Shifting Trends in Corporate Social Responsibility for Sustainable Business Practices

Introduction

The term Corporate Social Responsibility (CSR) can be defined as a “voluntary effort by a business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large” (Bansal, 2012, p. 7). In other words, CSR involves taking voluntary measures above and beyond the legal requirements of a company to improve the quality of life and environment around them. Although CSR is often associated with large, multinational corporations, it is becoming increasingly common for smaller businesses to engage in CSR activities as well. For instance, small businesses may develop a CSR strategy by taking steps to reduce their environmental footprint, support local charities and community projects, or offer employees flexible working arrangements.

There are numerous benefits associated with Corporate Social Responsibility (CSR). These benefits are both direct and indirect, and can be divided into economic, social, and environmental categories. Economically, CSR has been found to increase the financial performance of a company. For instance, a meta-analysis of 50 studies found that companies engaging in CSR activities had higher returns on assets, higher returns on equity, and higher valuations (Orlitzky, 2003). Similarly, a study of S&P 500 companies in the US found that those with higher CSR ratings had higher financial performance (Weaver et al., 2007). In terms of social benefits, CSR has been found to increase customer loyalty and trust. For instance, a study of US consumers found that those with higher levels of environmental concern were more likely to choose products from a company that had a good CSR reputation (Hoffman & Mahajan, 2000). Similarly, a study of European consumers found that those with higher levels of CSR perception reported higher levels of customer satisfaction (Chen & Chang, 2015).

For-profit entities around the world have explored, evaluated, and implemented initiatives relative to social responsibility. These efforts, developed in academia and by various business industry practitioners, have become publicly salient following the 2008 financial crisis. The production of goods and services can generate earnings but also have indirect social impacts, whether it is through economic, legal, ethical, or sustainable environmental changes. Boli and Harsuiker (2001) suggested that 90% of Fortune 500 firms embraced corporate social responsibility (CSR) as an essential element within their organizational goals, and actively promote their CSR activities in annual reports.

There are some business organizations that currently do not use social responsibility initiatives or perhaps do not have an understanding of how social responsibility is beneficial to the company’s future prospects (Duca & Gherghina, 2019). However, this perspective is not common. According to Bowen (1953), CSR had begun as a field of study since Fortune magazine published a 1946 article in which the editors suggested that CSR “meant that businessmen were responsible for the consequences of their actions in a sphere somewhat wider than that covered by their profit and loss statements” (p. 44). Moreover, establishment of business communities, such as Business for Social Responsibility (BSR) in 1992 and Ethical Corporations in 2001 are some examples of the CSR phenomenon (Carroll & Shabana, 2010).

Although CSR is a global initiative, the preponderance of organizations within the United States has built extensive plans to implement socially responsible activities into their annual business as a way to reducing behavioral damage (Kolodinsky et al., 2009). This research paper examines some barriers of adopting CSR as well as a number of benefits for doing so. This research effort also will describe the important issues and current dilemmas that surround CSR, identify a few organizations and discuss their CSR activities, as well as provide insight regarding how the organizations can rationalize incorporating social responsibility into their organizational strategy (Carrera, 2022).