24/7 writing help on your phone
Corporate Social Responsibility (CSR), defined as “the broad array of strategies and operating practices that a company develops in its effects to deal with and create relationships with it numerous stakeholders and the natural environment” (Waddock, 2004). Globalization and liberalization has reinforced with the introduction of corporate social responsibility, Developing countries need to focus more about the corporate social responsibility planning and implementation process (Kiran and Sharma, 2011). Corporate social responsibility is one of the most important issues and developments of 21st century as the organization in 21st century faces problems for which corporate social responsibility is an answer (Horrigan, 2010).
Davies (1973) says social responsibility starts when the law ends. Any organization is not socially responsible if it simply complies with the minimum requirement of law, as this is what any good citizen would do.
Milton Friedman argues that people responsible for decision and action in business should not exercise social responsibility in their capacity as company executives. Instead, they should concentrate on increasing the profits of their companies (Mulligan, 1986).
Friedman (1970) the one and only social responsibility of business is to use its resources and involve in activities focused to increase its profit as long as it stays with in the rules of the game, which is to say engages in open and free competition without deception or fraud.
This essay focuses on the views against the neoclassical economical stakeholders approach which states profit is the sole social responsibility of any business in comparison with Kellogg’s corporate social responsibility and also discussing the views and theories supporting corporate social responsibility.
The concept of corporate social responsibility is considered to be a powerful way of achieving sustainable competitive profit and for achieving long term value for the investors, shareholders and stakeholders. Entrepreneur can consider corporate social responsibility as a win-win strategy or opportunity for business, financial investors and society. Accomplishment of proper corporate social responsibility practices can affect the perception of stakeholder’s customers, investors, local communities, environmental groups, government, suppliers and competitors (Kiran and Sharma, 2011). Organization should arrange its corporate social responsibility goals and decision making with the companies goal and strategy that makes corporate social responsibility natural as customer’s perspective (Maon et al., 2008).
A number of companies identify corporate social responsibility practices to its main strategy and the policy of the company based on the importance give to a) defining a plan for social action, b) intensity of investment in social programs, c) commitments of employees, d) perceived impact of social action on competitive position and e) measuring outcomes of programs (Husted et al., 2007). Previous research has shown that corporate social responsibility enables a firm to appeal to the socio-cultural norms of its institutional surroundings and contributes to its socio legitimacy (Handelman and Arnold 1999; Palazzo and Scherer 2006; Scott 1987). The moral and ethical case of corporate social responsibility has been described the “pure” case for business acting responsibly; it is the right thing to do as a member of the society (Osuji, 2011). Institutional corporate social responsibility helps to create strong relationship with stakeholders, a positive corporate image and goodwill.
Shaw (1988) there are some principles that are considered to serve direction and coherence into corporate social policy
Beliefs toward the corporate responsibility of the society is focused on the following; providing customers with quality products and services, having a safe working place, investing into human development, building genuine relationship with all stakeholders, increase the wealth of shareholders and business operations with the motive of adding values, following ethical values within the business process and by contributing to civil society through partnership and community development projects. Shaw (1988) not all organizations work with the motive of profit making for example, in a hospital or school the managers will not have profit as their object but believe in rendering of specific services.
Theory of consistency clarifies the views within the organization which also known to be the inside-out perspective, to achieve sustainable advantage organization sticks to its environment with all its resources (Mintzberg 1979). Organization should be planned in a way to react to its external environment in appropriate way. Herzberg’s two factor theory (1959) states for an organization hygiene factor and motivation are important for an
employees working condition inside an organization. Socially responsible image is not just used to polish the image of an organization it is also a way of motivation factor; there are possibilities that employees find satisfaction in their work under such circumstances (Ruschak, 2008).
Based on the consistency theory any organization needs to give equal importance to the corporate social responsibility to be incorporated in their firm, as it is one way to satisfy the employers in their work place and provide motivation toward achieving the goals of the organization.
Everything in an organization depends on situations and environment plays an important role as it influence everything also the performance has to be based on the situation there is no specific behavior to be applied in all situation (Galbraith, 1973). Dictionary of human resource management (2001) the contingency theory suggests effectiveness of an organization is based on the factors taken into account by the managers that can have a positive or a negative impact on the organization. The main contingency factors are the environment, technology, size, product diversity and people employed.
According to the contingency theory environments plays an importance role in influencing the performance of an organization. Social responsibility is a factor used to improve communication between an organization and the society that can lead to better outcomes in an organization.
