Research Article: 2021 Vol: 27 Issue: 5S
Sarfraz Hussain, Universiti Teknologi Malaysia
Alhareth M. Abu Hussein, Amman arab university
Salman M. Abu Lehyeh, Amman arab university
Corporate Social Responsibility ("CSR") is gaining importance as global issues such as climate change and economic inequality need collaborative solutions. This article analyses the Business Roundtable's recent "commitment" to responsible business practices and shows how it is consistent with Delaware Corporate Law, which mandates for-profit companies to achieve shareholder goals. Additionally, this article explains the times gone by of CSR and why prior changes have failed to enhance CSR. This study argues that the Business Roundtable will be unable to fulfil these promises on its own, and that long-term change would need the government to be willing to regulate businesses in ways that align economic incentives with social goals. Finally, it proposes several laws that may assist in aligning these goals and so enhancing Corporate Social Responsibility.
CSR, Stakeholder Theory, Corporate Law, Managerial models, Social and Environmental Problems
The importance of Corporate Social Responsibility (CSR) on theory and research seems to be mirrored in theoretical and methodological discussions that contend that "doing good is not just the moral thing to do, but it also results in performing better" (Heinberg Liu, Huang & Eisingerich, 2021). So CSR has gone from theory to reality, and many companies now recognise their social and ethical responsibilities (Christensen & Lumberton, 2021). While more businesses are sticking to and showing their level of Commitment (Tibiletti, Marchini, Furlotti & Medioli, 2021), many continue to suffer (Park, Kim & Popelish, 2021).
The current scenario may serve as an example of how Corporate Social Responsibility (CSR) has developed as a result of the impact of various theories, including agency theory, resource-based business perspective, stakeholder theory, stewardship theory, and firm interpretation, among others (McWilliams et al. 2002; Najaf, 2021). The most advanced conceptualizations are still in their infancy, and specific CSR methods continue to baffle both theorists and practitioners. This situation is likely to obstruct managers' complete grasp of what defines CSR, as well as CSR's future theoretical development.
Several studies (Lee, 2008; Chatzopoulou & de Kiewiet, 2021; Islam, 2021) address significant research gaps in the field of corporate social responsibility. CSR studies and concepts have developed in two directions, as per a recent study in the International Journal of Management Reviews (Lee, 2008). From evaluating macro-societal impacts, researchers had progressed on to assessing CSR and its influence on business financing and investment success. From a legal and ethically point of view, the field's scholars have moved to production and explicitly prescriptive perspective. Contempt the popular perception that CSR helps companies fulfil their stakeholder responsibilities, there are still several problems that need to be addressed. Its primary aim is a thorough review of the literature on five key CSR issues, with an emphasis on organisational and management levels of analysis. It is a timely and important contribution to the field of CSR. As described in greater detail below, the five literature assessments included in this book offer timely, reasoned, and authoritative conclusions to unresolved issues.
Organizations are increasingly using CSR efforts, such as annual reports (Park, Kim, & Rim, 2020) and websites, to establish a positive brand image for their company among consumers and other stakeholders (Foroudi, 2020). Simultaneously, there is debate in the literature on whether businesses should promote their CSR activities and, if so, whether standard marketing techniques are appropriate (Lin, Law & Azman‐Saini, 2020). This is particularly true when Sustainability reporting results in customer cynicism and pessimism, according to a recent study (Chon & Kim, 2021). In addition to providing a foundational concept of Risk management, such a study could highlight the importance of such correspondence and outline key Contemporary communication tactics, such as environmental performance, internationally recognised CSR methodologies, and alternative means for engaging people in two-way effective communication. Stakeholders often have questions over what to say and also how to say without being identified or endangering distrust.
Implementation
The flexible and realistic aspects of maintaining a corporate social responsibility direction within a company have indeed recently been addressed in the literature, even though Corporate Social Responsibility (CSR) is now widely recognised as an essential component of modern business activities (Jurkowska-Gomulka, 2021; Velte & Stawinoga, 2020). While adopting a corporate social responsibility plan is almost definitely a watershed moment in the history of a business, existing standards and verifiable success criteria are still lacking in both theoretical and empirical support, especially when seen from a dynamic perspective.
