Social responsibility of business is also called as Corporate Social Responsibility (CSR).
Corporate social responsibility was basically developed by an American economist, named Howard Bowen in 1953, in his publication Social Responsibilities of the Businessman.
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Generally, Social responsibility is an ethical concept. In which the business maximizes its overall shareholder value in such a manner that it is beneficial for the society.
Suppose, a company is making its overall policy. Then, the company should surely make its policy in such a way that it not only helps the company to earn more profit but also it should not harm the environment.
When the social responsibility is applied to business then it is called Corporate Social Responsibility (CSR).
Nature of Corporate Social Responsibility
Given below are the following nature of CSR:
- Continuous activity: CSR is a very important for the organizations, in order to continuously involve itself in the social problems/issues for their long-term growth.
- Deals with moral issues: Basically, CSR deals with the moral issues. It is equally important for the companies to develop program for fulfilling their responsibilities for the society.
- Focus on business related firms: Generally, business as well as non-business firms both are responsible to the society. But CSR significantly focuses on business related firms for showing their interest towards the society.
- Pervasive activity: Moreover, social responsibility is the pervasive activity. In this, not only top level manager but also managers at all the level of an organization are involves in fulfilling social responsibility.
- Corresponding to the profit maximization objective: Moreover, the funds for social responsibility is fulfilled by increasing the prices of goods as well as of services which are sold to the customers.
Scope of Corporate Social Responsibility
Given below are the following scope of CSR:
- Product: It is specifically concerned with the quality of the product. The firm should make the product with better quality so that it should give benefits to people living in the society. As moreover, it is the responsibility of the firm to provide good products to the customers without harming the society.
- Human Resources: Human resources are specifically concerned with the effect of the activities of an organization on the people who is forming the organizations overall human resource.
- Environment: Generally, environment is concerned particularly with those aspects of production in which the organizations overall operations or activities on processing natural resources doesn’t harm the environment.
- Energy: Energy is concerned specifically with those business operations in which the firm should conserve the energy.And it should also increase the overall efficiency of the energy of products of the company.
- Community Development: Community development is concerned with the education, community activities, health-related activities and other community activities which should be supported by the firm for the overall development of the community.
Need of Corporate Social Responsibility
Given below are the following that states the need of CSR:
For establishing public image
Good public images certainly secure the customers for the firm. It undoubtedly helps the firm to stand in the market. After all better public image can be established only by accomplishing various social goals.
For avoiding government interference
Every company should use its energy, power as well as money efficiently, because wrong use of them for society can lead to the interference of the government. In order to prevent government interference the company must fulfill its social responsibilities towards the society.
To secure firm’s existence
The business secure its existence specifically by giving its valuable services to the society. Every firm must fulfill its overall social responsibility to exist in the market.
For avoiding misuse of resources and power
Every firm should utilize its power as well as resources for a productive work, i.e. for the welfare of the society. Firm should not forget that, these resources are provided to them by the society for a specific purpose, therefore they should not misuse it.
For converting resistances into resources
Generally, with the help of innovative ability of the business, the resistances can be surely transformed into resources. Meanwhile, with the help of this many social issues can be solved.
Importance Corporate Social Responsibility
Given below are the following that states the importance of CSR:
- Corporate social responsibility program surely increases the overall brand value of the product of the business.
- CSR put positive impact on the communities which eventually results in the increased sales and customers.
- Corporate social responsibility also helps to build a good public image.
- The firm which adopts corporate social responsibility stands for a long period of time in the market and also gets an advantage over its competitors.
- Implementation of corporate social responsibility significantly increases the brand awareness among the people.
- Corporate social responsibility explicitly enhances the reputation of the company.
Reasons for growing concern of Corporate Social Responsibility
Given below are the following that reasons for growing concern for CSR:
Awareness and education
Undoubtedly, education provides citizens a better quality life. A citizen compares the products, prices as well as quality and furthermore. Therefore, business provides quality products with affordable prices.
Regulation and interference
If a business firm makes money by fraud and use improper ways then the government may interfere from the side of public. Therefore, firm must make reasonable money/profit.
Employees and trade union
Generally,trade union companies and employees force the business firm to share its overall profit with the community as well, along with sharing the profit with employees.
Reputation and image
For building a public image and reputation in the society, firms are forced to commit huge amount of money even if they earn less profit.
Competition and competition
CSR not only builds competitive immunity but also helps us to run our business in a long run. It is also a source of opportunity, innovation and competitive advantages. It also differentiates one firm from other firms.
Arguments for Corporate Social Responsibility
Given below are the following that arguments for CSR:
Basically, the aim of each and every business is to build wealth. And it also to satisfy demands of people by making goods and services through resources.
In fact, there is possibility that business can misuse resources for personal welfare. Therefore, for punishing business for its wrong deeds corporate social responsibility is important.
Business can run for a long-term only when it gains good reputation in addition with good public image. After all, these two are the major factors that creates demand for the product of the firm. Therefore, every firm should commit its profit for welfare of society.
Undoubtedly, every firm wants its growth. And in order to grow the business, firm must contribute its profit to the society.
After all, society increases the demand of the firms’ product/services. These in short, eventually increases the growth of the firm.
Minimize government control
If a government found that the firm is conducting its business in unethical manner, then the government will take the business under its control.
Therefore, for minimizing government control the firm must carry out social responsibilities.
Society regularly checks the activities of the business and if the society finds any defects in the activities of business then the society does not support that business.
Therefore, the business firm should adopt and meet up the changing demand of the society.
Arguments against Corporate Social Responsibility
Given below are the following that arguments against CSR:
Business is done for profit
The main purpose of the business is to earn profit. If the business will do social work then it has to share its profit.
Therefore, business must focus on earning profit and social work should be leave on government and other social welfare services.
Social work and social welfare are the agendas of government. Obviously, these are the responsibilities of the government.
Therefore, the business must not do social welfare, it should focus on its profit only and leave social welfare and work on government.
Lack of social skills
Social welfare and social work are the referred as full-time work, so it cannot be done as supplementary work along with business.
Government and other social welfare organizations which are having knowledge and skills can do social welfare program.
Basically, the money/profit spend by the firm for social welfare program are not investment, these are the expenditure.
The firm did not receive any profit by these social welfare programmes which in results makes the firm financially weak and effects its growth. So the firm should not do social welfare activities.
There is no economic justification present which states that the business firm should social welfare work.
It means that there is no profit in doing social welfare program, therefore business firm should not do social welfare program.
It is very important for all of us to fulfill the needs of our society. We should save our environment as it is providing us essentials to survive.
Every firm should work for the welfare of our society. It not only protects our environment but it also helps the
Corporate social responsibility makes the public image of the firm which is beneficial for the growth of the business.
It is also firm’s responsibility to work for the welfare of the society; therefore every firm should complete its corporate social responsibility in order to save our environment along with earning profits.
(Ans.) Companies practices CSR as it provides competitive advantage, increases brand awareness and also develops trust with customers, employees and stakeholders.
(Ans.) India is the country which introduced the CSR Act for the 1st time under section of 135 of the new Companies Act, 2013.
(Ans.) CSR is necessary for the companies for the protection of their national and international “social license to operate”.
(Ans.) Yes, CSR increases profits of the firms. CSR builds the good image of the firms and increases the sales of the company resulting in increase of firms profits.
(Ans.) In bigger firms the Chief Environmental officer is responsible for the CSR and in medium firms a team or special person appointed is responsible for the CSR activities.