Corporate engagement with society, also termed corporate social responsibility (CSR), has become a commonly used term in contemporary society and refers to one process by which an organization expresses and develops its ‘corporate culture’ and social consciousness.
CSR has been receiving lots of attention from various backgrounds of researchers worldwide, it has attracted a great deal of attention over the past decade and according to some researchers, has gathered great momentum over the past number of years and is now regarded to be at its most prevalent. Therefore business leaders, government officials, and academics are focusing more and more attention on the concept of “corporate social responsibility”.
Almost all corporate websites/ policies/reports talk about their endeavors for CSR, which has become a way of ensuring that the organization is fulfilling all the obligations towards society and thus is eligible for the license to operate. It assures that the organization can grow on sustainable basis. There are also societal pressures with respect to social issues such as human rights and the environment on the corporations and CSR is widely regarded as the response of corporations to this pressure and according to Bénabou & Tirole (2009), responding to such pressure, business leaders, governments and academics are now also emphasizing the notion of CSR.
In CSR, the central issue is the appropriate role of business that overlaps, almost completely, with its reference area and now business organizations have waked up to the need for being committed towards CSR because the role of businesses in society is no longer focused on creating wealth alone but is also focused on acting responsibly towards stakeholders.
Everyone agrees that firms should obey the law. But beyond full compliance with environmental regulations do firms have additional moral or social responsibilities to voluntarily commit resources to environmental protection. To be specific, why companies do CSR? For this, it is answered that CSR is situations where the firm goes beyond compliance and engages in “actions that appear to further some social good, beyond the interests of the firm and that which is required by law” and it is also due to various reasons such as to attract new investors, part of branding strategy, an obligation from the government and the lists go on. However, CSR does not mean just taking part in charitable activities and events; it means holding the responsibility to develop the society by envisioning future plans for socio-economic justice and be conscious about their responsibility for the welfare of society around them. Therefore, according to Zu & Song (2008), a large number of companies appear increasingly engaged in a serious effort to define and integrate CSR into all aspects of their businesses.
Corporate executives have also encountered demands from multiple stakeholder groups to devote resources to CSR. This may be partially due to the pressure generated by a union of ethics-oriented campaigners including NGOs, anti-capitalism activists, labor unions, and news media; and partially due to the demand for doing so by their customers, employees, suppliers, communities, governments, and even stockholders. Ismail (2011) stated that CSR is supported by the case whereby the government alone is definitely cannot afford to have a sole responsibility in improving the lives of their people as it exceeds their capabilities. If the government is unable to fulfill the increasing demand of their people thus this is where the corporations should support the government. However, those who opposed this statement saw the situation as unfair to the business corporations, such as Friedman’s (1970) famous statement that ‘the only responsibility of a business is to maximize shareholders’ wealth’. But according to Krishnan & Balachandran, companies are beginning to realize the fact that in order to gain strategic initiative and to ensure continued existence, business practices may have to be molded from the normal practice of solely focusing on profits to factor in public goodwill and responsible business etiquettes.
An examination of some of the factors, which have led to the development of the concept of CSR, would be ideal starting ground for the conceptual development of suitable corporate business practices for emerging markets. Krishnan & Balachandran also expressed that in the last twenty years, there has been a sea change in the nature of the triangular relationship between companies, the state and the society.
No longer can firms continue to act as independent entities regardless of the interest of the general public. The evolution of the relationship between companies and society has been one of slow transformation from a philanthropic coexistence to one where the mutual interest of all the stakeholders is gaining paramount importance. Bénabou & Tirole (2009) asserted that CSR is somewhat of a “catch-all” phrase for an array of different concepts.
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