Corporate Social Responsibility and Organizational Performance

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Introduction

In the 21st century, the operational context of modern companies has seen an increase in complexity and interconnectedness. If previously organizations could concentrate on the efficiency of their internal operations and the functioning of the supply chain, the present context introduces a different perspective. In today’s complex business environment, companies work under increasing social pressure. This pressure consists of high expectations in regards to the social and environmental responsibility of organizations. In other words, companies are required to demonstrate their commitment to modern values, green initiatives, and socially aware practicesIt is now difficult for corporate leaders of various markets to remain silent in the time of acute social issues. For example, the prominent movement called Black Lives Matter has rallied not only individual activists but also entire corporations, such as Nike. Giants of each industry have become public entities, meaning that they wield immense potential in terms of becoming role models helping their consumers navigate in the age of indeterminacy and global change. This paper proposes a research project that will examine the correlation between corporate social responsibility (CSR) and organizational performance.

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Problem Statement

In spite of the increasing attention paid to the concept of corporate social responsibility, it still remains a relatively recent phenomenon. Evidently, prior to the 21st century, important companies utilized their public influence potential in order to lead global campaigns for the common good. However, Agudelo et al. (2019) state that these instances were rather occasional, even sporadic at the time. Moreover, companies are said to have relied on social responsibility as the means of generating additional income. The contemporary leadership theorized that well-pointed demonstration of social awareness could instigate the purchasing intention of the customers.

Nevertheless, by the 21st century, such an approach could no longer be executed as the value of social responsibility increased dramatically. According to Freeman and Dmitriyev (2017), CSR has become an integral element of general corporate responsibilities to all stakeholders. At the same time, its perception remains highly generalized. In other words, the current body of knowledge varies from the common acceptance of CSR as a must to the discussion of specific cases. In addition, Galant and Cadez (2017) note that even the exact definition of CSR remains a reason for academic debate. It appears that further research is required in order to determine the exact effects of corporate social responsibility on organizational performance.

Research Objectives, Questions, and Hypotheses

The proposed research is going to ensure an in-depth examination of the discussed problem, aiming to evaluate the effect of corporate social responsibility on the performance of modern organizations. The primary research question of the current study is as follows: “How is social responsibility connected to organizational performance?” Such phrasing imminently suggests a qualitative direction for the subsequent study. Therefore, the primary objective of the process will relate to establishing a comprehensive conceptual framework that can serve as the foundation for further theoretic and practical research. This way, the study will focus on the key elements of the current body of knowledge, seeking to bridge the existing gap in specific areas of CSR. In addition, below are the primary hypotheses to be discussed within the framework of the envisaged study:

  • How does organization’s economic responsibility relate to Organizational Performance?
  • How do human rights responsibility relate to Organizational Performance?
  • How does environmental responsibility relate to Organizational Performance?

Significance of the Study

The importance of the proposed project is justified by the topical nature of the issue it undertakes to discuss. First of all, corporate social responsibility is a prominent concept of today’s business environment, Sánchez-Torné (2020) state modern companies face an unprecedent degree of competition across various sectors. This level of rivalry is enabled, most of all, by the continuous globalization that allows successful enterprises to expand their operations to new markets. In this adversarial environment, each company seeks to maximize its competitive advantage, and earning the trust of stakeholders through responsible practices is the main avenue.

Second, CSR is important not only for the external relations also for the proper functioning of all process within a company. Van Dick et al. (2020) refer to corporate social responsibility as an instrument of immense value that positively affects employees’ loyalty and commitment to the mission. Therefore, more profound research into the effect of CSR will provide modern business communities with a conceptual framework that will encompass all operational strata. In other words, leaders will be able to see the exact avenues of CSR’s influence on both external and internal aspects of their operational environment.

Research Scope and Limitations

The topical status of the research problem calls for rigorous studies within the discussed context. The proposed project is expected to address a considerable scope, as enabled by the envisaged qualitative design. More specifically, it will address three major directions of corporate social responsibility, which are economic, social, and environmental. Furthermore, the aforementioned aspects are to be reviewed on both critical levels from a managerial perspective: external primary stakeholders and internal commitment of workers. This way, the study will be able to yield a multi-layered conceptual framework that will reflect the complexity of the current business environment. However, while the proposed study is expected to advance the field to a considerable degree, it will require further elaborations in order to attain its full potential. The contextual environment of each market, industry, and country is different. Even though similar sets of factors may be observed in various scenarios, their exact distribution and degree of effect in specific settings are not be covered by a single study. Ultimately, the envisaged project is likely to become the conceptual foundation for future, more specialized studies.

