Discuss the various theories and criticisms of CSR

CSR or Corporate Social Responsibility

Until the late 1950s, there have always been ongoing debates regarding the phenomenon of “corporate social responsibility” or CSR. Secchi (2007) and Lee’s (2008) latest analyses indicated that the interpretation, as well as the significance of the concept of CSR, have changed over time.

The traditional definition of Corporate Social Responsibility was confined to philanthropy and thereafter centered on corporate ties, in specific on the commitment an industry or organization has rendered to the settlement of social challenges. Public success was related to economic efficiency during the early 20th century.

Nevertheless, Oliver Sheldon (1923), the founder of this perspective, quoted in Bichta (2003), urged the administration to take lead to improve both justice and ethical standards by economics ethics in culture, i.e. to save money under the term effective production and utilization of capital.

The new CSR is a philosophy in which company companies understand the benefit of the community, assuming accountability for the effects of its actions on consumers, consumers, staff, owners, societies and many other stakeholders, as well as on the climate.

The “CSR” is often termed as corporate accountability, corporate governance, ethical corporations, and corporate social resources. This provision illustrates that companies, but also for the environment and culture in general, must cooperate with the regulations and implement willingly steps to enhance the health of their workers and their relatives.

CSR generally applies to organizational or industrial approaches that are ethically and community-friendly in their company. CSR includes a variety of practices, such as collaborations with indigenous communities, environmentally responsive engagement and the establishment of connections with workers, consumers and their relatives as well as environmental protection and mitigation practices.

The essay seeks to examine the significance and the functional importance of all the three CSR theories including utilitarian, managerial and relational. These theory groups were chosen since they covered the important elements of the economy, the strategic planning, and the beneficiaries.

These theories were mostly interdisciplinary in nature. The report then discusses the CSR’s position in the growth of society on the basis of the diversity of CSR from its definition to activities in various nations across the globe.

The essay is structured in the following ways: CSR philosophy is first examined so as to explore its meaning, context and strategies. Furthermore, CSR’s position in community growth is emphasized particularly as the CSR’s basic rationale is to consider its cultural, environmental as well as economic effect in the society.

Second, the expertise needed by CSR administrators is addressed so that the operational dimensions of CSR are properly understood. Eventually, assumptions and repercussions are developed considering the potential analysis.

Theories of CSR

Because theories, as well as approaches to CSR, are extremely heterogeneous this paper is focused on a detailed Secchi study (2007) and comparable to the Garriga and Mele research (2004). Secchi also developed a collection of theories that take into account the purpose the theories serve in the business and culture. The theories are:

1. the utilitarian theory
2. the managerial theory
3. the relation theory;

Table 1: Theories of CSR

Utilitarian Theories

Throughout the utilitarian concept, the organization is the only representative of the capitalist structure wherein the purpose is technically labeled as benefit maximization. Upon recognizing the value of an environment of obligation, CSR concepts arose, rooted in a company’s business ethics.

This is why the old concept of free-market capitalism gives rise to methodological individualism, internationalism and collective regulation and personal accountability. Utilities may also be regarded as associated with functional ideologies (Garriga and Mele in 2004; Jensen in 2002), that only treats the business as a tool of wealth generation.

The underlying concept of investing in a regional society was also founded upon functional ideas wherein Friedman (1970) claimed clearly prior to that the expenditure should supply the community’s living standards in the longer term with the services and facilities.

The functional ideas apply to strategic benefit approaches. For starters, Porter as well as Cramer (2002) including Litz (1996), who saw these theories for the basis for developing strategies for efficient use of the organization’s natural capital to gain strategic advantages, are inspired by those theories. The techniques also include the widely accepted philanthropic acts as marketing campaigns.

The utilitarian collection of concepts, Secchi (2007), is split into two parts: external benefits of the organization and the concept of flexibility. The hypothesis of social costs for CSR seems to have a foundation in which industrial anti-economic forces are believed to control the “socio-economic” system within the society.

It has also been referred to as functional philosophy, since it is known that “CSR” is only a method to the goal, originating in the assumption that the social influence of the organization is actually materialized from its political connection with community. Consequently, the ethical principle implies that the organization would recognize social obligations and mutual partnership privileges.

Managerial Theory

Secchi’s analyzes (2007) also highlight the concept of organizational philosophy, wherein business management relies centrally on CSR. It contrasts between both the CSR’s utilitarian approach as well as its administration. It means that anything outside the business is brought into consideration in the judgment-making process. Management philosophy has been classified into three categories:

• “Corporate performance of organizations (CSP)”
• “Social accountability auditing and monitoring (SAAR)”, and
• Multinationals social responsibility

The objective of CSP is to calculate the economic output impact of the socio-economic factor. The concern is therefore to manage the company together, taking into account economic and social determinants.

