Why Corporations And Corporate Reputation

In short term, the enforcement of CSR will increase cost to the enterprises. For example, in the labor-intensive industries such as textiles, garments, toys, hats, and shoes, the CSR aspects of working environments and labor rights respect will result in an increase in production costs. This will initially have negative impacts on the competitiveness of some export industries. Thus, the comparative advantage in cost will diminish. But in the long run, the benefits will outweigh the costs.

Based on my interpretation of CSR, I see it as a voluntary obligation that companies have promised to their stakeholders to fulfill by improving, or at least not harm, the environmental and social wellbeing. When companies engage in CSR, they voluntarily promise to, for example, carry the responsibility to protect the environment and take actions against bribe or other corruptive activities related to their business. It certainly has some positive influences to specific areas based on my knowledge gained from other classes; nevertheless, when judge CSR in the context of total impacts on our society and environment, it is obvious that CSR has failed its mission to lessen the negative impacts of business based on the evidences that provided by the author. Also, since there is a strong positive relationship between CSR behaviors and consumers’ reactions to a firm’s products and services, it seems to me, now, that CSR for the most companies is just a fancy cover that helps them to create or promote a good image and reputation. The recent case that shows the failure of CSR of Volkswagen even make me believe that CSR programs may be just a marketing or public relation exercise for many

Even though customers are a major key to success of any business, limiting CSR practices to an external group of stakeholder is insufficient. From the customers’ side, the focus is “on the corporate brand and its societal relationships with external constituencies.” (Lacey, Hensel 316). It is undeniable that implementation of CSR can attract the customers and lead them to be a significant are source of a financial gain. That is because CSR changes the way consumers behave in the market and alter their beliefs toward the company standards.” (Lacey, Hensel 316). Nevertheless, extensive focus on the social gains may cause the business to suffer financially. If that happened, the case is considered to be a failure of executing CSR. Again, this is a result of shifting all the business gears to benefit a sole group the stakeholders.

1. It is hard for companies to communicate their efforts in CSR to shareholders and investors. Although companies have progressed from only 20% of public companies publishing CSR reports to 72% from 2011 to 2013, there are still no universal standards established for reporting CSR information. Therefore, even the best CSR efforts can lose their value simply because the efforts are not communicated to users of financial statements. This is also in part due to CSR efforts being ill-defined. While some CSR ideas are universal many of the aspects of CSR are industry specific and hard to translate into meaningful disclosures for interested parties.

Both the definitions given highlight the “voluntary” part of the actions taken by firms, those which go beyond law requirements, and from this starting point Matten and Moon (Matten & Moon 2008a) define two types of CSR, “implicit” and “explicit”. Implicit CSR reflects the actions taken by the firms to respond to formal and informal institutions for society’s interest, and consists of values, norms, and rules which result in requirements for corporations. Explicit CSR describes corporate activities that assume responsibility for the interests of society. They normally consist of voluntary programs and strategies by corporations which combine social and business value and address issues perceived as being part of the social responsibility of the company, often in response to local communities or Non-Governmental Organizations’ pressures (NGO) (Matten & Moon 2008b).

Apart from safety, Energy Australia has a whistle blower policy related to reporting of any non-conforming or illegal behaviour in the workplace. This is another example of internal ethical practice by an organization. Moving on to external ethical behaviour, we have examples of Toyota 's Community Spirit Gallery and Energy Australia 's apprenticeship programs. Ethical management practices can be demonstrated in a company 's outsourcing practice, amassing raw materials and relationship with its suppliers. Reduction in water and energy consumption are 2 areas in which CAT focuses.. This is an excellent example of being responsible to the environment and the employees. In my opinion, CSR may distract from the fundamental economic role of a business. To satiate my business profit-minded thinking, I was extremely interested in knowing about the benefits of CSR. This CAT policy explains about some of the long-term benefits a business can have due to investing in CSR. It also gives reasoning’s behind it. Some of it is