To our knowledge, research into developing and executing a corporate social responsibility strategy has concentrated on a small number of specific characteristics and dimensions, and management models and suggestions have remained ambiguous (Nkam, 2021). However, while some authors argue that CSR can be implemented through incremental or transformational organisational change processes (Knebel & Seele, 2020), others argue that radical, transformational approaches are required, requiring managers to fundamentally rethink their current views on strategy, technology, and markets (Knebel & Seele, 2020; Knebel & Seele, 2020; Jimenez, 2021).
There is a lack of agreement among researchers on CSR integration and development, as well as on methods for ensuring that CSR is ingrained in an organization's culture and strategy. Because of this, a thorough, comprehensive evaluation of the literature on Sustainable construction and change models is urgently required.
Stakeholder Engagement
With Corporate Social Responsibility (CSR), the public expectations of company behaviour are jeopardised (Tencati, Misani & Castaldo, 2020). CSR that is centred on participants believes that companies operate within networks of stakeholders, confront often competing stakeholder demands, and translate those needs into CSR goals and activities. In certain cases, organisations try to alter stakeholder expectations (Odziemkowska & Henisz, 2021). Building connections with stakeholders - via formal and informal conversations and engagement techniques - is necessary for managers to accomplish shared objectives and persuade stakeholders to support the organization's selected strategic direction, according to the Harvard Business Review (Shestakofsky & Kelkar, 2020). Business leaders must deal with a broad variety of stakeholder expectations, which may lead to ethical quandaries. They must also build long-term, mutually beneficial relationships with important stakeholders to succeed (Maon, 2021). As a result, it serves as an example of corporate social responsibility in action. As a result, stakeholder engagement may take on a variety of various shapes and theoretical perspectives depending on how businesses choose to manage their stakeholder relationships. It is critical to identify and address the contradictions, ambiguities, and practical implications associated with stakeholder participation in corporate social responsibility.
Measurement
When it comes to business, what kind of actions is considered socially responsible? As defined by the United Nations, Corporate Social Responsibility (CSR) is an institution's on-going commitment to act ethically and contribute to economic development while concurrently improving the quality of life for its employees (and their families), the surrounding community, and society on the whole (Raza, 2021). CSR (Corporate Social Responsibility) is a broad phrase that refers to a company's attempts to address a wide range of social and environmental issues in which it operates. So corporate social responsibility initiatives are naturally diverse; they range from voluntary programmes and partnerships aimed at mitigating the environmental impact of industrial plants and manufacturing processes (Jimenez, Franco & Smith 2021) to the development of sourcing and marketing strategies that prioritise social welfare while also committing to environmental benefits (Franco & Smith, 2021; Jimenez, 2021; Maon, 2021). As a result, international and corporate social responsibility (CSR) organisations are worried about the effect of commercial activities in developing countries (Jurkowska-Gomulka et al., 2020) and the implications of such operations for human rights (Kurczewska et al., 2021). Rather than being a single, complete activity, Corporate Social Responsibility (CSR) is a collection of activities from which a company may choose (Tencati, 2020). As a result, the following questions are important to consider: How should the level of a company's Corporate Social Responsibility (CSR) engagement be determined? What are the many criteria and indicators that may be used to evaluate a company's corporate social responsibility? A critical assessment of existing scales and indicators may be useful in future research attempting to determine the degree of corporate social responsibility and its impact on different elements of business performance as well as the well-being of society.
Business Case
As Vogel (Jimenez, Franco & Smith, 2021) observes, there are "a variety of reasons why some companies choose to behave more ethically in the absence of legal requirements." Some are protective, while others are altruistic.
Corporate interest in CSR is motivated by the belief that CSR can benefit business (Maon, 2021) because organizations can gain a competitive edge by integrating non-economic factors (Tencati, 2020), differentiating themselves from competitors and developing a stronger image and reputation (Tencati, 2020), and generating consumer goodwill (Christensen & Lamberton, 2021). Businesses understand that developing and implementing CSR initiatives provides a 'win–win' situation for both the firm and the community as a result of these factors. A comprehensive and multidisciplinary analysis of the business rationale for CSR should include several studies that look at the possible good and negative impacts of CSR on whole firm performance, not just financial success. Many of the research gaps listed above are tackled in this feature article Published In the journal of Management Reviews on Corporate Social Responsibility. The goal of this issue is to provide academics with a better understanding of some of the more complicated aspects of CSR, as well as practitioners some guidelines for conducting CSR projects.
