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2007bai7568.doc.doc 2007bai7568.doc.doc Document Transcript

  • THREE TYPES OF CORPORATE SOCAIL RESPONSIBILITY ENGAGEMENT; SELF INTEREST & ALTRURISM ON SUSTAINABILITY L. Chamila Roshani Perera Graduate School of Business Administration, Kobe University, Japan chamilaroshini2004@yahoo.com & Chandana Rathnasiri Hewege Department of Management, Caulfield Campus, Monash University, Australia chandana.hewege@buseco.monash.edu.au ABSTRACT Milton Friedman emphasised on firm‟s self-interest (profit maximisation) as the main direction for CSR. Some of the Post-Friedman literature on CSR calls for firm‟s selfless commitment (altruistic) to the betterment of the society beyond profit motive. The two opposites, firm‟s self interest and the firm‟s selfless (altruistic) commitment for CSR, have been analysed with a view to developing a synthesis that can ensure sustainability of CSR practices. It is believed that these two opposites are not mutually exclusive and that it is not necessary to attempt a trade off between the two. Maximisation of both ends can be achieved by strategically linking CSR into business. This paper theoretically argues that sustainability of CSR can be ensured by incorporating it as an important element of firm‟s business strategy. A typology of CSR engagement of firms is developed to categorise different CSR initiatives of firms. Keywords: CSR, sustainability of CSR, firm‟s self-interest and altruism. INTRODUCTION Since the pioneering work of Bowen (1953), social responsibility of businessman, the concept of corporate social responsibility (CSR) has been receiving unprecedented attention from researchers and practitioners (Andrews, 1972; Carroll, 1979; Freeman 1984; Wartick and Cochran, 1985; Utting, 2005; Luo. X. & Bhattacharya C.B, 2006). However it was Milton Friedman (1970) who boldly expounded the inevitability and primacy of firm‟s self-interest in engaging in CSR by business firms. He claimed; There is one and only one social responsibility of business-to use its resources and engage in activities designed to increase its profits as long as it stays within the rules of the game… Friedman‟s emphasis on profit motive was, perhaps, to eliminate the dilemma that could arise when profit oriented private firms engage in non-profit actions. In a capitalist economy where market forces operate and where firms engage in competition to maximize market share with a craze for cost cutting operations, it is not viable to commit resources for public welfare unless there is a direct benefit toward profit motive. However some post–Friedman CSR literature (Carroll, 1979; 1
  • Waddock, 2004; Matten and Crane, 2005), being critical of Friedman, demands selfless (altruistic) corporate commitment to society beyond profit motive. Many firms have provided examples of CSR actions, yet there are questions relating to ulterior motive and the scope of CSR activities these companies engaged in. Close scrutiny of these CSR actions and the related propaganda by the firms provide evidence for self-interest (firms trying to use CSR as a strategic tool for long term business growth) in CSR actions. However, in order to refute Milton Friedman‟s (1970) argument for primacy of profit over social welfare, one has to prove that firms engage in CSR with a selfless, genuine commitment to society devoid of profit motive. Most of the post-Friedman CSR studies seem to have emphasised less on the importance of firms‟ profitability and growth for the sustainability of CSR engagements. Ideally, private firms should conduct business operations in a manner that preserves and enhances social well-being. Being social entities and corporate citizens, private firms are said to have a responsibility to be discharged in lieu of the exploitation of community resources and the detrimental actions against community as a result of profit oriented business operations. Due to escalation of corporate failures in this regard, CSR has become an issue of grave concern. Although the necessity of CSR is undisputedly accepted by all, there are unresolved issues regarding conceptualisation and operationalization of CSR actions in corporate practices. On one hand, as Friedman expressed, it is unrealistic to expect that private firms willingly and altruistically engage in CSR at the expense of profit maximization. On the other hand, it is the duty of academics, practitioners, law making bodies and all sorts of „watch dogs‟ of just and fair society to make sure private firms behave in a socially responsible manner. For this to happen, it is important to look at the motive for doing CSR actions by private firms. Generally, private firms are not willing to tolerate „pain‟ if there is no „gain‟! Self-interest of firms is an important factor for firms to engage in CSR practices. Due to variety of pressures from stakeholders, private firms are increasingly engaged in CSR activities and are aggressively disseminating CSR related propaganda through media. In the context of growing corporate power and curtailment of social welfare actions by the