According to Milton Friedman the social responsibility of a business is to increase profit. (Friedman,1970). In an enterprise the corporate executive is the owner of the business the executive has direct responsibility to his employers. Responsibility of a business is to make as much money as possible. As an individual any corporate executive would have many other responsibilities to his family, churches, clubs and etc these are considers being as the social responsibilities. He is spending his own money or time
or energy not the money of his employers or time or energy these are considered to be responsibility of an individual not as social responsibilities. Corporate social responsibility would reduce the returns to the stockholders, by increasing the price to the consumers he is spending the money of the consumer’s money by lowering the wages of the employers he spends their money.
There are companies that connect in fighting the idea of social responsibilities and environmental sustainability and cling to the classical view that the only social responsibility of business is to make money for investors (Winston, 2002). Social responsibility behavior could enhance loyalty and trust both of the customers and employees. The organizations are “ not just judged on their result but on their behavior too” (CSR campaign, 2005). The idea of corporate social responsibility has failed to create a good society (Freeman and Liedtka, 1991). Friedman’s argument is that corporation should pursue their economic self-interest and that any attempt to promote corporate social responsibility, however it might be defined, amounts to moral wrong. Friedman also argues that government is the best means for facing such concerns. The theory of shared value argues that business should consider profit more broadly than the financial bottom line, and includes societal benefits as value creation, recognizing that a business is affected by, and can contribute to solving, social challenges (Poter and Kramer, 2011).
Freeman and Liedtka (1991) mentions seven reasons to discard the concept of corporate social responsibility
Mulligan (1986) Friedman argues that the practice of social responsibility by a corporate executive is
Ruschak (2008) Corporate social responsibility according to stakeholder perspective is considered to be only towards the stakeholders. Milton Friedman the man who won Nobel Prize in 1976 is the famous person to promote the stakeholders perspective of corporate social responsibility. According to Friedman companies are only responsible towards their stakeholders (Friedman, 1970). Adam Smith the father of classical economic theory favors Friedman’s view and argues what is good for the company is good for the society as well. Society determines its demands through the market and companies respond to those demands (Carroll, 1996).
Freeman, Marrison and Wicks (2007) offers two observations regarding stakeholder theory first being in a win-win situation with an aim of managing stakeholders and second giving importance to the values as it is essential in business. Friedman view of corporate responsibility is to deal with stakeholders in a profitable way by executing all operations required (Philips, 2011).
According to stakeholder theory it suggest that the purpose of the business is to create as much as value possible for its stakeholders following this theory Friedman argues, “the purpose of the business is business” therefore the social responsibility of an organization is to its stakeholders.
W.K Kellogg founded Kellogg’s company through his belief in nutrition and dedication to well-being more than 100 years ago. The main vision of Kellogg’s is to enrich and delight the world through foods and brands that matter. The purpose of Kellogg’s is nourishing families so they can flourish and thrive.
The corporate social responsibility of Kellogg’s is divided in to four different pillars
Kellogg’s company maintains six pillars towards social accountability such as no child or involuntary labor, safe working conditions, freedom to associate and no discrimination, protection of environment, fair wage tome off and living conditions and no harassment or coercion.
Kellogg’s has certain corporate social responsible commitments such as
Corporate social responsibility is one of the major factor for a business to maintain its image and reputation. According to Friedman the social responsibility of a business is considered to be responsible for the stakeholders and increase their returns. Where as there are other theories proving being socially responsible is important for a business.
Unfortunately for Milton Friedman, corporate social responsibility was followed over many years and now it is no longer being considered a development but a long strategy incorporated in a business. Prior literature has anticipated outcomes of corporate social responsibility, including corporate reputation, competitive position, and the fir between corporate social responsibility and core competence (Du et al., 2011; Porter and Kramer, 2011; Yoon et al., 2006).
Kellogg’s company follows and maintains the social responsibility as a result they have achieved many awards and recognition such as world’s 100 most reputable companies, powerful brand, innovative company by Forbes, In 2012 news week awarded Kellogg’s with green ranking, reader’s digest awarded with most trusted cereal brand and great place to work institute in Spain awarded Kellogg’s with best companies with 100-250 employers. Therefore corporate social responsibility is a strategy to promote business opportunities for companies.
👋 Hi! I’m your smart assistant Amy!
Don’t know where to start? Type your requirements and I’ll connect you to an academic expert within 3 minutes.get help with your assignment