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Benefits And Costs Of Adopting A Csr Strategy

1776 words - 7 pages

Organisations, governments and activists currently face the challenge in how to respond to the growth of Corporate Social Responsibility (CSR). CSR has now grown swiftly and relatively smoothly over the last two decades as the numbers of companies take up the standards of CSR in attempt to make their operations more moral ( Hancock, p27, 2005). CSR originated in the year1953 with the publication of Bowen's book "Social responsibilities of Businessmen" (Keller, 2003). CSR can be defined in various ways, it can be described as operating an organisation or a business in a way that meets or exceeds the ethical, legal, commercial and public expectations that a society expects from the business. CSR is closely connected with the principles of sustainable development in declaring that business organisation should be obliged to make decision not only based on its financial and economic factors but also on the social and environmental factors. CSR could be in various forms such as, healthcare initiatives, and community relations, preservation of cultural heritage and volunteer assistance programs (Theaker, 2001). The philosophy of CSR is to give back to the society, what the organisation had taken from it to achieve its objectives.There are two opposing views of social responsibility. On one hand there is the classical view and on the other hand there is the socioeconomic view. The classical view that is purely economic, states that the management's only social responsibility is to work on maximising the profits. At the social level, classical view identifies the managers as individuals responsive to market conditions and responsible to follow the laws and the societal norms (Brown, p15, 2005). Economist Milton Friedman adds that a corporation's principle goal is also to obey the laws of the countries within which it works. However, some people have different views on why corporations take social responsibility. There view is that, the corporation gets commercial benefit by raising their reputation with the society and the Government. Friedman also argues that when managers make decisions to spend the organisation's resources for social responsibility, they are raising the costs of the organisation and therefore reducing the profits (Robbins et. al., 2006). However, the costs can be passed on to the customers by raising the prices or the costs can be contributed by the shareholders by reducing the organisation's profit margin.The socioeconomic view states that management's social responsibility is not only making profits but it goes beyond to include protecting and improving the society's welfare. The supporters for the socioeconomic view debate that managers should be looking forward to maximise the financial returns over the long run and to do that, they must take on social responsibility and its costs (Robbins et. al., 2006). The socioeconomic view argues that the role of recent modern organisations has changed and that society expects the organisation...

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