CSR activities are much popular activities now of any business organizations?
In the present context most of the organizations are focusing
on the CSR activities. In early stages of industry revolution organizations
were interested in making more profitability for the organization. Profit
maximization was the ultimate objective of the organization. In 1980, most of
the organizations were trying to give more attention towards the corporate
social responsibilities. In that era business and social interests came closer
and organizations became much responsive to its stakeholders. In 1990s CSR idea
was universally approved. And after that in early 2000s the CSR idea was
included in the strategy formulation of the organizations and considered this
concept as a more important factor for the organization.
In the current context the customers have more choices
than the past. Therefore, customers have the choice to choose between the
competitors. Therefore, organizations have to differentiate themselves with the
other competitors. Customers make decisions based on how much good a
corporation is doing outside of the workplace and how they are positively
impacting their community.
Most of the organizations try to build up their public
image through the CSR activities. Buy undertaking CSR activities, they believe
that customers perception towards the organization will be positive. According
to a study by Cone Communications, 9 out of 10 consumers would refrain from
doing business with a corporation if there existed no corporate social
responsibility plan. Therefore, this means that the customers are more willing
to purchase the products from the organizations that are helping the community
or doing the CSR activities.
Modern organizations are now moving towards the green
concept. This also could be taken as one CSR initiative of the organizations.
Customers would prefer to do business with organizations which are
Another importance of CSR activities is positive
workplace environment. The employees would prefer to work for an organization
which has positive image among the general public. The employees demand their
company to be socially responsible. Around ten years ago, it is considered good
if a company does not harm the environment and the community. But now the
things have changed. Now the employees demand the company to do good for the
society. According to a study done by Forbes, 32% of employees would seriously
consider leaving their job if their company gave no / little money to charity. 65%
would seriously consider leaving their job if their company harmed the
environment and 83% would seriously consider leaving their job if their
employer used child labor in sweatshop factories. So, this shows that CSR is a
very important part of any organization. And not only the outside parties,
employees are also much concern about the CSR activities done by the
Customers will expect better business practices form
the organizations and they are willing to do more to do business with those organizations
that are socially responsible. According to a study it shows that a customer is
willing to drive extra 11 minutes to purchase the product or get a service from
an organization which is practicing CSR. And also, customers will adjust their
buying behavior accordingly from average companies to socially responsible
companies. According to the same article by Forbs, more than 88% of consumers
think companies should try to achieve their business goals while improving
society and the environment and 83% of consumers think companies should support
charities and nonprofits with financial donations.
Another reason for the popularity of CSR activities is
that it creates competitive immunity. This means that the CRS makes the business
more sustainable in the long run. According to Harvard business review.
is about choosing a unique position – doing things differently from
competitors… These principles apply to a company’s relationship to society as
readily as to its relationship to its customers and rivals”. Furthermore “CSR
can be much more than a cost, a constraint, or a charitable deed—it can be a
source 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.
argue that the CSR gives long term profitable to the organizations. Using the
literature of research articles of CSR comment the above statement.
The organizations perform CSR activities not just for
the wellbeing of the society. They expect a positive return for the
organization form those activities. There is an argument that the CSR will lead
to long term profitability of the organization. Therefore, it would be
appropriate to analyses an organizations CSR activity and the profitability for
a longer time. Below I will discuss the CSR initiatives taken by Pepsi -Cola
and the impact on the organizations from those CSR activities. Pepsi refresh
project was one of the CSR initiatives taken by Pepsi.
The Pepsi Refresh Project was an online platform that
launched in 2010 that gave individuals and organizations the opportunity to submit
proposed solutions to local community problems and receive grant money from
PepsiCo for those ideas. But this new initiative could not last long and it had
to be abandoned in 2012 due to the loss of share price, reduction in sales and
reduction in the profitability of the organization.
In the other hand, there are companies which were able
to increase the profitability through CSR activities. For an example “Dutch
Bangla Bank Ltd” was able to increase the profits using CSR activities.
