FINAL ASSIGNMENTIntroduction the emergence of corporate social resposibility

UNIVERSITY OF FINANCE – MARKETING INTERNATIONAL SCHOOL OF FINANCE – MARKETING FINAL ASSIGNMENT Subject: Name: Bùi Thị Nhật Phượng Student ID: 1921006155 HCM, 08/2021 0 Introduction - the emergence of corporate social resposibility The world is witnessing a genuine change in public perceptions over the role of business in society It is forcasted that in the next 10 years, sustainable development will continue to be a worldwide trend, associated with the United Nations’ 2030 Agenda for Sustainable Development As a members of the United Nations, the Government of Viet Nam is committed to mobilizing all resources and the participation of government ministries and agencies at all levels, organizations, communities and the people Obviously, while businesses contribute to a significant increase in economic growth, wealth creation, and employment, they are also expected to come up with solutions to many of the twenty-first century’s main social and environmental challenges, such as water accessibility, global warming, climate change and affordable health care Mayer (2007) suggests that, although business is largely seen as the source of the current environmental degradation, it is also the potential solution to the problem In the midst of this shifting set of expectations, businesses worldwide face increasing pressure to adopt or improve corporate social responsibility (CSR) In this essay, I present the some overall theories and three main benefits companies can gain when appling effective and efficiency CSR initiatives Defining CSR According to the EU Commission (2002), “CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.” Besides that, the United Nations Industrial Development Organization has defined CSR as the way through which a company achieves a balance of econmic, environmental and social imperatives, simultaneously, it addresses the expectations of shareholders and stakeholders Although CSR is a relative common topic in recent, there is however no agreed definition due to the different practical orientations of corporations towards their responsibilities First, CSR has been associated with different underlying strategic purposes (e.g legitimacy, responsibility for externality, competitive advantage) (Table 1) Second, it varies according to its substantive content (e.g economic, legal, ethical, discretionary – Carroll, 1991) 0 Table 1: CSR theories association with different purposes Author(s) Theories Year (Golob, Ursa & Stakeholder Theory Lah, Marko & Jancic, Zlatko , 2008) Oppinion CSR incorporates all societal obligations that are expected of the companies beyond economic (and legal) ones or activities that are based on some ethical or philanthropic motivation (Barnett, 2007) Stakeholder Theory CSR is considered as corporate responsibilities to create value for both shareholders and stakeholders, such as government, customers, workers, and local communities (Oliver, 1991) Instutional Theory CSR activities focus on enhancing credibility, sustainability, legitimacy, social support, inner and outer commitment, attracting personnel and recognition (Branco, M.C., Resourced-based CSR create tangible value such as Rodrigues, L.L., Theory improving reputation, improve the 2006) relationship between businesses and stakeholders, improving retention and the attractiveness of enterprises to potential labor resources, increasing the motivation in productivity, engagement and loyalty of employees (Deegan, 2002) Legitimate Theory CSR in the theory of legitimacy is based on the view that the rights and responsibilities of an organization must come from society Business organizations must operate within the boundaries of society to meet society's expectations, including by providing better goods and services to society Because organizations are part of a broader social system, organizations need to function within the social system, without any negative impact on society 0 Carroll’ 1979 conceptualization Carroll (1979) – one of the early and the most prestigious scholars in CSR discipline states that: “Corporate social responsibility encompasses the economic, legal, ethical, and discretionary (philanthropic) expectations that society has of organizations at a given point in time” In 1991, Carroll revisited his four-part definition of CSR and organized the notion of multiple corporate social responsibilities in a pyramid construct This conceptualization implied that corporations that want to be ethical must be economically and legally responsible (Jamali et al., 2006) PHILANTHROPIC Resposibilities ETHICAL Responsibilities LEGAL Responsibilties ECONOMIC Responsibilities Economic Responsibilities – producing goods and services for profit At first, it may seem unusual to think about an economic expectation as a social responsibility, but this is what it is because society expects, indeed requires, business organizations to be able to sustain themselves and the only way this is possible is by being profitable and able to incentivize owners or shareholders to invest and have enough resources to continue in operation In its origins, society views business organizations as institutions that will produce and sell the goods and services it needs and desires As an