governments, private corporations are expected to act, firstly, for the improvement of social welfare of citizens and secondly, in a socially responsible (ethical) manner in business dealings. Majority of CSR themes fall outside of core business operation of firms and some of the themes are in the domain of duties and responsibilities of a responsible government. It is widely accepted that corporations should be engaged in socially responsible actions for the purpose of enhancing social well-being. However, from a utilitarian perspective, it is unrealistic to assume that in the absence of material gain in return (or strategic advantage), profit oriented private firms lavishly commit resources for social well being. In fact, there is a problem in expecting profit oriented, competitive firms to spend on social welfare like governments do. So, it can be questioned whether there can be a genuine commitment (without expecting a material gain in return) for CSR by private firms. In the main stream CSR literature, there is an inclination toward philanthropic nature of CSR. Firms are likely to engage in occasional corporate donations or corporate philanthropy as an expression of CSR consciousness (Maignan and Ferrell, 2001). This „philanthropic–only‟ nature of CSR does not amount to be complete CSR 2
  • practice (Carroll, 1996). CSR can be viewed from four facets of philanthropic, ethical, legal and economic responsibilities of firms (Carroll, 1996). Accordingly, firms should go beyond charitable activities and frequent donations. More importantly, firms should engage in CSR in a manner that it encompasses the overall business. Sustainability of CSR cannot be maintained unless private firms have some benefits from CSR activities. Once CSR actions are linked with company business strategy and are incorporated in to day-to-day operations of the business, some firms have shown positive results and also the sustainability of CSR (Key and Popkin, 1998). Most of the well known CSR practices of firms (Benetton, Body Shop and Ben & Jerry), indicate as to how these firms have used CSR for corporate image building (that generate higher customer loyalty with repeated purchases). Sizable amount of post-Friedman CSR studies appear to have neglected the importance of firm‟s self-interest in CSR for CSR sustainability. Also, these studies have demanded selfless company engagement in a wide spectrum of social welfare actions outside core business activities. This may result in a situation where the firm deviates from its direct responsibility to customers and other stakeholders. Further, though it seems attractive, redirecting the companies toward socially responsible engagements beyond the core business may yield in unintended and unfavourable performance. Embedding selfless social commitments in to business will deviate the business from its core mission (Badger.T.A, 2004). Moreover, philanthropy without active engagement has been criticized as „narrow‟, „self serving‟ and „often motivated just to improve the corporation‟s reputation‟ (Husted.B, 2003).Thus the main argument of this paper is that sustainability of CSR can be ensured by incorporating it as an important element of core business strategy that enables firms to receive a benefit in return for CSR commitment. The paper introduces three types of CSR engagement to enable categorization of CSR initiatives in terms of sustainability. The rest of the paper is organized in five sections. Firstly, a review of changing business context and emergence of CSR is presented followed by a theoretical review self interest & altruism of CSR in the second section. Thirdly, the relationship between CSR and business gain is discussed. Fourthly, how to ensure sustainability of CSR is explained. Finally, in the fifth section, discussion and conclusion is presented. Change in Business Context and the Emergence of CSR concept CSR has been receiving increasing attention of practitioners and academics due to changes in business context, especially over the past half century. According to neo- classical view of firm, the only social responsibility of a firm is to provide employment and pay taxes (Moir, 2001). Such views are in harmony with profit-only idea of Friedman. However complying with tax obligations is not apparently sufficient to convey the level of corporate social responsibilities of firms (Bowie, 1995). Moreover, as a result of significant reductions in government spending on social welfare, public policy makers expect greater social involvement from corporations. (Maigan, et al., 2001). Change of regulatory systems and increasing influence of society over businesses paved the way for CSR. For example, according to Gallin (2000), the two reasons for CSR to emerge are; (1) the rise of welfare legislation in post-war Europe ,occurred in a context where the labour movement and other ideological and political forces associated with social democracy were relatively strong (2) big businesses had been 3
