Illustrate the benefits of Corporate Social Responsibility and the ways to increase Corporate Social Responsibility's effectiveness

Topics: Corporate social responsibility, Social responsibility, Business ethics Pages: 8 (2685 words) Published: April 4, 2014
Introduction
‘Corporate social responsibility (CSR) is a long-term strategy, uniquely relevant to the twenty-first century, in which responsible social change can become a source of innovation and profits rather than added cost‘ (Vogel, David J, 2005, p.19). ‘Those that don't make that effort won't be a problem because ultimately they won't be around.’ (L. Hunter Lovins, 2006, p.26). Obviously, CSR is no longer a new strategy to companies nowadays.

In terms of definition, Carroll (1991) suggests that CSR has four kinds of responsibilities or dimensions: economic, legal, ethical, and philanthropic whereas Kotler (2001) defines it as doing business in a way that maintains and improves both customers’ and society’s well-being. Actions like cause-related marketing, sponsoring charitable events, offering employee volunteerism programs, having environmental initiatives and demonstrating a commitment to health and safety issues can all be classified as CSR (Maignan and Ralston, 2002). Owing to its benefits, CSR has been embraced by various successful companies: Dell Computer allows customers to buy carbon offsets when they purchase a new computer, Nike plans to be carbon neutral by 2011(Donaldson and Preston, 1995; Griffin and Mahon, 1997). In the following essay, several benefits of CSR and ways to increase CSR’s effectiveness will be illustrated.

External benefits of CSR
Regarding the benefits of CSR, they can be categorized as external benefits and internal benefits. Generating a positive corporate image and brand perception which is crucial to succeed is one of the external benefits of implementing CSR programs (Smith and Stodghill, 1994).

The above figure is extracted from an academic journal called ‘Reputation and Corporate Responsibility’ which is written by Stewart Lewis. The figure shows that other than the traditionally despised politicians and journalists, business leaders are the professional group least trusted to tell the truth. Stewart (2003) states that by taking CSR actions, companies can re-engage with the society and ultimately change customers’ perception that companies are not just only aiming at maximizing profits but also being conscious of the society, resulting in generating a positive corporate reputation. According to Peter (2001), who is the CEO of Nestle, customers have learned to trust their brands and the people behind them are the one fundamental reason behind their success. Corporate reputation supports brand equity both in the market and in society. Hence, it is shown that CSR can effectively help to improve brand perception and image which lead to success.

Not only can CSR help to establish a good corporate reputation, it can also enhance customers’ willingness to purchase products (Brown and Dacin, 1997). Ellen (2002) illustrates that customers appear to provide greater support for companies which are socially and environmentally responsible and have negative reactions to companies that are not, Ben and Jerry’s is one example of the successful companies. In the recent years, whether companies have been fulfilling social responsibility has become one of the considerations when customers purchase, for example, Colombia is a major exporter of cut-flowers to the United States and Europe. Customers in the European Union (EU) have begun to choose suppliers based in part on their practices concerning the use of pesticides (Thomas P. Lyon & John W. Maxwell, 2008). Another evidence is that over one million copies have been sold of ‘Shopping for A Better World’ which is a book rating major companies on eight aspects of CSR (Council on Economic Priorities, 1994). This can probably infer that a number of customers desire the social responsibility records of companies. In addition, a research extracted from ‘Reputation and Corporate Responsibility’ also demonstrates the positive relationship between customers’ purchase and companies’ social responsibility. From this figure, it probably proves...
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