Theoretical Framework: Corporate Social Responsibility (CSR) Definition CSR is a much broader concept than business ethics. Business ethics is the application of ethics and ethical theory to the decision of business. CSR claims that businesses are more than just profit-seeking entities and, therefore, also have any obligation to benefit society. CSR is about business and other organizations going beyond the legal obligation to manage the impact they have on the environment and society.
In particular, this could include how organizations interact with their employees, suppliers, customers and the community in which they operate, as well as the extent they attempt to protect the environment. Nature According to Carroll’s four-part model, corporate social responsibility encompasses the economic, legal, ethical, and philanthropic expectations [placed on organizations by society at a given point in time. Motivation To be corporate social responsible, businesses must go beyond profit-making to be responsible for a variety of stakeholder groups other than focusing exclusively on investors.
It is applicable to both large corporations and SMEs. The firm goes beyond compliance and engages in ‘actions that appear to further some social good, belongs to the interests of the firm and that which is required by law’. Outcome The outcome of CSR includes financial performance, corporate reputation – brand & image, employee commitment, cost saving, customers, government, and competitiveness. Components There are six stakeholder groups considered as the most important influence factors in terms of corporations’ social responsibility.
They are shown as followings: Customer responsibility practices It demonstrates customer commitment by providing high quality service that includes complete information, responding to customer complaints, and adapting products and services to enhance customer satisfaction. Employee responsibility practices This element includes equitable employee selection, promotion, and compensation practices, supporting employee educational development, and helping employees attain work-family life balance.
Investor responsibility practices It encompasses the factors related to seeking investor input on strategic decisions, responding to investor needs and requests, and providing all investors with a competitive return on their investment. Supplier responsibility practices It focuses on developing long-term collaborative supplier relationships founded on open communication and information sharing, cooperative goal- and decision-making, and offering suppliers price guarantees for the future.
Community responsibility practices It demonstrates voluntary commitment to improve the quality of life in their local communities by giving resources to local charities, and sponsoring cultural, sports, and education programs. Environmental responsibilities It integrates environmental sustainability goals and objectives in organizational operations. It is typified by voluntarily exceeding government environmental regulations, implementing environmental management systems. Influence Factors
There are two types of Influence Factors in CSR, which are Macro Factors and Micro Factors. Macro Factors are the external elements affecting CSR strategy development of the company whereas Micro Factors are those internal elements having effect on CSR strategy decision making of the company. Macro Factors can be the environmental factors such as Political, Economical, Social and Technological elements. On the other hand, Micro factors can be Firm size, Budget, Top management commitment, Decision maker morality and Company culture.