  • weakened through decades of depression and war. Businesses have been influenced by civil society engagement in CSR since 1980s. Many issues such as child labour, sweatshops, fair trade, the rights of indigenous people, toxic chemicals, oil pollution, tropical deforestation, and other forms of environmental degradation have been highlighted in actions of numerous NGOs, consumer groups and trade unions (Utting, 2005). Similarly, there has been increased pressure on organizations to acknowledge responsibility to society and to act in a way that benefits the society overall (Lambin, 1997). Further globalization and economic liberalization tend to alter the balance of right and obligations which inturn change the behaviour of organizations (Change 2001). Due to these new circumstances, not only firms are expected to be virtuous, but also they are supposed to practice social responsibility (Carroll, 2000). In line with this trend, increasing number of firms has been adopting a variety of voluntary initiatives aimed at improving CSR records (Utting, 2005). The change in the business context also influences the way in which businesses are evaluated. Thus, business performance is measured not only as a function of economic and moral accomplishments but also its social contributions. In 1969, Henry Ford II commented; “The terms of the contract between Industry and society are changing…. Now we are being asked to serve a wider range of human values and to accept an obligation to members of the public with whom we have no commercial transactions” ( Chewing et al.,1990,p.207 cited in Lantos 2001) In addition, because of size and special legal status, the modern firms may be perceived as public institutions rather than private organizations in many aspects. A private firm, to a certain extent, is expected to perform a public role. Some argue that private firms must be held responsible to discharge higher standards of social responsibility than that of individuals (Miller and Ahrens, 1993). Changing social context imposes pressure of change on it social constituents. Firms, being social entities, have to adapt to these changes for survival. Now, firms are evaluated based on the gap between newly defined social expectations and the actual social performance. CSR has thus become inevitable, given the present social context. In a way, corporate social responsibility is a tool, which guides organizations to comply with these changing social expectations and thereby to ensure continuity of the organization. Sustainability of corporate social responsibility is dependent on the sustainability of business organizations and vice versa. Therefore, there should be a link between CSR and business performance. By incorporating social performance of a business in to its core business operations, this link can well be established. Firm’s self interest and altruism Over the past few decades, as evident from literature, the notion of CSR has been taking its form as a concrete concept (Browen 1953; Heald, 1957, cited in Ulmann, 1985; Fiedman, 1962; Mguire 1985; Wartick and Cochran, 1985; Klein et al, 2004). However, still it is apparent that the notion of CSR is scattered widely in many dimensions. The broad nature of the concept and the lack of precise definition indicate that CSR is still taking its shape as a business philosophy and a practice (Frankental, 2001). Initially, corporate donations and other philanthropic actions were identified as CSR and these were considered „out side‟ of core business function. Organizations embraced CSR by engaging in social activities and making charitable contributions (Fry, Keim and Meners, 1982). Some of the previous studies implied that CSR is yet 4
  • to reach perfection as far as conceptual clarity is concerned (Berner 2005, Smith 2003). Subsequently, scope of CSR began to expand to cover a wider spectrum of areas and more importantly several attempts have been made to incorporate CSR as an important business function. The notion of CSR can be grasped in a continuum; „normative case (altruism)‟, and „self interest‟ (Holliday et al.2002; Porter and Van Der Linde 1995; Smith, 2003). Firstly, the normative case (altruism) of CSR accepts the fact that firms need to commit their resources for societal benefits. This commitment of a firm is not only for business stakeholders but also for those groups who do not have direct business relationship. Theoretically, the normative theory developed by Donaldson, T., and Preston, I. (1995) also rationalizes as to why firms should give consideration to their stakeholders. This perspective is also supported by some of the Post Friedman studies (Carroll, 1979, Waddock, 2004; Matten and Crane, 2005) where as Friedman‟s (1970) argument of CSR was rejected in normative terms. The definition developed by Commission of the European communities (2001) emphasises on the voluntary nature of CSR. According to this definition CSR is “a concept whereby companies integrate social and environmental concerns into the business operations and their interactions with their stakeholders on a voluntary basis”. Similarly CSR is defined as a commitment for sustainable economic development ensuring quality of life of employees, development of local