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What Is Corporate Social Responsibility (CSR)?

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How Corporate Social Responsibility Works

Benefits of corporate social responsibility, frequently asked questions (faqs).

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Corporate social responsibility (CSR) is the business practice of joining environmental and social policies with a business’ economic goals and operations. It is based on the idea that businesses can reduce their adverse social and environmental impact on the world.

Key Takeaways

  • Corporate social responsibility (CSR) involves actions taken when a company seeks to improve its environmental and societal impact.
  • CSR also includes companies adopting fair and ethical business practices.
  • Research suggests that a commitment to CSR can positively affect a company’s finances and employee morale.
  • CSR is similar to ESG, a process by which investors make decisions based on CSR programs and a company's environmental impact.

Corporate social responsibility is a way of doing business that aims to increase a company's social impact while meeting business objectives such as growth and revenue goals. It can also refer to any effort to improve a company's eco-friendliness or carbon footprint. Companies can deploy CSR efforts as a standalone program or as part of a broader campaign.

Companies may create CSR programs that involve every part of their business and often have dedicated staff members and resources for CSR.

Types of Corporate Social Responsibility

In 1991, researcher Archie B. Carroll, came up with a 'pyramid of corporate social responsibility.' His pyramid included the four components of CSR – economic responsibility (make profits), legal responsibility (follow laws), ethical responsibility (be fair) and philanthropic responsibility (be charitable).

These components have evolved over time into the following types of CSR:

  • Economic responsibility : According to Carroll, maximizing profits consistently was the firm's responsibility. Of course, that definition has evolved to include business practices that not only help maximize profits but help make an impact.
  • Environmental responsibility : Efforts made by companies to adopt business practices keeping in mind their environmental impact. This could include companies committed to shirking their carbon footprint or working in other ways to mitigate adverse impacts of global warming and climate change.
  • Ethical responsibility : Efforts made by companies to adopt fair and ethical business practices. That could mean anything from offering equal to or better than minimum wages to employees, to using ethically sourced raw material.
  • Philanthropic responsibility : Some companies may opt to give away a portion of their earnings or executive time to charities or towards charitable causes. For example, in 1946, Target made a commitment to give away 5% of the company's profits back to the community.

Examples of Corporate Social Responsibility

CSR programs vary in scope, but a few examples might include:

  • Giving to nonprofit groups, such as local food banks, by supplying volunteers or through monetary donations
  • Offering job-training programs for those in need
  • Pledging to ensure diversity in the workforce
  • Focusing on shrinking the company’s carbon footprint through improved supply chain efficiency

For example, outdoor and sport apparel-maker Patagonia has a number of programs as a part of its CSR efforts. These include a living wage program, a migrant worker program, a fair trade program as well as a fair labor program among others.

Another example of a company's corporate social responsibility is Starbucks' commitment to global human rights. This commitment is spelled out in official corporate policy and includes compliance requirements across the firm's business units. From hiring to supply chain to the way the company works with its business partners, adhering to this social mission affects all levels of Starbucks' operations.

Though CSR programs are often the result of pressure from within the community , research shows that, once instilled, these programs often receive broad support from within the company, too.

One report found that 92% of S&P 500 and Russell 1000 companies published reports charting their efforts related to CSR and sustainability in 2020. In 2011, that figure was less than 20%.

There's little doubt that CSR programs should exist in every business. Companies with robust CSR programs can benefit from better public relations and have happier customers. Improved company profits usually result, in turn satisfying stakeholders.

In some cases, the positive financial impact of CSR is clear. For example, a shift toward renewable energy sources, like solar panels at corporate campuses, might result in lower electricity costs over time.

A report by Babson College reviewed hundreds of CSR program studies. The reviewers found that the programs can have a strong impact on a company's market value and brand and lower risk. The report's findings found that CSR programs have the potential to do the following:

  • Increase market value by up to 6%
  • Reduce systemic risk by up to 4%
  • Reduce the cost of debt by 40% or more
  • Raise price premium by up to 20%
  • Reduce staff turnover rate by up to 50%

A lot of companies publish CSR reports and provide success metrics, however, it is very difficult to measure the actual impact of CSR activities beyond the numbers provided by the companies.

Corporate Social Responsibility vs. Environmental, Social, and Corporate Governance

CSR is similar to environmental, social, and corporate governance (ESG) principles. The leading difference is that CSR is an internal function, while ESG is an external one.

With CSR programs, it's up to those inside the company to measure the success of their actions. They decide which programs to continue, and rework those that aren't performing as well.

ESG, on the other hand, is a metric that outside analysts can use to compare the effect of different corporate efforts to address environmental and social issues.

Many investment groups gauge companies based on their pledge to integrate ESG criteria. Institutional investors and mutual fund companies may outline how ESG guidelines are incorporated into their philosophies in their annual reports.

The framework for ESG reporting stems from the Global Reporting Initiative (GRI), which is a private standards body that seeks to standardize corporate sustainability reporting. It has been working toward this goal since the late 1990s.

In 2006, the United Nations launched the Principles for Responsible Investment (PRI), a program that institutional investors can use to merge ESG values into their decision-making process. More than 3,000 investors and groups have signed on to the PRI, pledging to stand by ESG six principles.

Individual investors may want their investments to reflect their values. They can buy into mutual funds and exchange traded funds (ETFs), grouped by their commitment to CSR. Examples of this include the iShares MSCI KLD 400 Social ETF (DSI) and the SPDR SSGA Gender Diversity Index Fund (SHE).

Why is corporate social responsibility important?

Big businesses committing to social and environmental causes can make a big a difference. However, CSR is important for businesses not just because it is good for their brand. Research suggests that CSR can potentially help companies increase their market value, reduce systemic risks and even retain employees. A 2019 survey suggested that 77% of consumers were motivated to give their business to companies committed to making the world a better place.

What is mainly driving the move toward more corporate social responsibility?

Companies moving towards practices aligned with environment, social and governance (ESG) criteria one of the driving forces behind CSR in recent years. While ESG has its roots in CSR, ESG is more focused on driving environmental impact, sustainability , and positive changes towards social justice.

Harvard Business School. " 5 Examples of Corporate Social Responsibility That Were Successful ."

Archie B. Carroll. " The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders ," Pages 40-43.

Target. " 2021 Target Corporate Social Responsibility Report ," Page 11.

Patagonia. " Social Responsibility. "

Starbucks.com. " Global Human Rights Statement ."

Porter Novelli. " PN Purpose Tracker: Employee Perspectives on Responsible Leadership During Crisis ," Page 3.

Governance & Accountability Institute. " 92% of S&P 500® Companies and 70% of Russell 1000® Companies Published Sustainability Reports in 2020, G&A Institute Research Shows ."

Babson College. " Project ROI: Defining the Competitive and Financial Advantages of Corporate Responsibility and Sustainability ," Page 3.

Global Reporting Initiative. " About GRI ."

Principles for Responsible Investment. " About the PRI ."

Aflac. " 2019 AFLAC CSR Survey ."

Dan Daugaard and Ashley Ding. "Global Drivers for ESG Performance: The Body of Knowledge."

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Corporate Social Responsibility (CSR) Explained With Examples

corporate responsibility essay

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

corporate responsibility essay

What Is Corporate Social Responsibility (CSR)?

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship , companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.

Engaging in CSR means that, in the ordinary course of business, a company is operating in ways that enhance society and the environment instead of contributing negatively to them.

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Key Takeaways

  • Corporate social responsibility is a business model by which companies make a concerted effort to operate in ways that enhance rather than degrade society and the environment.
  • CSR can help improve various aspects of society as well as promote a positive brand image for companies.
  • Corporate responsibility programs can also raise morale in the workplace.  
  • CSR is often broken into four categories: environmental impacts, ethical responsibility, philanthropic endeavors, and financial responsibilities.
  • Some examples of companies that strive to be leaders in CSR include Starbucks and Ben & Jerry's.

Understanding Corporate Social Responsibility (CSR)

Corporate social responsibility is a broad concept that can take many forms depending on the company and industry. Through CSR programs, philanthropy, and volunteer efforts, businesses can benefit society while boosting their brands.

For a company to be socially responsible , it first needs to be accountable to itself and its shareholders. Companies that adopt CSR programs have often grown their business to the point where they can give back to society. Thus, CSR is typically a strategy that's implemented by large corporations. After all, the more visible and successful a corporation is, the more responsibility it has to set standards of ethical behavior for its peers, competition, and industry .

Small and midsize businesses also create social responsibility programs, although their initiatives are rarely as well-publicized as those of larger corporations.

Types of Corporate Social Responsibility

In general, there are four main types of corporate social responsibility. A company may choose to engage in any of these separately, and lack of involvement in one area does not necessarily exclude a company from being socially responsible.

Environmental Responsibility

Environmental responsibility is the pillar of corporate social responsibility rooted in preserving mother nature. Through optimal operations and support of related causes, a company can ensure that it leaves natural resources better than before its operations. A company can pursue environmental stewardship through:

  • Reducing pollution, waste, natural resource consumption, and emissions through its manufacturing process.
  • Recycling goods and materials throughout its processes, including promoting re-use practices with its customers.
  • Offsetting negative impacts by replenishing natural resources or supporting causes that can help neutralize the company's impact. For example, a manufacturer that deforests trees may commit to planting the same amount or more.
  • Distributing goods consciously by choosing methods that have the least impact on emissions and pollution.
  • Creating product lines that enhance these values. For example, a company that offers a gas lawnmower may design an electric lawnmower.

Ethical Responsibility

Ethical responsibility is the pillar of corporate social responsibility rooted in acting in a fair, ethical manner. Companies often set their own standards, although external forces or demands by clients may shape ethical goals. Instances of ethical responsibility include:

  • Fair treatment across all types of customers regardless of age, race, culture, or sexual orientation.
  • Positive treatment of all employees including favorable pay and benefits in excess of mandated minimums. This includes fair employment consideration for all individuals regardless of personal differences.
  • Expansion of vendor use to utilize different suppliers of different races, genders, veteran statuses, or economic statuses.
  • Honest disclosure of operating concerns to investors in a timely and respectful manner. Though not always mandated, a company may choose to manage its relationship with external stakeholders beyond what is legally required.

Philanthropic Responsibility

Philanthropic responsibility is the pillar of corporate social responsibility that challenges how a company acts and how it contributes to society. In its simplest form, philanthropic responsibility refers to how a company spends its resources to make the world a better place. This includes:

  • Whether a company donates profit to charities or causes it believes in.
  • Whether a company enters into transactions only with suppliers or vendors that align with the company philanthropically.
  • Whether a company supports employee philanthropic endeavors through time off or matching contributions.
  • Whether a company sponsors fundraising events or has a presence in the community.

Financial Responsibility

Financial responsibility is the pillar of corporate social responsibility that ties together the three areas above. A company might make plans to be more environmentally, ethically, and philanthropically focused; however, it must back these plans through financial investments of programs, donations, or product research. This includes spending on:

  • Research and development for new products that encourage sustainability.
  • Recruiting different types of talent to ensure a diverse workforce.
  • Initiatives that train employees on DEI, social awareness, or environmental concerns.
  • Processes that might be more expensive but yield greater CSR results.
  • Ensuring transparent and timely financial reporting including external audits.

Volunteering

Some corporate social responsibility models replace financial responsibility with a sense of volunteerism. Otherwise, most models still include environmental, ethical, and philanthropic as types of CSR.

Benefits of Corporate Social Responsibility

As important as CSR is for the community, it is equally valuable for a company. CSR activities can help forge a stronger bond between employees and corporations, boost morale, and aid both employees and employers in feeling more connected to the world around them. Aside from the positive impacts to the planet, here are some additional reasons businesses pursue corporate social responsibility.

Brand Recognition

According to a study published in the Journal of Consumer Psychology, consumers are more likely to act favorably toward a company that has acted to benefit its customers as opposed to companies that have demonstrated an ability to delivery quality products. Customers are increasingly becoming more aware of the impacts companies can have on their community, and many now base purchasing decisions on the CSR aspect of a business. As a company engages more in CSR, it is more likely to receive favorable brand recognition .

Investor Relations

In a study by Boston Consulting Group, companies that are considered leaders in environmental, social, or governance matters had an 11% valuation premium over their competitors. For companies looking to get an edge and outperform the market, enacting CSR strategies tends to improve how investors feel about an organization and how they view the worth of the company.