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Review of the Literature

In order to make further advancement within the discussed research field, it is required to acquire a profound understanding of the current body of knowledge. In order to attain this objective, the proposed research incorporates a comprehensive review of existing literature aiming to synthesize the perspectives of prominent scholars. The selection process focused on relevant, recent sources published in the English language in reputable academic periodicals. More specifically, the researcher sought to synthesize the ideas from academic articles related by the common notion of corporate social responsibility. The sources examine the subject matter from various perspectives, adding new dimensions to the discussion. However, as the discipline in question evolves at a rapid pace, the selection criterion of recency eliminated the articles published earlier than within the past five years. This way, the synthesis of knowledge will reflect the current perception of the central concept by scholars and experts.

Evolution of CSR

While the envisaged project focuses on the most recent findings and new avenues in relation the CSR-performance nexus, the historical context retains its importance for the discussion. It is important to note that corporate social responsibility as a phenomenon is not a 21st-century invention. Agudelo et al. (2019) explore the evolution of CSR in business from an occasional tactic to the key strategy. The transformation of the concept has become a logical product of the shift in the paradigm of corporate thought. In the 20th century, profits were at the center of the managerial perspective. Therefore, any instances of socially-aware practices used to be related exclusively to the financial benefits of companies. A similar idea is expressed by Williams (2019) who wrote that the 20th-century CSR dichotomy of public good versus private revenues saw the predominant role of the second element. Overall, positive advancements in the area of social responsibility were not regular in nature until recently.

Closer to the turn of the century, corporate leadership saw an increase in positive social initiatives. Agudelo et al. (2019) explain this tendency by the emergence of true globalization and the development of new means of communication. Under these circumstances, reputation became a matter of paramount importance, as it was difficult to withhold any compromising details from stakeholders. As a result, the development of technology, combined with intense globalization and the rise of social awareness, placed organizations under public scrutiny. These transformations added an element of competitiveness and uncertainty to the operational context and instigated the growth of corporate social responsibility in its current state. As such, positive, socially aware practices took the form of an integral element of business. They were no longer a profit-making avenue, instead becoming a matter of survival. Nave and Ferreira (2019) confirm that CSR is the cornerstone of modern corporate strategy, as doing otherwise would put the organizational performance at risk. Ultimately, CSR has come a long way from occasional activism to one of the pillars of 21st-century business.

21st-century CSR: Definition and Interpretations

Following the major transformations across two centuries, corporate social responsibility has acquired the status of a central business strategy component. This role in the current environment has instigated active discussion surrounding the nature of the concept. Nevertheless, Galant and Cadez (2017) observe an evident gap in the body of knowledge. More specifically, scholars and experts struggle to devise a comprehensive definition of CSR that would suit all stakeholders. In the general sense, this concept implies that companies that profit from people are to make substantial efforts to give back to the society that provides their income (Chen et al., 2020). Therefore, a CSR implies a mutually beneficial exchange of money for effective social policies. In the capitalist economy, corporations possess the power to sway countless minds. Within the framework of CSR, companies are to exercise this power to promote positivity, equality, and respect through public support of related policies.

Economic Context

In spite of the evolution of corporate social responsibility discussed within the prevous sections, its economic aspect remains pivotal. Maqbool and Zameer (2017) state the effect of CSR in this context lacks conclusiveness in literature. However, the majority consensus appears to point toward the direct positive correlation between the presence of CSR practices and financial outcome of an organization. From one perspective, the primary stakeholders appreciate socially aware efforts, thus confiding in such companies. On the other hand, CSR leads to better results in terms of the market value. Nguyen et al. (2020) elaborate on this aspect, arguing that the primary role of corporate social responsibility is not to increase the cash flow but to reduce the corresponding risks. In other words, commitment to CSR sends a positive message to investors who become assured of an organization’s resilience to external perturbations. As such, socially responsible companies enjoy the benevolence of stakeholders and regulators, which lowers the risk of increased external pressure. The financial aspect of CSR can be summarized as the instrument of stability rather than growth per se.

CSR and Human Rights

As can be inferred from the overview of the concept evolution, the distinct characteristic of present-day CSR consists of its diversity. More specifically, while the economic side of it remain important, it is not the only factor at play. Socially responsible companies lay a considerable emphasis on human rights and recognition of various communities. Chen et al. (2020) presume that the external stakeholders are not the only group that experience the positive effect of CSR. As a matter of fact, experts theorize that such actions contribute to the higher levels of job satisfaction and commitment on behalf of employees (van Dick et al., 2020). Diversity is one of the key features of today’s society, as modern democratic values prompt global decision-makers to move past the paradigm of oppression toward equality.

