WhyCSR activities are much popular activities now of any business organizations?In the present context most of the organizations are focusingon the CSR activities. In early stages of industry revolution organizationswere interested in making more profitability for the organization. Profitmaximization was the ultimate objective of the organization. In 1980, most ofthe organizations were trying to give more attention towards the corporatesocial responsibilities. In that era business and social interests came closerand organizations became much responsive to its stakeholders.
In 1990s CSR ideawas universally approved. And after that in early 2000s the CSR idea wasincluded in the strategy formulation of the organizations and considered thisconcept as a more important factor for the organization.In the current context the customers have more choicesthan the past.
Therefore, customers have the choice to choose between thecompetitors. Therefore, organizations have to differentiate themselves with theother competitors. Customers make decisions based on how much good acorporation is doing outside of the workplace and how they are positivelyimpacting their community.Most of the organizations try to build up their publicimage through the CSR activities. Buy undertaking CSR activities, they believethat customers perception towards the organization will be positive. Accordingto a study by Cone Communications, 9 out of 10 consumers would refrain fromdoing business with a corporation if there existed no corporate socialresponsibility plan. Therefore, this means that the customers are more willingto purchase the products from the organizations that are helping the communityor doing the CSR activities.
Modern organizations are now moving towards the greenconcept. This also could be taken as one CSR initiative of the organizations.Customers would prefer to do business with organizations which areenvironmental friendly.Another importance of CSR activities is positiveworkplace environment. The employees would prefer to work for an organizationwhich has positive image among the general public. The employees demand theircompany to be socially responsible. Around ten years ago, it is considered goodif a company does not harm the environment and the community.
But now thethings have changed. Now the employees demand the company to do good for thesociety. According to a study done by Forbes, 32% of employees would seriouslyconsider leaving their job if their company gave no / little money to charity. 65%would seriously consider leaving their job if their company harmed theenvironment and 83% would seriously consider leaving their job if theiremployer used child labor in sweatshop factories.
So, this shows that CSR is avery important part of any organization. And not only the outside parties,employees are also much concern about the CSR activities done by theorganization.Customers will expect better business practices formthe organizations and they are willing to do more to do business with those organizationsthat are socially responsible. According to a study it shows that a customer iswilling to drive extra 11 minutes to purchase the product or get a service froman organization which is practicing CSR. And also, customers will adjust theirbuying behavior accordingly from average companies to socially responsiblecompanies. According to the same article by Forbs, more than 88% of consumersthink companies should try to achieve their business goals while improvingsociety and the environment and 83% of consumers think companies should supportcharities and nonprofits with financial donations.Another reason for the popularity of CSR activities isthat it creates competitive immunity. This means that the CRS makes the businessmore sustainable in the long run.
According to Harvard business review.”Strategy…is about choosing a unique position – doing things differently fromcompetitors… These principles apply to a company’s relationship to society asreadily as to its relationship to its customers and rivals”. Furthermore “CSRcan be much more than a cost, a constraint, or a charitable deed—it can be asource of opportunity, innovation, and competitive advantage “CSR activities also inspire innovation within the organization.Therefore, this will lead to longer term sustainability of the organization.
Peopleargue that the CSR gives long term profitable to the organizations. Using theliterature of research articles of CSR comment the above statement.The organizations perform CSR activities not just forthe wellbeing of the society. They expect a positive return for theorganization form those activities. There is an argument that the CSR will leadto long term profitability of the organization. Therefore, it would beappropriate to analyses an organizations CSR activity and the profitability fora longer time.
Below I will discuss the CSR initiatives taken by Pepsi -Colaand the impact on the organizations from those CSR activities. Pepsi refreshproject was one of the CSR initiatives taken by Pepsi.The Pepsi Refresh Project was an online platform thatlaunched in 2010 that gave individuals and organizations the opportunity to submitproposed solutions to local community problems and receive grant money fromPepsiCo for those ideas. But this new initiative could not last long and it hadto be abandoned in 2012 due to the loss of share price, reduction in sales andreduction in the profitability of the organization.In the other hand, there are companies which were ableto increase the profitability through CSR activities. For an example “DutchBangla Bank Ltd” was able to increase the profits using CSR activities.According to statistical analysis done by “StamfordUniversity Bangladesh” it is shown that corporate social responsibilityexpenditure on profitability in DBBL which revealed (Beta= 0.953, p<.
