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To What Extent Is Corporate Social Responsibility (Csr) Beneficial To A Company’s Performance

1337 words - 6 pages

Corporate social responsibility (CSR), which was first suggested in the late 1960s, is an idea to urge companies not only to focus on maximizing the profits of shareholders, but also the interests of other stakeholders like suppliers and employees (Wong, 2014). Issue about whether adopting CSR can enhance companies’ performance is still controversial. However, it is becoming more and more popular for companies to carry out different types of CSR measures since it is being widely believed that practicing CSR is beneficial to corporations’ performance. In this essay, aspects including financial performance, employees’ commitment, community relation and companies’ efficiency, which are ...view middle of the document...

However, research done by Baron, Harjoto and Jo in 2009 (as cited in Robins, 2011) suggested that even though CSR and corporate financial performance generally had a positive correlation, this correlation was weak. Despite the extent that CSR influence on financial performance may be insignificant, it is still believed that CSR in general can improve corporate performance by having a positive correlation with companies’ financial performance.

Secondly, adopting CSR practices is suggested to have a positive impact on boosting employees’ commitment towards a company, which in turn improves the performance of it. Committed employees have long been recognized as one of the most critical factors for the success of a company (Ali, Rehman, Ali, Yousaf & Zia, 2010). According to the study done by Ali, Rehman, Ali, Yousaf and Zia (2010), it revealed a positive correlation between CSR actions practiced by companies and employees’ commitment. It is also suggested by Kowske (2011) that employee engagement among socially responsible corporations was four times higher than those which do not adopt CSR policies. By encouraging employees’ commitment, their sense of belongings to companies would be increased. For example, several corporations in Pakistan encouraged their workers to engage in rehabilitation of earthquake victims in 2005. It was later reported by researchers that these actions have built a great sense of proud and belongingness among the staffs (Ali et al., 2010). Alongside the above example, Ford Motor Company has sent employees to build homes for the needy in Detroit, while workers of Samsung Electronics are required to join the firm’s teams of volunteers (Kim, Lee, Lee & Kim, 2010). Getting involved in socially responsible activities allows employees to find fulfillment since they can witness their contributions to the society. People generally are more committed to their work when they believe what they are doing is meaningful. A high degree of employees’ commitment could motivate employees to work harder for the companies, which probably leads to better performance of firms.

Furthermore, CSR practices are beneficial for building good relationships between corporations and communities. Having positive relations with communities is essential in building up corporate reputations, which could believably promote the growth of organizational performance. Good reputations often generate extra returns by inhibiting the mobility of competitors within a business field (Caves & Porter, 1977; Wilson, 1985 as citied in Fombrun & Shanley, 1990). Having the image of being socially responsible can often boost the sales of companies as well. According to the survey done by Havas Media Lab, more than half of the interviewees would buy products from socially responsible companies so as to reward them, while 53% of them were even willing to pay a 10% premium for products from those companies (Levick, 2012). Nowadays, people not only care about the quality of...

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