It is focused on the premise that businesses are relying on community for productivity and sustainable development. In order to maintain detailed records on their activity in corporate catalog, the company’s CSP is therefore split into 5 parameters:

• Centrality evaluates the reason why CSR is consistent with key project goals;
• Precision assesses the benefits of “CSR” to the company;
• Pro-activity assessing the extent of response to external requirements;
• Voluntarism, the flexibility of the organization in applying the CSR; and
• Accountability relates to how the group of stakeholders perceives obligation.

The managerial theory, in conclusion, addresses that the “socio-economic” factors are taken into consideration for the calculation of political-economic performance by businesses and the relation of the doctrine of social accountability to business strategies.

The integrative ideas of Garriga and Mele (2004), including civic obligation organizations and organizational social activities are concerned with the managerial theories. Social accountability stresses the process of law and social policy that is used as a guide for social success, while business social efficiency is defined as looking for social credibility.

Relational Theory

The relational theory seems to have its foundation in dynamic interactions between the corporation and its environment. The word implies that the CSR research relies on the interrelationships among the pair. Table 1 call for specific separation of “relation theories” into four categories:

• Organization and society;
• Stakeholder approach;
• Client nationality; and
• Social contracting

Business, as well as society, would imply “business in culture” where the relationship among the two groups stems from CSR. The growth of economic principles in a community is among the activities of CSR.

The second is the duty of an individual to take into consideration the impact of his judgment and behavior on the entire social structure. The social obligations of business-people must be stated as an overall interaction and reflect their social capacity.

One of the methods introduced for strengthening the operation of the business was the “Stakeholder’s strategy”.

It has also been considered a means of recognizing the truth to handle a company’s publicly accountable actions. The view of stakeholders often recognizes an organization to be a dynamic network with conflicting interests, in which the self-design and the development of a society occur harmoniously.

The strategy of the involved parties is focused on Garriga and Mele’s study (2004) both in the sense of interdisciplinary and ethical philosophies, in which the former discusses social demand convergence and the previous one insists on the best thing in order to create a healthy community.

The nationality of the partnership principle depends heavily on the form of group to which this is applied. It is indeed a direction a business should pursue in a responsible way. Ultimately, it is regarding the partnership between an organization and the customers and the previous must always pursue loyalty and interaction with them.

Garriga and Mele’s (2004) study of corporate nationality is an idea that is endorsed simultaneously (Swanson, 1995 and Wood and Lodgson, 2002), both in interventional and political perspectives.

Eventually, the partnership group’s social transaction philosophy relates to the fundamental question of defending the value of business practices, with a view to presenting the theoretical foundation for study of social interactions between community and businesses.

CSR is thus generated from corporate moral legitimacy thus the definition of “CSR” in the societal context involves the rationale of social activities that legitimizes the company’s actions.

Conclusion

Inferences on all these three CSR theory groups are: in terms of personal and mechanical visions, Utilitarian is generalized from a company’s perspective. Managerial is highly organizational and quantifiable, and the relational can be defined as an intermediate between them as it is value-based as well as interdependent.

As per the hierarchy of hypotheses, liability is the socioeconomic structure, the business and the essence of the partnership. Furthermore, a “not-so-distant interpretation of CSR confirms this inference by dividing philosophy into structural, financial, equitable and cost-based theories.

The instrumental theory focuses on economic priorities by social practices; political emphasis on the effective strategic use of company strength; integrative concentration on integrating management problems, environmental policy, stakeholder management or corporate social efficiency, as well as ethical theory stresses approaches for a healthy society.

Criticisms of CSR

Among the most prominent opposers of the “CSR theory” could be Milton Friedman. Schwartz (2010) relates to the Friedman (1962) opinion that “there is only one and only one social responsibility in company–the use of its capital and operation aimed at increasing its income as long as they abide by the laws of the sport, i.e. free and open competition without failure and theft” (Schwartz, 2010; p.52). The critique of the CSR definition can usually be classified into five groups:

