This report discusses the concept of social responsibility of business and its importance in improving organization's performance. It also explores the different theories applicable in CSR practices. The report focuses on the social responsibility of Lego, a manufacturing company known for its toy production.
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SOCIAL RESPONSIBILITY OF BUSINESS
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TABLE OF CONTENTS INTRODUCTION...........................................................................................................................1 MAIN BODY..................................................................................................................................1 CONCLUSION................................................................................................................................5 REFERENCES................................................................................................................................6
INTRODUCTION Social responsibility is based on the ethical theory in which individuals are accountable for fulfilling their civic duties or responsibilities, action of individual must provide benefit, advantage the entire society (Abugre and Anlesinya, 2019). This report will discuss about the concept of social responsibility of business, which plays important role in organization to improve organization’s performance in global marketplace. Furthermore, this report will describe about the importance of CSR in business which always give contribution to increase brand image, reputation and value in marketplace. However, report will discuss about the different theories that applicable in the business through CSR practices. This report will focus upon social responsibility of Lego company which is a manufacturing company based on the toy production for manufacturing the toys, consisting mostly of interlocking plastic bricks. MAIN BODY Analysis of Social responsibility of business The social responsibility of business is to increase its profits, gain competitive advantage, contribute to social goals or contributing in taking an initiative towards environment, economic, and cultural issues. It also helps in sustaining within market, enhancing transparency and accountability within an organization(Buhmann, Jonsson and Fisker, 2019). CSR helps a company in ensuing long term visibility, sustainability and success of an organization. Being a socially responsible company can help then in developing a positive brand image. Today it has become important for companies to focus upon their CSR responsibilities as it helps them in enhancing overall morale, loyally and satisfaction level of their employees, attract a greater number of customers and develop a positive brand image. Social responsibility in business and Corporate social responsibilities, Sustainability Strategy at the operational level of Lego Today social responsibility has become an important factor which is required to be focused upon by companies.It helps a firm in demonstrating that a business is interested in wider social issues and taking initiatives in resolving those issues. Customers who share same values as a sustainable organization helps such firms in attracting a greater number of customers and increase their customer base(Fernández‐Gago, Cabeza‐García and Godos‐Díez, 2020). Lego is one of those companies that has a high corporate social responsibility level. They have focused upon reducing negative environment impact or are even trying to eradicate it. They 1
have taken various kinds of initiatives for his like they have replaced their plastic bricks used in toys to plant-based polyethylene bricks. Adoption of these bricks has helped Lego in taking an initiative in reducing non-environment friendly wastage. This strategy has successfully helped them in resolving their wastage problems. Not only this, they are planning to have no waste by 2025. Lego has also focused upon recycling its plastic waste products and reuse it in other processes. Some of the waste is also sent by them to other suppliers so that they can turn that plastic waste into different kinds of plastic products. Being a large manufacturer of plastic products, it is a positive initiative taken by them so that negative impact of these plastic products upon environment can be reduced. Another initiative taken by them is to reduce their carbon foot print and for that they have focused upon using wind energy. Lego promises their employees that, they will be focusing upon pyritizing safety of employees first so that motivational and satisfaction level of employees can be enhanced. Thy have also focused upon tsking an initiative forward towards by focusing upon education of children digitally. They believe that it is a positive step towards social responsibility Importance of Social responsibility in Business There are various reasons that makes social responsibility for business important. Some of the main reason that helps in increasing its importance for business are as follows: CSR helps in increasing brand awareness. Ethical practices adopted by business can help in spreading awareness but the brand and its products. Another reason because of which it becomes important for firms to adopt CSR practises is that it helps in reducing overall cost associated with manufacturing. For example, sustainable packaging can help and organization in reducing their cost associated with packaging. It many times helps in standing out of competition or it can also be said that it helps in gaining competitive advantage. Social responsibility plays a vital role in positive marking and promotion of products and services which not only helps in increasing sales and enhancing their customer engagement. Good public image also helps the company in motivating their employees to work with more dedication and enhance their overall productivity (Nicoara, Palihawadana and Robson, 2019). Organization that do not focus upon their social responsibility not only face difficulty in sustaining within the market but also face high competition with other brands. It also becomes a bit difficult for such organizations to build a strong relationship with their customers or gain their trust. High CSR or taking initiative towards 2
