Corporate Social Responsibility

Topics: Corporate social responsibility, Management, Social responsibility Pages: 6 (2036 words) Published: March 2, 2009
The benefits and disadvantages of co-operate social responsibility

By Mahamed Abdi

Studying for Business SM1007
Student Number: 0747672
There is an ongoing debate over business roles in society which revolves around two opposing arguments.  On the one hand, it is argued that CSR issues are not suitable to corporate agenda. This point of view maintains that corporations and society pursue different goals, and that the aims of one can only be achieved at the expense of the other. Companies are profit driven, and the sole purpose of business is to generate shareholder value.  On the other hand, CSR proposes that companies which participate in activities that positively contribute to society will see the benefits to their reputation and subsequently their bottom line. This essay will evaluate the supporting and opposing arguments surrounding the Corporate Social Responsibility (CSR) debate. It will define CSR and explore the positive aspects of adopting it in an organisation, as endorsed by CSR advocates such as Dick Hubbard and based on research from various sources and business case studies such as McDonalds and Timberland Co. It will cover the positive arguments for CSR such as its ability to enhance a company's reputation and brand name, to expose market opportunities and to attract and maintain valuable staff. The second part of this essay shall voice the CSR-critic's view, such as the views of economist Milton Friedman of America, David Henderson of Britain and Roger Kerr of the New Zealand Business Round Table. Arguments against are that CSR increases costs, mishandles shareholder's money, is difficult to measure and account for. Thirdly, It will evaluate the discussion and draw an informed opinion as to whether it is a sensible business strategy. The conclusion will summarise my observations.

The definition of Corporate Social Responsibility (CSR) is described [Lockwood, 2004] by the World Business Council for sustainable Development as the “commitment of a business to contribute to sustainable economic development, working with employees and their families, the local community and society at large to improve quality of life” [article 1204R].  From a business point of view, it can be described as a way of establishing a good reputation and brand name, through positive social and environmental contribution. Examples of companies who adopt CSR are British Petroleum, IBM, Motorola, General Electric, Coca Cola and The Body Shop [Baker, 2001]. CSR requires organisations to broaden their profit-maximising focus, incorporating financial, ecological and societal responsibility into their core business strategies. Looking at reputation and positive brand image many organisation see this as an assets to their business. Credibility with stakeholders is a determinant of a company’s viability and eventually leads to increased profits [Davis, 2005]. CEO of Hubbard’s Foods Ltd, Dick Hubbard, has been a representative on the executive of New Zealand Businesses for Social Responsibility and the New Zealand Business Council for Sustainable Development [Hubbard Foods, 2001]. Among the company’s CSR activities is the support for outward bound and the inspirational “clipboard” found inside Hubbard’s cereal boxes [Hubbard, 2005].  Hubbard believes CSR has huge commercial benefits because customers make purchasing choices based on the ethics behind the brand [Hubbard Foods, 2001]. It is in the profit-seeking organisation’s interests to accommodate to society’s idea of social responsibility. For example, resource companies engaged in community-minded projects may find it easier to obtain their social licence to operate and expand because the public are more willing to grant them consent. Lacking support from the community can increase costs by way of consent hold ups in extensive public hearings, delays and wasted labour expenses [Tunzelmann, 1997].  Among investors, bond agencies and banks, CSR advocates argue that environmental...

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