MGT100 - Organisations and Management

Corporate Social Responsibility
Corporate Social responsibility a good management practice:- An Empirical
Study
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Introduction
There has been a considerable amount of research study conducted in the past few years to
show that how CSR activity affects the structure and the financial performance of a firm
(Aguilera etal, 2007 Margolis and Walsh 2003).In a research study conducted by Hilman and
keim in the year 2001 easily proved that how CSR activity improves the Financial
performance of a firm. It also helps to improve the image of a firm as it portrays a firm’s
positive picture towards its audience so parallely it contributes to improve the financial
position of the company. There is certain evidence presented by the experts which proves that
CSR activity has the ability to improve the overall position of the company. Employee
turnover plays a very significant impact on the competitiveness of the firm. That is the reason
behind the promotion of CSR activity is very important. It improves the morale of an
organization due to social awareness programs. The Corporate social responsibility has found
to have a positive impact on the financial as well as organizational health of the organization.
In this research study it will be proved how the CSR activity can contribute to the
sustainable success of the organization. The main purpose of the study is that to understand
that how CSR activity can lead to long term benefits of an organization which can be beyond
any traditional financial outcomes. Specifically there has been a considerable amount of link
between employee turnovers, and customer satisfaction. This data provides hypothesized
relationships. In this study it will be outlined how CSR activity diminishes employee
turnover and increases customer satisfaction. This study offers empirical evidence that CSR
can provide benefit to an organization beyond financial benefits.
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Theoretical Development and Hypothesis
CSR
Now let’s go deep in to the insight of what CSR actually means and what are the
management determinants to give it a proper shape. As per the opinion of (Etzioni, 1988,
Fomburn, 1997, Sen & Bhattacharya 2001, Wood, 1991) CSR actually refers to those
activities to maintain the perceived societal or stakeholders obligations the CSR activity is
performed by the firms. There has been considerable amount of conceptualization and
responsibilities which the firms undertakes to take a consistent approach towards its empirical
study (Sagebien & Lindsay, 2011). As per the opinion of Caroll, in the year 1979 he clearly
stated that there are four basic responsibilities of which this activity involves in it for a firm’s
betterment. So let’s see what those responsibilities are as follows:-
Economic Responsibility:- This includes creating new products, as per the needs of the
consumers ,generate profits and provide jobs.
Legal Responsibility:-
It involves complying with the rules and regulation of the state, central and federal
government of the country.
Ethical responsibility:-
This actually means meeting other social expectations which are not written in the law but
plays a very vital role in creating a better image of a company like respecting peoples moral
right, avoiding any harm or social injury, and doing what is just and right.
Discretionary responsibilities:-
It helps in meeting additional behaviour of the society which contributes to the cultural and
social behaviour which involves providing training to the employees, salaries as per industry
standard and providing employee benefits. It has been seen that firms which demonstrate a
proactive CSR activity approach gets a dual benefit. As,it helps to enhance social welfare and
to improve its own performance in the long run perspective.
For the particular interest of the study it is very essential to understand the relationship of the
CSR activity with two most important diamention of Organizational performance.
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