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social issues helps in gaining trust of customers and also helps firm in developing a strong relationship with them which directly helps them in increasing loyalty of their consumers. Theoretical underpinning of Social responsibility of business There are various kinds of theories that can used to explain importance of social responsibility for business organizations. Some of the main theories that can help in analysing social responsibility for business are: Friedman theory According to this theory social responsibility of a business is majorly for increasing its profit. Friedman theorist said that an organization has no social responsibility for public or for society. Their only responsibility is towards their shareholders. He had explained his theory on the basis of various arguments like: a corporate executive is simply an employee of owner of the company he has a direct responsibility towards his employees or staff members. Their main responsibility is to conduct a business in accordance with their desires(Ramesh and et. al., 2019). As per this this theory, there is only one main social responsibility of a company is to use its resources and engage in activities that can help a business in increasing their overall profits. This simply says that an organization should engage in free and open competition without any kind of fraud or deception. Triple Bottom Theory Triple bottom line focuses upon social, financial and environmental performance of a company over time. These are the three dimensions of performance. This theory is also referred as 3 P’s theory where 3 P’s refer to: people, profit and planet. This triple bottom line helps in measuring an organization’s commitment to corporate social responsibility on the basis of its impact upon environment over time. This through focuses upon three bottom lines: people which is a social equity bottom line, planet which is an environmental bottom line and profit which is an economic bottom line. 3
Figure1Triple Bottom Theory (Source: Triple Bottom Line, 2019) People which is a human capital bottom line says that a fir and beneficial business practisefocusesuponlabour,communityandregioninwhichabusinessconduct.An organization is required to focus upon well-being of corporate, labour, employees and other stakeholders. Planet is a natural capital bottom line that majorly focuses upon sustainable environmental practises. This bottom line says that an organization should focus upon causing no harm to environment or should focus upon reducing its negative impact upon environment. Companies can do this by managing or reducing their consumption of non-renewable energy resources, reducing their manufacturing waste(Siltaloppi, Rajala and Hietala, 2020). Last line is economic bottom line that helps in reducing input cost of organization so that profit level of organization can be increased. This can only be done by organizations if they focus upon adopting sustainable activities and providing sustainable products or service to customers like focusing upon eco-friendly packaging. As compared to their competitors they have one of the most detailed corporate social responsibility policy and have a clear social responsibility statement. Carroll’s Model It is also known as Carroll’s CSR pyramid which is a kind of framework focuses upon reasons because of which an organization should meet their social responsibilities. This model is built on basis of three facts that are: CSR is based on profit comes first fact. Then it focuses upon ensuing that needs of the business are under law and regulations and lastly business should meet 4
itsethicalduties(Witek-Crabb,2019).Carroll’sCSRpyramidisbaseduponfurmain responsibilities of business, that are: economic, legal, ethical and philanthropic. Figure2Carroll’s Model (Source: Carroll’s CSR pyramid, 2020) Lowest level of pyramid is economic responsibility which is the first and foremost type of responsibility. This is because without profit a firm will not be able to pay its workers, staff members and employees. It is extremely difficult for an organization to survive in the market without making profit. If this responsibly of a firm is fulfilled only after that they should focus upon another responsibility. Second level of pyramid is legal responsibility i.e. business should obey law and should fulfil all of its legal obligations so that they can conduct their business in market place. Third layer of pyramid is ethical responsibility i.e. an organization should focus upon obeying law and doing business in an ethical manner as it helps increasing morale of all of its stakeholders both internal and external. It is the top most level of pyramid which focuses upon responsibility of business or giving back to society, responsibility of remaining discretionary like focusing upon reducing its carbon footprint, charitable donations etc. Halal Model This model says that corporate social responsibility is a difficult task as none of the corporate posture is value free(Witek-Crabb, 2019). An organization can only focus upon forming a workable collision between diverse interest groups who are engaged in creating value for distribution among collision members. Beyond certain level of social issue, economic activity that may become conflicting. 5
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CONCLUSION From above discussion, it has concluded that corporate social responsibility plays important role within organization. Through CSR practices, organization take initiative towards social issues or problem helps in gaining trust, loyalty among existing customers. It is useful for establishing the strong relationship between organization and consumers. In this report, it has summarised about the concept of social responsibility of business, which plays important role in organization to improve organization’s performance in global marketplace. It can be identified the significantly importance within organization in term of growth and development. In order to maintain or control the brand image, reputation and value in marketplace. Moreover, it has been discussed about theories regarding Corporate social responsibilities, overview brief idea about the concept which applicable to eliminating social issues in business. 6
REFERENCES Books and Journals Abugre, J.B. and Anlesinya, A., 2019. Corporate social responsibility and business value of multinational companies: lessons from a Sub-Saharan African environment.Journal of African Business. 20(4). pp.435-454. Buhmann, K., Jonsson, J. and Fisker, M., 2019. Do no harm and do more good too: Connecting theSDGswithbusinessandhumanrightsandpoliticalCSRtheory.Corporate Governance: The International Journal of Business in Society. Fernández‐Gago,R.,Cabeza‐García,L.andGodos‐Díez,J.L.,2020.Howsignificantis corporate social responsibility to business research?.Corporate Social Responsibility and Environmental Management. 27(4). pp.1809-1817. Nicoara, C.A., Palihawadana, D. and Robson, M.J., 2019. Strategic CSR and the CSR strategy- making process of international business. InSocially responsible international business. Edward Elgar Publishing. Ramesh, K., and et. al., 2019. Consumer's response to CSR activities: Mediating role of brand imageandbrandattitude.CorporateSocialResponsibilityandEnvironmental Management. 26(2). pp.377-387. Siltaloppi, J., Rajala, R. and Hietala, H., 2020. Integrating CSR with business strategy: A tension management perspective.Journal of Business Ethic.pp.1-21. Witek-Crabb, A., 2019. CSR Versus Business Financial Sustainability of Polish Enterprises. InCorporate Social Responsibility in Poland(pp. 43-58). Springer, Cham. Online Carroll’sCSRpyramid.2020.[Online].Availablethough:< https://www.thomasnet.com/insights/pyramid-of-corporate-social-responsibility/ > Triple Bottom Line. 2019. [Online]. Available through: <https://lmd.lk/triple-bottom-line/> 7