The phenomenon of globalization not only changed the rules of business but also irrevocably affected society. Corporate Social Responsibility (CSR) is the result of studying and compiling new principles of interaction between employers and workers. The essence of this term is a set of economic and social measures and responsibilities that the company takes upon itself to avoid state and public pressure.
According to Williams, “today, no analysis of corporate governance systems would be complete without considering the pressures on companies to be seen as responsible corporate citizens” (1). Corporations consciously begin to play the role of the social service of the country by providing their employees with various rights, social guarantees, and repayments. The purpose of this paper is to discuss different basic techniques of introducing social analysis and practices into macroeconomic business and its influence on modern society.
Criticism as the Cornerstone of Corporate Social Responsibility
Constant supervision, parsing of statistics, and open expression towards corporations at one point determined the appearance of the principle under discussion. Criticism is implied both from the external social environment and from internal sources. According to Seidman, “most analysts recognize that companies can adopt codes of conduct, but without external monitoring, those promises may have little impact” (992).
External sources of criticism are mainly representatives of right, left, and moderate political movements. Internal ones are represented by various analytical dependent and independent departments and firms. This principle of openness allows corporations to avoid various fines, regulations, and verification of confidential information by government agencies. It also prevents multiple strikes, boycotts, and loss of business reputation, allowing time to consider the disturbance and demands of company employees. This aspect of CSR has dramatically influenced the position of companies and employees in the discourse.
One of the key achievements in adopting this principle of CSR is the alignment of the positions of the employer and employee. In the modern world, even despite all the economic power of corporations, people can openly speak out against the company’s business policy. This technique takes into account not only the interests of employees but also the goals of the company, improving its performance.
According to Seidman, in the second half of the 20th century, American companies in Africa, under pressure from human rights defenders, took measures to improve the corporate climate (993). Similar practices on the part of employees later led to the formation of the basis of SCR among ordinary companies and business giants.
Stakeholders Participation in Corporate Responsibility and Company’s Business
Stakeholders, as participants in a particular company, are directly interested in the financial development and growth of positive perception. Reputational risks and fines might lead to lower salaries and fewer ways to promote a business. CSR opens the door for caring stakeholders who see the problem in managing the company and want to solve it. There are two tactics of conducting CSR; one of them is a narrow model that is aimed exclusively at multiplying profits taking into account the minimum social requirements. The second is called a broad model, and it involves high expenses on the social business climate, which in theory will later pay off.
According to Williams, “investors as well have become more attentive in recent years to environmental and social risks in portfolio companies, and therefore more concerned with corporate responsibility” (3). Oddly enough, a broad model more designed for dialogue with activists and the vast powers of stakeholders in managing the company shows better performance. This indicates that with a particular approach, CSR accepts the opinion of all parties while making a profit.
The participation of stakeholders has mostly influenced the attitude of companies to wildlife and climate. According to Monks et al., stakeholders are most interested in companies taking part in global climate change and maintaining ecological standards (317). This trend, in many respects, raised essential questions regarding the impact of man on the nature and harm of corporations. Nowadays, many companies in terms of CSR primarily put reporting and control over the interaction with the environment, despite possible monetary losses.
Corporate Social Responsibility as the Embodiment of Human Rights in Business
The concept of human rights is a natural part of every person in the modern world. CSR is an analog of human rights in terms of corporations. It largely determines freedoms, duties, and principles of work between companies and workers. This practice establishes rules for corporations in aspects of human rights, such as their observance and support. CSR also includes work standards like the removal of forced labor and slavery, the forming of a safe ambiance, and the absence of pressure on workers.
It is possible to note that “children over 12 years of age may engage in light work which does not interfere with their education” (Canada, Standing Committee on Foreign Affairs and International Development 10). CSR also sets standards for ecological production behavior and anti-corruption activities. It can be said that CSR gives the business a more human face.
This concept has helped to set boundaries and protect poverty-stricken and defenseless groups from exploitation. It is possible to note that “exploitation includes forced labor or slavery-like practices, among other forms” (Canada, Standing Committee on Foreign Affairs and International Development 11). This practice also allows corporations, with the proper observance of laws, to avoid reputation scandals, create a pleasant image, and find common ground with employees. CSR allows workers from different places in the world to declare their freedoms and fight for their rights, work, and money.
Implementation Results of Corporate Social Responsibility into Governance Practice
CSR opens up the possibility for senior company members to hear, understand, and possibly resolve the demand of various social groups. It also allows top-brass to see further development paths for business and investment. However, usually, companies begin to use this practice only when there are severe issues and the threat of fines and regulations by the state. According to Williams, “Surroca and Tribo interpreted these results to suggest that company responsibility is a strategy for management entrenchment and thus indicative of agency concerns” (qt. in 28).
There is also a constant possibility that management and investors can buy various statistical dependent and independent firms for further information manipulation. However, open criticism is still the defining criterion of CSR. That is why the most successful companies are those where stakeholders constitute the majority of personnel. According to Williams, the international level corporations where the stakeholder-system is adopted show the greatest financial stability and confidence (31). It can be concluded that the openness and democracy provided by CSR have a positive effect on all areas of the corporate fragment of the economic world.
The basic principle of Western society, namely freedom of speech, helped to create such a concept as CSR. Free criticism equalized employers and labor activists to find agreement. Seeing the benefits of this practice, management began to support it, and CSR became one of the business standards. It was built on the norms of international culture and morality because business is a type of interaction and cooperation between people. This system allows channeling the company’s multi-million dollar resources in the right direction to improve human lives and preserve nature.
Canada, Standing Committee on Foreign Affairs and International Development. A Call to Action: Ending the Use of All Forms of Child Labor in Supply Chains. House of Commons, 2018.
Monks, Robert, et al. “Shareholder Activism on Environmental Issues: A Study of Proposals at Large US Corporations.” Natural Resources Forum, vol. 28, 2004, pp. 317-330.
Seidman, Gay. “Traditional Labour Campaigns: Can the Logic of the Market Be Turned Against Itself?” Development and Change, vol. 39, no. 6, 2008, pp. 991-1003.
Williams, Cynthia A. “Corporate Social Responsibility and Corporate Governance.” Oxford Handbook of Corporate Law and Governance, edited by Jeff Gordon and George Ringe, Osgoode Hall Law School of York University, 2015, pp.1-55.