Employee Engagement

Another study by professionals from Texas A&M, Temple, and the University of Minnesota found that CSR-related aligning firms and employees serve as non-financial job benefits that strengthen employee retention. Workers are more likely to stick around a company that they believe in. This in turn reduces employee turnover, disgruntled workers, and the total cost of a new employee .

Risk Mitigation

By adhering to CSR practices, companies can mitigate risk by avoiding troubling situations. This includes preventing adverse activities such as discrimination against employee groups, disregard for natural resources, or unethical use of company funds. This type of activity is likely to lead to lawsuits, litigation , or legal proceedings that may harm the company financially or expose it to negative news headlines.

CSR strategies may be difficult to assess strategically because not all benefits may be financially translatable back to the company. For example, it might be very difficult to assess the positive impact to a company's brand image that planting 1 million trees may have.

In 2010, the International Organization for Standardization (ISO) released ISO 26000, a set of voluntary standards meant to help companies implement corporate social responsibility. Unlike other ISO standards, ISO 26000 provides guidance rather than requirements because the nature of CSR is more qualitative than quantitative, and its standards cannot be certified.

ISO 26000 clarifies what social responsibility is and helps organizations translate CSR principles into practical actions. The standard is aimed at all types of organizations, regardless of their activity, size, or location. And because many key stakeholders from around the world contributed to developing ISO 26000, this standard represents an international consensus.

Examples of Corporate Social Responsibility

Starbucks ( SBUX ) has long been known for its keen sense of corporate social responsibility and commitment to sustainability and community welfare. In its 2022 Environmental and Social Impact Report, the coffee giant highlights taking care of its workforce and the planet among its CSR priorities. Starbucks points to its investments in its employees through stock grants and providing additional medical, family, and educational benefits. In terms of environmental sustainability, the company's goals include achieving 50% reductions in greenhouse gas emission, water consumption, and waste by 2030.

As part of its annual reporting on ESG, Home Depot ( HD ) highlighted its achievements in focusing on its employees, operating sustainably, and strengthening its communities. The company has invested more than 1 million hours per year in training to help front-line employees advance in their careers, aims to produce or procure 100% renewable energy to operate its facilities by 2030, and has plans to spend $5 billion per year with diverse suppliers by 2025.

General Motors

General Motors won the Sustainability Leadership Award from Business Intelligence Group in 2022 and was among Diversity Inc.'s top 50 companies for diversity for a seventh consecutive year in 2021. According to its latest Sustainability Report, the automaker provided $60 million in grants to more than 400 U.S. nonprofits focusing on social issues, and it has agreements in place to use 100% renewable electricity at its U.S. sites by 2025.

Why Should a Company Implement CSR Strategies?

Many companies view CSR as an integral part of their brand image, believing that customers will be more likely to do business with brands that they perceive to be more ethical. In this sense, CSR activities can be an important component of corporate public relations. At the same time, some company founders are also motivated to engage in CSR due to their convictions.

Why Is CSR Important?

The movement toward CSR has had an impact in several domains. For example, many companies have taken steps to improve the environmental sustainability of their operations, through measures such as installing renewable energy sources or purchasing carbon offsets. In managing supply chains, efforts have also been taken to eliminate reliance on unethical labor practices, such as child labor and slavery.

Although CSR programs have generally been most common among large corporations, small businesses also participate in CSR through smaller-scale programs, such as donating to local charities and sponsoring local events .

What Are the Benefits of CSR?

CRS initiatives strive to have a positive impact on the world through direct benefits to society, nature and the community in which a business operations. In addition, a company may experience internal benefits through the initiatives. Knowing their company is promoting good causes, employee satisfaction may increase and retention of staff may be strengthened. In addition, members of society may be more likely to choose to transact with companies that are attempting to make a more conscious positive impact beyond the scope of its business.

What Are the 4 Types of CSR?

CSR initiatives are often broken down into four categories: environmental, philanthropic, ethical, and economic responsibility. Environmental initiatives focus on preservation of natural resources, while philanthropic initiatives focus on donating to worthy causes that may not relate to a business. Ethical responsibility ensures fair and honest business operations, while economic responsibility promotes the fiscal support of the goals above.

What Companies Have the Best CSR?

There is no single defining rubric for evaluating the CSR of all companies. Various sources will review and compile rankings differently. Since 1999, Corporate Responsibility Magazine has ranked the top 100 Best Corporate Citizens each year among the 1,000 largest U.S. public companies. Rankings are determined based on employee relations, environment impact, human rights, governance, and financial decisions.

In 2022, the top five ranked companies on the list were Owens Corning ( OC ), PepsiCo ( PEP ), Apple ( AAPL ), H.P. ( HPQ ), and Cisco ( CSCO ).

Companies striving to measure success beyond bottom-line financial results may adopt corporate social responsibility strategies. These strategies may target environmental, ethical, philanthropic, and fiscal responsibility that extend beyond the products they sell. CSR aims to make the world a better place beyond transacting with customers and may result in company-specific benefits as well.

Frontiers in Psychology. " Corporate Social Responsibility and Employee Engagement: Enabling Employees to Employ More of Their Whole Selves at Work ."

Ben & Jerry's. " Socially Responsible Causes Ben & Jerry's Has Advocated For ."

Society for Consumer Psychology. " Good Guys Can Finish First: How Brand Reputation Affects Extension Evaluations ."

Boston Consulting Group. " Your Supply Chain Needs a Sustainability Strategy ."

Social Science Research Network. " Corporate Social Responsibility and Employee Retention ."

International Organization for Standardization. " ISO 26000, Social Responsibility ."

Starbucks. " 2022 Starbucks Global Environmental and Social Impact Report ," Pages 6 and 32.

Home Depot. " ESG Report (2022) ," Pages 9-10.

General Motors. " 2022 Sustainability Report ," Pages 6-7.

3BL Media. " 100 Best Corporate Citizens of 2022 ."

  • Guide to Socially Responsible Investments (SRI) 1 of 22
  • Why Social Responsibility Matters to Businesses 2 of 22
  • Investing in Unethical Stocks: Pros and Cons for Traders 3 of 22
  • Socially Responsible Investing (SRI) vs. Sin Stocks 4 of 22
  • Racial Justice Investing: What It is, How It Works 5 of 22
  • The Top 5 Impact Investing Firms 6 of 22
  • Socially Responsible Mutual Funds 7 of 22
  • The Rise of the Socially Responsible ETFs 8 of 22
  • Demand for ESG Investments Soars Emerging From COVID-19 Pandemic 9 of 22
  • A Guide to Faith-Based Investing 10 of 22
  • Socially Responsible Investment for Gender Empowerment 11 of 22
  • A History of Impact Investing 12 of 22
  • Impact Investing vs. Venture Philanthropy 13 of 22
  • How Do ESG, SRI, and Impact Funds Differ? 14 of 22
  • Ethical Investing: Overview and How To Do It 15 of 22
  • Social Responsibility in Business: Meaning, Types, Examples, and Criticism 16 of 22
  • Corporate Social Responsibility (CSR) Explained With Examples 17 of 22
  • What Is Environmental, Social, and Governance (ESG) Investing? 18 of 22
  • Conscious Capitalism: Definition, 4 Principles, and Company Examples 19 of 22
  • Social Impact Statement: Meaning, Criticisms, Example 20 of 22
  • Social Impact Bond (SIB): Definition, How It Works, and Example 21 of 22
  • Impact Investing Explained: Definition, Types, and Examples 22 of 22

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From there to here: 50 years of thinking on the social responsibility of business

It has now been 50 years since economist Milton Friedman asked and answered a fundamental question: What is the role of business in society?

Friedman’s stance was plain: “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits.” That view has long influenced management thinking, corporate governance, and strategic moves. But more recently, many leaders have sought to expand that definition to consider all the stakeholders who stand to gain—or lose—from organizations’ decisions.

In 2019, Business Roundtable released a new “Statement on the purpose of a corporation,” signed by 181 CEOs who committed to lead their companies for the benefit of all stakeholders—customers, employees, suppliers, communities, and shareholders. The statement outlined a modern standard for corporate responsibility.

On the 50th anniversary of Friedman’s landmark definition, we look at how the conversation on corporate purpose  has evolved.

The pre-1970 conversation

Even before Friedman’s essay published, the social responsibility of business was a topic of discussion. McKinsey, for example, was part of the early conversation about corporate purpose, which centered on the idea of improving performance and a belief that healthier corporations meant a healthier society. The firm’s earliest formal expression of its objectives spoke of the value of “advancing the profitableness and welfare of American business and hence the welfare of the country as a whole” (1937).

The discussion of corporations’ role in society continued to unfold in the 1950s and 1960s, when Columbia University and McKinsey presented a lecture series in which executives discussed the challenges of large organizations. Many of those talks became books that addressed the issues Friedman would soon take on.

Friedman’s seminal 1970 essay

On September 13, 1970, when Friedman published his landmark piece, “The social responsibility of business is to increase its profits,” in the New York Times , he wrote:

In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to their basic rules of the society, both those embodied in law and those embodied in ethical custom.

Like many businesses and thinkers, McKinsey has grappled with such ideas over the years. A 1971 statement of the firm’s goals highlights the role of profitability but acknowledges that it isn’t the sole social responsibility of business; consultants can also “do worthwhile things for society as well as to earn substantial financial rewards.”

Marvin Bower—McKinsey’s managing director from 1950 to 1967, who remained a vocal leader even after stepping down—also continued to emphasize the importance of enduring business values, which could be translated into societal as well as business impact:

Outside the service for which we are compensated, each of us has an opportunity, through the firm, to serve the society of which [we are] a part. Our knowledge of the problem-solving process enables us to contribute disproportionately to the welfare of our communities.

The 1980s and 1990s: An expanded global view

Management attention started to go global in the 1980s. The business world examined how Japanese companies in particular were revolutionizing manufacturing to compete against once-dominant Western players. Political and social changes were also afoot, and the shift toward globalization took hold.

McKinsey managing director Fred Gluck (1988–94) called on the firm to raise its sights and expand its horizons:

Beginning with a memo not two weeks before the Berlin Wall came down, he urged his partners to expand their vision beyond their usual business clients. As the world’s best problem solvers, he argued, McKinsey should aspire to advise national and world leaders on global issues like poverty, European integration, and the environment. It should help design and implement the reforms that were certain to follow in the wake of the revolutions unfolding in Eastern Europe, the Soviet Union, and Asia. Though not universally shared, Gluck’s call to action struck a chord with many firm leaders. … They were being challenged to help change the world.

The McKinsey Global Institute was founded in this era, looking to generate fresh insights through serious research that integrated the disciplines of economics and management. And although work continued to prize financial impact for clients, the thinking around future impact continued to expand.

The 2000s and 2010s: A focus on longer-term, inclusive growth

Technological advances may have facilitated globalization, but the dot-com crash of the early 2000s and ensuing changes—to say nothing of the global financial crisis of 2008—brought discussion on the social responsibility of business into the zeitgeist.

In a 2006 interview, McKinsey’s former London office manager Peter Foy reflected:

I have real misgivings about the way that [business] changed. Because the minute the world … changed from building great companies and keeping shareholders happy to serving shareholders on a quarterly delivery, wealth-creation basis … you changed everything in the business system. The motivation of the CEO, and the organization, and the time you spend on it all.

The conversations also entered the realm of public ideas. One particularly powerful statement in the March 2011 Harvard Business Review article “ Capitalism for the long term ,” penned by McKinsey managing partner Dominic Barton, called for business-led reform to go beyond quarterly capitalism:

This shift is not just about persistently thinking and acting with a next-generation view—although that’s a key part of it. It’s about rewiring the fundamental ways we govern, manage, and lead corporations. It’s also about changing how we view business’s value and its role in society.

Barton later helped found the not-for-profit Focusing Capital on the Long Term, which encourages long-term investing and business decision making.

Additionally, the McKinsey Quarterly marked its 50-year anniversary  with a special edition on the future of management. One key theme: Corporate longevity and a long-term view of performance.

2019, the Business Roundtable statement, and what lies ahead

On August 19, 2019, the Business Roundtable issued its latest statement on the purpose of a corporation :

Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services. Businesses make and sell consumer products; manufacture equipment and vehicles; support the national defense; grow and produce food; provide health care; generate and deliver energy; and offer financial, communications and other services that underpin economic growth. While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.

The statement was endorsed by 181 CEOs (along with McKinsey global managing partner Kevin Sneader ), each committing to leading their companies for the benefit of all stakeholders—customers, employees, suppliers, communities, and shareholders.

