Review of Related Non-Research Works and Related Studies

This is a presentation of the literature and studies that were considered

related and relevant to the study. The review also contains the synthesis of the art,

gap to bridge the study, the theoretical and conceptual framework and the

definition of terms to be used.

Related Non-Research Works

“The idea of social responsibility supposes that the corporation has not only

economic and legal obligation but also certain responsibilities to society which

extend beyond this these obligations” (McGuire 1963). This means that corporate

social responsibility is how company operates their business process to build a

positive overall impact to the society. This view opposes Friedman`s general belief

that only people can have responsibilities, not businesses, and the people who are

hired by business owners have a responsibility primarily to their employers, to meet

their desires which in most cases are profits (1970).

In contrast, Moire believes that society is keen when it comes to CSR and

as Ben Cohen has observed, business is an extremely rich and powerful member

of society. Business is part of society and not just a separate entity. This means

that they must provide returns for shareholders and accountable more than just to

shareholders. Besides, they are also accountable to employees for safe working

conditions, to customers for safe and fair products, to society and the environment

to avoid pollution (2002).

 David Myddelton (2002), argues that some aspects of CSR can be regarded

as public relations. Firms must find ways to embed social responsibility as part of

their processes. He added that there’s nothing wrong if corporate social behaviors

lead to an increase in the value of the firm. If the shareholders invest solely to

increase wealth, they will meet a conflict. To be responsible enough, they must

also be taken into account.

The factors that directly affect the economic standing of the company must

be addressed as much as it consider its relationship with the society and the

environment. This implied contract defines broad relationship between business

and society (Steiner and Steiner, 2003).

CSR is the company commitment to help in developing the economy and at

the same time, to raise the employees’ life and their families especially the

community (Baker, 2004). It serves as a tool to have the concept of equal

distribution of wealth between the business and society. Some corporate

organizations recognize the consequence of engaging in free enterprise as the

need to create balance wealth distribution especially in a pluralistic society like the

Philippines (Cunningham, 2007). Here, the presence of interest groups advocates

priorities in the conduct of their business. Thus, business is often criticized for

being self-serving and solely interested in profit (Han, 2008). More intense

criticisms are levelled against businessmen along the issues of greed and vested

interests (Aguinis, 2009).

CSR also helps to develop and improve policies applies responsible

practices into the daily business operations to report the progress done by CSR
practices (Speshock, 2010). However, it has been proven time and again that a

negative CSR policy (that is one aimed at increasing profit) can destroy profits, as

Russell-Walling reveals “Footwear mogul Nike is still dealing with the backlash of

a UK-instigated campaign that accused it of employing child labor in developing

countries. It responded proactively with a rigorous CSR initiative, including the

appointment of a director of sustainable development. In many markets, its

reputation has been restored. In a recent survey of most ‘ethical’ brands

by country, however, Nike did not appear anywhere in the UK ranking.”(2011).

In recent years business has been criticized as a major cause of social,

environmental, and economic problems (Porter and Kramer, 2011). Porter said,

“The purpose of the corporation must be redefined as creating shared value, not

just profit per se. This will drive the next wave of innovation and productivity growth

in the global economy. “Shared value is not a social responsibility, philanthropy or

even sustainability, but a new way to achieve economic success. Firms can do this

in three distinct ways: 1. by reconceiving products and markets, 2. redefining

productivity in the value chain, and 3. building supportive industry clusters at the

company’s locations.

At a global level, CSR has been a highly important tenet of our business for

many years. Sustainability has been another major tenet of our CSR strategy.

Sustainability is one of the key issues for our industry and our clients are

increasingly favoring agencies with the knowledge and know-how to help them

achieve their sustainability goals (Southern, 2013).

 The main goal of Corporate Social Responsibility (CSR) is to align a

company’s social and environmental activities with its business purpose and

values. CSR activities mitigate risks, enhance reputation, and contribute to

business results. But for many CSR programs, those outcomes should be a

spillover, not their reason for being. CSR programs are often initiated and run in

an uncoordinated way by a variety of internal managers, frequently without the

active engagement of the CEO. Philanthropic programs are not for generating

profit or directly improve business performance (Rangal, et.al, 2015).

Environmental programs are focused on environment. Both large and small

businesses have a large carbon footprint and any steps they make to reduce those

footprints are considered both good for the company and society as a whole. And

lastly, ethical labor programs concerned with treating the employees fairly and

ethically and businesses also operate in international locations with labor laws that

differ from those in the United States (Taylor, 2015).