According to statistical analysis done by “Stamford
University Bangladesh” it is shown that corporate social responsibility
expenditure on profitability in DBBL which revealed (Beta= 0.953, p<.01). This means that for every unit change increment the CSR expenditure will lead to .953 or 95.3% increase in the profit after tax of the company. According to the analysis it it clear that that the CSR activities has a positive impact on the profitability of the organization. Therefore, this shows that expenditure on the CSR activities will lead to short term and the long-term profitability of the organizations in the banking sector. The study concludes that there is a significant relationship between CSR and profitability. What are the other benefits that can be expected by implementing CSR activities? It encourages both professional and personal development Providing the opportunity for employees to be involved in a company's socially responsible activities can have the benefit of learning new skills, which can in turn be applied in the workplace. By undertaking activities outside of their usual work responsibilities, employees have the chance to contribute to work and causes that they might feel passionate about, or learn something entirely new which can help enrich their own perspectives. By supporting these activities, organizations encourage growth and support for employees. It enhances relationships with clients Having strong corporate social responsibility framework will lead to strengthen the relationship between clients and the organization. This will also help in developing new relationships with clients which could generate more profit for the organization. The ability to have positive impact to the general public Keeping social responsibility front of mind encourages businesses to act ethically and to consider the social and environmental impacts of their business. In doing so, companies can avoid or mitigate negative impacts of their business to the community. In some cases, companies will find ways to make changes in their services or value chain that delivers benefits for the general public. Cost Reductions CSR activities does not always cost money for the organizations. 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 and retention · Implementing energy savings programs · Managing potential risks and liabilities more effectively · Less investment in traditional advertising Long term future for your business Business 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 capital By undertaking CSR activities, it will be easier for an organization to raise capital for the company requirements. The company reputation will increase and that will lead to develop the investor confidence towards the organization. Differentiate the CSR concept in developed and developing world? The CSR activities in developing and developed countries could be different. Visser (2008) stated four reasons why CSR cannot be treated same in developed and developing countries. Those are as follows. 1.The economies of developing countries are the most rapidly expanding and hence the most lucrative markets for business. 2.Social and environmental crises in developing countries 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 impact in developing countries (both positive and negative). 4.The challenges of CSR practising in developing countries are distinctively different from the ones in the developed world (Visser, 2008). There is no doubt that both the view on and the practicing of CSR in developing countries are very different from CSR seen in the resourceful developed countries. "Visser" developed ten drivers for CSR in Developing countries. 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 are more relevant than the internal drivers. Furthermore, Visser (2008) found out that CSR in developing countries tends to be less institutionalized and that CSR codes and standards are less commonly integrated in procedures of companies in developing countries. The concept of CSR mainly originated from the developed countries. Standardization has a great impact on the development of CSR around the world. There are various ways of standardizing CSR and several different organizations that design standards. Many developed countries have governmentally supported standardization (e.g. Danish Standard, DS). Often, these national standardization organizations translate and modify standards that have been developed on an international level by international standardization organizations. Most of the developed countries are more focused on the child labor. There have been huge arguments regarding the use of child labor in the recent past. The developed world is in many ways privileged to have an institutionalized society where CSR can continue to develop in many areas. However, the communication and the useful involvement may lack understanding and ability to understand another starting point than the one we have in the Western world. The background of developing countries is often far from the one of developed countries and therefore requires a different cultural view and a different basis. What is your idea of this differentiating? There could be several reasons for the differentiation of CSR activities in developed and developing countries. One of the main factor is the culture and the traditional differences between developed and developing countries. The way people see the CSR activities done by organization could be different. And, the CSR activities done by developed countries may not directly beneficial to implement in the developing countries. The CSR activities should be tailor maid for each country and it should suit the requirement of community which the organization operates. In the other hand the issues addressed through CSR activities in developing countries may not even exist in the developed countries.