Echoes of that statement continue to resonate today, even as leaders navigate crises and contemplate the next normal beyond coronavirus . As Marc Goedhart and Tim Koller note in “ The value of value creation ”: “Long-term value creation can—and should—take into account the interests of all stakeholders.” And Sneader and his coauthors underscore it as a top-management ethos in a new article on the CEO moment :

[The] COVID-19 pandemic has laid bare the profound interconnectedness between businesses and the broader world in which they operate. … Employees, customers, and stakeholders expect a CEO to articulate where the company stands on critical issues.

What lies ahead on this topic? Write to us .

This article was conceptualized, illustrated, and edited by McKinsey Global Publishing colleagues Mike Borruso , Torea Frey , Gwyn Herbein ,  Philip Mathew , Janet Michaud , and Nathan Wilson , with Paul Lasewicz , our archivist, guiding us on this walk through history.

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The Truth About CSR

  • V. Kasturi Rangan,
  • Lisa Chase,
  • Sohel Karim

corporate responsibility essay

Despite the widely accepted ideal of “shared value,” research led by Harvard Business School’s Kasturi Rangan suggests that this is not the norm—and that’s OK. Most companies practice a multifaceted version of CSR that spans theaters ranging from pure philanthropy to environmental sustainability to the explicitly strategic. To maximize their impact, companies must ensure that initiatives in the various theaters form a unified platform. Four steps can help them do so:

Pruning and aligning programs within theaters. Companies must examine their existing programs in each theater, reducing or eliminating those that do not address an important social or environmental problem in keeping with the firm’s business purpose and values.

Developing metrics to gauge performance. Just as the goals of programs vary from theater to theater, so do the definitions of success.

Coordinating programs across theaters. This does not mean that all initiatives necessarily address the same problem; it means that they are mutually reinforcing and form a cogent whole.

Developing an interdisciplinary CSR strategy. The range of purposes underlying initiatives in different theaters and the variation in how those initiatives are managed pose major barriers for many firms. Strategy development can be top-down or bottom-up, but ongoing communication is key.

These practices have helped companies including PNC Bank, IKEA, and Ambuja Cements bring discipline and coherence to their CSR portfolios.

Most of these programs aren’t strategic—and that’s OK.

Idea in Brief

The problem.

Many companies’ CSR initiatives are disparate and uncoordinated, run by a variety of managers without the active engagement of the CEO. Such firms cannot maximize their positive impact on the social and environmental systems in which they operate.

The Solution

Firms must develop coherent CSR strategies, with activities typically divided among three theaters of practice. Theater one focuses on philanthropy, theater two on improving operational effectiveness, and theater three on transforming the business model to create shared value.

Companies must prune existing programs in each theater to align them with the firm’s purpose and values; develop ways of measuring initiatives’ success; coordinate programs across theaters; and create an interdisciplinary management team to drive CSR strategy.

Most companies have long practiced some form of corporate social and environmental responsibility with the broad goal, simply, of contributing to the well-being of the communities and society they affect and on which they depend. But there is increasing pressure to dress up CSR as a business discipline and demand that every initiative deliver business results. That is asking too much of CSR and distracts from what must be its main goal: to align a company’s social and environmental activities with its business purpose and values. If in doing so CSR activities mitigate risks, enhance reputation, and contribute to business results, that is all to the good. But for many CSR programs, those outcomes should be a spillover, not their reason for being. This article explains why firms must refocus their CSR activities on this fundamental goal and provides a systematic process for bringing coherence and discipline to CSR strategies.

  • VR V. Kasturi Rangan is a Baker Foundation Professor at Harvard Business School and a cofounder and cochair of the HBS Social Enterprise Initiative.
  • Lisa Chase is a research associate at Harvard Business School and a freelance consultant.
  • SK Sohel Karim is a cofounder and the managing director of Socient Associates, a social enterprise consulting firm.

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What Is Corporate Social Responsibility? 4 Types

Corporate social responsibility graphic with hand holding lightbulb

  • 08 Apr 2021

Until fairly recently, most large businesses were driven almost exclusively with a single goal in mind: maximizing profits.

In the past few decades, however, more business leaders have recognized that they have a responsibility to do more than simply maximize profits for shareholders and executives. Rather, they have a social responsibility to do what’s best—not just for their companies, but people, the planet, and society at large.

This realization has led to the emergence of companies identifying as socially responsible. Some even carry designations or seals, such as B Corporations (B Corps), social purpose corporations (SPCs), and low-profit limited liability companies (L3Cs).

But what is corporate social responsibility, and what are the different forms it can take?

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What Is Corporate Social Responsibility (CSR)?

Corporate social responsibility (CSR) is the idea that a business has a responsibility to the society that exists around it, according to the online course Sustainable Business Strategy .

Firms that embrace CSR are typically organized in a manner that empowers them to act in a socially responsible way to positively impact the world. It’s a form of self-regulation that can be expressed in initiatives or strategies, depending on an organization’s goals. Many organizations communicate these efforts to external and internal stakeholders through corporate social responsibility reports .

There are various examples of what “socially responsible” means from organization to organization. Firms are often guided by a concept known as the triple bottom line , which dictates that a business should be committed to measuring its social and environmental impact, sustainability efforts, and profits. The adage “profit, people, planet,” known as the “three P’s,” is often used to summarize the driving force behind this concept.

Check out our video on corporate social responsibility below, and subscribe to our YouTube channel for more explainer content!

corporate responsibility essay

Types of Corporate Social Responsibility

CSR is traditionally broken into four categories: environmental, philanthropic, ethical, and economic responsibility.

1. Environmental Responsibility

Environmental responsibility is the belief that organizations should behave in as environmentally friendly a way as possible. It’s one of the most common forms of CSR. Some companies use the term “environmental stewardship” to refer to such initiatives.

Companies that seek to embrace environmental responsibility can do so in several ways:

  • Reducing harmful practices: Decreasing pollution, greenhouse gas emissions, the use of single-use plastics, water consumption, and general waste
  • Regulating energy consumption: Increasing reliance on renewables, sustainable resources, and recycled or partially recycled materials
  • Offsetting negative environmental impact: Planting trees, funding research, and donating to related causes

3 ways to embrace environmental responsibility: reduce harmful practices, regulate energy consumption, and offset negative environmental impact

2. Ethical Responsibility

Ethical responsibility is concerned with ensuring an organization is operating in a fair and ethical manner. Organizations that embrace ethical responsibility aim to practice ethical behavior through fair treatment of all stakeholders, including leadership, investors, employees, suppliers, and customers.

Firms can embrace ethical responsibility in different ways. For example, a business might set its own, higher minimum wage if the one mandated by the state or federal government doesn’t constitute a “livable wage.” Likewise, a business might require that products, ingredients, materials, or components be sourced according to free trade standards.

In this regard, many firms have processes to ensure they’re not purchasing products resulting from slavery or child labor.

3. Philanthropic Responsibility

Philanthropic responsibility refers to a business’s aim to actively make the world and society a better place.

In addition to acting ethically and environmentally friendly, organizations driven by philanthropic responsibility often dedicate a portion of their earnings. While many firms donate to charities and nonprofits that align with their missions, others donate to worthy causes that don’t directly relate to their business. Others go so far as to create their own charitable trust or organization to give back and have a positive impact on society.

4. Economic Responsibility

Economic responsibility is the practice of a firm backing all of its financial decisions in its commitment to do good. The end goal isn’t just to maximize profits, but also to make sure the business operations positively impact the environment, people, and society.

Sustainable Business Strategy | Unite Profit and Purpose | Learn More

What Are the Benefits of Corporate Social Responsibility?

Most firms embrace CSR due to moral convictions, which can result in several benefits and important social change .

CSR initiatives can, for example, be a powerful marketing tool, helping a company position itself favorably in the eyes of consumers, investors, and regulators. These initiatives can also improve employee engagement and satisfaction—key measures that drive retention. They can even attract potential employees who carry strong personal convictions that match those of the organization.

Finally, CSR initiatives inherently force business leaders to examine hiring and management practices, where and how they source products or components, and the steps they take to deliver value to customers.

This reflection can often lead to innovative and groundbreaking solutions that help a company act in a more socially responsible way and increase profits. For example, reconceptualizing the manufacturing process so that a company consumes less energy and produces less waste allows it to become more environmentally friendly while reducing its energy and materials costs— value that can be reclaimed and shared with both suppliers and customers.

Are you interested in learning how to lead your organization toward positive change? Explore Sustainable Business Strategy —one of our online courses related to business in society —and discover how you can become a purpose-driven leader. Not sure which course is the right fit? Download our free course flowchart to determine which best aligns with your goals.

This post was updated on August 8, 2023. It was originally published on April 8, 2021.

corporate responsibility essay

About the Author

  • Original article
  • Open access
  • Published: 05 July 2016

Corporate social responsibility research: the importance of context

  • Carol A. Tilt 1  

International Journal of Corporate Social Responsibility volume  1 , Article number:  2 ( 2016 ) Cite this article

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There has, in recent times, been an increasing interest in understanding corporate social (and environmental) responsibility (CSR) and, in particular, CSR reporting in developing countries. However, many of these studies fail to investigate fully the contextual factors that influence CSR and reporting in those countries, preferring to rely on theories and hypotheses developed from studies undertaken in the West, particularly the US, UK and Australasia.

It may be argued that this is appropriate as many emerging economies are experiencing growth and moving towards having a more market-based orientation. Notwithstanding this, a large number of these countries have an entirely different socio-political environment, with different political regimes, legal systems and cultural influences. These factors have a significant effect on the applicability of theories such as stakeholder theory, legitimacy theory and accountability theory, which are commonly used to explain the phenomenon of reporting.

In State Capitalist countries, such as China, an important influence on companies is the political ideology that underpins the nation’s government. The nature and impact of ideology and hegemony in China has been under-studied and, therefore, investigating how the ideology, and competing forces that may mitigate its influence, manifest themselves in Chinese reporting are essential. In the Middle East, countries such as Saudi Arabia have no free press, are ruled by a royal family, have a market dominated by the oil industry, and potential religious influences. Such socio-cultural differences mean societies develop different understandings of concepts such as sustainability and social responsibility. Finally, countries such as Sri Lanka have some similarities to other developing countries, but their economy is set against a background of a recent civil war – operating in a post-conflict economy is a factor rarely considered in social and environmental disclosure, yet has important influence on policy in these areas.

This paper discusses three contextual issues that warrant more and improved consideration in CSR research, with particular emphasis on CSR reporting research.

More and more corporations worldwide are involved in corporate social responsibility activities, and as a result are providing more social and environmental information to the public. Following from this, CSR disclosure, or reporting, has become one of the major fields of investigation by accounting scholars (Deegan 2009 ; Mathews 1997 ; Tilt 2001 ). Research that considers both CSR activity and CSR reporting has traditionally focused on companies in more developed economies, predominantly the US, UK, Australia and New Zealand (Burritt and Schaltegger 2010 ; Frost et al. 2005 ; Gray 2006 ; Gurvitsh and Sidorova 2012 ; Othman and Ameer 2009 ; Patten 2002 ; Sahay 2004 ), but recently there has been increasing interest in understanding the phenomenon in developing countries particularly as they experience growth and move towards a more capitalist orientation (Sumiani et al. 2007 ). Of the research that does exist, a number of papers suggest that ‘country’ is a determinant for CSR involvement and for the level of disclosure, but do not go much further.

Many of the studies of developing countries however, choose a framework for their investigation based on those shown to be meaningful for explaining disclosure in developed, capitalist economies. That is, they fail to investigate fully the contextual factors that influence firms and their reporting in those countries that have a different social, political, legal and/or cultural context.

It may be argued that this is appropriate as many emerging economies are experiencing growth and moving towards having a more market-based orientation. However, this is rarely acknowledged or questioned in these papers. Yet, it is reasonable to suggest that these factors have a significant effect on the applicability of theories such as stakeholder theory, legitimacy theory and accountability theory, which are commonly used to explain the phenomenon of reporting.

The majority of the world’s population lives in developing countries and each country experiences its own unique social, political and environmental issues (United Nations 2013 ). These countries are in the process of industrialisation and are often characterised by unstable governments, higher levels of unemployment, limited technological capacity, unequal distribution of income, unreliable water supplies and underutilised factors of production. As a result of rapid industrial development, policies are pursued that aim to attract greater foreign investment, and the investors are often keen to start benefitting from fiscal incentives and cheap labour. While these strategies make economic sense, they have adverse social and environmental effects, including the use of child labour, low or unpaid wages, unequal career opportunities, occupational health and safety concerns, and increased pollution.

