Corporate Social Responsibility
I had the good fortune of growing up in Jubail Industrial City, my father was working for Sabic, and in Jubail, Sabic has done a wonderful job educating the community in the part an organization plays in the community, whether it is a campaign to clean the beach, or a campaign against speeding, everyone is informed and involved.
To better explain the idea, let me start by defining it:
Social Responsibility is an ethical theory that an entity, be it an organization or individual, has an obligation to act to benefit society at large. Social responsibility is a duty every individual has to perform so as to maintain a balance between the economy and the ecosystems.
Corporate Social Responsibility (CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business) is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. In some models, a firm’s implementation of CSR goes beyond compliance and engages in “actions that appear to further some social good, beyond the interests of the firm and that which is required by law.”.
It is also said to be “the obligation of decision makers to take actions which protect and improve the welfare of society as a whole along with their own interests” (Carroll and Buchholtz, 2008, p.39)
Now that I am a part of a the working force, one of the most important aspects that attracts me in an organization is its Corporate Social Responsibility. I believe that it is the single best tool of marketing an organization and impacting the local community at the same time, and wherever I worked I tried to push the organization to do more.
According to Blowfield and Murray (2008, p.21), as taken from Carroll (1979), company CSR activities can be classified into the following four groups:
- Economic responsibility. The responsibility of private entities of offering products and services to the marketplace according to the needs of society in order to make a profit.
- Legal responsibility. Companies have to operate within the boundaries of law in order to achieve their aims and objectives.
- Ethical responsibility. Ethical responsibilities of businesses include the types of responsibilities that are important, but at the same time they are not covered by law e.g. fair-trade.
- Discretionary responsibilities. Company responsibilities in this form, like philanthropy initiatives are not necessarily expected by societies, but they are usually welcomed by societies and create positive image for the business.
This classification is also known as Carrol’s Pyramid of CSR and is best illustrated on the following figure:
Alternatively, CSR initiatives are classified by Kotler and Lee (2005) into six broad categories that can are illustrated on the following table:
|Type of CSR activity||Descriptions|
|Cause promotions||Resources spent by companies to promote a specific cause that benefits society in many levels such as eliminating poverty or fighting against child abuse|
|Cause –related marketing||A marketing campaign initiated by a business that highlights positive correlation between the amount of sales for the business and the amount of contribution to support a specific cause.|
|Corporate Social Marketing||Businesses promoting social causes such as healthy eating, caring about parents, quit smoking etc.|
|Corporate Philanthropy||This form of CSR involves businesses donating money or products of the company in substantial amounts in order to support specific causes.|
|Community volunteering||Businesses engaging their employees to work in a community sector for a specified number of hours on a voluntary basis|
|Socially responsible business practices||Engaging in fair trade when dealing with suppliers and sustaining ethical business norms and practices.|
Source: Kotler and Lee (2005)
Banerjee (2007) mention three important characteristics of CSR activities:
- CSR can be perceived as a company commitment formed and regulated through company policies and action.
- CSR activities engaged by businesses usually exceed law requirements
- CSR activities are voluntarily and cannot be enforced upon businesses by law.
Lepoutre and Heene (2006), on the other hand, divide CSR activities on the following seven main groups:
- Leadership, vision and values.
- Marketplace activities.
- Workforce activities.
- Supply-chain activities.
- Environmental activities.
- Community activities.
- Stakeholder engagement.
Approaches to CSR can be generally divided into four categories: passive, reactive, active, and proactive. Description of each category and associated behavior is illustrated on the following table:
|Passive||Problem solving||The company waits until there is pressure by the authorities and other stakeholders and then responds to their demands|
|Reactive||Risk minimisation||Potential ecological and social risks are prevented that may impair the value or the reputation of the company|
|Active||Innovation||The company realizes that corporate social responsibility offers strategic opportunities in the market. New products, services and technologies give rise to new business fields.|
|Proactive||Responsibility to stakeholders||The company takes into account existing needs, but also shapes sustainable ways of life and business together with its stakeholders.|
Source: Habisch, A., Jonker, J., Wegner, M. & Schmideper, R. (2005) “Corporate Social Responsibility Across Europe” Springer Publications