(course: Business in Sustainable society)
Business case of CSR
On the tracking thread toward understanding the concept and aspects of a sustainable business in this course, the inclusive wide concept of corporate social responsibility is an key approach which feeds sustainable development pattern. This paper aims to look at the CSR concept in relation to business case issue and argue the business case of CSR in different positive or negative perspectives.
Reflection on business case of CSR
Social corporate responsibility is the fashion of business world for the recent decade. Increasingly companies are getting involved with CSR and try to regulate themselves to the ethical standards and care about all the stakeholders namely environment, society,
Customers, employees rather than only the financial share holders perspectives and interests. This commitment to the CSR from the business managers -no matter under the pressure of groups or in the absence of pressure groups- has a contrast with the money making philosophy of business which requires maximation of profits. This is where the argument emerges and the business case of CSR is questioned. In fact debates on business case of corporate social responsibility is one the most controversial issues of CSR. The literatures and empirical studies haven’t come to a common agreement if there is a business case for the CSR or not. I think when the benefits of CSR goes only to the society rather that to the company or the business which is socially responsible, the business case of CSR would be under a question mark. In terms of profitability this fact justifies if managers are not interested in being socially responsible to some extent. From a classic approach, companies tendency to SCR is against the pure profitable logic of a business nature and it`s just a virtue. However the benefits of CSR such as good reputation in public or government is not deniable towards competitive advantage but still this approach doesn’t see CSR an positive effective mean to profitability. This is the old style of CSR which is mainly expressed by ”doing good to do good”. On the other hand the new style of CSR stating “doing good to do well”, focuses on the core concept of Triple bottom line which requires an equilibrium between financial, social and environmental factors to be sustained. (Vogel 2005) Sebhatu says the old style perspective believes that CSR can play a more important role to financial profitability rather looking at CSR as a virtue generator. CSR in new style is involved with the business model and a source to create market strategy and competitive advantage. This new style can help the companies to be responsible and profitable but it doesn’t solve the fundamental problem; the business case of CSR. Generally I think there are some areas that CSR can have a direct impact in terms of organizational benefits to get competitive advantage. Today that people are paying more attention to environmental and ethical issues being socially responsible can strongly have an effect on good reputation, loyal customer, morale employees (vogel 2005), decreasing risk of scandals and damaging the image of the company in public, law courts and Medias. In the same way not behaving responsibly has a negative direct effect on profitability of a company too (for instance the bad reputation of a company for using child labor decreases the customer quantity of the business dramatically). CSR practices are new business solutions ways leading to gain competitive advantages. But getting competitive advantage through CSR is not only a choice, rather an inevitable requirement for the 21 century companies for surviving. Sebhatu1 says the new business nature and requirement of embrace of money and morals has made business systems to change their business models towards CSR. The value orientation in business case of CSR argument is a key concept. If a company succeeds...
References: Edvardson B. And Enquist, B. (2008). Values-based service for sustainable Business. Routledge, UK.
Vogel, D J. (2005). Is There a Market for Virtue? THE BUSINESS CASE FOR CORPORATE SOCIAL RESPONSIBILITY California Management Review, 47(1), 55-67
Waddock S. And Bodwell C. (2004). Managing Responsibility: What Can Be Learned from the Quality Movement? California Management Review, 47(4), 19-45
Enquist, B. , Edwardson B. and Sebhatu. S.P. (2008). Corporate social responsibility for charity or for service business?. The asian journal of quality. 9(1), 25-37
[ 1 ]. Samuel Sebhatu, Lecture on the 20th of September 2010
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