In a review of the literature on determinants of CSR reporting (Morhardt 2010 ), reports that research on the impact of different variables in different regions is inconclusive due to the lack of enough studies. Factors that may influence CSR disclosure practices fall broadly into internal and external (Fifka 2013 ; Morhardt 2010 ), but are commonly classified further as (Adams 2002 : p224):

Corporate characteristics, such as size, industry group, financial/economic performance and share trading volume, price and risk;

General contextual factors, such as country of origin, time, specific events, media pressure, stakeholders and social, political, cultural and economic context; and

Internal contextual factors, including different aspects of corporate governance.

While CSR reporting has been studied by a large number of scholars, only a few fall into the second of the categories above, and consider context in detail. This is particularly relevant when considering developing countries. A few papers have specifically reviewed studies on developing countries. For example, (Belal and Momin 2009 ) categorise the work on developing countries into three groups: studies of the volume or extent of reporting; studies of the perceptions of CSR reporting by managers; and studies of the perception of CSR reporting by stakeholders. In all the studies reviewed there is little discussion of the context, other than a description of the country, and no real thought about the theoretical assumptions being made.

This paper presents a discussion of the different contextual issues or factors that show some evidence or potential to influence CSR and reporting in developing countries. It focusses on three specific issues and provides a research agenda for future consideration of the influence of context in CSR reporting research. The paper is structured as follows. The next section introduces some broad contextual factors that warrant consideration in the literature on CSR reporting. Next, three specific contextual issues are examined: the role of political ideology and hegemony; the influence of cultural understandings; and the impact of historical economic context. Finally, by way of conclusion, some recommended areas for further research are suggested.

Contextual considerations

Adams ( 2002 ) talks about the social, political, cultural and economic context, so some consideration of what this might mean is needed as each of these concepts themselves cover a variety of aspects, and indeed overlap. While papers may talk about the ‘social context’ in which the companies being examined operate, this is not well defined and little consideration is given to what this means. Some things that could be more explicitly considered include, inter alia : the role of the press; the status of women; the legal/justice system; the level of corruption; the level of government control, cultural understandings; and so on. This paper chooses to highlight three of these areas, and these are discussed briefly below in broad terms, followed by a discussion of some specific aspects of each identified as providing fertile grounds for future research.

Political system

Assumptions are often made about capitalist systems, whether explicit or implicit, as the vast majority of work on CSR reporting has been done in the Western context. However, there is little research looking at CSR reporting in socialist or communist countries. Some work has been undertaken on China (Dong et al. 2014 ; Gao 2011 ; Situ and Tilt 2012 ), but this work often applies the same conceptual frameworks as Western studies. What about the influence of ideology, and hegemony?

Sociocultural environment

Human beings have “distinctive cultural (learned) characteristics, histories and responses to their environment” and the term ‘sociocultural’ is commonly used in anthropological research to describe these and the “interactions and processes” that this involves (Garbarino 1983 : p1). Some general studies of culture and CSR using Hofstede exist (Silvia and Belen 2013 ), but an in-depth analysis of different understandings and conceptions of terms such as CSR as a result of sociocultural influences is lacking. The work that does examine specific factors often suggests that the Western concept of CSR does not fit these contexts (Wang and Juslin 2009 ).

The majority of work that considers sociocultural factors has looked mainly at religious aspects of CSR, most commonly by reviewing reporting by Islamic organisation, such as Islamic banks (Maali et al. 2006 ; Siwar and Hossain 2009 ; Sudarma et al. 2010 ). The teachings of many religions focus on social responsibility, the relationship with the natural environment, treatment of others, fairness, justice, etc., so there is a natural expectation that religion-based organisations may be more likely to engage in CSR and CSR reporting. A more nuanced consideration of how this manifests itself in different societies would improve understanding of the drivers and motivations of these activities. Similarly, other sociocultural factors, such as national identity, values, social organisation and language, could be incorporated.

Stage of development

The emerging literature on CSR reporting outside the Western world examines countries that are ‘developing’ (Belal and Momin 2009 ; Momin and Parker 2013 ), but little depth is included about where they are in their development journey and how the potential conflict between economic and social goals impacts CSR or CSR reporting. Rostow’s ( 1962 ) Stages of Economic Growth model suggests there are five stages (traditional society, preconditions for take-off, take-off, drive to maturity, and age of high or mass consumption), yet most literature on CSR classifies countries only into developed or developing. The ‘developing’ classification potentially includes countries that are in Rostow’s first, second or third stage which may have an impact on their response to CSR issues. In addition to economic variables however, the United Nations also produces a Human Development Index (HDI) which considers life expectancy, education and income to measure how social, as well as economic, development (UNDP 2015 ). Both these concepts are important for consideration of CSR.

Importantly, consideration of just one or two aspects of these three broader contextual issues may result in misinterpretation of the results. Often these things interact, for example, social issues often cross over with cultural and religious impacts, or even with political influence where the regime is more hegemonic. It is thus important to consider, or at least acknowledge, the holistic nature of the context of the phenomenon being examined.

It is beyond the scope of this paper to discuss all of the issues raised here although this would be an important part of a larger research program. Therefore, three particular contextual issues, and three specific contexts, are the focus of this paper: the role of political ideology and hegemony (China); the influence of cultural understandings (Middle East); and the impact of historical economic context (Sri Lanka).

Politics, ideology and state control

Ideology is a set of common beliefs that are shared by a group of people, and is “the fundamental social beliefs that organize and control the social representations of groups and their members” (Van Dijk 2009 : p78). Countries such as China provide a fertile research setting to examine the influence of ideology, and hegemonic approaches of influencing CSR, which have been missing from most CSR research in the region.

The Chinese political model has some unique characteristics. Among these is the dominance of ‘the party state’, which exercises control in different forms over most aspects of the economy that is unmatched when compared to other state capitalist economies. Political leaders use a variety of tools (Bremmer 2010 ) and it is the combination of three particular tools that sets apart the Chinese system: the exercise of control as a dominant shareholder, the ability to appoint key positions in major firms, and the means to influence decision-making via ideology. First, the party exerts shareholder power over state-owned enterprises (SOEs). Chinese SOEs play an instrumental role in society (Du and Wang 2013 ) and make up around 80 % of the stock market (Economist T 2012 ). As protecting the environment is a major part of the guiding ideology and the nation’s policy, SOEs are likely to be keen to provide CER. Second, the party exercises power over the appointment of the senior leadership in SOEs (Landry 2008 ). This has resulted in control as they are “cadres first and company men second. They care more about pleasing their party bosses than about the global market” (Economist T 2012 : p6). Third, party control is exercised through ideology. The party has cells in most larger firms, whether private or state-owned, which influence business decisions made at board meetings. Given that China considers the Marxist-Leninist-Maoist ideology as crucial this distinguishes it most significantly from other varieties of state capitalism that have a more liberal-democratic flavour.

There is some evidence that the first form of party control has been declining in recent times with the number of SOEs under the SASAC’s control halving over the last decade (Mattlin 2009 ). Similarly, since 1999, the share of SOEs in the economy has declined from 37 % to less than 5 %. This results in greater use of regulation and ideological hegemony to achieve its aims, yet most CSR research still uses state-ownership as a proxy for all types of state control.

Even after economic reform, ideology in China was still pervasive (Lieber 2013 ). Lieber ( 2013 ) argues that ideology is widely used to signal loyalty and the government is good at using ideology to “control and direct key vocabularies… (and) vague ideological language can create a climate of uncertainty thus increasing the range of a control regime” (Lieber 2013 : p346). However, the prevailing ideological themes in China are dynamic. In particular, most recently, new ideological themes have developed to respond to the changes in society. When economic reform began, “building up a socialist market economy with specific Chinese characteristics” was the guiding ideology (Zhang 2012 : p25). As such, economic growth was the country’s priority, but in 2005, “building up a harmonious society became the prevailing ideology” (and CSR is a key element of this resolution).

Ideology is used by the Chinese government to exert control over businesses. Traditionally, the government has “been considered a source of moral authority, official legitimacy and political stability…and …political language has been vested with an intrinsic instrumental value: its control represents the most suitable and effective way first to codify, and then widely convey, the orthodox state ideology” (Marinellin 2012 : p26). The language “developed and used by party officials … consists of ‘correct’ formulation, aims to teach the ‘enlarged masses’ how to speak and, how to think” (Marinellin 2012 : p26). The idea of the importance of a ‘Harmonious Society’ is the “re-contextualized discourse in response to the emergent issues in the changing social stratification order” (Zhang 2012 : p33). As a result, Chinese companies have been noticeably adopting the language of social concern and environmental protection.

It may therefore be suggested that CSR reporting in China is directly a response to the government’s ideological hegemony. However, the story is not as straightforward as it may first appear, for two reasons. First, despite a great deal of commitment to social and environmental regulation in China, implementation of these regulations has been limited. Second, as China enters a phase of continued economic development, Western influences may begin to have a moderating effect on the strength of the ideology.

The Chinese economy has grown rapidly in terms of gross domestic product (GDP) (World Bank 2016 ). The economic reforms that took place over the past decades were motivated substantially by the Chinese central government, and recent scholars have noted the positive role that ideology played in driving those reforms, notwithstanding that economists historically view ideology as “distorting… knowledge, judgment and decision making” (Lieber 2013 : p344).

With economic reform however, has come substantial environmental degradation which in turn has led to poor health outcomes for much of society generally. This led to a high level of commitment to environmental regulation in particular from as early as the 1990, followed by the release of even more rigorous regulations on environmental protection in the 2000s. However, despite the high commitment made by the Chinese central government, implementation of these policies is quite poor (Bina 2010 ). In terms of environmental regulation, for example, the implementation problems stem from a number of areas, including: the position of environmental protection agencies in the political framework; conflict between central and local governments; and supervision issues. The system of supervision of local environmental departments is a key problem (Bina 2010 ). When an environmental department is set up in the central government, corresponding environmental departments are set up in local governments. Ideally, these local departments should be agencies of the central department, deliver the central environmental department’s strategies, and supervise local environmental protection implementation. In reality, the local environmental departments are subservient to the local rather than central governments. All their financial support and staff appointments come from local governments. Therefore, rather than supervising local environmental protection implementation, the local environmental departments become “rubber stamps” for local governments (Zheng 2010 ). Therefore, it is unlikely that there will be efficient enforcement of environmental laws, regulations and policies at the local level (Bina 2010 ; Zheng 2010 ).

Finally, as China heads towards a market economy, government intervention becomes a policy choice, and markets function as a tool of national interest (Zhao 2011 ). However, as Chinese firms become more involved with foreign trading partners and markets, their reporting activity is also influenced by foreign and global organisations, leading to potential tension between demonstrating commitment to state ideological goals and meeting the requirements of global stakeholders.

Given the complexity of the context, research into CSR reporting in China needs to take into account the specific aspects of Chinese politics and culture in order to provide a nuanced understanding, and ultimately an improvement, of CSR reporting activities. However, a review done of the literature on CSR in by Chinese showed that it is very descriptive with little depth and much of the CSR literature is conceptual, descriptive, or argumentative in nature (Guan and Noronha 2013 ). The authors noted proper research methodologies are not systematically applied in some studies, and supporting theories are lacking. In the non-Chinese studies on China, there is also a predominance of papers on determinants and volume of reporting (Situ and Tilt 2012 ), with very few considering broader contextual factors, other than a few that look at specific cultural attributes (e.g., Rowe & Guthrie 2009 ).

Sociocultural understandings

Notwithstanding a move towards a market orientation of many developing countries, such as in China as outlined above, conceptions of CSR by management of companies in these countries may be quite different to those in the West (Wang and Juslin 2009 ). These differing conceptions may be a result of differing values and attitudes, language, religion or identity. Even specific elements of CSR are conceived of differently, for example in China, the main understanding of sustainability is in terms of environmental protection (Situ et al. 2013 , 2015 ). These socioculturally derived understandings are inevitably reflected in their reporting.