communities and society at large (Business and Sustainable Development ,2001; The World Bank 2004). Some of the definitions moved in different aspects within the normative case of CSR by defining CSR as forming relationships with artistic, educational, and cultural institutions, whereby firms integrate themselves into their social communities and shape favourable attitudes to their activities (Useem, 1988). Moreover, there are instances where CSR is related to business ethics (Kilcullen, 1999). For example, Andrews (1998) described CSR as intelligent and objective concern for the welfare of society that restrains individual and corporate behaviour from ultimately destructive activities, even though those activities ensure immediate profits (cited in Hartman, 1998). It is evident, that the other end of the CSR continuum, „self interest‟, has been gaining prominence in recent CSR research literature. With Bowen‟s (1953) seminal work, Social Responsibilities of the Businessman, researchers began to investigate the social responsibility aspects in businesses. However, it was after Friedman‟s (1970) writing, the real debate started. Friedman boldly claimed that the sole social responsibility of a business is to be profitable, operating within the stipulated legal framework. Friedman was criticized based on the argument that a private firm should not be allowed to exploit the environment and society that support its very existence. However, it should be noticed that many of the critics have not been able to totally reject Friedman‟s view. Modern day businesses are showing a transition from this „volunteerism‟ perspective to „self interest‟ perspective in CSR, as they believe CSR contributes to the development of the business (CCPA, 2000). Further, it is noted that 90% of the fortune 500 companies have explicit CSR initiatives (Kotler and Lee 2004; Lichtenstein Drumwright, and Bridgette 2004) and many large-scale firms tend to create specific senior management positions to take the responsibility of CSR activities (Pearce 11.J.A, and Doh.J .P, 2005). The firms ensure to treat stakeholders in an ethical and responsible manner aiming at creating higher standards of living while preserving the firms‟ profitability (Snider, et. al., 2003). 5
  • As a whole, although there is a CSR continuum laying between „normative case (altruism)‟ and an „self interest‟ (the business case), executives and companies engaging in CSR are likely to reflect a mixture of these extremes (Smith, 2003).When analysing the „mixture‟, the scope of CSR can be viewed from a framework that consists of two dimensions; 1) narrow to wider perspective, 2) cost to benefit driven perspective. The narrow to wider perspective of CSR covers a range of issues stating from simple corporate philanthropy and extending to more complex issues such as plant closures, employee relations, human rights, corporate ethics, community relations and environment. It is noted that the key CSR issues are often clustered under four headings: Marketplace, Workplace, Environment and Community (Whooley, 2004). Overall, Cost -benefit driven perspective is more or less related to the profitability argument of Friedman. In recognizing the business aspects of CSR, Carroll (1979) developed a conceptual model including three dimensions; discretionary, ethical and economic responsibility. The model was used by Wartick and Cochran (1985) and Wood (1991) to build a complete model of corporate social performance. Incorporating CSR and corporate social responsiveness, Wood (1991) emphasized the need of measuring corporate social performance. Elaborating the discretionary dimension; managers‟ moral responsibilities in selecting activities to achieve socially responsible outcomes, Schwarz and Carroll (2003) improved the concept of CSR beyond philanthropic framework. This new paradigm integrated CSR in to the main business functions removing it outside „non-business‟ voluntary activity label. Further, 3C-SR model , a refined version , (Meehan at al, 2006) guides managers in dealing with the growing number of social conscious consumers and achieving economic and social objectives simultaneously. Overall, it can be concluded that CSR is now almost universally recognized as an integral component of an executive‟s role, either motivated by self interest, altruism, strategic advantage or a political gain. (Smith, C.2001; Campbell, L., et al.1999; Shaw, et al, 1993). CSR AND BUSINESS GAIN In Capitalist economies, market forces determine as to how resources are allocated for the production of goods and services. Objective of a firm is to maximize profit. The size of market share directly influences the quantum of profit. Competition among firms to secure a bigger piece of market share is bound to push firms toward continuous struggle for cost cutting operations. Downsizing, re-engineering, restructuring, de-layering and retrenchment are some of the cost cutting projects of modern day business strategy affecting CSR performance. Committing resources for CSR with the sole intension of social welfare is an ideal and altruistic state and only a small