The Social Capital Theory ( Sct ) And Stakeholder Theory

Businesses, specifically larger corporations, play a major role in what occurs in society therefore, they are responsible to their stakeholders not only to pursue economic goals but the greater social good as well. Corporate social responsibility (CSR) means that a corporation should act in a way that enhances society and its inhabitants and be held accountable for any of its actions that affect people, their communities, and their environment. (Lawrence, 2010). Social responsibility is becoming the norm so much so that some businesses have incorporated it into their business model. There are three components of the bottom line of social

Businesses have a responsibility to give back to the customers they serve and the communities they operate in. Today, many organizations have realized the importance of corporate social responsibility (CSR) in response to consumers and stakeholders becoming more mindful of social issues. Corporate social responsibility has continued to change and grow. It can be difficult to define CSR because it takes on a variety of social, economic, political and environmental formats depending on the business. Corporate social responsibility in the broadest sense is viewed as for-profit organizations becoming ‘good corporate citizens’ (Salton & Jones, 2015).

This report focuses on social responsibility issue focusing on stakeholder theory. Social responsibility will be introduced and defined based on stakeholder theory. Next, analysis on the importance and limitations of social responsibility will be shown based on reputable published articles, followed by examples of two successful companies on how social responsibility affects their business. Lastly, conclusion will be concluded based on findings on

The Corporate Social Responsibility (CSR) originated in 19537 with the publication of Bowen’s book Social Responsibilities of Businessmen (Carrol, 1999). Some perceived that at that time, the emphasis is placed on business people’s social conscience, rather than on the company itself. Some argue that corporate entities do not have any social responsibility except the ones that were written in agreement with government while establishing corporate entities, whereas others justify that corporate entities do have social responsibility. The roots of critics of CSR are so old that it is a challenge to the neoclassical business model itself (Valor, 2005). According to Smith (2005), there are five major arguments against corporate social responsibility. These are the problem of competing claims, competitive disadvantage, competence, fairness and legitimacy. We will discuss below the arguments made against the concept of CSR and also we will counter argue these prepositions.

Corporate Social Responsibility (CSR) is something that affects all companies and should be an active factor in the company’s decision making. It is something all corporations need to care about. CSR is when business’ or corporations take part in an initiative or campaign for a cause that will benefit society and/or in some way make the world a better place (Taylor, 2015). Initially, Corporate Social Responsibility started to take shape around the 1950’s, but some say that it dates all the way back to the 1800s, the idea of CSR was seen (Carroll, 2007). One may think that because it is dated so long ago, it doesn’t have an important impact today nevertheless, it is proven that Corporate Social Responsibility is a pathway for entities to self benefit as they are in the process of benefitting society.

The purpose of this essay is to research the notion of CSR and uncover its true framework and outline what social responsibility truly means to corporate organisations, and whether it should be seriously considered to be a legitimate addition to the corporate framework of an organisation.

Despite the increasingly obvious trend of CSR, conflicts around the topic are common especially in real businesses. Conducting CSR initiatives or programs requires investing corporate resources, including charitable giving, investing in green solutions, paying for better working environment and assisting community development, for returns that are usually distant and uncertain. For the decision makers within corporations, it is hard to judge because they would be at someone else’s expense to create social value. Another conflict occurs when it comes to the role of CSR in businesses’ development: whether it is harmful or helpful for the businesses’ profitability is still quite a concern, not to mention that the difficulties to get a measurable bottom line out of CSR initiatives.

In a competitive business environment where consumers are increasingly aware of their buying power, they are asserting their right to not only demand quality but hold companies to account to high standards. They are concerned with where the goods were originated, the conditions under which the goods are manufactured and what ethos a brand stands by. It has become crucial for a business to be built on ethical practices in order for an organization to maintain its success. Over time the idea of CSR just being an unnecessary expense has shifted, with it coming as far as being called out as a, ‘definitively important strategic issue’, Businesses now see CSR as a method of generating and protecting income through creating a good brand image and customer loyalty.

Various authors have different definitions of what Corporate Social Responsibility. According to Lorde Holmes and Richard Watts, 1998 in their publication ‘Making Good Business Sense,’ they define CSR as “the continuing commitment by businesses to behave ethically and contribute to

This research has primarily emphasized the importance of CSR to both individuals and the community at large, but one question remains underexplored: how do consumer perceptions of CSR line up with their concurrent expectations from the company? The literature shows little agreement; definitions are murky and left to individualized scholars, and evaluation of company’s efforts, as previously discussed, are difficult to present to major shareholders within a company, to say nothing of informing consumers.

Among modern century more companies are being interested about corporate social responsibility (CSR) as business reports proved that it became a fact in business growth. CSR is a mechanism accomplished to maintain the economic, legal, and ethical responsibility to the community as same as organization. Stakeholder theory enables managers to take account of these different interests in business ethical responsibility:

Traditionally the business objectives of business were to maximise profits, sustainability, and shareholders’ value but after the advancement of stakeholder theory there has been a radical shift in the business objectives towards meeting stakeholders’ expectations in addition to maximisation of profit. Typical stakeholders of a company except shareholders are customers, employees, and suppliers. Today modern business objectives are to meet expectations of stakeholders as much as possible. Corporate social responsibility has emerged as a phenomenon that is born out of stakeholder theory.

There is a multitude of definitions of Corporate Social Responsibility (CSR). According to Business for Social Responsibility, ‘CSR is defined as achieving commercial success in ways that honor values and respect people, communities and the natural environment.’ Alternatively, CSR has been described as ‘an action by a firm, which the firm chooses to take, that substantially affects an identifiable social stakeholder’s welfare.’ Osie-Kwame, S (July

Leading community businesses and governments admit Corporate Social Responsibility (CSR) as an official policy objective. Those companies who apply CSR are able to maintain sustainable progress. This development covers social, economic and environmental influence in how they run (Clegg, 2011, p. 216). Three areas are the bases of the triple bottom line (TBL) approach (Elkington, 1994). CSR itself has various meaning but in more simple way it can be defined as firms’ obligation to act ethically and to facilitate elaboration. Thereby they try to make employees’ life better and likewise help to demonstrate a positive impact on local society. Therefore businesses are responsible for two factors of how they operate. Firstly, they should be concerned about the quality of management including people and operations. Secondly, they have to consider the character and amount of their effect on community in different fields. External stakeholders take a huge concern on how an organisation acts whether they perform well in their products, services, and society or not. Moreover they take an interest in how they care towards the workforce (Baker, 2004). The following paper demonstrates the major reasons of why businesses should take CSR seriously and what advantages does CSR have when they use it. First aspect will be related to reputation and brand image. Then it will be followed by strategy of cost reduction. Third aspect will explain the approaches to gain a competitive

In a recent time companies are giving more attention to develop a CSR (Corporate Social Responsibility) and mainly their core values. Core values are used in marketing strategies (Berry, 1999) also in customer-retention management in order to create distinctive, long-lasting relationships with customers (Prahald and Ramaswamy, 2004; Normann, 2001) and stakeholders (Pruzan, 1998; Post et a, 2002). The interaction with a stakeholder and concerns a business operation use to understood CSR as the voluntary integration of environmental and social, but it has failed to discuss and analyse CSR explicitly from the perspective of stakeholders (Andriof et al,2002; Post et al,2002).