CSR Strategy Analysis: Benefits, Drawbacks, and Corporate Influence

This essay provides a comprehensive analysis of Corporate Social Responsibility (CSR) strategies, examining their benefits and shortcomings, and their influence on corporate performance and stakeholder relationships. The introduction defines CSR and highlights its focus on sustainable development and ethical conduct. The essay then delves into the merits of CSR, such as enhanced reputation, employee retention, and increased investment. It also discusses the drawbacks, including increased costs, potential hindrances to profit-making, and challenges related to disclosures and implementation, particularly for small and medium-sized enterprises. The essay analyzes CSR from the perspective of various organizations and market experts, concluding with a call for government regulations to ensure effective implementation and prevent misuse of CSR policies. The essay emphasizes the need for global adoption of CSR strategies to benefit society and the environment, which is crucial for the sustainable growth of corporations.

Running head: CSR 0
Corporate Responsibility and Ethics

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Contents
Introduction................................................................................................................................2
Merits and Shortcomings of CSR Strategy................................................................................3
Conclusion..................................................................................................................................7
References..................................................................................................................................8

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Introduction
Corporate social responsibility or CSR is a modern corporate approach which focuses on
gaining sustainable development by providing economic, environmental and social to various
stakeholders of the corporation. By implementing CSR mechanism, a corporation can ensure
that all the transaction will be conducted ethically and organisation will work according to the
interest of its stakeholders. CSR strategy is focused on performing the duties of a company as
a corporate citizen instead of just focusing on the revenues. Most of the multinational
organisations implement a CSR approach while dealing in foreign countries.
The popularity of CSR strategy has grown but there is still lack of strict regulations to
implement the policies of the corporation. Many organisations implement a CSR strategy but
failed to comply accordingly. This essay will discuss the benefits and shortcoming of CSR
policies and effect of CSR strategy corporations. Further, the essay will analyse the CSR
influence from the perspective of various organisations and evaluate the theories of market
experts.

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Merits and Shortcomings of CSR Strategy
The concept of corporate social responsibility has grown in previous few years. A large
number of organisations have implemented CSR policies in their business model for the
sustainable development of their stakeholders. According to Galbreath (2010), the effective
CSR strategies adopted by organisation ensure that the activities of a company are based
upon developing various stakeholders such as customers, environment, supplier, and
shareholders. CSR strategy is self-regulated by the corporations and they can adopt policies
according to the requirement of their organisation. Many companies misuse the policies of
CSR strategy to gain an unfair advantage. The influence of government has reduced with the
increase in the number of corporations. The implementation of CSR policies can assist in the
development of a corporation.
The recruitment and retention process of organisations is benefited by implementing a strict
CSR policy. Crane, Matten and Spence (2013) provided that the International corporations
require hiring the talented employees from worldwide and effective CSR policies assist them
in achieving such objective. Most multinational corporatism such as Google, Facebook,
Apple or Toyota implements an effective CSR policy toward the development of their
employees. The organisations provide various benefits and incentives to their employees
along with self-development programs. A study provided that employees prefer to work for
corporations with effective CSR policies. For example, Google has implemented an effective
CSR policy which has gained the title of best place to work many times. A Google employee
gets various incentives such as scholarships for further studies, time to work on private
assignments, annual facility vacations and much more. Other than these benefits, Google
focus maintains various environmental provisions which reduce their carbon footprint and
preserve the environment (Hansen et al. 2011).
By implementing a CSR strategy in the business model, an organisation can enhance their
reputation in the market. As per Mishra and Suar (2010), people consider corporations with
strict CSR policy as reputable organisations who ensure the sustainable development of their
stakeholders. The CSR policies ensure that steps taken by an organisation are for the
improvement of its stakeholders which increases the reputation of a company. For example,
Apple is one of the world’s most reputable corporations. Apple ensures that their products are
safe for the environment and they perform various activities for the society’s development.

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Apple uses 100 percent natural energy to power their factories and data centers, the material
used by their in the manufacturing process are also recyclable. This method ensures the
protection of the environment and at the same time, it helps Apple sustain their future growth.
As per Ruggie (2017), CSR strategy adopted by organisations requires compliance with
various guidelines, one of which includes proper and timely disclosure of business
transactions. The investor prefers the disclosure made by the company since it assists them in
analysing the performance of the corporation. The timely disclosures also ensure that the
money invested by financiers are utilised by the corporation is the correct way. Therefore, an
effective CSR strategy enhances the amount of investment in a corporation.
Most of the people in developing countries prefer to use products which are environmentally
friendly. According to Jackson and Apostolakou (2010), corporations can charge a high price
for same products if they implement the environmental friendly procedure in their
manufacturing process. Starbucks is known for their high-quality coffee which produced by
corporations only form ethical sources. A study provides that a maximum number of online
customers prefer to buy products form corporations with better environmental protection
policies. Therefore, CSR policies regarding preservation of environmental resources can
increase the sale of an organisation.
The CSR strategy has gained popularity in developed markets but most small and medium
scale corporations avoid implementing the strategy in their business model due to its
shortcomings. Aras, Aybars and Kutlu (2010) provided that the main difficulty of CSR policy
is that it increases the expenditure of an organisation. The incentive of employees and the
environmental friendly procedures cost significantly higher than compared to other sources.
Large corporations such as Apple or Google can afford the high expenditures but smaller
corporations avoid the expenditures. For the environmental friendly procedure, corporations
require to completely change their manufacturing and selling procedure. The complete
overhaul of procedures can be significantly expensive of organisations which can reduce their
revenues. For example, Volkswagen uses highly pollutant material in their cars to reduce
their costs. Such material increases the pollution from Volkswagen vehicles.
The primary objective of companies is to increase its profits and shareholder’s value, but
CSR policies shift such object to stakeholder interest. According to Chih, Chih and Chen
(2010), CSR strategy requires the organisation to provide benefits to society and stakeholders
which is not beneficial for shareholder’s value. If the corporations focus on providing benefit

