August 25, 2012 SYNTHESIS PAPER ON CORPORATE SOCIAL RESPONSIBILITY 1

JOHN MICHAEL G. FAVILA Ethical Foundation and Corporate Social Responsibility

Synthesis Paper on Corporate Social Responsibility
By
John Michael G. Favila

The concept of corporate social responsibility (CSR) has a long and varied history. The evolution of the
CSR constructs begins in the 1950s, which marks the modern era of CSR. In the 1990s, CSR continues to serve as
a core construct but yields to or is transformed into alternative thematic frameworks.
This essay will discuss about corporate social responsibility (CSR), which is one of the key factors face
by corporations today, where it become relatively important to employees and stakeholders. This essay will
also discuss why stakeholders are giving CSR more attention and how companies by abiding to the CSR
standards create conflicts of the companys objective with stakeholders.
What is corporate social responsibility? Corporate social responsibility (CSR) refers to an organisations
moral obligation towards all its stakeholders. stated, Corporate social responsibility (CSR) is a practices that
improves the workplace and benefits society in ways that go above and beyond what companies are legally
required to do.
In Singapore, in order to encourage organization to adopt the CSR concept, the National Tripartite
Initiative (NTI) on CSR was launched in May 2004. The NTI on CSR committee review and formulate broad CSR
strategies and has since founded a society known as Singapore Compact for CSR, in bringing the CSR movement
forward.
Singtel a local telecommunication organization not only excels as the market leader in Singapore, it also
helps the less fortunate through social programmes. It started the Touching Lives Fund in June 2002, encourage
the community to be involved in the companys fund raising event. Lee (2004, p4) states that Singtel makes an
effort to ensure that the fulfillment of this social responsibility comes from all levels in its ranks, from senior
management to workers.
August 25, 2012 SYNTHESIS PAPER ON CORPORATE SOCIAL RESPONSIBILITY 2

JOHN MICHAEL G. FAVILA Ethical Foundation and Corporate Social Responsibility

This lead to a question in why should companies be socially responsible? The world has change and the
interconnectedness of the world is moving rapidly and this sign is called Globalisation. Globalisation refers to
the exchange and flow of economic and intellectual items in terms of goods, knowledge, values and images, as
well as people on a global scale. As a result, company around the world began to seek new challenges in their
business. Nourick (2001, p14) stated that, With the fall of the communist system in 1980s, the old idea of
maximizing profits and concentrating all concerns on shareholder interests are evolving and the interest of all
stakeholders need to be considered in todays global economy. Organization started to adopt CSR as one
factor to evolve into todays economy.
In todays business world, companies believe that positive associations with CSR can have a positive
effect on the reputation of specific products, the company reputation and consumer behaviour. In a survey
poll, McShane and Tavaglione (2007, p15) stated that Almost 80 per cent of Canadians say that the companys
record of corporate social responsibility has either a moderate or a great deal of influence on their decision
about where to work. Based on the survey poll by McShane & Tavaglione, it reflects a positive aspect towards
companies who adopted CSR, where it creates a better reputation effect on the customers and suppliers.
For example, McDonald a well-known one stop fast food restaurant which provides meals from
teenagers to adults practices corporate social responsibility which benefits the society by adopting the
European Unions restrictions on the use of growth-promoting antibiotics for its suppliers of beef and chicken
in the United States. With this action, McDonald creates a positive image where it shows that they care for the
well-being of the community.
Another example would be Timberland. Vogel (2005, p57) stated that Timberland allows employee to
take one week off with pay each year to help local charities and it also closes for one day a year so that its
5,400 company can take part in company-sponsored philanthropic projects involving local community.
Timberland creates a caring image by working towards the benefit of the employee and the community. Both
August 25, 2012 SYNTHESIS PAPER ON CORPORATE SOCIAL RESPONSIBILITY 3