In another example, in the Middle East, the predominant perception of CSR is that it simply means philanthropic donations. In this region, the issue of social responsibility is relatively new, and as such the number of studies of CSR and CSR reporting in the Gulf region is growing (Al-Khatar and Naser 2003 ; AlNaimi et al. 2012 ; Emtairah et al. 2009 ; Mandurah et al. 2012 ; Marios and Tor 2007 ; Minnee et al. 2013 ; Nalband and Al-Amri 2013 ; Naser et al. 2006 ; Naser and Hassan 2013 ; Qasim et al. 2011 ; Sangeetha and Pria 2012 ). Many of these studies do not consider the cultural context to a very great extent as the research is emerging and focusses on perceptions. For example, Mandurah et al. ( 2012 ) and Emtairah et al. ( 2009 ) explored managerial perceptions of the concept of CSR in Saudi Arabia and found that managers are aware of the concept, but there is little connection between the managerial level perceptions and firms’ workforce. The authors describe CSR as being in its infancy phase, which limits the understanding of the concept to the view that CSR simply means being philanthropic. This indicates a different, and perhaps less developed, understanding of the concept in the region compared with the West, but the reasons for this, and the consequences for CSR reporting, are under-explored. Some authors suggest the narrow use of the term is because of the religious obligations towards society, (Visser 2008 ). There is only minimal evidence of any CSR practices other than philanthropy-based or any strategic approaches to CSR for long-term benefits (Visser 2008 ), but the trend is increasing and the forms that philanthropy takes is expanding.

It has also been argued that politics plays a significant role in increasing the awareness of CSR in the Arab world. Avina ( 2013 ) suggests that the perception of CSR in the Middle East changed after the Arab spring event, for both local and international firms. The term CSR more than a decade ago had little meaning to the public (Visser 2008 ) but since the Arab spring, the sense of social responsibility among civil society and the corporate sector has increased Avina 2013 ). Firms realised that they play a role in social responsibility, not just governments, and recognised that CSR should go beyond just donations to charitable causes (Avina 2013 ). Ronnegard ( 2013 ), however, predicts that CSR in the Middle East will not mimic the Western concept because of the strong influence of culture and religion in the region. Moreover, the influence of stakeholders in the Middle East is considered to be limited due to there being a lack of free press, few lobby groups and the different cultural attributes of employees and consumers. Some studies in Gulf countries have however, suggested that stakeholders, such as government and charitable organisations, may have an impact on firms’ behaviour (Emtairah et al. 2009 ; Naser et al. 2006 ). Others suggest that CSR may have developed as a concept due to the increase of foreign direct investment into Arab countries, the trend of shifting family and government owned firms into the public domain, and the globalisation of the region’s large national firms.

From the limited studies that have been undertaken, there is evidence of CSR reporting by Gulf country companies, with human resources and community involvement being the dominant themes in may reports Abu-Baker and Naser 2000 ). Thus, understanding of motivations for CSR reporting is not yet well developed and few existing studies consider the different level of stakeholder pressure in the region. This suggests that more research is needed on the formation of notions of CSR within specific contexts. This region is of particular interest because, according to the Human Development Report (HDI 2013 ), countries in the region are classified as high, or very high, in human development. That is, they are not only trying to develop and improve their economy, but are also trying to improve the quality of life of their citizens (Ramady 2010 ). The overall outlook of these countries indicates that they are performing well, however, Fadaak ( 2010 ) notes that identifying poverty lines is a challenge because of a lack of a clear definition of poverty in the region. There are no official reports considering poverty or other social problems and no GCC (Gulf Cooperation Council) countries were found in the list of the World Bank Database in relation to the poverty rate.

Similarly, in other developing countries the importance of local economic, cultural, and religious factors that shape the business environment, and understandings of charity and philanthropy, need to be taken into account. Empirical work in this area is lacking (Lund-Thomsen et al. 2016 ). In Sri Lanka, for example, “the most common arguments used to ‘sell’ the business case for CSR and CP [Corporate Philanthropy], for example an improved brand image, increased market or customer share, employee retention, mitigated regulatory risks, and reduced tax burden, are considered mostly irrelevant” (Global Insights 2013 : p1). Business leaders engage in CSR for a range of business, humanitarian, social, religious, and political reasons. Key amongst them is a belief that ‘giving back’ to society discharges religious obligations to the poor, and an awareness that being seen to contribute to national development goals is important (Global Insights 2013 ). Hence, the conception of CSR in this region is culturally determined, but also shaped by the economic environment.

  • Economic development

As well as government control, culture and political factors, the stage of economic development a country is in is also an important contextual factor that may impact CSR reporting. In China, as discussed above, the drive for economic reform led directly to environmental impacts which needed to be addressed. A number of other developing countries have been examined for their reporting on CSR issues, particularly from the Asian region (Andrew et al. 1989 ; Elijido-Ten et al. 2010 ), India (Mishra and Suar 2010 ; Raman 2006 ; Sahay 2004 ), and Bangladesh (Belal and Owen 2007 ; Belal and Roberts 2010 ; Khan 2010 ; Muttakin et al. 2015 ).

While these countries are classified as developing (IMF 2015 ), Bangladesh and India score only medium for human development. Another country in the region, Sri Lanka, has a high rating on the HDI, and has been exhibiting extensive growth since the end of a 30-year war (WPR 2015 ). Thus, exhibiting both economic and social growth aspects makes it an interesting case for studying CSR.

Sri Lanka has a population of over 20 million and foreign companies have increased their investments with one billion US dollars in direct foreign investments in 2013 alone ( BOI ). Classified as a middle income developing country, the challenge for Sri Lanka is to achieve high economic growth without causing irreversible damage to the environment and while continuing to eliminating social issues such as poverty, malnutrition and poor workplace ethics (Goger 2013 ). In addition, Sri Lanka also has a long history of corporate philanthropy, largely led by individuals whose values and actions stem from religious and cultural views (Beddewela and Herzig 2013 ) but has recently seen an increase in private firms offering development-related initiatives. Public infrastructure projects have been the main element of post-war economic planning, but there still remains rural poverty in the country. Thus, the primary motivation for CSR and philanthropy in Sri Lanka is poverty reduction, particularly for children and youth, social welfare organisations like orphanages and elderly homes, hospitals and health services, and veterans’ charities (Global Insights 2013 ). Thus, the economic, cultural, and political context means that these poverty rates have fallen (data indicates that the rate went from approximately 20 % in 2000 to under 9 % in 2013) and that inflation has slowed (Wijesinha 2014 ), so opportunities for private businesses to contribute to infrastructure abound. However, these private, development-orientated, CSR initiatives have often failed to deliver their aims and there is considered to be a danger that they may in fact perpetuate the causes of poverty and ethnic and religious conflict given their ties to particular ethnic groups (Global Insights 2013 ).

Notwithstanding this environment, the topic of CSR reporting in Sri Lanka has received relatively little research attention compared to other parts of the world (see Belal and Momin 2009 , for a review). In terms of motivations for CSR, there is some evidence that firms in which senior management have a positive outlook towards social and environmental practices tend to disclose more on these aspects, as compared to other firms (Fernando and Pandey 2012 ). However, reporting on CSR initiatives is not mandatory thus it is likely that any voluntary reporting by Sri Lankan firms will vary significantly. One study of reporting was conducted by Senaratne and Liyanagedara ( 2012 ) who examined the level of compliance with Global Reporting Initiative (GRI) guidelines in the disclosures of publicly listed companies, selected from seven business sectors. The authors conclude that the level of compliance with the GRI is low and that disclosures vary significantly amongst the companies, potentially reflecting varying commitment to CSR. Similarly, a longitudinal study across five years (2005–2010) was carried out by Wijesinghe ( 2012 ) to identify trends in CSR reporting in Sri Lanka and the study identified an increasingly positive trend, predicting similar levels of disclosures provided by companies in developed countries. The few studies that have been conducted examining the predominance of reporting in Sri Lanka, mostly examining multinational companies, conclude that CSR reporting is gaining momentum in Sri Lanka but is still emerging as the concept of CSR itself emerges (Beddewela and Herzig 2012 ; Hunter and Van Wassenhove 2011 ).

Conclusion and a future research agenda

As more and more research on CSR in developing countries emerges in the academic literature, it is important to ensure that appropriate consideration is given to the context in which the research takes place. Examination of CSR and CSR reporting practices without contextualisation could perpetuate flawed understandings that are based on evidence from research in the developed world. Different political, social, cultural and economic environments impact on the both the development of, and reporting of, CSR activities and consequently impact on the value of these activities to benefit society and the natural environment.

A suggested agenda for future research, that considers context in more depth, includes:

Consideration of ideological and hegemonic regimes and their attitude towards CSR. This research would consider potential positive and negative impacts of the political and governance system. In China, for example, the potential for Communist Party ideology to increase environmental protection and improve social conditions is vast, and is starting to be seen to have a strong impact on firm behaviour. Examination of this over time will provide an important contribution to understanding the role of government beyond the more common analysis of environmental protection regulation.

Greater examination of sociocultural variables in different countries, beyond analysis of religious influence, and beyond the use of Hofstede. Understandings of concepts such as CSR in countries in Asia, the Middle East and the Asian sub-continent, are known to differ from those in the West, so understanding their potential to lead to better (worse) CSR outcomes is important. The variety of variables that could be included is vast, but some clearly important issues include: language, secularism, freedom of the press, access to information, homogeneity of values and attitudes, and the existence of a national figurehead or identity.

Longitudinal examination of the process of economic development. Countries where the economy is developing rapidly, such as China and the Middle East; and countries where the historical economic context differs dramatically, such as in Sri Lanka where the need for development is borne out of conflict, provide rich backgrounds to consider how CSR is developing alongside economic developments.

A comprehensive framework for examining these, and other, potential factors that influence CSR and CSR reporting in developing countries does not exist, but Table  1 attempts to provide a preliminary outline of some factors that could comprise such a framework, and be used to guide future research. As mentioned earlier, it is important to note, however, that these variables are not discreet and are likely to interact with each other. This is noted in the table as a reminder that the classifications are somewhat artificial and that acknowledgement of a more holistic consideration is important.

These are clearly only a selection of opportunities for CSR research on developing nations and emerging economies. Calls for more work on these factors have continued since Adams’ ( 2002 ) original call, but there is still vast scope to improve our understanding of CSR practice throughout the world (Fifka 2013 ), where much of the social and environmental damage is taking place.

Importantly, research of this kind must be transdisciplinary as perspectives from areas such as political science, philosophy and economics are essential. Only with in-depth, contextualised understandings can improvements to the nature of CSR activity be implemented.

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Acknowledgements

It is important to acknowledge that this paper provides an overview of a larger research program currently being undertaken by a team of doctoral students at Flinders University and the University of South Australia. Credit must be given to Ms Hui Situ (Flinders University) who is researching environmental reporting in China, Mr Abdullah Silawi (Flinders University) who is researching social responsibility reporting in the Gulf region, and Ms Dinithi Dissanayake (University of SA), who is researching environmental disclosure in Sri Lanka.

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Tilt, C.A. Corporate social responsibility research: the importance of context. Int J Corporate Soc Responsibility 1 , 2 (2016). https://doi.org/10.1186/s40991-016-0003-7

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corporate responsibility essay

Home — Essay Samples — Business — Corporate Social Responsibility — Corporate Social Responsibility (CSR)

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Introduction, types of csr, importance of csr.

  • Environment-Focused Corporate Social Responsibility (CSR) This type of CSR focuses on reducing detrimental effects of the corporation’s operations on the environment. The corporation innovates in its manufacturing stage to reduce the production of environment harming by-products. It also promotes the use of non-renewable energy sources to prevent harm caused to the environment by burning of fossil fuels.
  • Community-Based Corporate Social Responsibility (CSR) The corporation joins hands with other organizations (usually Non-Profit ones) to ensure the welfare of a local community’s people. These organizations either fund or receive funding from corporations to perform tasks that can improve the living conditions of the community’s people.
  • Human Resource (HR)-Based Corporate Social Responsibility (CSR) Corporations focus on the well-being of their own staff and improve their living conditions. The companies may extend compassionate leaves like paternity leaves so that the employee can look after his newborn. They can also provide medical insurance to their employees to take care of accidents caused due to occupational hazards.
  • Charity Based Corporate Social Responsibility (CSR) In a charity-based CSR, corporations donate to organizations or individuals (usually through a charity partner) to improve their financial condition and for their general upliftment. This is the most common form of a CSR activity. Most corporations provide direct financial support to organizations or individuals who require such assistance.
  • Increased employee’s loyalty and retention.
  • Gaining legitimacy and access to markets.
  • Less litigation
  • Increased quality of products and services.
  • Bolstering public image and enhanced brand value.
  • Less volatile stock market.
  • Avoiding state regulations.
  • Increased customer loyalty.
  • Improved quality of life and changing habits.
  • Capacity building creates wealth and employment.
  • Balanced eco-system.
  • Waste management.
  • Clean and green environment

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The Friedman Essay and the True Purpose of the Business Corporation

corporate responsibility essay

Martin Lipton is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. This post is based on his Wachtell Lipton memorandum. Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance by Lucian A. Bebchuk and Roberto Tallarita (discussed on the Forum here ); For Whom Corporate Leaders Bargain  by Lucian A. Bebchuk, Kobi Kastiel, and Roberto Tallarita (discussed on the Forum  here ); and Toward Fair and Sustainable Capitalism by Leo E. Strine, Jr (discussed on the Forum here ).