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to stakeholders than their market share reduces considerably. CSR policies can hinder the
company’s success because they would not be able to engage in the profit-making activities.
The number of companies shareholder can also decrease since their interest is not the first
objective of the organisation.
The disclosures made by a corporation can be detrimental to the success of a company.
Regular disclosure can frustrate the board of directors of the organisation. As per Dhaliwal et
al. (2012), the information can be used by competitors of the company to formulate
competitive strategies against the company. The disclosures also provide information
regarding the drawback of corporation products to the customers, which can reduce the
reputation of the organisation. For example, if a company discloses information regarding the
pollutant material used by them or the shortcoming of their products, customers will not
purchase such products. Such information can eventually reduce the organisation’s market
share.
The popularity of CSR strategy has grown mostly in developed countries, customers in such
countries live a high-class lifestyle, therefore, they can afford high price products. Horrigan
(2010) provided in his book that in case of developing and underdeveloped countries, the
demand for high quality and environmentally friendly products are not significant. The
maximum number of customers lives in such countries, therefore, it is difficult for
corporations to increase the rate of their products. To increase their market shares, companies
reduce their prices by avoiding the CSR policies. For example, Starbucks enter into a joint
venture with Indian company Tata to reduce their process while entering in the Indian
market.
Due to the lack of legal regulations, the strict implementation of CSR policies is difficult for
government. As per Kanji and Chopra (2010), international corporations use their resources
to avoid implementation of CSR policies for augmentation of their profits. Many reputable
corporations have found guilty of breaching their CSR policies to increase their revenues. For
example, in 2014, various large corporations such as Facebook, Amazon, and Starbucks
found guilty of tax evasion by using their properties in the United Kingdom. HSBC bank has
also found guilty of breaching their CSR policies by disclosing wrong information regarding
their market valuation. The company also assists their rich clients by letting them evade tax
through the bank (Lanis and Richardson, 2012).

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The above-methodized incidences show the necessity of strict regulations regarding CSR
strategy. As per Kolk and Pinkse (2010), by implementing effective CSR policies
corporations can avoid fraud or abuse of their position. The government is required to pass
legislative policies regarding CSR strategy and introduce a strict penalty for its breach. For
the preservation of environmental resources, corporations in developing or underdeveloped
countries should also apply environmental effective CSR policies. Global implementation of
CSR strategy can benefit the society and corporation by sustaining their future growth.

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Conclusion
From the above essay, it can be concluded that the concept of CSR strategy has benefited
various sections of society. The advantage of CSR policies benefits not only the company and
its stakeholders but overall society too. It is necessary that organisations analyse their
working environment to implement an effective CSR strategy. Many corporations misuse
their CSR policies to gain profits; therefore, the government should provide new regulations
which enforce the proper implementation of CSR policies. The awareness regarding the
benefits of CSR strategy should be spread between small and medium enterprises. Effective
CSR strategy benefits society and environment which should be mandatory for all the
corporations worldwide.

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References
Aras, G., Aybars, A. and Kutlu, O., 2010. Managing corporate performance: Investigating the
relationship between corporate social responsibility and financial performance in emerging
markets. International Journal of productivity and Performance management, 59(3), pp.229-
254.
Chih, H.L., Chih, H.H. and Chen, T.Y., 2010. On the determinants of corporate social
responsibility: International evidence on the financial industry. Journal of Business
Ethics, 93(1), pp.115-135.
Crane, A., Matten, D. and Spence, L.J., 2013. Corporate social responsibility in a global
context.
Dhaliwal, D.S., Radhakrishnan, S., Tsang, A. and Yang, Y.G., 2012. Nonfinancial disclosure
and analyst forecast accuracy: International evidence on corporate social responsibility
disclosure. The Accounting Review, 87(3), pp.723-759.
Galbreath, J., 2010. How does corporate social responsibility benefit firms? Evidence from
Australia. European Business Review, 22(4), pp.411-431.
Hansen, S.D., Dunford, B.B., Boss, A.D., Boss, R.W. and Angermeier, I., 2011. Corporate
social responsibility and the benefits of employee trust: A cross-disciplinary
perspective. Journal of Business Ethics, 102(1), pp.29-45.
Horrigan, B., 2010. Corporate social responsibility in the 21st century: Debates, models and
practices across government, law and business. Edward Elgar Publishing.
Jackson, G. and Apostolakou, A., 2010. Corporate social responsibility in Western Europe:
an institutional mirror or substitute?. Journal of Business Ethics, 94(3), pp.371-394.
Kanji, G.K. and Chopra, P.K., 2010. Corporate social responsibility in a global
economy. Total Quality Management, 21(2), pp.119-143.
Kolk, A. and Pinkse, J., 2010. The integration of corporate governance in corporate social
responsibility disclosures. Corporate Social Responsibility and Environmental
Management, 17(1), pp.15-26.

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Lanis, R. and Richardson, G., 2012. Corporate social responsibility and tax aggressiveness: a
test of legitimacy theory. Accounting, Auditing & Accountability Journal, 26(1), pp.75-100.
Mishra, S. and Suar, D., 2010. Does corporate social responsibility influence firm
performance of Indian companies?. Journal of business ethics, 95(4), pp.571-601.
Ruggie, J.G., 2017. Corporate Social Responsibility and the Global Compact1. Business,
Capitalism and Corporate Citizenship: A Collection of Seminal Essays.