Practising CSR: Magic of doing well by doing good

Md. Amlan Jahid Haque

BUSINESS enterprises are the economic institutions through which people go on producing and distributing goods and services and develop the financial structure in support of land, labour, capital and technology. Some people argue that widening the interpretation of social responsibility will undermine any economy by detracting from the basic mission of business: to earn profits for owners. Other argues that the only reason corporations put in place social projects is utilitarian; that they see commercial benefits in raising their reputation with the public or with the government.
Advocates of corporate social responsibility (CSR), however, would suggest a number of reasons why self-interested corporations, solely seeking to maximise profits are unable to advance the interests of society as a whole but the debate over the basic purpose of the corporation is long standing. Those who embrace the classical economic model contend that business's social responsibility is to maximise the profit for stockholders. Proponents of the socio-economic model disagree, saying that business has responsibility, above and beyond making profit, to improve the general quality of life. The arguments for corporate responsibility go like this: businesses are members of society with resources and motivation to improve society and avoid government regulation. Those arguing against call for profit maximisation because businesses are primarily economic institutions run by unelected officials who have enough power already.
Generally, CSR is a set of management practices that ensures the corporation maximises the positive impacts of its operations on society in a manner that meet and even exceed the legal, ethical, commercial and public expectations. The World Business Council for Sustainable Development (WBCSD) defines CSR as ''the commitment of business to contribute to sustainable economic development, working with employees, their families and the local communities'' (WBCSD, 2001). For this reason the primary proposal of CSR is that business corporations have an obligation to work towards meeting the needs of a wider array of stakeholders.
In point of fact the term ''corporate social responsibility'' has gained prevalence in the last decade and the idea of CSR is not new. Since the 1950s at least, the expression ''social responsibility'' has been used to denote a firm's responsibilities to society (Carroll, 1999). Early definitions suggest that social responsibility begins where the law ends. More particularly, Carroll (1991) has argued that there are four basic corporate social responsibilities: economic, legal, ethical, and philanthropic. These four domains can be linked to key corporate social performance processes, such as environmental assessment, stakeholder management, and issues management (Wood, 1991); thus, CSR communicate to corporate social performance outcomes such as social impacts, programmes, and policies. So, corporate social responsibility embraces both policy and practice.
 A convincing argument behind why firms are motivated to invest in CSR programmes comes from the domain of stakeholder theory (Argandona, 1998; Freeman, 1984; Harvey and Schaefer, 2001; Post, 2003). Stakeholder theory suggests that organisational survival and success is contingent on satisfying both its economic (e.g. profit maximisation) and non-economic (e.g. corporate social performance) objectives by meeting the needs of the company's various stakeholders. Early research in the area of stakeholder management defines a stakeholder in an organisation as ''any group or individual who can affect or is affected by the achievement of the organisation's objectives'' (Freeman, 1984, p. 46). Primary stakeholder groups consist of shareholders and investors, employees, customers, suppliers, public entities such as governments or other public organisations that set laws and govern economic commerce (Clarkson, 1995), and trade associations and environmental groups (Donaldson and Preston, 1995).
In summary, stakeholder theory suggests that firms are motivated to broaden their objectives to include other goals in addition to profit maximisation. Based on this theory, many companies embrace a Corporate Social Responsibility programme as a way to promote socially responsible actions and policies, and effectively respond to stakeholder demands (Maignan and Farrell, 2004). Motivation for satisfying stakeholder demands stems from the fact that addressing stakeholder needs can be correlated with a firm's survival, economic well-being, competitive advantage, and the development of trust and loyalty among its targeted customers (Mitchell et al., 1997). While ample facts exists supporting the idea that companies that invest in CSR will achieve positive benefits across all stakeholder groups, this paper proposes that companies can maximise consumer stakeholder response from CSR programmes in the marketplace by carefully identifying which categories of CSR either affect or are noticed by consumers the most. By understanding these connections, managers can adopt a specific category of CSR programme, contingent on the desired response from the consumer stakeholder group.
Organisations which are serious about social responsibility must ensure that their efforts are producing the desire benefits. Essentially this requires applying the concept of control to social responsibility. Many organisations now require current and new employees to read their guidelines or code of ethics and then sign a statement agreeing to abide by it as charity begins at home.
 Now days CSR is the idea that management has broader responsibilities than just making profit. A harsh interpretation holds that an action must be voluntary to qualify as socially responsible. Accordingly, reluctant submission to court orders or government coercion is not an example of social responsibility.
In the short run, proactive social responsibility usually costs the firm money. But, according to the notion of enlightened self-interest, both society and the company will gain in the long run. Research indicates that corporate philanthropy actually is a profit-motivated form of advertising. The future looks promising for corporate social responsibility because of board acceptance of the concept by present and future executives.
According to a survey by Environic International, conducted in 20 countries in each of which 1,000 people were canvassed, found that in the US, in which 61% of people own shares, 25% of respondents  said that they bought and sold share on the basis of a company's social performance. This was the same proportion in Canada, Japan, Britain and Italy. The survey also found that in the wealthier countries, CSR made greater contributions to corporate reputations than brand image; in developed countries, CSR-related activities account for 49% of company image compared to 35% for brand image and only 10% for financial management. Companies that ignore social responsibility place market share at risk--42% of North American consumers report having punished companies they regard as irresponsible by not buying their products.
Focusing Asia by contrast, there is far less pressure with only 8.o% of consumers boycotting irresponsible companies. The survey found that the most socially demanding  markets are the US, Canada, Mxico and Britain; the second tier countries include Argentina, European Union(EU) members-states, South East(SE) Asian countries, France, Turkey, Brazil and Chile; the least demanding are India, Russia  and Nigeria.
Therefore, reason for social responsibility is profit itself. Organisations that make clear and visible contributions to society can achieve enhanced reputations and garner market for their products. Thus 'do well by doing good'; in other words, it can make a profit and make the world a better place at the same time.
The writer is Md. Amlan Jahid Haque Lecturer, School of Business, Independent University, Bangladesh