Evidently, large companies employ people of different backgrounds and socioeconomic statuses. Certain groups among them have considerable experience with the violation of basic human rights due to the lack of recognition. If their employers take meaningful actions to counteract the disparities, these people are more likely to feel grateful, in return. For example, Nike refrained from neutrality and openly supported the Black Lives Matter movements through collaboration with Colin Kaepernick, one of its main activists. The management took serious risks by engaging in such heated debates, but they acquired unprecedented loyalty of African American communities in return (Kim et al., 2020). Human rights activism within the CRM paradigm is a two-way avenue that benefits the company from both external and internal perspectives. On the one hand, such campaigns send strong messages to the public in regards to the organization’s compliance with modern values. On the other hand, the company’s own workers become reassured, and this sense of recognition prompts them to be loyal and thankful to the employer (Shan et al., 2017). This way, better levels of people’s commitment shortly translate into better organizational performance.

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CSR and Environmental Policies

Another critical component of CSR relates to the environmental protection. Today’s policy-makers pay increasing attention to green initiatives, as the world’s leading experts discuss daunting prospects of climate change. Environmentally aware organizations execute this aspect of corporate social responsibility on various levels. First of all, many prominent players across industries have engaged in the continuous pursuit of sustainability. According to Ashrafi et al. (2018), it is possible to integrate this concept into the paradigm of CSR, as both notions are inherently connected. More specifically, the idea of corporate sustainability suggests that it is current residents’ obligation to ensure that their profit-making practices will not compromise the future of the next generations in terms of resource availability and environmental situation (Ashrafi et al., 2018). In way, sustainability is a manifestation of corporate social responsibility and the ultimate obligation of today’s corporate leaders to the future residents of the Earth. On the global level, companies achieve through substantial improvements in production and logistics that reduce emissions and waste while using recycled materials. In other cases, socially responsible firms promote green practices among their employees, while allocating financial support to meaningful initiatives.

Research Methodology

The presented findings reflect the current body of knowledge in regard to the implementation of corporate social responsibility in the 21st century. The synthesis of the literature can serve as the theoretical foundation of the proposed research initiative. However, the envisaged design implies a much broader scope of the literary analysis, as drafting comprehensive conclusions will require a considerable body of knowledge. Considering the aims and objectives of the study, a qualitative approach appears to be a suitable form of research. The design will be multi-layered and comprise three major stages, during which both theoretical and practical data is to be collected, processed, and analyzed.

Phase One

During the first phase of the envisaged project, the researcher is to expand the body of knowledge, upon which subsequent stages will rely. The systematic review will remain in line with the review of the literature presented above in terms of direction and theme. However, it will need to incorporate a much wider selection of the literature in order to reflect the comprehensive nature of the topic. As such, the selection criteria are likely to undergo certain transformations that will increase the number of pieces of interest. For example, the range of appropriate publication dates will be expanded from the last five years to the entire decade. Such a change will enable a more precise historical perspective on the evolution of CSR.

This way, the research will rely on contemporary pieces, making it easier to discern and trace any alterations in corporate and social thought. The selection of themes will see additional keywords, that will ensure insight into the way, in which CSR is implemented by specific industries. Overall, the systematic review sample for phase one is likely to comprise thirty to forty articles of value to the research. This stage of research will yield a solid theoretical foundation, allowing the author to outline the primary directions for subsequent elements.

Phase Two

Once the systematic review of the academic literature is completed, the research will advance to the next, more practice-oriented stage. Phase two implies a range of interviews in an attempt to add a practical dimension to the previous findings. The sample is to include primary stakeholders and employees of prominent companies from different spheres. Each participant will be invited to share his or her thoughts in regards to the execution of CSR in their particular industry and organization. At the current stage, the researcher envisages three groups of respondents – consumers, workers, and managers – from five key categories distinguished by the literary review.

In order to mitigate the influence of personal biases, each participant group will comprise three people, which will ensure the diversity of opinions. Accordingly, the total sample of stage two will include fifteen randomly selected people. The respondents will share their ideas of the past, present, and future of corporate social responsibility in their category. Considering the COVID-19 situation and for further convenience, the researcher will hold each interview in the online format. As this stage implies the participation of people, each respondent will sign an informed consent form, while possessing the full information regarding the aims, timelines, and procedures of the project. In addition, the participants will remain anonymous and no personal data will be recorded or kept.

Phase Three

Having collected both theoretical and practical data, the researcher will undertake an in-depth analysis of correlations. First of all, it is required to see whether the information provided by interviewees corresponds with the literary data. Once the correlation analysis is complete, the researcher is to review each category by comparing theory to practice. The insight of the interviewees will prove especially valuable at this stage, as it will enable a categorized list of industries in which further CSR-related efforts are required. During phase three, the author of the proposed study will describe and analyze the results of the previous stages, presenting them in the form of a qualitative research paper.

