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Advantage and Disadvantage of CSR

Advantage and Disadvantage of CSR

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Published by: Auosh Stars on Aug 04, 2011
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, Univerzitni 8, 306 14 Pilsen Czech Republic
ABSTRACT Corporate Social Responsibility (CSR) represents not just successful enterprise but also thinking on social and environmental aspects. Corporations must include the social and environmental aspects to the activities which lead towards making profit. Corporate Social Responsibility answers the requirements of both the customers and persons who are co-operating with them in business activities. Corporate Social Responsibility positively affects the whole of society and regulates its impact on the environment. Corporate social responsibility is a concept. It is a way of managing a company and making relationships with partners which contributes to improving the reputation and credibility of a company. This paper presents the issue of Corporate Social Responsibility with its characteristics, assets, advantages and disadvantages. KEYWORDS Corporate Social Responsibility, performance, competitiveness, environment INTRODUCTION The concept of CSR was established in the 1950s. It is a way of managing a company and making relationships with partners which contributes to improving the reputation and credibility of a company. The European Union supports CSR activities in the Europe. This issue has been worked on since the 1990s. The European Union uses CSR as a tool for achieving tenable and acceptable growth. CSR DEVELOPMENT The development of CSR is discussed from the second half of the 20th century. The year 1953 was a breakthrough because the book Social Responsibilities of the Businessman [1] was published. Bowman first defined social responsibility in this book. His definition is more about the responsibility of the businessman than the responsibility of the company. But his definition is still valid: “… to realise such procedures, take such decisions or follow such ways of behaviour which are required for the goals and values of our society.” The problem is that his definition and others insufficiently identify the requested behaviour of the businessman and company. The following idea became very popular in the 1960s: a company has not only economic and legal obligations but also obligations to society. If a company does not follow these obligations to society, society can close down or limit the enterprise. The problem here is that the idea does not define who or what is a part of the company. The answer is the stakeholders’ concept. Developing the stakeholders concept started at the beginning of the 1970s. CORPORATE SOCIAL RESPONSIBILITY Developing CSR takes a long time. There is no simple definition because CSR has no definite limits and it is voluntarily established. It is a trend which is focused on the change from short-term tasks to long-term tasks. CSR companies´ behaviour is such that inside needs and outside needs are covered. They contribute to tenable and acceptable growth and generally help to improve the overall situation of society. CSR integrates the attitudes, practices and procedures into the company strategy at the highest level of management. It requests a change from the “profit only” level to the wider level “three Ps – people, planet, profit.” The triple-bottom-line means that the company is focused on economic growth and environmental and social aspects of its activities. The company is a part of society and society influences it.

Economic area . health.stakeholders Economic area • Ethical codex creation • Transparency • Best practice management • Corruption rejection • Relation with stockholders • Relation to customers / consumers • Relation to suppliers • Relation to investors • Protection of intellectual property Table 2: Economic area – CSR activities Stakeholders CSR activities Social area In the social area. The company influences the standard of living. The definitions show that they are not fixed. Each part of CSR contains a lot of different activities depending on the type of enterprise and the requirements of stakeholders.There are a lot of definitions of CSR but here are the most well-known: • “CSR is a voluntary integration of the social and environmental aspects in the everyday company activities and relations with the stakeholders. social and environmental. Area Stakeholders Social area Working environment Local community • Employees • Non-profit organizations • Unions • Public Table 3: Social area .Market • Owners and investors • Customers / consumers • Suppliers and other business partners • Governmental institutions • Media Table 1: Economic area . The impacts of the company on the economy at local. national and global levels are monitored. Economic area Transparent enterprise is expected from the company. A positive relationship with investors. abolition of child labour • Equal possibilities Local community Corporate donorship Corporate volunteerism Support for social integration Education of the public Area CSR activities • • • • .” [2].” [3]. • “CSR is a way of an enterprise which follows ethical. legal. THREE FUNDAMENTAL PRINCIPLES OF CSR CSR is based on three fundamental principles.” [3]. education and cultural development of citizens. behaviour is focused on the attitude to employees and on supporting the local community. safety. commercial and social expectations. customers. They are economic.stakeholders Social area Working environment • employee health and safety • Developing human resources • Follow working standards. The reason is to provide flexibility to companies for their use. • “CSR is a continual obligation of companies to be ethical and contribute to economic growth and at the same time improve the quality of employees´ lives and their families and local and global society. suppliers and others business partners is also expected.