inducement, society allows businesses to take profits Businesses create profits when they add value, and in doing this they benefit all the stakeholders of the business Legal Responsibilities – obeying the law while attempting to make profit This is the minimal ground rules for all businesses , society expects businesses to achieve economic goals within the legal framework and to adhere to basic norms 0 and values In many countries, this means being honest about what products or services are sold, keeping employees and customers safe, not destroying the environment, and paying taxes At the same time, it is a way to protect the organization from fines or prosecutions that affect the company's profits and reputation and even lead to bankruptcy Ethical Responsibities - behaving in accordance with societal norms embodies in the law Societal expectations go beyond what is required by law and regulation Taking on ethical responsibilities implies that organizations will embrace those activities, norms, standards and practices that even though they are not codified into law, are expected nonetheless One aspect of the ethical expectation is that businesses will conduct their affairs in a fair and objective fashion even in those cases when laws not provide guidance or dictate courses of action The goal of these expectations is that businesses will be responsible for and responsive to the full range of norms, standards, values, principles, and expectations that reflect and honor what consumers, employees, owners, and the community regard as consistent with respect to the protection of stakeholders’ moral rights Philanthropic Responsibilities - going beyond the profit motives to act as a good corporate citizen and living up to the societal expectations Corporate philanthropy includes all forms of business giving Corporate philanthropy embraces business’s voluntary or discretionary activities Philanthropy or business giving may not be a responsibility in a literal sense, but it is normally expected by businesses today and is a part of the everyday expectations of the public They are guided by business’s desire to participate in social activities that are not mandated, not required by law, and not generally expected of business in an ethical sense The Triple Bottom Line (TBL) Another theory about CSR idea is based on the Triple bottom line concept, which is also known as 3Ps or three pillars This concept was introduced in 1987 in Brundtland Commission and officially named by John Elikngton in 1994 It indicates that a company should be responsible for three features: Profit, People and Planet, in other words that is economic, social and environmental responsibility 0 Profit Planet People Profit - Similar to the economic resonsibilities, profit is a mandatory requirement for a company to maitain and develop itself However, the economic part of CSR is not only about making profit, the most important task is to use it well (Księżak & Fischbach, 2018) CSR's economic component, according to (Uddin et al., 2008), is determined by how the company's activities affect local communities and other stakeholders People - People or social dimension in TBL refers to improving the standard of living Achieving social sustainability by a corporation is a requierment in the TBL CSR framework Enterprises use CSR as a tool to build and maintain positive relationships with the community as well as pay attention to social affairs, for example unemployment rates, human rights, female labor force participation, health services, educational services provided by government, etc After determining the community priorities, shareholders must take decisions to satisfy as much as possible the social needs Planet - Planet is the habitat for a company and the people If large corporations pollute the environment with their actions and drive the planet to destruction, they will be equally affected as anything else on the Earth Natural environment is the responsibility of everyone, and primarily of corporations, which are often the first reason for its damage Irresponsible usage of natural resources, producing waste or emission of polluting by-products are the dominant negative impacts of corporations on the environment Therefore the least those companies can is to minimise or eliminate the detrimental environmental impact (Gupta, 2011) 0 Business benefits of CSR A numerous growing researches suggest that CSR activities have a significant influence on several consumer-related outcomes such as consumer product responses (Pirsch et al., 2007), attitudes toward that company and its products (Brown & Dacin, 1997), corporate and brand images (Webb et al.,1998), purchase intention (Smith and Alcorn, 1991), as well as consumer-company identification (Sen and Bhattacharya., 2001) (Weber et al., 2008) indicates reasons for CSR: positive effect on organization‘s image and reputation; positive effect on employee motivation, retention and recruitment; cost savings; revenue increases from higher sales and market share; and CSR-related risk reduction or management In addition, according to (Bhattacharya et al., 2004), CSR activities generate more immediate outcomes such as word-of-mouth; resilience to negative company information; and consumers’ awareness, attitudes and attributions about