From a practical standpoint, the most significant part of the 1970 Milton Friedman essay in the New York Times was the headline: “ The Social Responsibility Of Business Is to Increase its Profits .” For a half-century, that phrase has been used to summarize the essay, and alongside Friedman’s similar views in a 1962 treatise, also used in support of “shareholder primacy” as the bedrock of American capitalism. “Shareholder primacy” and “Friedman doctrine” became interchangeable. The Friedman doctrine was a precursor to, and became a doctrinal foundation for an era of short-termism, hostile takeovers, extortion by corporate raiders, junk bond financing and the erosion of protections for employees, the environment and society generally, all in support of increasing corporate profits and maximizing value for shareholders. This concept of capitalism took hold in the business schools and the boardrooms, became ascendant in the eighties and continued as Wall Street gospel until 2008, when the perils of short-termism were vividly illuminated by the financial crisis, and the long-term economic and societal harms of shareholder primacy became increasingly urgent and impossible to ignore. Since then, acceptance of and reliance on the Friedman doctrine has been widely eroded, as a growing consensus of business leaders, economists, investors, lawyers, policymakers and important parts of the academic community have embraced stakeholder capitalism as the key to sustainable, broad-based, long-term American prosperity. This is illustrated by the World Economic Forum’s request that I prepare a new paradigm for corporate governance which it published in 2016 and its issuance of the 2020 Davos Manifesto embracing stakeholder and ESG (environment, social and governance) principles, as well as the 2019 abandonment of shareholder primacy and adoption of stakeholder governance by the Business Roundtable. So too, has corporate purpose and stakeholder and ESG governance been embraced by index fund managers BlackRock, State Street, Vanguard and other major investors.

It should be noted that some well-known business people, economists and lawyers reject stakeholder governance and adhere to the Friedman doctrine.

Also in commemoration of the 50 th anniversary of the essay, four prominent senior fellows of the Hoover Institute, George P. Shultz, Michael J. Boskin, John F. Cogan and John B. Taylor published an article in the Hoover Digest, the title of which aptly summarizes their opinion: Cheated by Collectivism: Businesses do good by benefitting their shareholders, not pursuing a phantom of “social responsibility.” In an article entitled The Illusory Promise of Stakeholder Governance , Lucian Bebchuk and Roberto Tallarita of the Harvard Law School called the Business Roundtable embrace of stakeholder governance naïve and marshalled a litany of empirical, historical and human greed arguments in derogation of stakeholder governance. As might be expected, compelling arguments rejecting the Bebchuk arguments soon appeared. Alison Taylor and Dina Medland in an article entitled The Illusion Of Reasoning , sum up the arguments for stakeholder governance and against preserving Milton Friedman’s fifty-year-old doctrine:

In fact, simplistic prioritisation of shareholder interests ceased to be an option some time ago. Shareholders today are not a monolithic interest bloc, and business leaders have some choices about which owners they seek to attract. Many shareholders today argue enthusiastically for longer time horizons and more substantive measurement of environmental, social and governance issues. More broadly, the value of intangible assets such as reputation, innovation and network effects now constitute 61% of the value of the S&P500. Return on investment takes longer, and is harder to measure. Any attempt to navigate successfully through this new environment is inherently “contestable”, too. It is the idea that a focus on shareholder value negates any need to consider complex trade-offs that is naïve and unrealistic, not the BRT statement.

In addition to these reasons for rejecting the Friedman doctrine, the fundamental structure of the corporate world has changed dramatically since the 1960s. Today the three index fund managers control on average in the aggregate about 20% of the shares of the listed corporations. Together with ten other asset managers, they have voting control of most corporations. Also, Friedman assumed that shareholders wanted primacy and had no concern for the other stakeholders.

Clearly that is not the situation today. Stakeholder and ESG governance and sustainable long-term investment are today embraced by the holders of a clear majority of the shares of most corporations.

Recent events—notably including the pandemic, its disparate impact on various segments of society, and the focus on inequality and injustice arising in the wake of the death of George Floyd—have accelerated the conversation on corporate purpose and the debate about stakeholder governance. The result has been substantial, salutary reflection about the role that corporations play in creating and distributing economic prosperity and the nexus between value and values.

For my part, I have supported stakeholder governance for over 40 years—first, to empower boards of directors to reject opportunistic takeover bids by corporate raiders, and later to combat short-termism and ensure that directors maintain the flexibility to invest for sustainable long-term growth and innovation. I continue to advise corporations and their boards that—consistent with Delaware law—they may exercise their business judgment to manage for the benefit of the corporation and all of its stakeholders over the long term. That it is the corporation, qua corporation, that commands the fiduciary duty of its board of directors.

In looking beyond the disruption caused by the pandemic, boards and corporate leaders have an opportunity to rebuild with the clarity and conviction that come from articulating a corporate purpose, anchored in a holistic understanding of the key drivers of their business, the ways in which those drivers shape and are shaped by values, and the interdependencies of multiple stakeholders who are essential to the long-term success of the business.

This opportunity leads me to reiterate and refine a simple formulation of corporate purpose and objective, as follows:

The purpose of a corporation is to conduct a lawful, ethical, profitable and sustainable business in order to ensure its success and grow its value over the long term. This requires consideration of all the stakeholders that are critical to its success (shareholders, employees, customers, suppliers and communities), as determined by the corporation and its board of directors using their business judgment and with regular engagement with shareholders, who are essential partners in supporting the corporation’s pursuit of its purpose. Fulfilling this purpose in such manner is fully consistent with the fiduciary duties of the board of directors and the stewardship obligations of shareholders.

This statement of corporate purpose is broad enough to apply to every business entity, but at the same time supplies clear guideposts for action and engagement. The basic objective of sustainable profitability recognizes that the purpose of for-profit corporations includes creation of value for investors. The requirement of lawful and ethical conduct ensures generally recognized standards of corporate social compliance. Going further, the broader mandate to take into account all corporate stakeholders, including communities, is not limited to local communities, but comprises society and the economy at large and directs boards to exercise their business judgment within the scope of this broader responsibility. The requirement of regular shareholder engagement acknowledges accountability to investors, but also the shared responsibility of shareholders for responsible long-term corporate stewardship. Essentially, this is The New Paradigm for corporate governance issued in 2016 by the World Economic Forum.

Fulfilling this concept of purpose will require different approaches for each corporation depending on its industry, history, regulatory environment, governance and other factors. I expect that board committees—focusing on stakeholders, ESG issues and the stewardship obligations of shareholders—will be useful or even necessary for some companies. But for all the differences among companies, there is an important unifying commonality: corporate action, taken against the backdrop of this formulation of corporate purpose, will be fully protected by the business judgment rule, so long as decisions are made by non-conflicted directors acting upon careful consideration and deliberation.

Executed in this way, stakeholder governance will be a better driver of long-term value creation and broad-based prosperity than the shareholder primacy model. Directors and managers have the responsibility of exercising their business judgment in acting for the corporate entity that they represent, balancing its rights and obligations and taking into account both risks and opportunities over the long term, in regular consultation with shareholders. Directors will not be forced to narrow their focus and act as if any one interest trumps all others, with potentially destructive consequences, but will instead have latitude to make decisions that reasonably balance the interests of all constituencies in a manner that will promote the sustainable, long-term business success of the corporation as a whole. Most important of all, The New Paradigm will obviate the need for legislation regulating corporations and institutional investors and asset managers that would quickly lead to state corporatism. For a fuller discussion of avoiding legislation and saving American capitalism, see my 2019 essay, It’s Time To Adopt The New Paradigm .

The current focus on the purpose of the corporation is important and welcome. However, corporate institutions operate as part of an ecosystem. As I said in my recent Barron’s article (Companies Can’t Solve Social Problems Without Coordination, 26 August 2020), to result in the kind of transformation now needed, work on corporate purpose also needs to be underpinned by a sense of systemic purpose. In financial markets, at least, that can be provided by what Mark Carney has referred to as the ‘social licence for financial markets’, as I explain in my recent book on that topic for which he wrote the foreword (Palgrave Macmillan 2020).

Milton Friedman did not talk about ‘social licence’. But in saying that business should be run ‘in accordance with [shareholders’] desires which generally will be to make as much money as possible while conforming to the basic rules of society, both those embodied in law and in ethical custom’ he was reaching towards it. Basic: foundational, essential, fundamental. If business does not nourish the ‘basics’ on which social systems rest, and business also therefore depends, everyone suffers including, ultimately, business.

It is 15 years since I wrote the Freshfields Report debunking the City’s interpretation and that of their legal advisers of Megarry’s judgement in Cowan v. Scargill (as he himself had done so in 1989 for those who had bothered to follow his writings)that it was unlawful for pension fund trustees to take ESG considerations into account in their investment decision-making. In so doing, I stirred up a hornet’s nest both within Freshfields and in the financial sector. It is difficult to give up short-term financial ambitions. I recall a number of very difficult conversations based on the impact of our findings. The Law Commission subsequently backed my team and me to the hilt.

I have few heroes in life but Megarry(the authority on the Rent Acts) was one and Martin Lipton was two. David you are in danger of being deified. Best of luck.

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Essay on Corporate Social Responsibility

This report provides information on whether the benefits of CSR outweigh the drawbacks. The report shows that the benefits of CSR are more than the drawbacks and managers should consider implementing the strategy. The research utilizes the use of secondary resources to conclude. Most of the authors used in this report show that CSR has more advantages such as consumer satisfaction, financial performance, productivity, and promotes relationships among the companies, the stakeholders, and society. This research informs the managers on the benefits of executing CSR in their companies. More so, it provides information on few drawbacks that the managers should be prepared to experience. The study adds new information concerning the comparison of advantages and disadvantages of CSR which makes it easier to determine if the strategy should be implemented in companies.

Corporate Social Responsibility

Introduction

Corporate social responsibility (CSR) is a self-controlling model of business that helps business organizations to be socially accountable to the public, stakeholders, and self. Through CSR, companies have conscious of how that affects society environmentally, socially, and economically as they do their businesses (Basuony et al., 2014). Engaging in CSR means that companies are operating in ways that improve society and its environment. As much as CSR influences companies to translate the principles into practical activities, some of the researchers show that CSR may harm companies, stakeholders, and consumers.

Research Questions

Do the positive impacts outweigh the negative effects of CSR among the companies?

Despite some of the researchers revealing the negative impacts of CSR, there are many positive influences that companies, stakeholders, and consumers experience. Companies should ensure that they are responsible for themselves, society, stakeholders, and consumers. This promotes the positive impact of business in society without other people suffering the implications of unethical business activities. However, it is linked to few drawbacks such as costs, conflicts in the profit motive, and “green washing” of customers.

Methodology

This report will utilize secondary sources for review to come up with conclusions. Articles that are less than 10 years old will be used to develop conclusions on whether CSR is effective among companies and if the benefits outweigh the drawbacks.

Literature Review

Based on a substantiation from Mena country, Basuony et al. (2014) state that CSR promotes the performance of business organizations. The stakeholder theory suggests that organizations have to manage relationships with other groups and stakeholders which influences the effectiveness of business decisions. Despite making entrepreneurship progress, businesses that pay attention to the needs of society are successful. For example, branding is effective when a business organization protects the environment and takes part in social activities such as the construction of schools. Most of the researches in this article show that CSR influences business performance through market orientation and consumer satisfaction and financial performance. In research done by Newman et al. (2018), shows that CSR has an independent positive influence on the level of firms efficacy- increased productivity influenced by high effective business engagement. Increased company involvement in community initiatives is a great influence for success in business due to customers’ and stakeholders’ trust.