air and water. • Credibility – increasing company credibility. etc. using of environmentally friendly products) • Reduction of impacts on environment • Protection of natural sources Table 6: Environmental area – CSR activities MAIN FEATURES OF CSR Main features of CSR are: • Triple-bottom-line – economic. land. must have a more local attitude than global. 265 companies from the Czech Republic were approached in this survey. relation with schools and ecology. • Voluntary – all activities are done voluntarily.” Almost all companies considered being a part of society to be an important role for the company. THE SITUATION IN THE CZECH REPUBLIC A survey on the topic of Corporate Social Responsibility was carried out by Business Leader Forum in 2003. The internal dimension of CSR is the most used now and will also be in the future. This means. This includes the ecosystem.) CSR activities • Environmentally friendly company policy (recycling. There is an assumption that the company will protect nature and natural resources. state. products and services • Compliance with regulations and standards (ISO. care about the employees. The task was to get answers to several main questions. its contributions to socially responsible behaviour must be communicated and must be listed good and bad examples of companies and discussed. [8]. social and environmental. This role does not have to be the main mission of a company. companies will want to extend their activities.stakeholders Environmental area • Environmentally friendly manufacturing. It is important to give it a definite content. and donations to charity) are minor. On the basis of the survey. their education. • Long-term period – all activities are done over a long-term period. • Stakeholders dialogue – integration of all participants. The conclusions of the survey are summarized here. it is clear that it is important to explain the concept of CSR. Environmental area – Environment • Environmental groups Stakeholders • Other environmental groups Table 5: Environmental area . The external dimension of CSR is focused on transparency. The relationships with other subjects (non-profit organizations. CSR must be understood more actively than intuitively. The results of the survey indicated that activities in CSR were established but they were very often called by different names. EMAS. In the future. The CSR issue is understood more intuitively in the sense “social responsibility = good product or respect for laws. especially inside the company. their hiring and keeping.Social area • • • • Work – life balance • Support of employees´ life quality Workplace diversity • Developing employment and local Support for laid-off employees infrastructure Job assurance Table 4: Social area – CSR activities Environmental area The company is aware of its impact on the living and inanimate nature in the environment. .

It brings financial profit to the company. which are also very important for successful enterprise. Assets • • • Good corporate reputation Evaluation by indicators Questionnaires Brainstorming Reaction in media Long-term measurement aspects • Strengthening market position • Possibility of new business opportunities • Possibility to gain environmentally friendly and sensitive customers • Strengthening market position • Turnover increasing • Expanding products • Increasing of market portion • • • • • • • Energy consumption Proportion of recycling waste quantity of exhaust quantity dangerous materials used • • • Table 8: Measurement of CSR benefits CONCLUSION AND RECOMMENDATIONS At the beginning I posed a simple question: “Why follow the requirements of CSR?” A lot of businessmen know very well that they must do good things. It means not only behaving well towards customers and business partners. content and performance Lower employee fluctuation Higher possibilities for recruitment Possibility to gain huge contracts Possibility to gain environmentally friendly customers Increasing eco-efficiency Customers satisfaction and faithfulness • • • • • • • • Company flexibility Employee qualifications and satisfaction Interviewing customers Number of repeated orders Number of complaints Number of product or services modifications Added value of products or services Interviewing employees Number of absences Number of qualified employees Environmentally friendly company culture . good public relations. better company image Higher attraction for investors Good reputation and strong position in market Distinguish from rivals Increasing employees´ productivity and loyalty Attraction for quality and talented potential employees Decreasing expenses on risk management Direct financial saving – ecological behaviour Better relationships with local society and public institutions Table 7: Advantages of CSR CSR does not bring advantages only to big companies. small and medium sized companies can also gain some advantages.ADVANTAGES OF CSR Responsible behaviour is advantageous. possibility of getting contacts and information from society and from main business partners. MEASUREMENT OF CSR BENEFITS CSR is an investment in the assets of the company. It is possible to measure them by indicators over the long-term period. but also Higher employee motivation. • • • • • • • • • CSR advantages Higher reputation of company. They are: easier recruitment of employees and business partners. especially non-financial. brings a lot of benefits.

etc.wikipedia. 268-295. 1999.cz. No.org/wiki/Corporate_social_responsibility. [4] http://www. 2001.blf.csr-online. . A.taking care of their employees and good relationships with their neighbours and protecting the environment.cz. p. Green Book. Vol. [5] http://en. 3. Available ProQuest 5000. REFERENCES A Paragraph in the expert Journal: [1] CARROLL. B. 38. A web page: [3] http:// http://www. Corporate Social Responsibility – Evolution of a Definitional Construct. In Business and Society. A Book Publication: [2] European Union. Why? Being a CSR company opens new business challenges and brings competitive advantages.

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