why companies are engaging in CSR initiatives CSR and Firm’s Reputation CSR initiatives have great impacts on firm’s image or reputation (Lii et al., 2011) and enhance the reputation of a company (CARROLL, 1979) Many theoretical and empirical studies have demonstrated that CSR has a significant positive effect on the corporate image and reputation of a company For instance, (Abdullah et al., 2013) indicated that initiation and effective management of CSR programs is important for a company because it shapes the corporate identity of the company and strategically ensures the achievement of the ultimate business asset-corporate reputation in the long term According to (Turban & Greening, 1997), independent dimensions of corporate social responsibility are positively related to firms’ reputation Thus, CSR has been identified as a tool to create and maintain favorable reputations and safeguard their interests in the event of socially irresponsible conduct (Brammer & Pavelin, 2005) Similarly, (Demetriou et al., 2010) argue that if a company participates in CSR initiatives, consumers have a better feeling towards its brands CSR and Consumer-related outcomes On the other hand, CSR activities have very important role in what products or services customers choose to purchase According to (Castaldoet et al., 2009), several surveys report that customers are influenced by the CSR activities of the organization Recent studies have concluded that CSR initiatives rise firms’ reputations and indirectly enhanced consumer perceptions of product quality 0 (Grewal et al., 1998), increase the competitive advantage of enterprise (Pirsch et al., 2007) (Fombrun & Van Riel, 2003) posit that a good reputation helps launch new products and enter new markets easier, by influencing consumers when choosing the same product in offered by various market competitors Moreover, good reputation improves customer loyalty and provides an indicator of product quality when consumers are challenged with a choice between competing products (Shapiro, 1983) In addition, firms with a strong reputation are typically viewed as providing greater value, allowing them to charge higher prices and achieve above-average returns, which contribute to their superior financial performance and profitability Most of the research that showed positive results concluded that good reputation improves a company’s image, strengthen its brand and raise their overall performance in terms of its profitability, sales growth, and market share CSR and Stakeholders The more times firms engage in CSR initiatives, the more possitive influences they create to the sustainable development in both the environment and economic (Moon, 2007) points out that long-term business success is bound up with social well-being, or ‘legitimate business cannot succeed in failing societies’ (Wade, 2005) (Moon, 2007) proveds embedding sustainable development as part of building competitive edge and engaging more widely in societal governance When employees understand their business participating in CSR activities, this makes them proud to be a part of that business (You et al., 2013) (Cable & Turban, 2003) claim that CSR strategy can raise employee morale, increasing productivity, improving recruitment and retention Moreover, prior research finds that those employees, who participate in CSR initiatives, often gain concrete skills that can be carried over to their job (Bhattacharya et al 2007) For example, an employee put in charge of a volunteer program may learn valuable managerial skills Besides, there is ample reason to believe that CSR activity provides many stakeholders with tangible benefits Obviously, CSR initiatives lead to an improvement in corporate performance (increase firm’s reputation, boost sales and sales volumes, etc…), which in turn have a possitive related to firm’s intangible value such as stock market, hence, investors can be expected to receive greater returns on their stock market investments Moreover, (Krueger, Wrolstad & Dalsem, 2010) examined stock market performance contemporaneous with changes in corporate reputation and provide evidence that firms with improved reputations enjoy lower volatility in their stock prices than firms with diminished reputations 0 Conclusion Socially responsible business models should be promoted by all businesses and by all countries In addition to the positive influence when applying CSR in business on the environment as well as society, business owners also receive enormous benefits such as enhance firm’s reputation, boost sales and sale volumes, retain and attract potential employees as well as increase the company value To this end, organizations need to assess what they and others are getting and giving up from their CSR decisions (Carroll, 1991) Ref Refere ere erenc nc nces es Abdullah, Z., Shahrina, , Nordin, and Abdul Aziz, Y (2013) "Building a unique online corporate identity" Marketing Intelligence & Planning Barnett, M L (2007) Stakeholder Influence Capacity and the Variability of Financial Returns to Corporate Social Responsibility The Academy of Management Review Bhattacharya, CB & Sen, Sankar (2004) Doing Better at Doing Good: When, Why, and How Consumers Respond To Corporate Social Initiatives 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