number of firms are capable of doing this. Most of the firms that engaged in CSR acknowledge the fact that motivation for CSR came from increased revenue due to higher level of customer loyalty caused by elevated corporate image (Business and Sustainable Development, 2001). Firms that initially started CSR with the sole intension of social welfare without expecting a direct benefit from CSR later realized the difficulty in sustaining CSR actions. Some studies confirmed that firms practice CSR with the motivation of maximizing self- interest. A study in Australia on motivations of businesses for community involvement (CCPA, 2000) found that Australian business is „experiencing a transition on expectations of its social role‟ but part of the reason is that this social role „contributes to the continuing health and growth‟ of business. This „social role‟ appears to aid sustainability of CSR practices 6
  • and thereby the sustainability of business. Lantos (2001) argued that though any organization has an obligation for ethical CSR, altruistic CSR is not legitimate. Therefore, companies should limit their philanthropy to strategic CSR (good works that are also good for their business). Many studies confirmed the proposition that good social and environmental performance is positively associated with organizational profits (Porter and van der Linde 1995; Balabanis et al., 1998 Holliday et al.2002).Interestingly; CSR has been a rewarding tool for many marketers. Large number of studies revealed that CSR plays a role in consumers, brand and product evaluation, and customer satisfaction (Asher,1991;Browen and Dacin,1997;Handelman and Arnold,1999;Klein and Bronn and Vrioni ,2001;Dawar, 2004;Peterson and Hermans ,2004;Luo. X & Bhattacharya. C.B., 2006). Moreover, the role of CSR in supporting marketing function is revealed by a study which claims that when price and quality are perceived as equal many customers tend to favour socially responsible companies and products(Bronn and Vrioni ;2001). There is an argument that firms use CSR related programmes for public relations ends and that raises moral problems over the real motivation of firms (L‟Etang 1994). Bronn and Vrioni (2001) have explored as to how companies use CSR in their marketing communication activities. They found that the changing attitudes of customers support companies in making marketing increasingly relevant to the society. Asher (1991) studied the effect of „green Marketing‟ on consumer behaviour at ATM machines. This study examined advertising campaigns that are tied to environmental friendly actions. It was found that ATM withdrawals went up by 56% in 1988-1990.The large food retailers (UK) have been steadily increasing their market share as a result of CSR being used as a marketing and communication tool (Jones.P, et al; 2005). In this study, the major CSR themes used by UK‟s top ten food retailers are organic and fair-trade products, healthy living ranges, local produce and community issues and CSR information printed on product labels and packaging, shelf edge marking, information leaflets, banners and posters. Conversely, some other studies reported on adverse consequences of not being socially responsible. The case study of the Exxon Valdez oil spill in Prince William Sound in US coastal waters revealed that the company has ignored the fundamental ethical aspects in strategic planing. (Bowen and Power, 1993; Wells and McCoy, 1989). In this case, a decision taken by considering only cost factors resulted in utilising reduced amount of manpower in a certain operation. The outcome severely affected business as it damaged the company‟s image especially among the citizens of Alaska. The failure led to both poor financial and ethical outcome. In another case (Angell, 1992), it was reported on the bankruptcy of US Company, Dow Corning, which produces and markets silicone breast implant. The company was subjected to severe court penalty due to the alleged hazard to consumers. It is reported that the product is complied with all the existing US regulations and no conclusive evidence has been offered to demonstrate that this product is unsafe. However, finally Dow Corning was forced to remove the product from the market. Though this product represent less than 1% of Dow Corning‟s profits, it forced the company to a bankruptcy. It is noted that in 1964, when Dow brought its first silicon breast implants to US market there were no regulations on any implants of human body and the company took advantage of this „opportunity‟ by taking its products to market with little testing. If the company had been conscious about moral and social duties and 7
