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Corporate Social Responsibility: A Definitional Construct & Concept

HomeAYV NewsCorporate Social Responsibility: A Definitional Construct & Concept

Corporate Social Responsibility: A Definitional Construct & Concept

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Although the evolution of the concept and definition of corporate social responsibility (CRS) began to mature in the 1980s, it origin can be traced back to the 1950s and 1960s, which according to Carroll (1999) “marks the modern era of CRS.”

Carroll (ibid) posits that in the early writings of CRS, it was referred to more often as social responsibility (CR) than as corporate social responsibility (CSR). He notes that that was partly due to the fact that “the age of modern corporation’s prominence and dominance in the business sector had not yet occurred or been noted.”

Carroll argues further that it was Howard R. Bowen’s seminal book (1953) titled: Social Responsibilities of the Businessman that marked the birth of modern literature on the subject. And that Bowen’s landmark work stemmed from the belief that the several hundred businesses existing then in the Unites States of America were “vital centres of powers and decision making,” and that the actions and decisions of those firms affect the lives of people at many points and in different ways. In that book, Bowen outlines an initial definition of the social responsibilities of businessmen (there were no businesswomen during that period): “It refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society”.

Fast forward to the twenty-first century, Leonard and McAdam (2003) note that because business scandals involving high profile organizations around the world and especially in the United States have shaken consumer confidence in both business leaders and the economy, concerns about business ethics and corporate good governance have become widespread. As a result, corporate social responsibility has become increasingly important.

Leonard and McAdam (ibid) argue that because CSR is being adopted by many corporate entities “as the means of assuring values based corporate governance, the quality community now has the opportunity and responsibility to take leadership in promoting ethical business practices and driving CSR to regain consumer confidence.”

In this regard, their definition of CRS is anchored on the one provided by the strategic advisory group on CSR, the International Organization for Standardization, known as ISO. It describes CRS as “a balanced approach for organizations to address economic, social and environmental issues in a way that aims to benefit people, communities and society.”For these and many authors that have written on this subject, CSR includes consideration of such issues as: human rights; workplace and employee issues, including occupational health and safety; unfair business practices; organizational governance; environmental aspects; marketplace and consumer issues; community involvement, and social development. Thus, CSR has a strong affinity with the founding principles of quality management and corporate good governance.

In fact, “ethics and values” according to Leonard and McAdam, “are essentials on which businesses are founded and through which success can be achieved and communities developed.” Therefore, they believe CSR has always been a major influence in the business world and is growing in importance as it is increasingly supported by business models and standards.

Also, according to Seitel (1995), closely related to ethical conduct of an organization is its social responsibility, which has been defined as a social norm. This norm holds that any social institution, including the smallest family unit and the largest corporation is responsible for the behaviour of its members and may be held accountable for their misdeeds. In the 1950s and 1960s, when the idea of corporate social responsibility was just emerging, the initial responses were of the knee-jerk variety. A company that was threatened by increasing legal or activist pressures and harassments would ordinarily change its policies in a hurry. Today, however, organizations and their social responsibility programs are much more sophisticated. Social responsibility is treated just like any other management discipline: analyze the issues, evaluate performance, set priorities, allocate resources to those priorities and implement programs that deal with the issues within the constraints of the organization’s resources. In fact, many companies have created special committees within to set the agenda and target the objectives.

Seitel argues that social responsibility touches practically every level of organizational activity, from marketing to hiring, from training to work standards.

In this regard, what underpins CSR is corporate ethics, and manifestation of the increased attention to corporate ethics is the growth of internal codes of conduct. Codes of ethics, standards of conduct, and similar statements of corporate policies and values have proliferated in recent years around the world. And although the reasons corporations have adopted such codes vary from company to company, the major considerations include but not limited to the need to increase public confidence;  stemming the tide of regulation; improving internal operations, and responding to transgressions (Seitel, ibid).

At this juncture, let me also endeavour to shed some light on corporate philanthropy, a subset of corporate social responsibility, which many people in this part of the world probably erroneously refer to as CSR.

In 1981, the Business Roundtable of leading corporate executives proclaimed that: All business entities should recognize philanthropy as good business and an obligation if they are to be considered responsible corporate citizens of the national local communities in which they operate.” According to Caywood (1997), public relations is popularly described as doing good things and getting credit for it and that the strategic use of philanthropy not only can make this possible, but can go beyond to help ensure the very survival of the corporation or firm. That is because “corporate contributions are one place where a company’s interest and the public interest can intersect. When properly used, both parties benefit.”

Today, corporate contributions are viewed not only as beneficial to communities and as helping companies fulfil the role of good corporate citizen, but increasingly they are being used to help improve profitability. For many companies, the nature of their reputation is a major factor in their ability to gain competitive edge.

That said, developing an effective strategy for contributions can assist the corporation/firm in establishing a positive identity with each of the key stakeholder groups, most important of which are investors, public officials, and employees. Many companies, large and small have used contributions to successfully build their images with the public. In Sierra Leone for instance, companies and firms like Africell, Mercury Lottery International, Airtel, African Minerals Ltd., Sierra Leone Brewery Ltd., Freetown Cold Storage, etc., have used corporate philanthropy to creating and maintaining a favourable corporate image.

Unfortunately, corporate contributions in many companies in Sierra Leone are reactive rather than proactive. Public relations expert believe however, that companies with well-defined grant criteria, which are used to attract or select grant requests, generally have the most-effective programs.

Meanwhile, corporate philanthropy must be distinguished from sales promotion, advertising, sponsorships and the newer field of event marketing. In one sense, they are all related; all are intended to better “position” the company in the minds of its stakeholders. In another important way, however, they are separate. The essential internal difference in each of these activities is the source of funding. While Corporate contributions are made from a company’s profits, funds for sales promotion, advertising, sponsorship, and event marketing are taken as part of operating expenses. In recent years however, due to the rapid growth of sponsorships and event marketing, the source of funds for these activities has become somewhat blurred.

 

In conclusion, while corporate social responsibility is about company leaders stressing on their responsibilities to the public, ethical behaviour and the need to practice good citizenship, corporate philanthropy on the other hand is about firms being generous by supporting causes in the society in which they operate.

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