Microsoft, Walt Disney, Google, BMW, Daimler, Sony, Intel, Volkswagen, Apple and Nestle are probably big company names that many have heard of. They are without doubt the sole powerhouses of their individual markets holding a big market share for themselves. But, despite the fact that they have that common factor, another thing that they have in common is that these 10 companies are the top ten companies with the highest CSR reputation in the world (SOURCE). CSR the acronym for Corporate Social Responsibility is currently a new business model that many businesses are starting to adapt. Throughout time, things improve and so do peoples expectations; CSR is a new model that incorporates things that people are more concerned with nowadays compared to the past. By requiring companies to spend more of their money on social responsibilities, CSR provides an opportunity for the companies to benefit more than just themselves in many different ways, but the question still lies at the point of to what extent does CSR benefits the companies themselves (SOURCE). There have been a lacking measurement in the actual benefits of CSR and companies are doubting whether or not CSR actually benefits company performance. Despite that though, there must be a reason as to why these powerhouses are incorporating CSR as their main business model and that reason would most definitely be that CSR benefits company performance in so many ways, both externally and internally, that no other business model

Friedman (2007) further argues that socially responsible firms will be at a competitive disadvantage due to the added expense incurred by CSR activities. Counter to this Smith (2002) with the evidences drawn from the case of Alfred Sloan’s decision proves that CSR doesn’t bring the competitive disadvantage with it. He argues that, firms that have good SCR record in public will be given better brand image and the investors will show more trust in such companies. Hence even though the companies initially lose their part of profit o CSR, they will after a period of time, attract more and more investors and broaden their consumer base which improves both the investment and gives advantage of efficiency due to large scale of operation.

Controversy exists as to whether companies have a duty to recognize and fulfill their corporate social responsibility (CSR), or whether it is sufficient for them to discharge their business functions while complying with the law. The opponents of CSR argue that managers are custodians of shareholders' wealth and should only engage in business functions that they are qualified in, leaving social functions to be performed by the government. However, CSR has now become a strategic part of business activity because it enables companies to gain legitimacy and approval of the community to ensure their survival, while contributing towards profitability.

Moreover, David Henderson’s book “Misguided Virtue” (2001) pointed out that companies have to adjust their accounting and management approach to adopt CSR raising costs and reducing revenues. In spite of that, the benefits will be able to outweigh the short-term costs in the long run (Millon, 2011).

CSR arrangement capacities as a self-administrative component whereby a business screens and guarantees its dynamic consistence with the soul of the law, moral principles and national or universal standards. With a few models, a company 's usage of CSR goes past consistence and takes part in "activities that seem to further some social great, past the hobbies of the firm and that which is required by law." The point is to increment long haul benefits through positive advertising, high moral measures to lessen business and lawful danger, and shareholder trust by assuming liability for corporate activities

Furthermore, the extent of CSR of a company may also depends on the nature of the company. If the company is selling products that are harmful to humans and environment, such as cigarette companies, wine-selling company, they should show a greater extent of CSR to the society. Three empirical studies deal with the effect of harmful products in relation to consumers. The first study claims that both product harm and target group vulnerability, affect the perceived level of company ethics. (Terije I. Vaaland and Morten Heide, Kjell Gronhaug, Jan 2007). So, these types of company should show greater CSR to the society. But for companies that are for the good sake of the society, they can put less efforts of CSR to the society, such as companies selling organic food, solar cars.

CSR is majorly working in a sustainable proximity of optimal utilization of resources furthermore progressing towards societal development and the protection of environment. CSR has become an indispensable part of growth for companies all over the world. It aims to incorporate a self-regulatory mechanism wherein a business monitors and ensures its assent with the spirit of law, ethics and international norms. However for many organizations today corporate social responsibility is much more than just following the above mentioned practices, they believe in growing with the people and have set standards and goals in order to realise their notions of societal development. CSR helps an organization in many ways by building good reputation in the market; encourage a positive impact on the stakeholders both internal and external and also proves to be an aid to recruitment and retention particularly with such competitive world market.

The advantages of CSR are more as compared to disadvantages. Attig, Najah, in 2013 discussed about the economic advantage of CSR told that it effects the credit ratings of company. Credit Ratings of a

CSR can improve the company’s reputation and branding and this in turn improves the prospects for the company to be more effective to attract new customers and increase market share.