Corporate Social Responsibility: An Analysis for Businesses

This essay provides a comprehensive overview of Corporate Social Responsibility (CSR), a business model gaining prominence due to increasing global competition and ethical considerations. The essay delves into the merits and demerits of CSR implementation, examining its impact from various corporate perspectives and drawing on expert theories. It highlights how CSR policies encourage ethical conduct, environmental preservation, and stakeholder welfare. The essay discusses the advantages, such as improved recruitment, enhanced market reputation, and increased investment sources. It also addresses drawbacks like shifting focus from profit maximization, increased expenses, and the challenges of maintaining transparency. The essay uses examples like Facebook, Microsoft, and Starbucks to illustrate both the misuse and effective implementation of CSR. It concludes by emphasizing the need for strict government regulations to ensure compliance and encourage CSR adoption, ultimately advocating for its integration into business models for long-term sustainability.

Running head: CSR 0
Ethics and Corporate Social Responsibility

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Contents
Introduction................................................................................................................................2
Advantages and Disadvantages of CSR.....................................................................................3
Conclusion..................................................................................................................................7
References..................................................................................................................................8

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Introduction
Corporate social responsibility (CSR) is a new method of a business model which has gained
significant popularity in past few years. As per CSR policies, corporations required
maintaining a level of transparency in their organisational culture to ensure the
implementation of ethical principles. Organisations focus on their duty as a corporate citizen
instead of just focusing on the enhancement of revenues. The competition between
corporations has grown due to globalisation which requires international corporations to
maintain certain guideline while operating their business in foreign countries.
Most organisations misuse their CSR policies since there is no strict structure provided by the
government regarding the implementation of CSR policies. This essay will focus on
analysing the merits and demists of implementation the CSR policies in a business. Further,
the essay will evaluate the situation from different corporation’s perspective and analyse
theories of different experts.

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Advantages and Disadvantages of CSR
Corporate Social responsibility is an important topic in modern times, due to the
enhancement of people’s perspective towards the preservation of the environment. As per Tai
and Chuang (2014), most large organisations implement an effective CSR policy to enhance
the environmental preservation and support different aspects of society. CSR policies stop
organisations from misusing their large position and ensure the welfare of society. Modern
organisations are expected to act as a citizen and perform their duties to protect the society
and environment. A CSR structure is self-regulated by an organisation. The CSR policies
shift the corporations focus on profit making to the welfare of society and preservation of
environmental resources. Suliman, Al-Khatib, and Thomas (2016) provided that due to lack
of proper administrative authorities, many organisations prepare effective CSR policies but
did not strictly comply with them. The managers and market experts worldwide have
accepted the requirement of strict CSR policies for the benefit of societies and environment.
In modern times, the competition between corporations has raised significantly. As per
Campbell and Helleloid (2016), to achieve more success, most companies use illegal or
unethical methods to enhance their revenues. To stop corporations from misusing their
position, CSR policies are necessary. For example, in 2014, many of the world’s largest
organisations, such as Facebook, Microsoft, and Starbucks, found guilty of tax evasion in the
United Kingdom. HSBC bank has also been found guilty in a tax scandal; the company was
helping rich people to avoid paying taxes and showing the wrong valuation of their company
in financial statements (Naheem, 2015). The role of government authorities has reduced with
the increase in the number of the corporation. Many large organisations use the unethical
method to enhance their production which increases the pollution in the environment.
Various unethical activities of corporations can be avoided by effective implementation of
CSR policies.
Effective CSR policies assist organisations in improving their recruitment and retention
process. Carroll (2015) provided that one of the main reasons for CSR policies popularity is
the better lifestyle of people. Most people gained knowledge regarding environmental
protection, and they prefer to use products from corporations who do not harm the
environment. People also prefer to work for organisations with better CSR policies because it
makes them feel they are helping in the improvement of the environment. The companies

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with effective CSR policies have happier employees than comparing to an organisation with
low CSR policies. According to the research of Aguinis and Glavas (2012), the example of
corporations with effective employees CSR policy includes Target, Google, and Ben &
Jerry’s. Google is known for implementing strict CSR policy for improvement of their
employees. The corporation has been awarded the best place to work numerous times. They
provide various benefits to their employees such as time to work on their own projects,
positive social interactions, and scholarships to continue their further studies. These policies
improve the recruitment process since Google hire world’s top talented individuals.
The strict implementation of CSR policies improves the reputation of corporations in the
market because people prefer to use products from environmentally friendly websites. A
study conducted by the online customer provided that more than 66 percent of customers
prefer to use and pay extra for the products of a company with better CSR policies (Kim,
Park and Wier, 2012). Most reputable organisations in the world have strictly implemented
CSR principles in their organisational environments such as Apple, Starbucks, and Microsoft.
As per Hopkins (2016), Apple is one of the world’s most reputable brands, and they use
natural energy sources, such as hydro, solar or wind, to power their manufacturing factories
in China. All the operation of Apple is the United States such as data center or offices are
also used natural energy to power their machines and the products created by Apple are 100
percent recyclable. The steps taken by Apple help they reduce environmental pollution which
assists them in enhancing their products sales.
As per Cheng, Loannou, and Serafeim (2014), an organisation with strict implementation of
CSR policy has better chances of improving their cash flows than compared to other
corporations. Most customers living in developed countries prefer to use products from
environmentally friendly corporations, which increase such company’s sales. Another benefit
of implementing CSR policies is an increase in the sources of investment for the company.
According to Crane, Matten, and Spence (2013), CSR policies ensure the transparency in
corporation’s work which attracts a large number of financiers to invest in the corporation.
Most investors prefer to associate with companies who have strict CSR policies since they
have a high reputation in the market.
Strict implementation of CSR policies has several benefits but it also includes several
drawbacks. The first drawback of implementing CSR policies is related to shifting of
corporations focus on profit making to providing benefit to society. According to Chandler