Related Studies

Bermudo (2001) conducted his dissertation study on "The Corporate Social

Responsibility in Bicol Region. “The study was aimed at determining the social

responsibility of corporations in the Bicol Region, Philippines. The problem of the

study included attempts at answering questions on the status of stock corporations

in the Bicol Region in terms of nature of business and profitability; the social

responsibility programs and projects undertaken by stock corporations as rated by

employees, management, and clients; the level of implementation of the social

responsibility programs and projects undertaken by stock corporations as

perceived by employees, management, and clients; whether is there associative

relationship between the status of stock corporations and social responsibility

programs/projects undertaken; and whether there is associative relationship

between the status of stock corporations and the level of implementation of social

responsibility programs and projects undertaken.

The study compiled by Orlitzky, Schmidt and Rynes (2004), yielded that

encouraging data suggesting a positive link between CSR and increased profits.

The meta-analytic findings suggest that the corporate virtue in environmental

responsibility is likely to pay off.

Carlsson and Akerstom’s (2008) study was focused on corporate social

responsibility of Ohrlings PricewaterhouseCoopers. They found out that company

can engage in CSR in order to increase performance, gain a competitive

advantage, improve the reputation and image of the company, and satisfy

customers who have started to demand that companies engage in CSR.

Companies can apply CSR in many ways; however, they concluded that the

company participates in CSR within the areas of environmental protection, charity

work, sponsorship and work environment.

The study conducted by Economist Intelligence Unit published in 2008,

Corporate Citizenship is another term roughly equivalent to CSR, and Corporate

Citizenship is becoming increasingly important for the long-term health of

companies even though most struggle to show a return on their investment from

socially responsible activities.

 Sepahvand (2009) focused his study on analyzing the concept of corporate

social responsibility. He believes that corporation actions can lead to a responsible

behavior that would benefit the whole society which the corporation is active in.

Baron, Harjoto and Jo (2009), found out that for consumer industries,

greater CSR performance is associated with better financial performance and the

opposite is true for industrial industries. Emperical studies have examined the

relation between CSR and corporate financial performance and while the results

are mixed, overall the research has found a positive but weak correlation.

The study conducted by Kiessling, Richey, Harris and Sloan (2010)

coincides with the study of Carlsson and Akerstom that increasing the level of CSR

can improve firm level reputation, competitive advantage and become more

appealing to investors interested in firms with an above average CSR profile.

Manesco’s study in 2010, about Economic Implications of CSR and

responsible investments revealed that CSR activities do not generally have a

negative effect on profitability but that in the few cases where they have a positive

effect, tuthis effect is rather small.

Sen’s (2011) study was focused on the corporate social responsibility of

small and medium enterprises. According to him, even though primary

stakeholders like employees, customers and suppliers are important for economic

objectives, social engagement with secondary stakeholders in the community and

the social capital which results from those social engagements, are more important

for the survival of small and medium enterprises. SMEs see social responsibility
as a source of social capital and an opportunity to compensate their limited

resources.

The study of Loannou and Sevafeim (2014) about the impact of CSR on

investments found out that analysts issue more pessimistic recommendations for

firms with high CSR strategy.

Synthesis

The related literature cited here in this study provides necessary details and

information. Baker, Speshock and McGuire defined Corporate Social

Responsibility as a commitment, obligation and certain responsibilities to improve

the policies of the business, employee`s life and their families and the economy of

the society.

Rangan together with his colleagues highlighted the main goal of CSR to

the company and the characteristics of CSR activities. In support to Rangal`s

discussion, Taylor also described the kinds of CSR activities such as Philanthropic,

Environmental, and Ethical Labor Practices.

The statement of Porter and Kramer talks about the shared value. In

contrast, in Friedman`s classical economic view argues that company`s

responsibility is to meet their goal which are profits. However, Rusell and walling

proved that negative CSR policy or profit maximization can destroy profits.

The related studies cited here are focused on the importance of corporate

social responsibility and its activities that company participates. The study of Sen

discussed that social responsibility is a source of social capital and to satisfy their
limited resources. Carlsson,Akerstom, Kiessling, Richey, Harris and Sloan showed

that increasing the level of CSR can improve firm level reputation, competitive

advantage and become more appealing to investors interested in firms.

Sepahvand found that corporation actions can lead to a responsible behavior that

would benefit the whole society.