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.
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