This paper discusses in details what the corporate social responsibility is and gives its historical background. Corporate social responsibility is an important aspect any organization whether small, medium or large should undertake. Taking an organization as a system, corporate social responsibility provides an avenue where the organization interacts with its environment. This involves the customers, suppliers, potential employees, investors, competing organizations, other organizations not in the same sector and stakeholders outside the organization. The first part of this research provides limelight of the corporate social responsibility with an intension to get an in-depth understanding of the concept. The second part of this research explores the historical background of the corporate social responsibility with an intension to know when and how the concept came into being and its importance to the organization and other relevant parties.
What is corporate social responsibility?
Corporate social responsibility helps organizations to define and play their roles in the society by adhering to their social and ethical standards as defined in their business’ guiding principles (Lindgreen & Swaen, 2010). In addition, it helps organizations get a chance of interacting with the society to help and raise social status of the people. Some organizations define their code of conduct and responsibility they plan to deliver to the society around them.
Corporate social responsibility as argued by Sweeney and Coughlan acts as a communication link between the organization, the consumers and other stakeholders. This is done through the annual reports and the organization websites (Lindgreen & Swaen, 2010). Annual reports are displayed to the public through the media and the websites are free to be viewed by any interested party.
While the definitions of corporate social responsibility vary, it is generally defined as those actions taken by organizations regarding the employees, communities and the environment surrounding them. The management defines the extent to which they participate in such actions and may go beyond the primary functions of the firm (Barnea & Rubin, 2010). A manufacturing firm for example may participate in the feeding programs of the hungry in the society despite their principle mandate being not in the community social work. What the firm does is aligned to the social values. This is seen in the company’s websites, brochures, newsletters, consultancies and professional associations. Organizations spend a lot of their income in CSR activities. Responsibility Pays and companies spend many of their resources in the social programs than in any other area of operation (Barnea & Rubin, 2010).
Historical background on corporate social responsibility
In the past decades, different scholars have defined corporate social responsibility differently. CSR has evolved in terms of its meaning and the impact it has on the organizations behavior. This paper therefore traces evolution of CSR and the impact it has had on organizations. CSR has evolved from the last century in two areas (Lindgreen & Swaen, 2008). In terms of the researchers’ arguments, CSR has moved to the discussion of the term in line with the firm’s performance from the ethics-based arguments and the social effects of CSR to an organizational-based movement (Robert & Rosamaria, 2011). It is evident that CSR in any organization is geared towards improving the performance of the firm.
In the 1950s and 1960s, the assertion is that social responsibility of the businesspersons is to follow the core values of the society. Their business operations are dictated by the societal norms and culture where managers should be concerned with their social responsibilities. The business goals and objectives should be set towards achieving the public good and ensure that the society is stable, strong and peaceful (Rosamaria, 2011). Managers of the organization should take up the responsibilities towards the society and not be limited by the economic and legal activities obliged to them.
Discussions of social responsibility in the 1970s and 1980s changed. Milton Friedman asserts that social functions are allowed in an organization but should be those that bring benefit to the organization in terms of adding profits. He accepted that the laws and regulations governing the business market should be free to allow firms engage in those social responsibilities that adds value in the end.
In this decade, there is a move from the normative theoretical models to a model where firms are allowed to pursue their positive self-interests (Robert & Rosamaria, 2011). Ackerman in 1973 asserts that organization should take up those CSR activities that do not conflict with the interests of the organization.
In 1990s up to the 21st century decades, there has been a wide acceptance of CSR activities by all the sectors ranging from the public to private sectors, community based to the faith based organizations, local, regional, national and the international bodies. Social responsibilities have positive consequences to the stakeholders and society as well as improving the performance of the firm. Communication link between the organization and its environment has been fostered by the rise in the use of internet and related information communication technologies.
PriceWaterhouseCoopers did a survey on the financial implications of CSR to a firm in 2005 and they found out that more than seventy percent of the top management employees globally believe that CSR plays a very important role in the business profitability. Those firms are using CSR activities to reach the consumers and enhance close interaction with them. It is forming part of the business strategy in getting more income (Robert & Rosamaria, 2011).
Firms nowadays have adopted the new principles of organizations behavior and culture. These rules are geared towards satisfying the shareholders’ interests and the society. Rules of transparency, sustainability provision, partnership with the community and the varied principles and standards have been formulated to encompass the corporate social responsibility.
Researchers have shown that large corporations are involved in corporate social responsibility. However, little research has been done in the small and medium enterprises because of the assumption that they have local and limited market reach. Most of the research done on CSR focus on large corporations and there is need to widen the scope to reach the small economies.
Most organizations both locally and internationally are engaged in the corporate social responsibility. Socially responsible organizations have been proved to achieve more in terms of financial performance than those that do not practice. There has been an evolution in the views and adoption of CSR by firms. This is most especially in the large public corporations. The researchers have viewed the trend in the evolution of corporate social responsibility as a move from its effects on the society to its effects on the organizational performance and the move from the arguments based on the CSR theories to the performance-based studies.
Barnea, A. & Rubin, A. (2010). Corporate social responsibility as a conflict between shareholders. New York: Springer.
Lindgreen, A. & Swaen, V. (2010). Corporate social responsibility. London: British Academy of Management.
Robert, C. & Rosamaria, C. (2011). Historical background of corporate social responsibility. Salamanca: University of Salamanca.