Structure of the Special Issue
An innovative approach to increasing the value of a business is presented. experts assert
in their article 'Returns to Corporate Social Responsibility: The Role of Marketing Communications' that stakeholders' lack of knowledge about and negative perceptions of corporate CSR initiatives impede efforts to maximise economic benefits from such activities. This situation may lead to a backlash against corporate social responsibility communication when stakeholders see companies' social activities as mostly extrinsic, with the corporation being perceived as attempting to increase profits. Through the use of a conceptual framework for CSR communication, these authors evaluate what should be communicated (message content), where it should be communicated (message channels), and the variables that are particular to a company and its stakeholders that influence the effectiveness of Social responsibility.
Christiansen & Lamberton (2021) provide an integrative framework that links moral, cultural, strategic, and organisational components and outcomes of corporate social responsibility. Their paper is titled 'Organization stages and culture stages: a critical evaluation and a preliminary conceptual model of CSR development.' Based on a critical assessment of current stage models of CSR growth and Roberts et al ethically's based stakeholder culture field, these authors suggest a seven-step developing route organised around three cultural phases (CSR resistance, CSR grasp, and CSR embedment). In contrast to prior models, the proposed consolidative model highlights the cultural implications of CSR development, particularly the integration of stakeholder relationships, as opposed to previous models. The findings of this research support the notion that the changes necessary to achieve CSR would need a revolution in company culture (Maon, 2021).
"Stakeholder engagement, discourse ethics, and strategic management," It is possible to differentiate between two main – but very different – schools of thought on stakeholder involvement, according to James Noland and Robert A. Phillips' (Stakeholder engagement, discourse ethics, and strategic management) book. A distinction is made between ‘strategic' and ‘moral' behaviour in the first term, ‘Habermasian.' In contrast to strategic action, which is concerned with achieving personal or corporate objectives, moral action is concerned with bringing about genuine understanding via conversation. Alternatively, the second school of thought rejects the Habermasian distinction by stressing the inextricable connection between ethical considerations and strategic decisions. According to Noland and Phillips, distinguishing between moral and strategic action has the effect of undermining rather than strengthening arguments for stakeholders' legitimate involvement. They favour Habermas' focus on genuine, good-faith engagement with stakeholders and the recognition of the consequences of power inequalities over other approaches.
If, on the other hand, business and ethics are seen as distinct worlds, or if business and morality should be kept apart, there is no way to cope with the plethora of obligations that corporations are required to deal with. Consider a more practical approach: gaining an understanding of how and why good strategy and ethics are inextricably linked. According to the authors, to create a cohesive theoretical framework, ethics must be incorporated into strategy; more precisely, a strategic plan must be integrated into a more complete ethical framework to accomplish this.
Donna J. Wood aims to bridge the information gap in the democratic can for assessing company social performance in general, as well as for measuring corporate social performance in particular. Her essay "Measuring corporate social performance: a review" argues that we do not have a clear understanding of how to develop corporate social regular processes. As a consequence of a lack of major methodological advancements, corporate social performance assessment has come to a grinding halt. Perception, reputation, second-hand information, identity information, indirect information, extremely fragmentary information, misinterpretation of information or outright erroneous information are all characteristics of existing facts, according to Wood. Finally, when techniques are used, they are unable to transcend the constraints of theory and data. This unfortunate state of affairs makes it difficult to develop ideas, put methods into practice, and deliver high-quality results. Businesses can thrive despite a lack of social responsibility on their part since social responsibility norms are drawn from the political philosophy that governs society.
Contrary to these ominous predictions, the essay maintains an optimistic tone, suggesting that the task of identifying significant business outcomes and impacts, as well as establishing meaningful categorization, may not be as difficult as it seems. Furthermore, by using social indicators, it is feasible to measure the impact of corporate operations on the broader community and society at large. However, it is up to society to demand such knowledge, which is often accomplished via increased regulation.
