Corporate Social Responsibility: Benefits and Costs of Its Implementation

Corporate Social Responsibility: Benefits and Costs of Its Implementation

Dolores Gallardo Vazquez (University of Extremadura, Spain), Luis Enrique Valdez Juárez (Technological Institute of Sonora, Mexico) and Juan de la Cruz Sánchez Domínguez (University of Extremadura, Spain)
DOI: 10.4018/978-1-7998-2128-1.ch002

Abstract

Corporate social responsibility (CSR) is a current important strategy in organizations today. Numerous factors that affect the global functioning of organizations have determined the need to incorporate a look towards sustainable development. This implies considering the integration of not only economic, but also social and environmental concerns in the day-to-day of the companies. We move, therefore, under the perspective of the Triple Bottom Line. In addition, the exercise of CSR will motivate the achievement of competitive advantages for organizations. Given this, this article seeks to analyze the numerous benefits derived from the implementation of socially responsible actions in companies. These are structured from different organizational approaches: personal sphere, organizational field, personal and organizational fields and financial area. Together with them, the implementation of the CSR may entail the need to incur certain costs, which are also referred to in the study. Finally, we propose some future lines of research
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Introduction

The study of ethics and CSR is of recent interest due to the rising amount of corporate scandals, such as the Volkswagen emission scandal that happened in 2015. Owing to the digital age, consumers are now more and best informed and require companies to behave ethically and more responsibly (Low, Ong, & Tan, 2017). Generally, there is some confusion between the concepts of ethics and social responsibility; new definitions arose in the 1980s, based on most advanced empirical research. The variation includes business ethics, corporate, stakeholder theory and management and corporate performance, which got into scene in the 1970s (Carroll, 1999). Ethics is defined as the fundamental principle that produces actions to prevent harm to others, when an individual or group has the chance to do it for its own benefit (Boddy, 2011). Business ethics is an attempt to set out a standard by which all the employees of an organization know what is expected from them (Sullivan, 2009); however, businesspeople are often very affected by their superiors and colleagues when making decisions.

CSR is a business philosophy which reinforces the need for corporations to behave ethically as good corporate citizens, not only by obeying laws, but also by conducting their activities in a way which avoids causing environmental pollution or exhausting world scarce resources. Businesses have begun to behave in a more socially responsible manner, which is argued that can pay off in the long term, even when it implies some short-term financial sacrifices. Thus, the discussion of corporate behaviour and social responsibility has taken more relevance within a new perspective of competitiveness and sustainable development (Low et al., 2017).

We are entering a new era of working, in which organizations had got to change their ways of making business towards a new organization model, different of the one they had been using before, oriented towards a bigger group of stakeholders and with a new work vision. Companies are working using the Triple Bottom Line perspective (Elkington, 2000), and at the same time they’re taking into account the Stakeholder Theory.

When we write about the Triple Bottom Line perspective, we are talking about the three dimensions (economic, social and environmental) that form the basic pillars of Corporate Social Responsibility (CSR). The European Union, in its Green Paper: Promoting an European Framework for Corporate Social Responsibility (Commission of the European Communities, 2001, p. 8) defines CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”. In more recent times, the Commission of the European Communities (2011) remarked the responsibility companies have because of their impact in society, and referred clearly to the need of cooperation between the interested parts “to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy” (Commission of European Communities, 2011, p. 6).

Key Terms in this Chapter

Triple Bottom Line Perspective: accounting framework with three parts (social, environmental and financial). Some organizations have adopted this framework in order to evaluate their performance in a broader perspective to create greater business value.

Corporate Social Responsibility: voluntary integration by the organizations of social and environmental concerns in its business operations and the relationships with their interlocutors.

Competitive advantage: a better position on the market related to the competitors.

Legitimidad Organizacional: social acceptance of organizations, which means that they should develop a collection of actions that are appropriate for communities because they are adjusted to a set of regulations, values and beliefs that determine their behaviour and legitimate them in their market, sector and with the society they are set into.

Stakeholders: people, individuals and groups of people that affect, can affect and can be affected by the activities of an organization. They are considered to be an essential element on the strategic planning of the organizations.

Sustainable Development: development that satisfies present needs without compromising the capacity of future generations, guaranteeing the balance between economic development, taking care of the environment and social wellbeing.

Benefits of CSR: positive results derived from the undertaking of socially responsable actions in organizations. They are very numerous and have very diverse orientations, for the company and also for employees and society as a whole.

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