Rather than profit-making, the general performance of a company is, to some extent, determined by the corporate social responsibility (CSR) activities. This means that there is a trade-off between the CSR activities and the financial performance of a company since this intangible factor determines the perception of stakeholders (Poelloe, 2013). According to Tran (2015), corporate social responsibility initiatives would attract financial gains that will exceed costs. For instance, CSR activities may create a positive perception that has a direct effect on the monetary worth, especially in the long-run. Thus, CSR activities have the potential of broadening the general corporate value attached to a company. Besides, CSR initiatives allow a company to invest in activities that are deemed as protective of their interests. In the end, a company that has invested in CSR might be in a position to benefit from indirect profits.
Since corporate social responsibility initiatives in a company are designed to guarantee sustainability, there are benefits of value enhancement that come with value creation activities within the financial portfolio. Ideally, rolling the ball on current and predicted challenges through social initiatives might generate returns since future-preparedness, exploration of opportunity, and de-risking may transfer positive financial value to such a company. For instance, the Toyota Incorporation rolled-out series of corporate social responsibility initiatives in the last decade that were considered unprofitable at their inception. At present, these activities have resulted in huge payoffs above the initial anticipation. Specifically, the Toyota Incorporation invested in green energy in the form of electric cells as part of its CSR activities (Orlitzky, 2012). Within ten years, this technology has turned out to be a puzzle that was needed to boost financial performance from the electric automobile line.
In order for a business to succeed, it is imperative to invest in fundamental core values in the form of intangible assets such as trust and corporate credibility, especially for the long-term benefits. Most companies are embracing the idea of evolving from short-term quick fixes to responsible and flexible long-term strategies (Palmer, 2012). For instance, following the accusation about defaults in some Toyota models in the US, the company reported that their strategy of investing in long-term corporate social responsibility initiatives in the US market arrested the damage to a minimum. From this example, the intangible social investments would result in company value addition that surpasses the resilience that is contoured by the profit-making goal.
In the business arena, companies that have invested in the creation of core social responsibility values tend to have innovative products beyond the tweaks of functional corporate structure, especially when the profit-making intention is facing indefinite costs (Palmer, 2012). For instance, the Interface Company’s mission zero strategy has worked magic, especially in terms of sustainability in the face of financial performance cycles. Through constant innovation and setting of goals of the CSR initiatives, the company was able to propel itself forward by facilitating sustainable progress in the financial performance.
In order to realize momentous improvement of the core values of sustainability in a company, there is need to spread tentacles of influence to capture an extensive financial allowance ecosystem (Poelloe, 2013). This collaboration may enhance profitability and general financial health. For instance, Chipotle has investment in education initiatives through cultivate foundation to create an interface between financial performance and corporate social responsibility.
Orlitzky, M. (2012). Social responsibility and financial performance: Trade-off or virtuous circle? Web.
Palmer, H. (2012). Corporate social responsibility and financial performance: Does it pay to be good? Web.
Poelloe, A. (2013). Is there a trade-off between social responsibility and financial performance? Web.
Tran, T. (2015). Corporate social responsibility and profits: A tradeoff or a balance? Web.