The theory of corporate social responsibility (CSR) is best elucidated by the statement that a company should take a wider view of how its actions and success impact society and stakeholders. CSR identifies that "doing well" and "doing good" go hand in hand. (Leadership and CSR: a Perfect Match). A commonly used definition provided by the World Business Council for Sustainable Developement states that CSR is "Continuing commitment by a business to behave ethically, and contribute to economic developement, while improving the quality of life of the workforce and their families as well as local communities and society at large".
1.2 How do Firms Engage In CSR?
One of the most recognised company's within the world of CSR is Starbucks Coffee company. Starbucks offers healthcare benefits and fair trade prices to its coffee bean growers around the world. They also offer a 10% discount to customers who bring in their own coffee mugs, to lessen their impacts on the quantity of resources they use for manufacturing the paper cups. Starbucks also use the notion of CSR to their advantage by advertising the fact that they engage in it. On all of their cups, it states that the coffee is fair trade, and the materials used have been recycled. This is an innovative method of advertisment because any customer looking to chose between the "big 3" notable Starbucks, Costa and Nero, may chose Starbucks because of the lengths they unertake to be socially responsible. (CNN- How UPS, Starbucks, Disney Do good). Starbucks CSR report stated that consumers are demanding more than just the product itself from their prefered brands. Employees are deciding to work for firms that are socially responsible, and shareholders are much more inclined to invest in firms with good corporate relations. (Corporate Social Responsibility- Whether or How?)
Another prime example of good is UPS. It strives to better its fuel efficiency, and use alternative fuel methods not only to decrease costs, but in turn to be socially responsible. These methods of CSR have a direct effect on lowering costs, and are therefore considered to be an investment rather than a deed. (CNN- How UPS, Starbucks, Disney Do Good).
1.3 Is it considered to be a cost to a business? Or an investement?
CSR has been an ongoing debate among businesses for many years. Some believe CSR is necessary within the business world, whilst others believe that a firm looking to formulate anything other than supernormal profit is rather extreme . Many believe that CSR can be used as a method of improving a company's image, and a way of differentiating one company from another (Is CSR The Privilege of Developed Market Economies?). Nike's reputation for example, has been hindered over the years due to information being released stating that in Indonesia, 30.2% of workers had personally experienced, and over 50% had witnessed, verbal abuse within factories, and 3.3% had been physically abused. (Mallen Baker). The university of Wisconsin cancelled its licencing agreement with Nike in 2010 because of concerns over how they treat their workers in Honduras (MPR NEWS). This evidence shows that ignoring CSR can have an adverse effect on business and profits, therefore in the case of Nike, their lack of CSR created a cost to their business in the form of the loss of a major client.
Recent approaches to CSR from most firms have been too basic and non-specific. A company purely engaging in broad and stereotypical CSR will find that it is actually a cost to their business, as opposed to an investment. If on the other hand a firm choses to integrate CSR within its core business framework, as opposed to viewing it as a charitable deed or cost, it will eventually experience benefits and a comparative advantage. (Strategy and Society: The Link Between Competitive Advantage and CSR). There is, in fact, clear evidence to suggest that there is a link between...