The Importance of Social Responsibility in Business
The exact meaning of ethics is hard to capture. What defines “ethics” varies from place to place depending on the culture and environment. However, scholars are entangled in the struggle of finding a comprehensive way of describing ethics. Fundamentally, ethical behavior aims to create harmonious coexistence between individuals in a social setting. Society hopes that laws reflect the ethical standards that it thinks are pertinent. Ethics refers to a body of standards of wrong and right, borne, not out of a requirement to obey a rule but for the sake of goodness and justice and fairness. Concerns about ethics cut across the whole sphere of society – from the household to the workplace to places of worship et al. So long as people interact, the question of how best to come within reach of their interaction and create an environment that is conducive will always arise. While the struggle for a comprehensive definition of ethic is elusive, a unanimous agreement on the role of corporate responsibility is palpable. For this reason, this paper attempts to explore the role of social responsibility in business.
According to Ferrel (2010), corporate social responsibility seeks to ensure businesses contribute to sustainable economic development of a society. Social commercial responsibility premises on the understanding that while firms engage economic development, their primary focus should be on improving the quality of lives of people within the local community. On his part, Rodrigues (2006) argues that corporate social responsibility entails making legal obligations in addition to investing in relationship with stakeholders, the environment, and human capital. The legal obligation is fundamental for businesses and organizations for positive influence in the society as well as reducing the impact of any negative externality. Ethics comes into social responsibility as a means of doing ‘good’ for the society. Evidently, the idea of social corporate responsibility has gained ground on contemporary business world making almost impossible to ignore . Businesses may have no option but embrace the practice corporate social responsibility.
So what is the big deal about social responsibility? First, social responsibility offers an easier way for companies to be able to build their public profile, reputation, and brand image. Businesses can create a positive image and goodwill for their brands through engaging in sound social programs. It is argued that an excellent reputation and the image is one of the most valuable assets for a business. However, these assets can only be achieved through participation in corporate social responsibility. At the same time, business can nurture these essential values and assets by constantly taking part in corporate social responsibility. It is necessary that businesses strategically design programs that are socially desirable. When these programs are used appropriately, a myriad of new opportunities are opened up and position the business for growth and profitability.
Second, corporate social responsibility is a mean to retain and attract highly skilled staff. Numerous research studies have focused on the impact of corporate social responsibility on turnover rate. Many companies that have effective programs on corporate social responsibility have reported low employee turnover compared to other companies which do not have similar programs in place. The same companies would also report job satisfaction from their employees, good performance, and high commitment by employees. It is considered an ethical practice when a business engages in doing well. A study conducted at the university of Stanford established that a significant number of MBA graduates would prefer to prefer to work for companies have a sound social program. In addition, these graduates would also sacrifice a significant amount of cut off from their salaries to work for a company with effective CSR programs. Therefore, by acting social responsible, companies manage to attract and retain skilled staff. In effect, this reduces recruitment cost and increases productivity . In some cases, corporate culture is visible in the way an organization is structured. Some companies emphasize servant leadership while others focus on teamwork; others promote basing on appraisals while others promote basing on future objectives. In many cases, culture is also defined by the nature of the competition. The culture can also be the desire of the company to be like the rest or to form a unique identity. The articulation of a corporation’s culture would be meaningless if a strong leadership is missing. Leaders of a corporation must be aware of the required culture in a corporation and determine ways in which the culture is understood by all sections for the firm. Leaders must also play the role models by exhibiting behaviors that are demonstrable of the organization’s goals.
With regards to customers, they tend to be attracted to companies with running programs for social responsibility. Analysts have argued that businesses that have been branded as socially responsible tend to have an edge over their competitors . It differentiates one company from another and becomes a basis for customer preference. Acting socially responsible does not only imply having the programs in place, but businesses can also decide to make products that add values to the society as well as the environment. Customers would prefer to purchase goods that are environmentally friendly. Customers are increasingly becoming more educated and informed about different products . The contemporary society requires that business are savvy with societal issues. With this nature of customers being targeted by businesses, corporations are left with little option but to focus their operation on social responsibility. Corporate social responsibility provides customers with a sound reason to buy a good or a service from one business.
Moreover, corporate social responsibility also helps in improving the competitiveness of a company. Companies must integrate their management system to ensure total quality management and corporate social responsibility. Such businesses prioritise the needs of the society at large before the needs of its shareholders. Its all round operation will be based on sustainability and quality thus making the company more competitive over its rivals.
In addition to attracting customers, corporate social responsibility has been seen to attract investors. Publicly trading businesses find themselves in constant need for investors interested in buying shares and having a stake in the company. Potential investors are mainly attracted to companies with effective program for corporate social responsibility. The investors decisions are mainly influenced by factors such as the companies corporate social responsibility. If a company is socially responsible, then the assumption is that the productivity level of the company and similarly, the company shows a lot of potential in growth prospects. Any reputable business would not wish to underestimate the influence of investors. They play an extremely pivotal role that can further boost the financial performance of a company. In addition, financers are attracted by companies that are socially responsible. It is indispensable for businesses to be socially responsible in order to attract financiers and investors.
Corporate social responsibility is crucial in encouraging employees and manager to grow professionally and personally. Most businesses conduct the social responsibility programs in the form of projects and assign the leadership role for these projects to some their staff members and managers . This provides an effective opportunity for employees to develop additional skills such as project management. At the same time, the programs can be designed in such a way that the whole workforce is involved. This can be a perfect opportunity to conduct team building exercises and to encourage employees to build relationships with different people in the society .
Weinstein& Johnson (1999) write that successful companies do not satisfy customers; they work hard to please them. Superior customer values mean continually creating a business experience that exceeds the ordinary expectations (p.4). In their view, value is the strategic driver that most multinational corporations utilize to differentiate themselves from the rest in view of customers. In the abstract form, values mean the excellence usually based on the desirability or usefulness (Weinstein & Johnson, 1999, p.5). Value driven marketing strategy help organizations in several areas.
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