Corporate
engagement with society, also termed corporate social responsibility (CSR), has
become a commonly used term in contemporary society and refers to one process
by which an organization expresses and develops its ‘corporate culture’ and
social consciousness.
CSR
has been receiving lots of attention from various backgrounds of researchers
worldwide, it has attracted a great deal of attention over the past decade and
according to some researchers, has gathered great momentum over the past number
of years and is now regarded to be at its most prevalent. Therefore business
leaders, government officials, and academics are focusing more and more
attention on the concept of “corporate social responsibility”.
Almost
all corporate websites/ policies/reports talk about their endeavors for CSR,
which has become a way of ensuring that the organization is fulfilling all the
obligations towards society and thus is eligible for the license to operate. It
assures that the organization can grow on sustainable basis. There are also
societal pressures with respect to social issues such as human rights and the
environment on the corporations and CSR is widely regarded as the response of
corporations to this pressure and according to Bénabou & Tirole (2009),
responding to such pressure, business leaders, governments and academics are
now also emphasizing the notion of CSR.
In
CSR, the central issue is the appropriate role of business that overlaps,
almost completely, with its reference area and now business organizations have
waked up to the need for being committed towards CSR because the role of
businesses in society is no longer focused on creating wealth alone but is also
focused on acting responsibly towards stakeholders.
Everyone
agrees that firms should obey the law. But beyond full compliance with
environmental regulations do firms have additional moral or social
responsibilities to voluntarily commit resources to environmental protection.
To be specific, why companies do CSR? For this, it is answered that CSR is
situations where the firm goes beyond compliance and engages in “actions that
appear to further some social good, beyond the interests of the firm and that
which is required by law” and it is also due to various reasons such as to
attract new investors, part of branding strategy, an obligation from the
government and the lists go on. However, CSR does not mean just taking part in
charitable activities and events; it means holding the responsibility to
develop the society by envisioning future plans for socio-economic justice and
be conscious about their responsibility for the welfare of society around them.
Therefore, according to Zu & Song (2008), a large number of companies
appear increasingly engaged in a serious effort to define and integrate CSR
into all aspects of their businesses.
Corporate
executives have also encountered demands from multiple stakeholder groups to
devote resources to CSR. This may be partially due to the pressure generated by
a union of ethics-oriented campaigners including NGOs, anti-capitalism
activists, labor unions, and news media; and partially due to the demand for
doing so by their customers, employees, suppliers, communities, governments,
and even stockholders. Ismail (2011) stated that CSR is supported by the case
whereby the government alone is definitely cannot afford to have a sole
responsibility in improving the lives of their people as it exceeds their
capabilities. If the government is unable to fulfill the increasing demand of
their people thus this is where the corporations should support the government.
However, those who opposed this statement saw the situation as unfair to the
business corporations, such as Friedman’s (1970) famous statement that ‘the
only responsibility of a business is to maximize shareholders’ wealth’. But
according to Krishnan & Balachandran, companies are beginning to realize
the fact that in order to gain strategic initiative and to ensure continued
existence, business practices may have to be molded from the normal practice of
solely focusing on profits to factor in public goodwill and responsible
business etiquettes.
An
examination of some of the factors, which have led to the development of the
concept of CSR, would be ideal starting ground for the conceptual development
of suitable corporate business practices for emerging markets. Krishnan &
Balachandran also expressed that in the last twenty years, there has been a sea
change in the nature of the triangular relationship between companies, the
state and the society.
No
longer can firms continue to act as independent entities regardless of the
interest of the general public. The evolution of the relationship between
companies and society has been one of slow transformation from a philanthropic
coexistence to one where the mutual interest of all the stakeholders is gaining
paramount importance. Bénabou & Tirole (2009) asserted that CSR is somewhat
of a “catch-all” phrase for an array of different concepts.
