CSR ANALYSIS: Toward Development &Help Business socially responsible By Sunil

Do you think CSR can genially contribute towards an ethical and pro poor development and help business be more socially responsible? Why or why not?

This essay deals with the explanation of CSR and its components that how it affects development process and business. This essay highlights the views points of Friedman, Janisch, Willian B., Surabh Mishra and others. Their arguments show that CSR is itself a very significant and efficient paradigm but it is unable to play its role efficiently due to issues. Therefore it has not achieved its ultimate goal to construct developed society through businesses. It seems like all CSR experience has more negative aspects than its positive aspects. Therefore this essay explains that how actual CSR is not as beneficial as its idea; also it is unable to contribute towards ethical and pro poor development.

Corporate social responsibly is "the obligation to take action to protect and improve both the welfare of society as a whole and the interest of organizations”. CSR has emerged as obligatory priority for business leaders to respond new conditions and new challenges which might be related to economic, social, environmental and political problems in this global age. CSR is an effective management tool which intends to develop new kind of relationship between business and society that does not treat corporate growth and social welfare as a zero-sum game (Sanjeev Gupta and Nidhi Sharma, 2009). So CSR discourse is meant for poor and vulnerable people.

CSR, no doubt presents better idea of making this world better place for humanity and to help poor people. However many people argued that CSR contradicts business freedom. Friedman argued against CSR because it distracts business leaders to achieve their economic goals. According to him, the only social responsibility of business is to use its resources and engage in those activities which increase its profit. He called CSR a” fundamentally subversive doctrine” (Friedman, 1970). Business leaders’ consent to their CSR obligations is getting in the way of business success.  CSR is critical and controversial because for-profit sector is largest and most innovative part of free society’s economy. Also these businesses are primary delivery system for employment, food, housing, medicines and other necessities of life so they are already contributing towards the betterment of society (Willian B. Wether, Jr., David, 2010). Therefore this question arises sometimes that do these businesses have this duty beyond the benefits their economic success already provides?

Saurabh talks about both positive and negative aspects of CSR that how both aspects affects the financial situation of firms. Both positive and negative CSR is linked to particular risk of firms. Author analyzes the secondary information for firms from multiple industries over the years 2000-2009, which shows that positive CSR reduces the risk whereas negative CSR increases. Different results also showed that reduction in risk from positive CSR is not guaranteed. That’s why CSR is very complicated process which should be managed with great responsibility because it could change the whole essence by doing it with irresponsibility (Saurabh Mishra and Sachin B.Modi, 2013). The negative corporate practices give us an opportunity to have a more focused approach about CSR and to review implementation policies of CSR.

Ziva and Nurit examined leading Israeli companies that set out CSR in their organization. These selected organizations are considered to be leading in CSR and targeted different sectors including finance, communications, telecommunication, infrastructure, food waste management, agriculture and retail. In this case study they collected data from different points in time 2004 and 2008 by analyzing methodology, interviewing their CSR operators and observing impacts of CSR. According to their study  most companies representatives reported in 2004 that they had been involved in CSR activities in previous 3-5 years but ten companies had implemented only one CSR activity area, i.e. community involvement , also CSR was not part of managerial strategy. In 2008, the survey showed that some of these companies actually minimize their CSR activities due to various reasons. These reasons were like some of them decreased due to privatization or their representatives decided to contract out CSR. (Ziva Sharp, Nurit Zaidman, 2010). This research clearly show that by introducing just CSR without ensuring strong strategies and framework does not mean that now CSR could completely contribute towards development.

Janisch talks about CSR risks related to the stakeholder behaviors that can lead to negative economic consequences for a company and those consequences could affects that business. He describes it by giving example of case of Nestle. In 1970s and 1980s, Nestle was criticized by NGOs, government and media for selling baby milk powder in developing countries, but due to low and poor quality of water in these developing countries, also the mothers were uneducated and illiterate. This causes the death of those babies. As a result Nestle faced severe consequences like reputation damage and financial loss as its consumer boycott Nestle products (Janisch, 1992). It shows that companies who are trying to apply CSR should have bottom up approaches or they should apply it after effective evaluation and assessment of a society, as it is cleared that CSR is very complicated process. Manuela also relates different examples of CSR failure in different businesses because according to her, current CSR and sustainability research lacks systematic and company-specific methods to evaluate CSR activities. CSR companies have to be more efficient in their work (Weber, 2008)

Mc Williams also explains the negative type CSR which is followed by several companies just to fulfill certain needs and requirement of it. These companies may show that they are doing CSR just for reputation enhancement or protection. Also CSR is a tool of corporate resources that would be better spent on valued-added internal projects. He also says that CSR is an executive perk in the sense that managers use it to advance their careers or other personal benefits and agendas (Abagail McWilliams, Patrick M. Wright, 2005). It means that CSR is also misuse by many companies; clearly when their work intension is not even good then how would it help in development.

By keeping all those aspects mentioned above, it is however difficult to analyze that to what extent CSR has succeeded to play its role in proper development. Mellissa argues that these contributions given directly to the communities lean to contribute less to sustainable development than investments in social development projects that improve the capability of community members to help themselves. In short this kind of help may for the time being improve the lives of recipients but it cannot assure their long-term needs. Moreover they are more likely to encourage dependency which definitely threatens community’s long-term self sustainability. She also explains that CSR tends to apply top-down approach but it should be bottom-up approach so that poor people could fully take advantages (Whellams, 2007). There should be specific CSR policy making to ensure long-term development for people. CSR framework and methodology is not for common people where it should involve poor people in process to have development.

It is concluded that the concept of CSR is not just all bad and unethical. Firstly, no wonder this CSR aims to have development through help of business. But there is a certain mindset of business leaders and companies (e.g. Friedman) which considered it as a unethical. For those CSR should not be imposed on them, it should be optional for every business company. Secondly, by analyzing the data of past experience and exercise of CSR, the reports are not satisfactory because of certain flaws in either strategy or framework. Also CSR has been misused by many companies; if we deal it properly results could be better. CSR should look for sustainable development and they should invest their money in capacity building projects for long-term achievements. It should be participatory and bottom-up approach. So CSR is not that much efficient and make businesses responsible because if it does, than developing countries and poor people get better living standards. Therefore Corporate Social Responsibility has to be more responsible and accountable if it wants to achieve development.