JOHN MICHAEL G. FAVILA Ethical Foundation and Corporate Social Responsibility

examples shows that companies go beyond what they are required to do and instill a strong commitment to
community responsibility.
However, on the other hand, with the concept of CSR in organization, conflict of interest between
stakeholders do occurs. Polonsky (2005, p959) describes that stakeholders characterizes as primary and
secondary. Primary stakeholders are those whose participation is necessary for business survival; they consist
of employees, customers, investors, suppliers and shareholders. Conversely, Crowther and Rayman-Bacchus
(2004, p36) put forward the idea that in any case, not all stakeholders will support particular corporate aims
and strategies equally.
An example of conflict would be Citigroups lending policies. Vogel (2005, p59) stated that Citigroups
senior executives hated being heckled by environmentalists critical of the banks lending policies and at the
same time they have to monitor the environment impact of its lending policies in developing countries.
Another example would be Shell in Nigeria. Vogel (2005, p140) also discussed that the conflict that Shell faced
were placing human rights issues on the agenda of firms involved in natural resource development which
resulted them often caught in the midst of violent conflicts between the community residents and both
government and private security forces responsible for protecting their investment.
Looking into the aspects of shareholders, they want the organization to earn profits which will create
valuable assets and market value for the company. Whincop (2005, p149) stated, shareholders recognize the
importance of the generation of wealth through collective investment by individuals in common enterprise and
emphasizes the responsibility of corporate managers to make prudent financial decisions and investment
involving the money of others.
However, in the perspective of customers, they determine on whether the company is socially
responsible before making decision. McShane and Tavaglione (2007, pg15) stated four out of five Americans
determine a companys commitment to a social issue is an important factor in deciding whether to work and
purchase the product of services.
August 25, 2012 SYNTHESIS PAPER ON CORPORATE SOCIAL RESPONSIBILITY 4

JOHN MICHAEL G. FAVILA Ethical Foundation and Corporate Social Responsibility


In conclusion, adopting corporate social responsibility standards do have their pros and cons. No doubt
that there are conflicts between the stakeholders, but on the other hand, we must agree that this is what
companies have to do to survive and prosper in a world. Claire Chang, President of Singapore Compact
commented, Practicing corporate social responsibilities is not a cost but an investment in the long-term
sustainability of a business. CSR showed that it is important for company survival in the future. With the
globalization, adopting of CSR strategies allows company to be socially responsible and it challenges the
company to demonstrate themselves as a caring company to the society.

Reference List:

Article Reference

Lee, S, 2004 Touching peoples lives NTUC News 24 October 2004, p.4

Chan,T.Y & Sim,G, 2004 Companies urged to play a much bigger
social role NTUC News 4 June 2004, p.4

Book Reference

Crowther, D & Rayman-Bacchus,L, 2004, Perspectives on Corporate Social Responsibility, Ashgate Publishing
Ltd

Macleod, D.V.L, 2004, Tourism, Globalisation and Cultural Change: An Island Perspective, Channel View
Publications

Mcshane, S & Travaglione, T, 2007, Organisational Behaviour on the Pacific Rim, 2nd Edition, McGraw Hill
Australia Pty Limited

Nourick, S, 2001, Corporate Social Responsibility: Partners for Progress, OEDC 2001

Polonsky,M.J, 2005, Stakeholder Thinking in Marketing, Emerald Group Publishing

Tulder, D.V & Zwart, A.V.D, 2006, International Business-Society Management: Linking corporate
responsibility and globalisation, Routledge

Vogel, D, 2005, The Market for Virtue: The Potential and Limits of Corporate Social Responsibility, Brookings
Institution Press

Whincop, M.J, 2003, From Bureaucracy to Business Enterprise: legal and policy issues in the transformation
of government services, Ashgate Publishing Ltd.

Journal Reference

Carroll, A.B, 1999 Corporate Social Responsibility: Evolution of a Definitional Construct Business Society,
vol.38, no. 3, pp. 268-295, viewed 7th February 2008

Internet Reference

CSR Singapore Compact 2005, viewed 7th February 2008 (http://www.csrsingapore.org/aboutus.php)