• By doing next to nothing, CSR helps companies to create a good identity. The reports of Mullerat (2009), as well as Aras and Crowther (2010), have listed these skepticism. In this respect, companies can take part under activities contributing to “CSR” in a minimal way, but can also build a very good brand image for the organization by the publishing of CSR initiatives.
• The advertisement amount connected to the instance of CSR gives the feeling that most organizations are actively participating in the practices of CSR, while the truth can be quite dissimilar. In fact, the researchers conclude that expanded reporting by multiple forms of media of “CSR” problems tends to make an illusion that all organizations are involved. As per the Mullerat (2009), nonetheless, many smaller companies often ignore major global organizations that are involved in CSR activities and CSR problems.
• The CSR initiatives of certain firms contrast their current corporate strategies and patterns. This relevant issue is addressed extensively by Mullerat (2009), Horrigan (2010), and Fernando (2011). The above scholars listed cases in which global companies discuss decent labor standards and equitable working practices within their internal structures, yet at the present, they deliberately outsource a few of their operational practices to a variety of emerging countries in which representation in their employment and function with them is a matter of concern.
• Through their strong participation in CSR problems, the presence of large companies and international corporations grows in community. Mullerat (2009) and Tolhurst et al (2010) suggest that corporations are considerably affected by positive involvement in CSR throughout the different facets of society.
• The CSR is a false pledge and just a useful tool for public communications. Several scholars like Catka et al. (2004), Lepoutre and Heene (2006), Banarjee (2007), Cilliberti etal. (2008), Johnson et al. (2008), Mullerat (2009), and Heath (2010) discussed these particular criticisms of CSR. The suggestion that CSR should be a mere propaganda and trend is a “common” criticism of CSR.

References

Secchi, D. (2005). The Italian experience in social reporting: An empirical analysis. Corporate Social Responsibility and Environmental Management, 13, 135-149

Lee, M. P. (2008). Review of the theories of corporate social responsibility: Its evolutionary path and the road ahead. International Journal of Management Reviews, 10,1, 53-73.

Bichta, C. (2003). Corporate socially responsible industry (CSR) practices in the context of Greek. Social Responsibility and Environmental Management, 10, 12-24.

Garriga, E. and Mele, D. (2004) Corporate social responsibility theories: Mapping and territory. Journal of Business Ethics, 53, 51-74

Litz, R. A. (1996). A resource-based view of the socially responsible firm: Stakeholder interdependence, ethical awareness, and issue of responsiveness as strategic assets. Journal of Business Ethics, 15, 1355-1363.

Secchi, D. (2007). Utilitarian, managerial and relational theories of corporate social responsibility. International Journal of Management Reviews, 9, 4, 347-373.

Swanson, D. L. (1995). Addressing a theoretical problem by reorienting the corporate social performance model. Academy of Management Review, 20(1), 43-64.

Aras, G., & Crowther, D. (2010) A Handbook of Governance and Social Responsibility, Gower Publishing, UK

Banarjee., S.B. (2007) Corporate Social Responsibility: the good, the bad and the ugly Edward Elgar Publishing, Cheltenham, UK

Cartka, P., Balzarova, M.A., Bamber, C.J.  & Sharp, J.M. (2004). How can SME’s effectively implement the CSR agenda? A UK case study perspective.  Corporate Social Responsibility and Environmental management.  11:140-149

Cilliberti, F., Pontradolof, P., & Scozzi, B (2008). Investigating Corporate Social Responsibility in supply chains: and SME perspective.  Journal of Cleaner production.  16:1579-1588

Fernando, A.C. (2011) Business Environment, Pearson, USA

Freitag., A.R. (2008) Staking Claim: Public Relations Lenders Needed to Shape CSR Policy, Public Relations Quarterly,  Volume:52, Issue:1

Heath., R.L. (2010) The SAGE Handbook of Public Relations, John Wiley & Sons, New Jersey, USA

Lepoutre, J. & Heene, A. 2006. Investigating the impact of firm size on small business social responsibility: A critical review. Journal of Business ethics. 67:257-273

Mullerat, R. (2009) International Corporate Social Responsibility, Kluwer Law International, Netherlands

Perrini., F., Pogutz., S. & Tencani., A. (2006). Developing Corporate Social Responsibility: a European Perspective, Edward Elgar Publishing, Cheltenham, UK

Johnson., G., Scholes., K. & Whittington., R. (2008) Exploring Corporate Strategy, 8th Edition, FT Prentice Hall, Essex

Schwartz, MS, 2011, Corporate Social Responsibility: An Ethical Approach, Broadview Press, USA

Tolhurst, N, Pohl, M, Matten, D & Visser, W, 2010, “The A to Z of Corporate Social Responsibility”, Wiley Publications, New Jersey, USA