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and Werther (2013), the existence of a company is based upon providing benefit to its
shareholders, but by implementing CSR policies a corporation has to focus on other
stakeholders as well, such as employees, environment, society, and suppliers. Due to a
reduction in a profit-making objective, many investors might not prefer to invest their money
in companies with strict CSR policies.
The disadvantage of CSR policies includes enhancement in the expenses of the organisation.
As per Albuquerque, Durnev, and Koskinen (2014), for an effective CSR policy, a
corporation is required to change their process to the environmental friendly mechanism,
such as better machinery or environmentally friendly material, which costs higher than
normal materials. Corporations also required providing different incentives to their
employees and performing other activities for social benefits, which can increase the
expenditure of a corporation.
CSR policies require an organisation to maintain transparency in their operations which is
beneficial for consumers but difficult for corporations. As per Madden, Roth, and Dillon
(2012), providing each little detail to customers and investors can be frustrating for the
company. It can also be risky since other corporations can assess the future plans of the
company. The organisations are also required to provide details regarding their failures which
can eventually reduce the reputation of the company in the market. For example, if a phone
manufacturer company admits that the material used by them in the manufacturing of their
product increases environmental pollution, then the reputation of such company will reduce
in the market.
According to Kim, Li, and Li (2014), another disadvantage of using corporate social
responsibility is an increase in the prices of company’s products, as compared to other
competitors. The corporations with strict CSR policies regarding environment or employees
have high price products, for example, Apple, Starbucks or Google all have high priced
products than compared to their competitors. The customers in developed countries can
afford high price products but the customers of developing countries usually did not invest in
high price products when they have other alternatives. This reduces the corporation’s
revenues from developing countries.
The popularity of CSR policies has grown rapidly in past few years but there is still lack of
strict implementation. Most large corporations implement CSR policies but did not comply
with them to enhance their profits. For example, Volkswagen has strict CSR policies but the

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company still used the highly polluted material in their cars to enhance their profits. For
effective implementation of CSR policies, it is necessary that government prepare strict
regulations regarding CSR. The awareness between small and medium organisation regarding
environmental protection is also required for encouraging them to implement CSR policies
(Baumann-Pauly, Wickert, Spence and Scherer, 2013). Companies should analyse their
organisational structure before implementing CSR policies to reduce the disadvantages of
CSR policies and enhancing their benefits.

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Conclusion
In conclusion, the role of CSR policies has grown significantly which covers various parts
such as environment, suppliers, employees and other. A large number of multinational
corporations have implemented CSR policies into their business model but still, the effective
follow-up of such policies is missing. Various large corporations are found guilty of misusing
their CSR policies such as HSBC, Volkswagen, Starbucks and much more. To ensure
successful implementation of CSR policies, the government should prepare strict regulations
which will force the organisation to comply with CSR policies. The advantages of CSR
policies overcome its drawback and every corporation should implement such policies into
their business model.

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References
Aguinis, H. and Glavas, A., 2012. What we know and don’t know about corporate social
responsibility: A review and research agenda. Journal of management, 38(4), pp.932-968.
Albuquerque, R.A., Durnev, A. and Koskinen, Y., 2014. Corporate social responsibility and
firm risk: Theory and empirical evidence.
Baumann-Pauly, D., Wickert, C., Spence, L.J. and Scherer, A.G., 2013. Organizing corporate
social responsibility in small and large firms: Size matters. Journal of Business
Ethics, 115(4), pp.693-705.
Campbell, K. and Helleloid, D., 2016. Starbucks: Social responsibility and tax
avoidance. Journal of Accounting Education, 37, pp.38-60.
Carroll, A.B., 2015. Corporate social responsibility. Organizational dynamics, 44(2), pp.87-
96.
Chandler, D. and Werther Jr, W.B., 2013. Strategic corporate social responsibility:
Stakeholders, globalization, and sustainable value creation. Sage Publications.
Cheng, B., Ioannou, I. and Serafeim, G., 2014. Corporate social responsibility and access to
finance. Strategic Management Journal, 35(1), pp.1-23.
Crane, A., Matten, D. and Spence, L.J., 2013. Corporate social responsibility in a global
context.
Hopkins, M., 2016. The planetary bargain: corporate social responsibility comes of age.
Springer.
Kim, Y., Li, H. and Li, S., 2014. Corporate social responsibility and stock price crash
risk. Journal of Banking & Finance, 43, pp.1-13.
Kim, Y., Park, M.S. and Wier, B., 2012. Is earnings quality associated with corporate social
responsibility?. The Accounting Review, 87(3), pp.761-796.
Madden, T.J., Roth, M.S. and Dillon, W.R., 2012. Global product quality and corporate
social responsibility perceptions: A cross-national study of halo effects. Journal of
International Marketing, 20(1), pp.42-57.

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Naheem, M.A., 2015. AML compliance–A banking nightmare? The HSBC case
study. International Journal of Disclosure and Governance, 12(4), pp.300-310.
Suliman, A.M., Al-Khatib, H.T. and Thomas, S.E., 2016. Corporate Social
Responsibility. Corporate Social Performance: Reflecting on the Past and Investing in the
Future, p.15.
Tai, F.M. and Chuang, S.H., 2014. Corporate social responsibility. Ibusiness, 6(03), p.117.