Arlene M. Garrick
Oklahoma State University, Stillwater
September 29, 2009
Corporate Social Responsibility in the Hospitality Industry
Corporate Social Responsibility (CSR) has progressively become known as a germane issue in the corporate world for the past decade. Making the world a better place, socially and environmentally, is a global accepted phenomenon. According to Porter & Kramer, 2006, “corporate social responsibility has emerged as an inescapable priority for business leaders in every country.” The objective of this review is to discuss benefits of CSR on the hotel industry. What is CSR?
Corporate social responsibility involves the ethical and non-commercial responsibilities of businesses as they relate to society in general. It is based, on a triple bottom-line approach for companies -- people (society), planet (environment) and economic (profit) (Gard McGehee, Wattanakamolchai, Perdue, Onat Calvert, 2009; Kuriakose, 2007; Clark, 2006). Smith posited that CSR implies the need for businesses to contribute to the communities and markets that have made them successful (cited in Gard McGehee et al, 2009, p.417); consequently, companies must consider the wellbeing of society in addition to their concerns for owners, investors and any shareholders. According to Holcomb, Upchurch and Okumus (2007), the value of CSR is in achieving corporate sustainability in order to create long-term shareholder value. This involves exploiting the market’s potential for sustainable product and services, while successfully reducing and avoiding associated cost and risk.
The Gap – The Negative Impact of Not Engaging in CSR
Porter & Kramer (2006) posit that, “Frequently, though, CSR efforts are counterproductive, for two reasons. First, they pit business against society, when in reality the two are interdependent. Second, they pressure companies to think of corporate social responsibility in generic ways instead of in the way most appropriate to their individual strategies.” This leads to a three-fold impact on companies not engaging in CSR– bad reputation, lower profits and customer cynicism. Examples of CSR in Hotels
The idea of CSR has gained traction within the hospitality industry. Consequently, many hospitality businesses, including Sandals and Starwood Hotels, are developing CSR programs and strategies in an attempt to boost customer loyalty, conserve environments, reduce social problems and contribute to the development of communities. Several initiatives include the adoption of linen exchange programs, the use of environmentally friendly cleaning agents and energy conservation through the installation of energy saving devices (White, 2006). An example is the new eco-friendly Element Starwood Hotels and Resorts that contributes to sustainability through the implementation of the 3Rs practice of reduce, reuse and recycle. The Benefits of CSR to Hotels
Companies that practice CSR achieve better reputation, improved brand image, increases in sales, more visible to investors, and increases in customer loyalty. It can also lead to enhanced public relations and benefits. For example, due to LaRosa’s Pizzeria’s contribution to community growth and development, two hundred volunteers, who had benefited from LaRosa’s generosity over the years, came to the aid of LaRosa’s Pizzeria after a fire. The volunteers made up for the short fall that resulted from inadequate insurance, with work and loans and saved the pizzeria from bankruptcy (Detwiler cited in Lynn, 2009 p. 2). Thus, companies deemed good corporate citizen are attractive to new customers and workers, and assist in raising staff morale, and have lower operating expenses. A recent study by a University of Chicago professor published in Management Accounting revealed that companies that are perceived...