The concept of the future of CSR presented by Archie Caroll shows that as companies continue to apply CSR, benefits such as stakeholders engagement, increased productivity due to employees being the driving force of business and the enhancement of power among ethically sensitive customers and the client will be experienced (Agudelo et al., 2019). The concept influences effective governance criteria, environmental responsibility, corporate citizenship, the establishment of shared business values, and social performance. However, CSR is linked to various negative impacts. Mahmood et al. (2020) suggest that CSR influences negativity through abusive supervision while valuing employees’ conducts. As much as CSR influences minimization of negative employees’ behavior, it also influences negative conduct when there is abusive supervision. More so, the implementation of CSR needs money. Especially for small businesses, CSR is not affordable to be allocated in the budget. The conflict of the profit motive is also established in CSR as the focus on societal benefits may influence losses to companies. Greenwashing of consumers is linked to CSR. For example, labeling products to be organic to attract consumers.

Implications

This exploration has implications for both bodies of knowledge and management. The research used in this report shows that as much as CSR may have various drawbacks, the benefits outweighs the disadvantages. It contributes to the existing body of knowledge by showing that CSR has more benefits and companies should consider its application in business. The limitations of the current study are the use of secondary sources and few articles to provide more evidence. More so, the articles used in this report do not include cultural factors such as religion which are significant in understanding CSR and the involved activities in the society. The discussion concerning the link between CSR and corporate governance is not provided. Therefore, further research should be done to evaluate this link and its impact on the performance of the company and the experiences of the stakeholders and customers. More so, the research provides a key takeaway for managers which is mainly the benefits of executing CSR in companies to influence performance. The managers should know that despite the presence of drawbacks linked to CSR, there are many advantages such as consumer satisfaction, effective branding, establishing trust, and financial performance.

Based on the previous research used in this report, it is evident that CSR has many advantages. These pros include consumer satisfaction, productivity, good relationships with society and stakeholders, financial performance, and effective branding. These advantages overpower the drawbacks which include costs, conflicts in the profit motive, and “green washing” of customers. However, the limitations of the research include the inclusion of fewer articles and a lack of cultural factors in the research. Therefore, this study concludes that the benefits of CSR outweigh the disadvantages. The implication of the literature is informing managers to execute CSR which promotes productivity and financial performance.

Agudelo, M. A. L., Jóhannsdóttir, L., & Davídsdóttir, B. (2019). A literature review of the history and evolution of corporate social responsibility.  International Journal of Corporate Social Responsibility ,  4 (1), 1-23.

Basuony, M. A., Elseidi, R. I., & Mohamed, E. K. (2014). The impact of corporate social responsibility on firm performance: Evidence from a MENA country.  Corporate Ownership & Control ,  12 (1-9), 761-774.

Mahmood, F., Qadeer, F., Abbas, Z., Hussain, I., Saleem, M., Hussain, A., & Aman, J. (2020). Corporate social responsibility and employees’ negative behaviors under abusive supervision: A multilevel insight.  Sustainability ,  12 (7), 2647.

Newman, C., Rand, J., Tarp, F., & Trifkovic, N. (2020). Corporate social responsibility in a competitive business environment.  The Journal of Development Studies ,  56 (8), 1455-1472.

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Opinions on Corporate Social Responsibility Essay

Introduction, reference list.

Corporate social responsibility is an essential aspect in the business world. It is an obligation for a business organization to pursue long term goals that are good for the society. It can also be termed as the continuing commitment by business firms to behave in an ethical manner and contribute to economic development while at the same time enhancing the quality of life of the employees and their families.

The business firm should also enhance the lives of the local community and the entire society around which it operates (Kotler, 2005). This piece of work looks at an individual, Karl Mark, evaluating him with respect to corporate social responsibility and its effects on his career.

Abiding by corporate social responsibility practices is not only beneficial to a business organization but also to individuals who participate in it. An individual’s perception and view about the idea of corporate social responsibility influences ones life greatly in terms of career progression and the behavior of the general public towards the individual.

This therefore dictates that it is advisable to support the idea of corporate social responsibility for the sake of one’s prosperity as well as that of the society at large despite the cost that could be involved.

Karl Marx was an active economic activist and socialist who was involved with many activities during his lifetime. It is evident that Karl Marx would totally support the idea of corporate social responsibility.

This is because of his nature and how he perceived life in general. He cared more about the communities and would therefore support any effort aimed at supporting the society in any way. He was against capitalism and supported collective gain among the society members (Marx, not dated).

In his career, Karl Mark was able to succeed due to the support he gave to the society in regard to advocating for developmental projects aimed at helping members of the society in an effort to uplift their living standards. Karl Mark’s economic and socialist work gained considerable support from people due to the fact that the benefits associated with the activities were clear (Marx, Easton and Guddat, 1997).

Business organizations should operate bearing in mind that the society is a crucial element that contributes towards their success. Without the support of the people who surround a business organization, it is difficult for it to succeed in its undertakings. This is because it requires a symbiotic relationship to be established between a business enterprise and the society around it.

This is so as both need each other for success. A business organization may need the society as buyers as well suppliers. They could also be a source of workforce in various positions for example marketers bearing in mind that they are in a better position to reach as many clients as possible.

The business should therefore go an extra mile in providing services to the society as a way of fulfilling corporate social responsibility. This could be through undertaking of some developmental projects that aim at enhancing the lives of the people.

Throughout his entire life, Karl Marx attempted to gain a deeper understanding of the society and its nature in an effort to ensure that their rights are fulfilled. He for example supported aspects like education and enlightenment of the people so that they would be in a position to fight for their rights and social justice.

Provision of educative programs by business enterprises to the community is a form of corporate social responsibility and plays a great role in ensuring that members of the society are well equipped with some knowledge and skills which in turn allows them to live a better and sustainable life for instance through securing employment opportunities (Eastman, 1959).

There are various benefits associated with corporate social responsibility. For example, it avoids excessive regulation, it is ethical and improves an individual’s and firm’s public image, enhances the social environment and more so, some socially responsible actions are profitable. It is also a good way of correcting social problems that might have been caused by various activities.

In cases of a business, it provides a competitive advantage, attracts and retains employees through motivation and attracts investors. It therefore follows that business enterprises should always foster corporate social responsibility.

Although Karl Mark received a lot of objections from the authorities such as the governments, he tried his best to enhance the lives of the society and for this reason his name and work will live to be remembered over the years. This is more so because of his contribution towards the understanding of society (Foot, 2004).

From the above discussion, it is evident that corporate social responsibility is critical to economic development due to the fact that it empowers societies.

Abiding by corporate social responsibility practices is not only beneficial to a business organization but also to individuals who participate in it. An individual’s perception and view about the idea of corporate social responsibility influences his or her career and how the general public reacts towards him or her.

Eastman, M. (1959). Capital, the Communist Manifesto and Other Writings . New York: Modern Library.

Foot, P. (2004). Karl Marx: the Best Hated Man, Socialist review . Web.

Kotler, P. (2005). Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause . New Jersey: John Wiley and Sons.

Marx, K. (n d). Economic and Philosophical Manuscripts of 1844 . Web.

Marx K, Easton, D.L and Guddat H.K. (1997). Writings of the Young Marx on Philosophy and Society . New York: Hackett Publishing.

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Essay on “Corporate Social Responsibility and Ethics”

Social responsibility is an idea that has been of concern to mankind for many years. Over the last two decades, however, it has become of increasing concern to the business world. This has resulted in growing interaction between governments, businesses and society as a whole. In the past, businesses primarily concerned themselves with the economic results of their decisions. “Today, however, businesses must also reflect on the legal, ethical, moral and social consequences of their decisions” (Anderson 15). This paper will discuss the concept of corporate social responsibility . It will give the definition of the phrase, and identify some of the global factors that necessitate corporate social responsibility. It will discuss the importance of corporations setting up corporate social responsibility projects, and the impact these have on society. Social corporate responsibility and the maintenance of high ethical standards is not an option but an obligation for all businesses.

Corporate social responsibility is no longer defined by how much money a company contributes to charity, but by its overall involvement in activities that improve the quality of people’s lives. Corporate Responsibility has come up as a significant subject matter in the international business community and is progressively becoming a mainstream activity. There is mounting recognition of the momentous effect the activities of the private sector have on the workforce, clientele, the society, the environment, competitors, business associates, investors, shareholders, governments and others groups . It is also becoming progressively clear that organizations can contribute to their individual wealth and to overall community wealth by taking into account the effect they have on the entire globe when making decisions (Anderson 5).

Ethics of multi-corporations involves actions that are morally upright. It is common knowledge that most of the activities corporations are engaged in may not meet the required ethical standards. This is because many businesses tend to focus on profit making rather than any other thing. Business ethics is an upcoming issue mainly due to the sheer number of persons involved. The actions of a few persons may seem safe on a small scale but on a large scale such actions could be devastating. An example of such situations that may be considered unethical is the firing or employees to keep the profit margin of a company high. In the wake of the financial breakdown, many people lost their jobs. Most of the persons who lost their jobs included civil servants who are middle class persons. In order to ensure that the corporations save some money, most of these workers were laid off. Such an action is considered unethical. This is because even though the companies are somehow at a loss, the firing of all those employees means that so many people are going to suffer. The multi-corporations could definitely live with the loss incurred but would rather avoid that by firing a number of their workers.

Businesses are an essential part of the society within which they operate. Excellent executives are aware that their long-term prosperity is founded on sustained good associations with a broad range of persons, groups, and organizations. Intelligent organizations know that businesses can never be prosperous if they operate within societies that are unsuccessful. This is regardless of whether the society is failing due to social, governance or environmental challenges. Furthermore, the common public has lofty expectations of the private sector with regard to responsible and ethical behavior. Consumers expect goods and services to mirror socially and environmentally accountable business conduct at reasonable prices. Shareholders also are seeking improved financial performance that interlinks social and environmental elements, as regards the opportunities they present (Banerjee 13).

There are several factors which explain the growing interest in corporate social responsibility. The first factor is the new concerns and expectations of citizens, consumers, public authorities globalisation and industrial change. The second factor is the increasing influence of social criteria on the investment decisions of individuals and institutions, as investors or consumers. The third factor is the growing concern about environmental degradation. This is a particularly important concern given the fact that environmental conservation has become an increasingly significant for everyone in society today. With multi-corporations raking in millions, it is only justified that they give back to the community. The wanton disregard of the environment by a few companies when it comes to handling of industrial waste, the use of recyclable paper or sheer indifference when it comes to environmental protection is shocking. As aforementioned, corporate social responsibility involves activities that give back to the community, or ensure fairness in the running of activities (Crowther and Rayman-Bacchu 69).

The protection of the environment has become the center stage of many humanitarian organizations. Most of these humanitarian organizations argue that the protection of the environment should be the key concern of any corporation. This is because; the environment is the only natural resource that is invaluable to the human race. The issue of handling industrial waste by many corporations has always been at the forefront of many environmental organizations. This is because corporations are guilty on more than one accord of irresponsibly handling their waste. Evidence such as the great pacific garbage patch exists to show how many corporations are not handling the dumping of waste seriously. The great pacific garbage patch is a myriad of human waste that has found its way into the ocean after being improperly dumped. The great pacific garbage patch leads to problems such as loss of aquatic life and the contamination of the water not mentioning the introduction of many pollutants into the water (Werther and Chandler 55).

Corporate social responsibility makes it clear that it is certainly unethical for these corporations to be making profits at the expense of the environment and other aspects of the human life. Corporate social responsibility makes it clear that corporations should therefore find better ways to handle their waste disposal. Even though it is currently not clear on what is the best way to handle some waste such as hot water, responsibility means that before waste is disposed, it should pass some tests. The tests could ensure that the waste is safe for disposal and would not in any way harm human beings and other life. Corporate social responsibility is therefore viewed as a control mechanism to ensure that multi-corporations are responsible for their actions (Werther and Chandler 70).

The global financial meltdown uncovered many social norms previously unimagined. The number of people who lost their jobs due to the financial situation is appalling. Interestingly, this does not mean that multi-national corporations are necessarily suffering. Most of the established companies with branches all over the world took the excuse of the financial breakdown to benefit. All of a sudden, it was okay to lay off people on the pretext of financial gloom. This means that a few people were benefiting from the woes of a thousand more. The issue of corporate social responsibility presents itself in this situation in that, the multi-corporations are run by a board of governors.

The board of governors is usually composed of a few individuals that call all the shots. It is common knowledge that these corporations employ a huge number of persons in many sectors of the economy. When the profits of these gigantic companies fail to reach a certain goal, the running costs of the business have to be checked. This is why, the few persons at the top, not wanting to lose, resort to firing some people. This is done so as to maintain the profits at a certain level. The problem is that when all of the multinational companies resort to firing a few employees, the net effect is that, a large number of persons end up losing their jobs.