  • obligations to its customers as a part of its product strategy, extensive product testing and the keeping records of customers would have been included in the product strategy. From this case, it is evident that CSR need to be embedded in the business process itself not as an alien activity (Key, S and Popkin, S.J, 1998). CSR directly influence marketing and marketing can use CSR for great results. CSR has a direct impact on businesses through marketing function. On one hand, CSR commitment is certain to influence the customer perception of the company and as a result company sales increase. On the other hand, failure in CSR actions of companies is bound to erode the net worth of firms. CSR has become a product as well as company attribute that plays a significant role in the total product offer of a firm. Typology of CSR engagement: Ensuring sustainability of CSR Sustainability connotes durability or longer existence. The sustainability of CSR is dependent on sustainability of firms. The firms‟ financial stability is a fundamental determinant of its survival and growth. The research literature on financial impact of CSR concluded with inconsistent findings (Pearce 11.J.A and Doh.J.P, 2005).In some studies, CSR relates with positive financial performance (Waddock and Graves (1997; Pava and Krausz, 1996; Key, S and Popkin, 1998), while for others it‟s a negative relation (Piacentini M., et al., 2000).And some other studies revealed no relationship between CSR and financial performance Goldreyer and Diltz (1999). We believe that such inconsistent findings are partly due to the vagueness of the CSR concept and the defects in definition, theory and methodology used to study the phenomenon. However, since mid-1990s, improvement in theory, research design and data analysis have produced empirical researches with more consistent results (Griffin.J.J and Mahon.J.F 1997; Roman.R.M et el,1999;Ruf.B.M et el ,2001;Margolis.J.D. et al,2003). A recent meta –analysis of more than 10 studies confirmed a positive relationship between financial performance and CSR. However, it should be noted that the primary vehicle for achieving superior financial performance for social responsibility is via reputation effects (corporate image) (Orlitzky.M et al, 2003). Reputation or corporate image is influenced by CSR actions of firms. It can be argued that when an organization uses CSR for marketing alone with other marketing strategies, firms can sustain CSR as they can derive a benefit in return. Companies can maximize the benefits of CSR actions when they treat CSR at strategic level and develop products and services that are based on CSR principles. This phenomenon was referred to at the recent World Economic Forum gathering, Davos, Switzerland; “ We see corporate social responsibility as part and parcel of doing business, part of our core skills,” ( Antony Burgmans,Chairman of consumer products ,Uniliver NV cited at Lazarus S.et al 2005). The CSR initiatives of firms such as Ben & Jerry‟s Home made Holdings Inc. showed that both CSR and profit goals can be achieved simultaneously and a trade off between the two is not necessary. These firms hold the view that „doing good led to making good money too’ (Pearce 11.J.A, and Doh.J .P, 2005). Similarly IBM, as part of its “Reinventing Education Initiative”, commits financial resources, facilitates research, provides educational consultants and technology at each site seeking new ways to spur and support fundamental school restructuring with a view to enhancing student achievements. In effect, IBM improves its technological and systems expertise in providing systems solutions to educational clients as well as puts strong foundations for potential markets (http://www.ibm.com). 8
  • IBM believes that a strong community is a key to a company’s success…..To this end, a key focus of our work has been on raising the quality of public education and bridging the digital divide. (Stanley Litow, Vice President of corporate community relations at IBM). Procter and Gamble‟s (P&G) believes that CSR should take the advantage of a company‟s core competencies and benefit to the company in turn. The company identifies projects that will have long lasting benefits for all of the stakeholders (Trevino A, 2003). People begin to accept that CSR is a two way relationship in which there are benefits to the community and benefits to the companies involved”(Trica Dodds, community relations manager ). Taking totality of preceding analysis, it is now possible to develop a typology that can explain the main argument of this paper (see figure 1). Self-interest of a firm is denoted by the benefits that a firm gains through CSR. These benefits can be direct or indirect. Direct benefit means profit that arises from CSR actions of a firm. Indirect benefit is the enhancement of corporate image through CSR actions. Sustainability or the firm‟s ability to prolong CSR actions is taken as high or low. Inability of a firm to sustain CSR actions for a long period of time is termed as „low sustainability‟. According to this typology, there are three categories of CSR engagement. Type 1: Firms engaging in CSR as a voluntary activity not as an essential component of business strategy resulting in low level of sustainability Type II: Firms engaging in specific promotional activities associating products and brands with social welfare activities Type III: Firms engaging in CSR treating it as a necessary and indispensable component of marketing strategy Table 1 outlines type of benefits and sustainability level associated with each type. Type III CSR style can offer firms a win-win situation Table 1: Benefits and Sustainability Gird Category Description Level of Benefits Sustainability Type 1 Firms engaging in CSR as a Low Indirect voluntary activity not as an essential component of business strategy resulting in low level of sustainability Type 2 Firms engaging in specific Low Direct promotional activities associating products and brands with social welfare activities Type 3 Firms engaging in CSR treating High High it as a necessary and indispensable component of marketing strategy 9
