CSR: A real business system

What does it mean for a corporation to be socially responsible? A company needs to be responsible for its activities - socially, ethically, and environmentally.  Usually, Corporate Social Responsibility (CSR) means how the companies accomplish the business progression to have an overall positive impact on the society. So, CSR has the straight impact on a firm's direct economic or technical interest.
Nowadays, CSR can be divided into four kinds: economic, legal, ethical and philanthropic:
(1) Economic Responsibilities: Business organisations are formed as economic entities designed to offer products and services to societal members. The economic responsibility of the firm can be recognised by the business responsibilities, because without it the others become moot considerations.
(2) Legal Responsibilities: The society has given the permission to operate business accordingly to get profit. At the same time it is expected that the business will comply with the laws and regulations publicised by federal, state and local governments as the ground rules under which business must operate.
(3) Ethical Responsibilities: It represents some standards, norms or expectations that denote a concern about 'moral rights' of consumers, employees, shareholders and the community. This includes fairness, respects and safeguard of stakeholders. It became a genuine CSR component after the business ethics movement of the past decade.
(4) Philanthropic Responsi-bilities: Philanthropy incorporates those corporate movements that the society expects. This covers actively engaging in acts or programmes to encourage human welfare or goodwill.
The International Standards Organisation (ISO) has developed an international standard for the social responsibility of private (corporate) and public sector organisations. There are seven core subjects of social responsibility that are established by the ISO 26000; all of which are parts of most current CSR definitions: (1) Organisational governance, (2) Community involvement and development, (3) Human rights, (4) Labour practices, (5) The environment, (6) Fair operating practices and (7) Consumer issues. These seven core subjects have a significant role to play in stakeholder management and ethical behaviour. Simply, the purposes of private and public sector organisations are different. There are so many factors that would be dangerous to each group that are absent. Even then there may be some commonalities between them.
The CSR is a business system that increases the betterment of its (a) stakeholders by enabling (b) production and distribution of wealth in a process of implementation and integration of (c) ethical systems and (d) sustainable management practices.
The purpose of the corporation is to produce and distribute wealth to their stakeholders. This proposed situation is not similar with other definitions. Because most of them generally use the terms such as profit, economic development or commercial success to describe the financial requirement for CSR. The above approach requires that the generated wealth must be distributed to stakeholders, so society will get a direct benefit. There are some societal function of the corporation; provide financial resources to stakeholders in the form of wages, the acquisition of materials from suppliers, a return on capital and paying taxes. For corporate social responsibility, the production and distribution of wealth is so essential that without it, the corporation cannot exist. The declining of profits, market share and competitive advantage can be happen in a corporation that does not engaged sustainable management practices. Ultimately it influences their ability to fulfill the purpose of the corporation. The different parts of the CSR system are clearly interrelated. The intention of making profit of a corporation is contentious and corporations that do not wish to engage in CSR can focus solely on profits. A more relevant purpose of the corporation is to produce and distribute wealth for the betterment of its stakeholders. It is agreed by the leading economists and management experts that profits alone are not acceptable purposes of a corporation. It is clearly benefited by the stakeholders of the world's societies, when corporations are producing and distributing wealth.
Stakeholder (e.g. investors, lenders, employees, consumers, nongovernmental organizations, debtors, suppliers and government) benefit is a critical component for effective CSR. The decisions of the corporation generally have a direct impact on one, many, or all of the stakeholders. When a corporation makes decisions that completely benefit investors, other stakeholder groups are affected. Managing stakeholders is a complicated and necessary part of the CSR system globally, because these can bring rewards to organizations that effectively manage those relations. In general, stakeholders affect, or in turn, are affected by the corporation. Shareholders become necessary when corporations reinvest profits into growing the business, even if it is necessity of expanding the number of stakeholders. It is important to establish better management practices and improved conditions for workers when the organizations become more complex. Two primary models guide stakeholder management. These are strategic stakeholder management and intrinsic stakeholder commitment. Strategic stakeholder management is led by improving financial performance by maintaining positive interactions with stakeholders. Intrinsic stakeholder commitment assumes that an organization engages in stakeholder relations to improve financial performance as a moral commitment.
The definition of ethics is often noticed as subjective. As a fact the conception of ethical systems presents a big challenge. Each group, within this system is expected and obligated to perform in a method steady with their roles. This creates controls within each group that influences ethical behaviour. When ethics are breached, the consequences for stakeholders, wealth production and distribution and corporate sustainability can be severely impacted. The recent financial crisis is largely based on poor ethical decisions because the financial institutions were generally operating in the legal framework of governments, but not behaving ethically. Thus stakeholders were adversely affected, like; consumers lost their homes, employees lost their jobs, suppliers' profits decreased, and governments lost essential tax revenue. The corporations operating globally need ethical systems.
In a corporation sustainable management practices is important because of time factor in taking decision has impact on others. While taking any decision that harms the environment, the corporations alter their business strategies to increase profits. It happens very often when they fail to innovate. There should be some issues, like; damaging stakeholder relations, financial losses to the firm and engaging in immoral practices.  These will have impacts on the organization's ability to employ a sustainable business model to produce and distribute wealth. Sustainable management practices broaden the space of the definition of sustainability since it relates to the corporation by adding other management principles. The key concept of environmental practices, management strategies, long-term financial management and innovation provide clarity and an ease of application for businesses seeking a comprehensive CSR strategy. Corporations are struggling with how to implement sustainable strategies. Corporations need to think about the long-term impacts of their operations on the society and how to remain in business for centuries to keep sustainable.
CSR is meant to benefit an organisation's mission. It is a guideline for the company which it upholds to its consumers. CSR is a business system with the goal of taking responsibility for the company's activities and also inspire a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public who may also be considered as stakeholders.
The writer is currently an MBA                student at Ashland University,                            [email protected]