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Expected Results and Implications

It is possible to expect the envisaged study to make a significant contribution to the existing body of knowledge. At the current stage, the researcher projects the establishment of a comprehensive theoretical framework that can become the point of reference for scholars, experts, and professionals within the corporate environment. The framework will be categorized on several levels, the first of which will reflect the industry-based division. In other words, there will be an arranged list of sectors, demonstrating whether corporate social responsibility is well-represented or underrepresented. Using this framework, it will then be possible to observe the roles and values of specific CSR aspects. For example, the final results of the research can show whether corporate social responsibility is currently important for the hospitality industry, while marking the distribution of influence between social, economic, and environmental policies. Ultimately, this framework format will be the product of the research procedures, synthesiszing theory and practice in its body.

The outcome of the study is likely to have positive implication on the field of research, in general. The framework format appears highly promising, as it can be used in the studies that will take the research further in terms of both scale and scope. Following similar procedures, the study can be recreated for the same or other industries with larger numbers of participants, thus increasing the precision of the data. The current design implies a relatively modest sample of interviewees and industries for discussion. Accordingly, this factor may become the most serious limitation of the project. Nevertheless, the study will introduce a new, evidence-based perspective on the prevalence and effect of CSR in today’s industries and companies. This way, it will inform subsequent studies and contribute to the development of the body of knowledge.

Conclusions

Overall, the concept of corporate social responsibility is a theme of topical discussion within today’s academic communities. This notion implies that modern companies should build a mutually beneficial, trusting relationship with the global community. Such an objective is attained through different avenues that ensure the interconnectedness of today’s business environment. Literary findings suggest that CRS exists in a nexus with the economic performance of a company. While this factor used to see a more direct approach in the past, the socially aware aspect of CRS is now on the increase. The proposed research will examine this phenomenon in all its diversity, comprising various sectors and stakeholder groups. Following the envisaged study procedures, it will be possible to draft a comprehensive framework reflecting the status of CRS in the economy.

References

Agudelo, M. A. L., Jóhannsdóttir, L., & Davídsdóttir, B. (2019). A literature review of the history and evolution of corporate social responsibility. International Journal of Corporate Social Responsibility, 4, 1. Web.

Ashrafi, M., Adams, M., Walker, T.R., & Magnan, G. (2018). How corporate social responsibility can be integrated into corporate sustainability: A theoretical review of their relationships. International Journal of Sustainable Development & World Ecology, 25(8), 672-682. Web.

Chen, H. L., Hu, Y. C., Lee, M. Y., & Yen, G. F. (2020). Importance of employee care in corporate social responsibility: An AHP-based study from the perspective of corporate commitment. Sustainability, 12(15). Web.

Freeman, R. E., & Dmitriyev, S. (2017). Corporate social responsibility and stakeholder theory: Learning from each other. Emerging Issues in Management, 1. Web.

Galant, A., & Cadez, S. (2017). Corporate social responsibility and financial performance relationship: A review of measurement approaches. Economic Research, 30(1), 676-693. Web.

Maqbool, S., & Zameer, M. N. (2017). Corporate social responsibility and financial performance: An empirical analysis of Indian banks. Future Business Journal, 4(1), 84-93. Web.

Nguyen, P. A., Kesckes, A., & Mansi, S. (2020). Does corporate social responsibility create shareholder value? The importance of long-term investors. Journal of Banking & Finance, 112. Web.

Sánchez-Torné, I., Morán-Álvarez, J. C., & Pérez-López, J. A. (2017). The importance of corporate social responsibility in achieving high corporate reputation. Corporate Social Responsibility and Environmental Management, 27(6), 2692-2700. Web.

Shan, L., Fu, S., & Zheng, L. (2017). Corporate sexual equality and firm performance. Strategic Management Journal, 38(9), 1812-1826. Web.

Van Dick, R., Crawshaw, J. R., Karpf, S., Schuh, S. C., & Zhang, X. (2020). Identity, importance, and their roles in how corporate social responsibility affects workplace attitudes and behavior. Journal of Business and Psychology, 35, 159-169. Web.

Williams, K. E. (2019). Between public good and private profit: A history of corporate social responsibility in the twentieth century [PhD thesis]. Rutgers University Libraries. Web.

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BusinessEssay. "Corporate Social Responsibility and Organizational Performance." August 3, 2022. https://business-essay.com/corporate-social-responsibility-and-organizational-performance/.