Corporate social responsibility ensures that corporations the world over are engaged in other activities that give back to the community (Crowther and Rayman-Bacchu 172). Many activities that are considered helpful include: organizing activities that seek to involve the community in such events as fund raising for the needy, events that seek to help out the disadvantage in society and other similar activities. In the financial and corporate world, corporate social responsibility is given with a positive impact on performance. There are, however, several factors that show the need for corporate social responsibility. The first factor is population. The expanding population in developing regions will create larger markets dominated by younger individuals with questionable access to the developed world’s standard of living. Statistics show that more than eighty five percent of the world’s population will live in developing countries by 2025 (Crowther and Rayman-Bacchu 165). This presents a challenge to companies seeking to involve themselves in corporate social responsibility, since it is clear that a lot of financial support will be required for these populations.

The second factor is wealth. Despite the fact that global wealth is rising, the income gap has grown wider, threatening civil society. Seventy eight percent of the world can be classified as poor, with eleven percent in the middle class, and only eleven percent can be classified as rich. Each and every company should strive to be involved in attempting to balance this distribution of wealth. The trend of the rich growing richer while the poor grow poorer should be eliminated, since it is unethical for some people to have so much and for others to have nothing at all. The third factor is nutrition. There are millions of people who are malnourished, amidst an abundance of food. Thousands die of hunger every year, while rich corporations blow millions on fancy holidays for their executives. It is crucial for each company to take time and reflect on the finances it spends on benefits for its executives, as compared to that spent on helping the needy in society. While these benefits are vital for employee motivation, they should not be taken overboard at the expense of the suffering masses.

Education is another critical factor that should be considered in the design of corporate social responsibility programs. Basic education is widespread, but opportunities for learning continue to elude many. Over one hundred million children are not in school, with ninety-seven percent of these being in developing countries. One in every five adults globally is illiterate, which are staggering figures given the widespread opportunities to learn available today. Corporates are faced with the challenge of promoting education by setting up schools, and funding educational development programs. Education can also be encouraged by taking in interns and trainees and giving them an opportunity to learn the tricks of the job, which will enable them compete fairly in the corporate world (Crowther and Rayman-Bacchu 169).

In conclusion, this paper has shown that corporate social responsibility is a vital element for nay business corporations. It has been shown that there are many different areas in which a company may choose to focus its corporate social responsibility. The first area of focus in corporate social responsibility is with regard to the environment. Other areas that should be considered in the development of corporate social responsibility programs are education, health, nutrition and employment. “Social responsibility investment combines investors’ financial goals with their obligation and dedication to factors that ensure the well-being of society such as environmental friendly practices, economic growth and justice in society” (Anderson 9). These elements are not only aspects of corporate social responsibility, but also a show of the ethical standards of a company. It is unethical for some individuals to own so much and earn so much, at the expense of other suffering members of society. It is also unethical for companies to engage in environmentally degrading practices that result in illnesses and loss of life. It can be concluded that Social corporate responsibility and the maintenance of high ethical standards is not an option but an obligation for all business.

Works Cited

Anderson, Jerry. Corporate Social Responsibility: Guidelines for Top Management. Westport: Greenwood Press, 1989. Print.

Banerjee, Subhabrata. Corporate Social Responsibility: The Good, the Bad and the Ugly. Northampton: Eward Elgar Publishing, 2007. Print.

Crowther, David and Rayman-Bacchus, Lez. Perspectives on Corporate Social Responsibility. Burlington: Ashgate Publishing, 2004. Print.

Werther, William and Chandler, David. Strategic Corporate Social Responsibility: Stakeholders in a Global Environment. Carlifonia: Sage Publications, 2006. Print.

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Corporate Social Responsibility Essay Sample

Corporate Social Responsibility is the responsibility of businesses to uphold social justice, human rights, and environmental protection. It can be seen as a way for companies to give back to society by contributing to the welfare of their communities. This essay will cover how CSR is important in our society today.

Essay Example on Corporate Social Responsibility

  • Thesis Statement of Corporate Social Responsibility Essay
  • Introduction of Corporate Social Responsibility Essay
  • Why does CSR matter to the economy?
  • Benefits of having a good CSR program
Thesis Statement of Corporate Social Responsibility Essay Corporate Social Responsibility is important because it provides companies with the opportunity to promote ethical practice in business and benefit their communities. Introduction of Corporate Social Responsibility Essay Corporate Social Responsibility can be defined as “the ethical, social and environmental behavior that is expected from every business entity” (Office of Government Ethics). According to the United Nations Global Compact in 2007, Corporate Social Responsibility consists of development opportunities in business, economic development to support sustainable growth, workers’ rights and opportunities for employment, respect for community rights including health care access, environmental protections regarding water quality or air quality standards. The importance of this statement is not so much in the activities conducted by corporations but in their role in engaging communities through discourse. Buy Customized Essay on Corporate Social Responsibility At Cheapest Price Order Now Main Body of Corporate Social Responsibility Essay Corporate businesses are really doing well across the world and some of them have even half the economic resources and wealth of the country. But these corporate business owners have some social responsibility towards the public of their country especially to eradicate the social problems. For instance, there are societies where problems like domestic violence, starving stomach without food, parching throat, dowry system, poor health, and lack of education are very common. In such areas, these corporate impart their social responsibility by giving money to get rid of the miserable conditions. From lower to higher-level corporate take part in such initiatives and always contribute to raising the level of their nation on a global scale. If we talk about the need for social responsibility of the corporate then it cannot be forced on these businessmen and it is their choice whether they want to involve in it or not. We have so many people who are doing these good deeds in their own interest so that they can improve the situation to some extent. It is very difficult for the government of a nation to handle all these problems with the revenue collected from the people in the form of various cess and taxes. That is why Private Corporation assists the government in every way so that ultimate results can be obtained towards the welfare of the people in a given social setup. Why does CSR matter to the economy? One might wonder why CSR is important for the general economy, especially in a country where it seems like policy and law enforcement would help companies ensure their employees are safe and protected. There has been much research done on this topic, and I will summarize three of the main arguments made by scholars in favor of CSR today: Competitive Impact:  A company’s commitment to socially responsible activities can positively impact its revenue and earnings growth. According to researchers, “investors perceive that these actions contribute directly to an increase in firm value.” This gives companies even more reason to invest in CSR practices. Additionally, taking part in multiple social programs can actually make businesses stronger financially by increasing both customer satisfaction and employee engagement . Market Orientation:  By being socially responsible, companies can have a positive impact on societal issues that are important to their customers. This idea is especially relevant today as consumers increasingly want more of a voice in the brands they purchase from and invest in. Government Regulations:  Finally, more and more often we see instances where CSR actually helps companies circumvent government interference (or at least reduce it). The 2008 financial crisis was an example where several major financial institutions that were “too big to fail” enacted programs that improved customer’s lives and even saved some people’s homes through mortgage modifications. In this case, both public opinion and policy enforcement helped the banks do what they thought was best for even if it wasn’t necessarily what was best for their bottom line. Hire USA Experts for Corporate Social Responsibility Essay Order Now Benefits of having a good CSR program A company that is able to implement a successful CSR program can be beneficial in several ways: Better Employee Productivity:  Higher employee engagement and lower turnover rates are two benefits of having an engaging work environment which typically comes from having positive relationships with management. A strong CSR program can help companies create this atmosphere and strengthen their brand loyalty, employee productivity and retention rates. Improved Reputation:  Having a good reputation matters for businesses because trust is the foundation on which any relationship is built. By implementing effective programs that address social issues or support charity initiatives, companies will be building trust with their customers as well as society at-large. This gives them a voice they can use to speak out about important issues and also helps them to become a valued member of the communities in which they operate. Increased Revenue:  Lastly, companies that put money into CSR practices and initiatives will often see a positive return on their investment in the long run. Whether this means strengthening brand loyalty and attracting new customers or reducing costs associated with turnover rates and waste management, businesses can benefit from investing time, energy and resources into improving quality of life for employees as well as the surrounding community. Some of the social responsibilities that are fulfilled by the corporate are also associated with developing the infrastructure and employment opportunities in their own country. For example, the project of setting an industry can be shifted to their own nation as compared to foreign investment. It will enhance the job to the youth of that nation at the same time money will not go out of the country. Even some countries make it mandatory to their citizens to impart a good role in the development of the nation and poor people by investing and offering jobs to needy people. This helps to bridge the gulf of poverty, lack of education, and many other problems of society. Conclusion So the conclusion of the essay can be given hereafter the above discourse is that there must be proper freedom to the corporate whether they want to invest to reduce a social issue or not. This will help them to work with free will in mitigating the issue that is more serious in their area as compared to putting limits on them. Some government officials even try to take benefit of the money collected from these businessmen to fulfill their personal needs in the name of social responsibility funds. Such ill practices must be checked on time by the loyal citizens of the country and should remove all those people who want to gain the benefits of corporate money in the form of social responsibility.
If we want to have a country where everyone is sleeping with a full stomach and there is no such incidence against women which can be included in crime then corporate people must do something about it. It is the social responsibility of every citizen of a country to protect its nation from the ill situation and it could be done in a better way by those only which are having the strength of money and feeling to do so. This does not mean that a poor person is not able to give anything for the development of the country. Maintaining peace and effort to reduce the various issues is also a way to impart a role as social responsibility by a person. Get Non-Plagiarized Custom Essay on Corporate Social Responsibility in USA Order Now

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Corporate responsibility essay

  • July 18, 2015
  • Posted by: Sergei
  • Category: Argumentative and Controversial

Corporate responsibility essay

Presently, the issue of corporate responsibility is among the most vividly discussed issues in the business world. This can be explained by its significant role in the social development. Many companies have realized that it is impossible to achieve success in business in an isolated environment. That is why the integration of the principle of corporate responsibility in the strategic development of a business is among the leading goals of corporations throughout the world. Modern world is characterized by sharp social problems, which makes the importance of corporate responsibility even more perceptible. The notion of corporate responsibility has emerged on the basis of understanding that the success in business plays a key role in the development of various countries all over the world.

Today, corporate responsibility is a rather controversial issue with both negative and positive sides. Generally speaking, different organizations define the notion of corporate responsibility differently, which leads to debates between different businesses. Overall, corporate responsibility stands for the achievement of commercial success with the use of major ethical principles that imply respect for people, community and external environment. Among the positive sides of corporate responsibility is the fact that it brings benefit not only to one’s own business, but also to the whole society greatly contributing to the social and economic development of the state. This is achieved by means of a positive influence of business on the society and minimization of negative outcomes.

In fact, corporate responsibility has a multi-level nature. Its basic level suggests that salaries and taxes should be paid timely and new workplaces should be created. The second level implies the provision of adequate work conditions to the employees. This should be realized by means of enhancing the qualification of workers, providing medical services and developing the social sphere. This is what corporate responsibility stands for. The highest level of corporate responsibility implies charitable activity. However, the negative side of corporate responsibility is that it is hard to realize all of these goals to full extent. The existence of corporate corruption greatly hinders the process of achieving managerial goals.

Among the positive motives for using corporate responsibility in business are the following. First, the improvement of work conditions allows avoiding the turnover of employees. It also attracts the most qualified specialists to the given corporation. Second, corporate responsibility encourages the growth of productivity within the company. Third, it improves the image and reputation of a company. Fourth, it allows advertising goods and services in the best possible manner. This is realized with the use of mass media, which is highly beneficial for the development of a company. Furthermore, it guarantees stability of the company’s development in the long run. It also gives an opportunity to attract investments in comparison with other companies working in the given industry.

However, it is often hard to realize all the goals of a company in terms of corporate responsibility. This happens for several reasons. First of all, the priorities of the company’s social policy should be defined. Second, a special structure of managing social programs should be elaborated, which is often hard to achieve. Third, the employees should be educated in the sphere of corporate responsibility and this is associated with additional costs. Furthermore, the results of implementing social responsibility should be predicted and evaluated. In this regard, it should be noted that honest business practice is a must, which is hard to put into practice because of ever-growing corporate corruption in the business sector. All these factors are likely to influence the decision of the company in terms of corporate responsibility. It is because the negative factors associated with corporate responsibility often outweigh the positive ones. This provokes vivid debates about the role played by corporate responsibility in the business sector.

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