Exploring Relationship of Corporate Social Responsibility and Business Organisation

Published: 2023/07/06 Number of words: 1655


In recent years, many businesses have been counted accountable for the social consequences of their action. Thus, they should look beyond achieving financial growth and business objectives. As a result, businesses have improved their acts towards social and environmental dynamics. Here, Corporate social responsibility represents a continuing commitment by an organisation to behave ethically and contribute to the economy while improving the quality of life of its employees, the local community, and community (Watts and Holme, 1999). Due to the rise in competition and globalisation, organisations tend to adapt to changes in their operational environment, including more corporate social action with long term goals. Thus, organisations have started addressing issues related to society and the environment. The activities for corporate social responsibility are multidimensional as volunteering programs and initiatives to reduce environmental impact from production and industrial plants (Rondinelli and Berry, 2000). In addition, the development of sourcing and marketing activities that protect social welfare and commit to environmental benefits also falls under the category of CSR (Roberts 2003; Szmigin et al. 2007). It can also define as the set of practices and behaviour that firms adopt towards their labour force, toward the environment in which their operation is in process, towards authority and civil society (Foran, 2001). Global impact on the economy, climate change, wildlife, and natural resources has imposed a threat on businesses, so most firms have accepted the need for CSR. CSR allows organisations to develop long-term relationships with stakeholders and increase opportunities for their growth in the market. This paper will analyse corporate social responsibility and why it is essential for business organisations to adopt it in today’s environment. It will also include a discussion of the impact of CSR on a firm’s performance. Moreover, it will identify primary opportunities and challenges associated with the CSR practices in the organisation’s followed by a conclusion.

Importance of Corporate social responsibility: 

Corporate social responsibility is a commitment of businesses concerning the community improvement, economic development, environmental development, and well-being of their workforce. Business organisations should adopt management practices that have a positive impact rather than negative ones. At present, CSR tends to be an essential dimension for business activities similar to financial, marketing and sales actions. Thus, businesses need to develop a strategic action plan that also includes initiatives towards corporate social responsibility. The demand for heightened corporate attention to corporate social responsibility has come from disparate groups include customers, employees, the community, and non-governmental organisations. The primary benefit for these organisations comes from return on investment and focuses on issues that are important to both the success of the company and the well-being of society at large (Choi and Wang, 2009; Doh et al., 2010).

Organisations investment in CSR activities improves their brand image and differentiate them from competitors in the market. These generate more interest for the company in the eyes of its stakeholders. In addition, corporate social responsibility creates a competitive advantage by integrating non-economic factors for firms (Porter and Kramer, 2006). Hence, it is a situation where society and business both have an advantage. Thus, corporate social responsibility is a concept of volunteering. So, organisations need to be aware of the impact of their activities on society and the environment and taking measures to prevent the damage accordingly. (Fischer & Sawczyn, 2013), investigates that corporate social responsibility is a dependent variable that is affected by firm performance. A financially strong firm is more involved in corporate social responsibility and innovation. Thus, according to (Hull & Rothenberg, 2008) investigation, a positive relationship between corporate social responsibility and firm performance enhances due to innovation and level of differentiation. Corporate social responsibility is a durable investment. So many local and international firms have increased their focus on changing their overall business strategies and turned towards sustainability and environment-friendly products.

Opportunity and challenges: 

Managing the CSR initiatives of the firm in terms of doing things better than and different from how competitors do them can contribute to competitive success in the same way that other aspects of competitive strategy do (Porter and Kramer, 2006). The prime aim of CSR in businesses is to make corporate responsibility sustainable in three main areas such as economic, social, and environmental. There are numerous opportunities associated with CSR initiatives for the firms. Firstly, doing good for society and the environment increases attention from consumers, which leads to more presence in the marketplace and a boost in sales and profitability. Secondly, Strategic CSR programs offer an opportunity for the organisations to learn from the projects they invest in and use that knowledge to build core competencies while simultaneously improving social or environmental conditions (Heslin and Ochoa, 2008). Learning more about issues and needs of society, organisations can develop new innovative approaches benefiting both business and community.

Thirdly, the acts of compassion from the organisation’s influence the attitude of employees. Keeping employees informed about CSR initiatives helps to develop effective communication, better engagement and decision making. In addition, recognising the progress of employees contributions will help to build motivation and retention. Fourthly, external stakeholders play an essential part in any businesses success. Firms CSR actions create value in stakeholders eyes and build trust and loyalty towards them. Engaging with stakeholders about CSR projects will increase chances of success and prosper positive relationships between stakeholders and organisation. Lastly, CSR builds a trustworthy corporate identity of organisations. In today’s competitive market, a firms contribution and commitment towards supporting society and the environment attracts attention from investors. Investors prefer to finance organisations whose is socially responsible.

Despite the benefits of corporate social responsibility, it has various challenges that organisations have to face. As CSR actions involve higher interest from stakeholders, their expectation gets high. Thus, it demands a lot of effort from organisations which may impact the other area of organisations. CRS activity implementation may impose ethical challenges in an organisation, such as changing operational practices in manufacturing and production, budget and investment planning. Also, it requires a lot of planning and hard work to analyse mutual benefits, build trust and manage the activities with dedication and commitment to the investors and both inside and outside stakeholders. In addition, communication and Discussion about CSR projects and activities with stakeholders tend to be challenging for firms. However, it requires firms to keep transparency that may affect privacy as it may create dilemmas regarding firms operation, performance, outcome. The workforce is a vital asset for a firm when it comes to implementing CSR activities. Thus, hectic, and stressful working conditions can impact employees behaviour and productivity. Employees expectations are rising beyond salaries. So, to retain or hire a skilled workforce, firms need to focus on improving their working conditions.


Overall, businesses should operate in a manner that meets the ethical and legal values, ecological footprints, and good relations with internal and external stakeholders. With the effect of competition and the COVID 19 pandemic, many businesses have experienced difficulties to survive with a profitable business. Thus, it is essential to identify the various innovative approach that helps firms to stand differently among competitors in their operations and CSR actions. Corporate social responsibility is long term commitment. So to give a strong impact of CRS actions, businesses need to maintain consistency and determination. The main goal of a business organisation would be customer satisfaction and financial growth but concentrating on changes occurring worldwide such as poverty, climate change, globalisation, hunger, resource depletion. So, supporting it to create a better world in itself is an opportunity for firms. Thus, investing in corporate social responsibility is a win-win situation for both society and business. Finally, there is a huge expansion in the economy globally, and that increases possibilities for businesses to expand their activities and support at the international level.


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