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Corporate Social Responsibility

Essay by   •  April 12, 2012  •  Research Paper  •  1,856 Words (8 Pages)  •  2,084 Views

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Corporate social responsibility

Means that a corporation should be held accountable for any or its actions that effect people, their commutes and their environment. It implies that negative business impacts on people and society should be acknowledged and corrected if at all possible. corporate responsibility ,does not precluded organizations from making profits, nor does it mean that firms acting in a responsible manners cannot be as profitable as other firms that are less responsible .the concept requires organisations to balance the benefits to be gained against the costs of achieving those benefits. An organisation that sought to act in a responsible way would need to compromise and take into account the secondary effects, i.e. the externalities of business practise when undertaking work. These responsibilities are directly linked to the essential function the organisation performs for society and the influence it has upon the lives of individuals. The term 'corporate social responsibility 'encompasses a variety of subjects which would include business ethics, corporate governance, business and the environment, and corporate citizenship or business in the community.

The issue of CRS has been pushed up the management agenda; driven to a degree of society's growing doubts over previously held implicit assumptions about ethical business behaviour. This response acknowledges that the way the much of business now operates makes it impossible to assume that those involved in it instinctively know how to do the right thing. The business community has slowly come to terms with this perception and many business leaders now appear to accept that management has a wider remit and that its decisions must involve and be transparent to a variety of bodies that include governments , citizens , shareholders , customers and employees. As a result, the issues which companies must address have broadened well beyond financial performance, to embrace corporate, ethical and environmental governance. This viewpoint is support by a survey of European companies conducted by Harris research (1997) which indicated that 70 per cent of companies reported corporate responsibility to be a very important issue; that 88percent regarded corporate value and that 25 percent saw greater expectations of social responsibility as the main reason that reputation management was rising in importance.

Historically actions that have led to improvements in corporate social responsibility have been viewed as having the potential to deflect attention away from the classical organisational aims of profit maximisation and increasing share holder value. The above survey indicates a growing realisation that changed in societal values mean that such actions are integral to an organisation's ability to achieve these classical aims. Nevertheless , there is still some discussion on the extent to which it is appropriate for organisations to pursue policies that create greater corporate responsibility. The debate revolves around the purpose of business and the knowledge/abilities of those that run the organisation. If the sole responsibility of business is to provide of capital, then all the resources of such an organisation should be decovoted to making profit and any deviation from this by the managers of a firm's resources is contrary to the objectives of the organisation . further more it can be argued that individual who are given the task of running a business are not equipped to decide what actions are of a corporately responsible nature, and as such should simply operate with in the rules established by the elected representatives of the people. This is not however, a view share by all, and although most commentator would agree that business will not generally behave in a socially responsible manner out of altruism ,it is acknowledged that there are benefits to be gained by business by at least making some efforts towards corporate responsibility.

Entrepreneurs and industrialists are increasingly taking the view that a change in business culture may be a more successful strategy .Ruddick, of the body shop, Carey ,of Lucas industries , and others may have started this trend but is has now moved into mainstream business. In the BT publication changing values (1998) for instance, sir Ian valance indicated that the pursuit of sustainable development is not an is nothing without an alternative perception to the environmental responsibility of business' this sets out an alternative perception to the environmental responsibility of business, where by business can make a contribution by facing up to moral choices concerning profits opposed to social responsibilities. Ruddick has commented that the body shop continues to espouse its values in the hope that one day cosmetics industry wake up and realise that the potential threat of the body shop is not so much economic as simply the threat of good example .the body shop, for many, represents an alternative view of how business might be run. This alternative view, however, has become more accepted and it is interesting to note that the institute of directors in an attempt to raise personal and corporate ethical standards has devised its own code of professional ethics to which it expects its members to adhere. The code goes further than existing code of professional conduct, focusing on personal responsibility towards employees, customers, suppliers and the wider community.

To summarise there is a range of opinions over how business should interact with its environment and there how best to incorporate concern for the environment with in corporate policy. However ,if the majority of firms do not perceive the sea change necessary in business culture to promote sustainable development , then external influences must ensure the protection of wider interest. Indeed one school of thought would argue that such control is the prerogative of elected representatives and that the attempts of business to develop social programmes independent



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