  • Figure 1: Typology of CSR Sustainability High Level of Sustainability of CSR Engagement Type 3 CSR with marketing extension Indirect Direct Benefits Benefits from Type 2 from CSR Type 1 CSR (Corporate Promotional (Profits) Image) activities with Volunteerism CSR extension (Frequent donations, community activities) Low Level of Sustainability of CSR Discussion and Concluding comments This paper investigated the two opposing tenets of CSR, Friedman and some of the post – Friedman, with a view to attempting a synthesis of the views. This synthesis is essential for the sustainability of CSR actions of the firms. It is believed that firms are not likely to practice CSR as an ongoing activity unless there is a return from CSR. Treating CSR as a totally altruistic activity for the betterment of the society is certain to affect the continuity of CSR actions of the firms. Therefore, it is essential to ensure 10
  • maximisation of firm‟s self-interest and social well-being through CSR. With a view to explaining this phenomenon, a typology of CSR engagement of firms is created. Three types of CSR engagements have been identified by using two dimensions, sustainability and benefits. Type III, embedding CSR in to marketing strategy, is suggested as the most viable approach that can ensure the sustainability firm‟s CSR actions. Friedman‟s profit motive in CSR is in the self-interest extreme whereas most of the post-Friedman CSR conceptions are in the extreme of selfless (altruistic) commitment. Undoubtedly, either extreme taken alone is not feasible for the sustainability of CSR in businesses. In the context of stiff corporate competition, securing a higher market share for firm‟s products and services are of utmost importance to all firms. If CSR actions aid market share growth, short term or long term, firms will surely be willing to embrace CSR. More importantly, firms will be self-motivated to act for CSR resulting in sustainability of CSR. Most of the thinkers appear to be mistaken when they comprehend these two opposites as mutually exclusive. It is not true to think that there is always a trade off between the two opposites. A higher level of managerial craftsmanship is required to design and configure a strategic map that enables optimisation of opposites, self interest (profitability) and selfless (altruistic) commitment to social well being. What seems ideal is a combination of the two polar opposites of self-interest and selfless genuineness via marketing strategies. Marketing strategies are the mirrors that a company can use to express their intensions in business. The marketing strategies and tactics convey lot about the principles, philosophy and practices of a business. So, the link between CSR and marketing is obvious. CSR actions of firms are essential for the wellbeing of the society and therefore, it is important to ensure firms‟ continuous engagement in CSR. Self-motivation or internal motivation of firms to engage in CSR is much more superior to external coercive persuasion by means of legal and other pressures. From rational view point, firm‟s motivation is dependant on the quantum of benefits that are to be derived from the CSR engagements. If a clear relationship between CSR and profitability is established, it is likely that firms are certain to incorporate CSR in to the main business strategy. Evidence from business cases corroborates this assertion. However, it is not within the scope of this paper to assert that there is a direct and definite impact of CSR on business performance. Firms are not equally competent in executing, supporting, and exploiting CSR initiatives in the market place (Brown T.J.and Dacin, P.A. (1997; Sen et al; 2001). On the other hand, different markets response differently for the CSR initiatives of organizations. For e.g. positioning an organization as a socially responsible company for example, Benetton, Body Shop, raises customer expectations and opens the organization to a wide range of potential criticisms that ultimately may not be manageable (Piacentini M., et al., 2000).However we argue that by incorporating CSR into core business function specially into the marketing function of a business, sustainability of CSR can easily be ensured. If CSR is expected from private firms as a voluntary altruistic commitment, it is both unrealistic and against the principles of free market mechanism. Thus, the implementation and Operationalization of CSR tend to pose serious problems. To 11
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