01).This means that for every unit change increment the CSR expenditure will leadto .953 or 95.3% increase in the profit after tax of the company. According tothe analysis it it clear that that the CSR activities has a positive impact onthe profitability of the organization.
Therefore, this shows that expenditureon the CSR activities will lead to short term and the long-term profitabilityof the organizations in the banking sector. The study concludes that there is asignificant relationship between CSR and profitability.Whatare the other benefits that can be expected by implementing CSR activities?It encourages both professional andpersonal developmentProviding the opportunity for employees to be involvedin a company’s socially responsible activities can have the benefit of learningnew skills, which can in turn be applied in the workplace. By undertakingactivities outside of their usual work responsibilities, employees have thechance to contribute to work and causes that they might feel passionate about,or learn something entirely new which can help enrich their own perspectives. Bysupporting these activities, organizations encourage growth and support foremployees. It enhances relationships with clientsHaving strong corporate social responsibility frameworkwill lead to strengthen the relationship between clients and the organization.This will also help in developing new relationships with clients which couldgenerate more profit for the organization. The ability to have positive impact to thegeneral publicKeeping social responsibility front of mind encouragesbusinesses to act ethically and to consider the social and environmentalimpacts of their business.
In doing so, companies can avoid or mitigate negativeimpacts of their business to the community. In some cases, companies will findways to make changes in their services or value chain that delivers benefitsfor the general public. Cost ReductionsCSR activities does not always cost money for theorganizations. If it is done right, the organization can save lot of money.Below are the ways that an organization can reduce cost through CSR activities.· More efficient staff hire andretention · Implementing energy savingsprograms · Managing potential risks andliabilities more effectively · Less investment in traditional advertising Long term future for your businessBusiness are done on the going concern concept. Therefore,organizations will last longer periods of time.
By undertaking CSR activities,an organization can achieve long term sustainability.Easier access to capitalBy undertaking CSR activities, it will be easier foran organization to raise capital for the company requirements. The company reputationwill increase and that will lead to develop the investor confidence towards theorganization. Differentiatethe CSR concept in developed and developing world? The CSR activities in developing and developedcountries could be different. Visser (2008) stated four reasons why CSR cannotbe treated same in developed and developing countries. Those are as follows.
1.The economies of developing countries are the mostrapidly expanding and hence the most lucrative markets for business.2.Social and environmental crises in developingcountries are often most acutely felt.3.
Aspects as globalization, economic growth,investment and business activities are likely to have the most dramatic social and environmental impactin developing countries (both positive and negative).4.The challenges of CSR practising in developingcountries are distinctively different from the ones in the developed world(Visser, 2008). There is no doubt that both the view on and the practicingof CSR in developing countries are very different from CSR seen in the resourcefuldeveloped countries. “Visser” developed ten drivers for CSR in Developingcountries. Those are as below Internal Drivers· Cultural tradition· Political reforms· Socio economic priorities· Governance gaps· Crisis response· Market access External Drivers· International standardization· Investment incentives· Stakeholder activism· Supply chain According to the analysis, the external drivers aremore relevant than the internal drivers. Furthermore, Visser (2008) found outthat CSR in developing countries tends to be less institutionalized and thatCSR codes and standards are less commonly integrated in procedures of companiesin developing countries.The concept of CSR mainly originated from thedeveloped countries.
Standardization has a great impact on the development ofCSR around the world. There are various ways of standardizing CSR and severaldifferent organizations that design standards. Many developed countries have governmentallysupported standardization (e.g. Danish Standard, DS). Often, these national standardizationorganizations translate and modify standards that have been developed on aninternational level by international standardization organizations.
Most of the developed countries are more focused onthe child labor. There have been huge arguments regarding the use of child laborin the recent past. The developed world is in many ways privileged to have an institutionalizedsociety where CSR can continue to develop in many areas. However, thecommunication and the useful involvement may lack understanding and ability to understandanother starting point than the one we have in the Western world. Thebackground of developing countries is often far from the one of developed countriesand therefore requires a different cultural view and a different basis.
Whatis your idea of this differentiating?There could be several reasons for the differentiationof CSR activities in developed and developing countries. One of the main factoris the culture and the traditional differences between developed and developingcountries. The way people see the CSR activities done by organization could bedifferent. And, the CSR activities done by developed countries may not directlybeneficial to implement in the developing countries. The CSR activities shouldbe tailor maid for each country and it should suit the requirement of communitywhich the organization operates. In the other hand the issues addressed throughCSR activities in developing countries may not even exist in the developedcountries.