective are to produce the goods and services that the consumers need and want. The prices should be reasonable and acceptable to among the consumers, the society, and the firms in order to present the true value of the products and services delivered as well as make the profit to pursue the growth of the firms. There are a number of financial effectiveness supporting the economic responsibilities management concept such as the attention on the revenues, costs, investments, strategic decision makings, and the other business concepts emphasis on the maximum long-term financial performance of the firms.

Legal Responsibilities

The legal responsibilities are the positive and negative obligations by the laws and regulations. The laws are like the basic rules that the firms have to follow obediently.

Ethical Responsibilities

The firms would be expected to follow the fundamental unwritten ethic norms, codes, and values in the society such as being honest in the product labeling. The ethical responsibilities would enhance the relationship between the firms and the society (Garriga and Melé, 2004). Also, the ethical responsibility seeks a greater balance between the profit and the ethic actively (Reidenbach and Robin, 1991)

Philanthropic responsibilities

The philanthropic responsibilities (voluntary/discretionary responsibilities) are the firms’ actions responding to the society’s expectation consistently. The actions include the active engagement to support the human welfare or good will (Carroll, 1991). The nature of the philanthropic responsibilities is not required by laws or any regulations, and not generally expected by the ethic sense. The firms simply desire to engage with the voluntary financial and non financial activities in the relations of social supports and solutions. Many firms make a donation to various causes such as the education, the community improvement, the arts and cultures etc. (Seifert et al, 2004). The philanthropic is not just the monetary support or donation made by the firms. The philanthropic actions might include the giving, the donation, local government partnership, and other voluntary involvement of the firms’ resources and employees to the community or other stakeholders. Many firms do encourage the philanthropic actions be their employees and customers through various forms of collaboration. For example, the firms might offer the employees the chance to make a charitable contribution through payroll deduction. Or the firms together with the customers raise the donation to some foundations.

2.4.2 Variables and Operational Definition of Corporate Social Responsiveness

Sethi (1975) defined the corporate social responsiveness as ‘the adaptation of the corporate behavior to social needs.’ The corporate social responsiveness could be from no response (to do nothing) to proactive response (to do many). Carroll (1979) also mentioned that the assumption of the corporate social responsiveness does not focus on the moral obligation like the corporate social responsibility, but rather the degree and the managerial action type of the firms. Carroll (1979) categorized the corporate social responsiveness as reactive, defensive, accommodative, and proactive. Clarkson (1988, 1991) created RDAP scale based on the concepts of Carroll (1979) and Wartick and Cochran (1985). The RDAP scale was adapted to be more realistic by adding the strategy, the posture, or the behavior of the firms into the model. The RDAP scale then could be demonstrated by the presence or absence of the policies, programs, and performances relating with different issue. Clarkson (1995) added the posture or the strategy into the model in order to make the model more understandable.

RATING

POSTURE OR STRAEGY

PERFORMANCE

Reactive

Deny responsibility

Doing less than required

Defensive

Admit responsibility but fight it

Doing the least that is required

Accommodative

Accept responsibility

Doing all that is required

Proactive

Anticipate responsibility

Doing more than is required

Figure: The Reactive-Defensive-Accommodative-Proactive (RDAP) Scale

Source Clarkson, 1995, p.109

Clarkson’s RDAP scale could measure the stakeholders’ satisfaction as well as determine the firms’ level of responsiveness. The RDAP scale is adapted and summarized as the following figure.

Figure: Clarkson’s RDAP scale

Source: Clarkson, 1991, 1995

2.4.3 Variables and Operational Definition of Corporate Social Performance

Recently, the corporate social performance has been arisen. The corporate social performance could be encompassing the corporate social responsibility and the corporate social responsiveness as well as referred as the outcomes of the corporate social behavior. The corporate social performance concerns about ‘what the firms do?’ and ‘Where the firms’ performance lead to?’

The corporate social performance would embrace the corporate social responsibility and the corporate social responsiveness. The focus of the corporate social performance has the emphasis on the concern of the firms’ actions and accomplishments in the relation to the society. With the corporate social performance, the firms would form the policies, the performances and the decision makings in order to reach their social goals. To assess the firms’ performance, the performance would be evaluated through the quantity, quality, effectiveness and efficiency.