Finally, in 'The feasibility study for corporate governance: a review of ideas, studies, and practice,' Archie B. Carroll and Kareem M. Shabana explore the business case for corporate governance: a review of concepts, research, and practise. Why should the business world, in the end, get on the corporate social responsibility bandwagon? What particular advantages may companies get from their corporate social responsibility policies, activities, and practices? While providing historical context and backdrop for corporate social responsibility, the writers also provide an overview of the idea's development through time as well as a discussion of some long-standing and conventional arguments for and against the notion. It is their opinion that there are four types of the business case for CSR. These are: (1) substantial cost savings, (2) improved legitimacy and reputation, (3) competitive advantage, and (4) the development of win-win scenarios via synergistic value creation (or value creation through other means). As a result, only those CSR activities that have a clear connection to the financial success of the company are backed in this manner by the business case. A broadened perspective, on the other hand, would emphasise the connection between CSR activities and commercial performance, allowing the firm to take advantage of CSR possibilities while also increasing its profitability. Effective corporate social responsibility requires the creation of appropriate corporate social responsibility strategies, and effective corporate social responsibility activities improve stakeholder relationships as well as societal well-being. As a consequence, a successful corporate social responsibility plan allows for the alignment of economic and social objectives. The advantages of Corporate Social Responsibility (CSR) would vary depending on the interactional fairness and the situational conditions, indicating that the effect of CSR on financial performance may not always be positive. Finally, a contingency plan may help to explain why there isn't always a clear connection between corporate social responsibility and financial performance, as well as to reinforce the business case for corporate social responsibility when it seems to be failing to provide results. If companies do not engage in CSR projects with the backing of stakeholders, there would be no market for virtue, and there will be no real economic justification for corporate social responsibility.
As the articles were chosen to demonstrate, CSR-related problems are rich terrain for academics and practitioners to explore. The results in this special, instructional issue show how companies plan and execute CSR activities, as well as evaluate performance outcomes, explain CSR involvement to stakeholders, and try to establish a business case for CSR. As a result, this special issue sheds light on the prerequisites for effective CSR implementation, which involve a thorough understanding of the host community's norms and beliefs, as well as an open dialogue with representatives from various groups. This problem may help managers figure out what type of CSR projects to pursue, what resources to employ, how to convey their CSR participation to diverse stakeholders, and even how to fully involve key stakeholders.
Finally, we hope that this special issue will stimulate further, ongoing, and additional research into areas of CSR that are presently understudied.
For instance, the emphasis on identifying and describing CSR activities has left out its antecedents, such as societal views or leadership behaviours (Velte & Stawinoga, 2020). The company leader's involvement in implementing CSR initiatives has generally been ignored in empirical studies on CSR. On the other hand, how do a leader's beliefs, ethics, and leadership style influence his or her commitment to CSR? According to a recent study, a broad range of leadership styles are linked with corporate social responsibility, either directly or indirectly; nevertheless, further research is needed (Maon, 2021). A more cross-level study, on the other hand, is required to better understand the connections between leadership behaviours, leadership styles, and corporate social responsibility (Christensen & Lamberton, 2021).
Also pertinent now is Lee's (2008) remark that the vast bulk of CSR research is focused almost entirely on big publicly listed companies, which he made in 2008 (Lee, 2008). There is a dearth of understanding of Corporate Social Responsibility (CSR), as well as information on how it is applied in Small and Medium-Sized Companies (SMEs) and organisations with a variety of ownership structures. In recent research, Small and Medium-Sized Enterprises (SMEs) have developed "unique" CSR orientations characterised by close and personalised stakeholder connections, limited innovation, insufficient institutionalisation of CSR processes, and a lack of identification with the corporate justification for CSR (Tencati, 2020). It is necessary to do further research to better understand the distinctive features of CSR activities in SMEs and to demonstrate the business case for CSR in SMEs. Finally, corporate social responsibility has risen in line with the global economy. CSR research, on the other hand, is mostly focused on a regional level (Lee, 2008). An additional empirical study on corporate social responsibility practises should examine how corporate social responsibility is conceived and executed in a range of institutional contexts.