CSR and Business Performance

This assignment examines the relationship between Corporate Social Responsibility (CSR) and business performance. It analyzes how CSR practices can contribute to financial gains and sustainable competitive advantages for companies. The assignment also discusses the limitations of CSR, such as addressing consumer demand for ethical products. Examples like Woolworths and BHP Billiton are used to illustrate successful implementation of CSR.

Running Head: Ethics and CSR
Ethics and CSR

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Introduction
Corporate social responsibility is an initiative in which company work to protect the environment
and well-being of society. In the current business scenario, CSR strategies are effective for the
company because it not only provides profitability but also builds the company’s image. In this
way, the company tries to meet the legal standards like an employment contract. But, at the same
time, it may increase the cost of company (Drea DeFoe, 2015). This essay discusses the
arguments in favor and against of corporate social responsibility. It also supports the arguments
with a real example.
Arguments in favor of CSR
It is argued that corporate social responsibility pulls the attention of stakeholders. Labour force
makes the unions and create demand to protect their right from the company. Hence, it has
become essential for companies to release the duties of employees as a result it helps the
company to get the support of workers. For example, Woolworths use caveat emptor strategy
which means let the buyer beware and no more holds true because the customer is a key player
around whom entire marketing practices are revolved. The consumer does not purchase the
products and services which are offered to them instead they only purchase those goods and
services that they actually want (Shyamala Sankaranrayanan, 2017). Hence, companies that
unable to meet the needs of customers, have the possibility to close down sooner and later.
It is analyzed that Wesfarmers Company uses remedy cells for consumers which protect them
against the anti-consumer acts. In this way, consumer control forced the firms to use social
responsiveness with respect to them. For example, if Wesfarmers Company uses effective social
responsibilities then it may suffer loss for a short period but accomplishing the obligation is

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effective for a company to survive at long-term (Forbes, 2012). Although, it can be a short-term
cost for the company yet, provides long-term profitability to it.
Flammer (2013) is also in the favor of CSR as it discusses that CSR is beneficial for the
company to survive in the market at long term. In this way, it is analyzed that business
companies are a strong factor for the society because it provides different benefits to them. But,
if a customer ignores the social problem then society can deny the acceptance of company’s
products and services. Therefore, the company considers social responsibility in its strategy to
avoid self-destruction in long-run.
Tai and Chuang (2014) are in favor of the corporate social responsibility as it depicts that CSR is
effective for self-enlightenment. It is analyzed that education level and business understanding is
increasing in society hence company can encourage the customers to buy the products and
services by involving the social activities. Moreover, managers build the public anticipation by
considering the social and moral responsibilities. For example, BHP Billiton ensures to pay taxes
to the government, fair wages to employees, dividends to shareholders, and quality goods and
services to consumers (Joutsenvirta and Vaara, 2015). Moreover, it involves the social
responsibility rather than using legislative interference.
CSR is also beneficial for a business to avoid the government regulation. Non-conformance to
social standard is used to attract the legislative limits. Government directly control on the
corporation by making regulation regarding business functions. As well as, there are different
agencies that affect the business activity. For example, central pollution control board addresses
the issues associated with environmental pollution and Australia stock exchange focuses on the
issues associated with investor’s protection. As well as, Employees State Insurance Corporation
highlights the issues associated with the health of employees. Hence, company will be held liable

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to pay fines and penalties for violating the regulation (Esping-Andersen, 2017). The organization
must involve the social responsibility by using the effective policies for their employees and
customers.
According to the Husted (2015), the business organization uses different resources that can be
partially exercised for solving the social issues. Moreover, business is a creation of society
because it works in the interest of society. These interests could be related to economic and
social benefits. In addition, it can be evaluated that management is going towards
professionalism which contributes towards the social orientation of business. Moreover,
increasing professionalism is the main reason for managers to use formal management within an
organisation. It is analyzed that managers is proficient to make a plan, organize, lead and control
by using their understanding as well as subscribe the code of conduct that is developed by the
organization and recognized authority.
In this way, managers are bounded to use social values due to ethics of the profession. This code
of conduct enables the employees to gain their awareness about social responsibility. For
example, Australian Airlines consider social responsibility by keeping the safe environment for
employees and travelers. It is beneficial for the company to grow in the dynamic environment
and to get the competitive advantages in the industry. This company also decided that how much
social responsibility will be delivered rather than focusing on whether or not to discharge the
social responsibility because it enables the company to attain the future targets (Ioannou, and
Serafeim, 2015).
Arguments against CSR
It is argued that business is an economic activity and social responsibility is a fundamental
function for the company to move towards the economic viability of its operations. Moreover,

