Money, that is what business is about isn’t it? Or in a more specific term
business is about profit; it is focused on enlarging revenue and shrinking
expenses in order to maximize gain. So when it comes to companies and the topic
of corporate social responsibility (CSR), it is easy to see why there is
controversy behind the motives and benefits that stem from CSR.
Corporate Social Responsibility is the idea that companies
go beyond their basic operational level and get actively involved in benefiting
the community around them. Companies do this in many ways, from converting
their products to “green” products to benefit the environment, to voluntarily
giving their community monetary and physical contributions such as sponsoring
or building new parks and playgrounds.
For executives and managers the question of participating in
CSR is a challenging one. They must ask themselves, “Is it truly
beneficial/profitable for the company?” or “What gains or loses will the
company experience, and if those gains will out weigh the loses?” This is where
the first issue of CSR arises: the motive. While some companies claim they participate in CSR because
they honestly want to help society, others do it because of the self-serving
benefits that arise from it.
So what are some of the benefits that arise from companies
participating in CSR? Well, first off public CSR, such as community clean up
events, are a way for a company to get its name out and more familiar with the
people in the surrounding areas. Secondly, these sorts of events also
contribute to the company’s positive image. When it comes to internal benefits,
it creates a family like atmosphere for the employees. These events give
employees a sense of belonging to the company by having do more than just the
average work day. It follows then that social gatherings and fellowship outside
of the work realm will lead to better teamwork and cohesiveness in the work
realm. These are only a few of the benefits that arise from a companies focus
on CSR (source).
Yet you ask, “With all of these wonderful affects of CSR,
why wouldn’t a company not participate in it?” This is an important question
that all managers need to ask themselves before making the changes and major
company commitment that CSR requires. The First major pitfall that can occur
when a company gets involved in the community is the lack of interest that the
public will have towards it. Many people may not know about a companies CSR or
they may know and just don’t care about it. This leads to the second downfall: the profits that arise
from CSR may not out weigh the cost. This is one of the greatest pitfalls of
participating CSR seeing as most companies’ number one priority is to maximize
profit. Starbucks, one of the worlds leaders in corporate social responsibility, is the perfect example for this (source). As Forbes.com says, although Starbucks has a large focus on
CSR (by using eco-friendly products, and supporting coffee industries in
developing countries) “its shares have recently declined by nearly 50% since
2008.” Lastly, CSR can create a
challenge for companies causing them to make a choice between taking actions
that benefit the shareholders or taking actions that benefit the public. As you can see it, it creates a conflict
of interest because serving the public can risk losing profit and this could
cause a loss of support from shareholders if public support is not what they
want.
In the end, CSR is an important issue for executives and
managers to think about before they make a commitment to it. For some it can be
beneficial, while for others it can be more costly. What do you think about
corporate social responsibility? Do you think companies should better the
community around them? Is it truly a profitable measure for the company to
take? And lastly, does the company’s motive behind being socially active matter
at all?
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