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the government should look towards the society’s interest instead of the business. In addition, the
government should be held liable for social responsibility rather than the business enterprises
because society expects with the government, not to the business (Schrempf-Stirling and
Palazzo, 2016).
In against, Flammer (2013) argued that corporate social responsibility has the limitation that
what can measure the social responsibility and at what level, should a company be engaged in it.
As well as, there is a limitation to assess what kinds of resources should be integrated to social
values and whose interest should hold priority over others such as investors should be prioritized
over suppliers or the vice versa. There are several questions which are based on the subjective
consideration that states social responsibility is not an easy task for the company.
Apart from this, a cost-benefit analysis is another limitation of using corporate social
responsibility within an organization. In this way, corporation cannot be executed any social
benefit acts where initial cost exceeds the benefits in the short run. Moreover, professionally
trained managers may not have the skills to resolve the social concern (Hopkins, 2016). Hence,
inadequate skills and competencies are key issues for executing the social responsibility within
the corporation.
It is stated that transfer of social cost is another limitation of using corporate social
responsibilities. Costs associated with social programs can be adjusted through business concerns
in a different manner. For example, the cost is passed to the customer by increasing the rate of
products and services. Another example is that if managers keep the price then they deduct the
few amounts from wages of employees as a social cost. Along with this, if wages are constant
and profits are declining then the company will decline the dividend amount of shareholders. In
this way, low profits will decline the interest of managers to further engage in CSR activity. It is

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also evaluated that sub-optimal utilization of resources is another limitation of CSR (Glavas and
Kelley, 2014). Because, when limited resources are utilized for meeting social objectives then
this can violate the purpose of company’s existence.
It is argued that every business deal in the larger operating system. Hence, CSR cannot come in
that system and transform the society. Further, the company is only responsible for creating the
products and services rather than dealing with welfare and societal activities. In addition,
corporations do not have the proficiency and understanding to handle the social concern. It can
also be stated that if a manager focuses on the social responsibilities which means they have not
performed the primary responsibilities of the company with full capacity (Hopkins, 2016).
It is also stated that being socially responsible, can lose the company’s financial position in the
global marketplace. There are different activities has involved in social responsibility which
creates a high cost for the company. These activities are donating money, ensuring product
safety, cleaning up the atmosphere, and spending time for welfare issues. In the ending level,
these expenses will be passed on the customers in terms of final prices of goods and services
(Flammer, 2013). In such case, some customers can wish to pay more prices for products and
services that are socially responsible but, at the same time, some customers cannot pay the high
amount for products and services. As a result, it can provide the economic disadvantages to the
company.
Conclusion
It can be concluded that there are different companies in Australia which use social
responsibility. Because, the company has realized that CSR is beneficial to gain financial
performance. It can also be evaluated that company can gain sustainable advantages via using
the CSR activities within the organization such as it can invest in good employment practices

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and proper labor standards. But, there is some limitation of using CSR activities such as it does
not addresses that what consumer is willing and pay for ethical approaches. There are certain
examples of business that are willing to adopt socially responsible activities because it may
affect its profitability. Woolworths and BHP Billiton is one of the examples of the company that
involved in the CSR activities and gained its profitability.

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References
Drea DeFoe (2015) Arguments for and Against Corporate Social Responsibility. [Online].
Available at: https://toughnickel.com/business/Arguments-for-and-Against-Corporate-Social-
Responsibility (Accessed: 19 September 2017).
Esping-Andersen, G. (2017) Politics against markets: The social democratic road to power.
USA: Princeton University Press.
Flammer, C. (2013) Corporate social responsibility and shareholder reaction: The environmental
awareness of investors. Academy of Management Journal, 56(3), pp. 758-781.
Forbes (2012) Six Reasons Companies Should Embrace CSR. [Online]. Available at:
https://www.forbes.com/sites/csr/2012/02/21/six-reasons-companies-should-embrace-csr/
#2c8813613495 (Accessed: 19 September 2017).
Glavas, A., and Kelley, K. (2014) The effects of perceived corporate social responsibility on
employee attitudes. Business Ethics Quarterly, 24(2), pp. 165-202.
Hopkins, M. (2016) The planetary bargain: corporate social responsibility comes of age. Berlin:
Springer.
Husted, B. W. (2015) Corporate social responsibility practice from 1800–1914: Past initiatives
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Ioannou, I., and Serafeim, G. (2015) The impact of corporate social responsibility on investment
recommendations: Analysts' perceptions and shifting institutional logics. Strategic Management
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Joutsenvirta, M., and Vaara, E. (2015) Legitimacy struggles and political corporate social
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Schrempf-Stirling, J., and Palazzo, G. (2016) Upstream corporate social responsibility: The
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Shyamala Sankaranrayanan (2017) Arguments For and Against Social Responsibility! [Online].
Available at: http://www.fibre2fashion.com/industry-article/5638/arguments-for-and-against-
social-responsibility (Accessed: 19 September 2017).
Tai, F. M., and Chuang, S. H. (2014) Corporate social responsibility. Business, 6(03), p. 117.