Corporate Social Responsibility as a business case

(First of two parts)

As far as I know, I don't recall a course on Corporate Social Responsibility (CSR) in the academic discipline. But there is a course on Business Ethics which, if I'm not mistaken, covers mostly ethical and etiquette-related issues that exist between business organizations and its shareholders or between the organization and its customers or its employees.

Discussions on CSR in our business schools are rare not because of scarcity of resources nor it is a difficult subject matter, but it doesn't offer a good business case. For many a professor in business, it neither contributes to improve operating performance and productivity nor help in finding new markets and therefore, an expense.  

While it is also widely accepted that today's business organizations have, one way or another, certain social responsibilities towards society, however, some beg to differ in their perception in that CSR must put above else the profitability of a business as corporations have the primary responsibility to their shareholders. Under this mindset, for as long as corporations play by the rules set forth by regulators, it is still CSR. To argue otherwise, it is tantamount to promoting or preaching "unadulterated socialism." From what I think, for as long as CSR is nailed by such definition, CSR will never have its business case.

Also, it's hard to find a good business case when we view it merely as an act of charity. And quite unfortunately, this is how it is popularly understood - corporate philanthropy. There are also those who take CSR to be in keeping with the minimum requirements of the law pertaining to taxes, wages, pollution control, financial performance and other legal responsibilities. But that's just one part of it. CSR goes beyond the scope of corporate benevolence or regulatory compliance - it is a conscious act of the corporation to make the world a better place to live in.

"CSR are actions that appear to further some social good, beyond the interests of the firm and that which is required by law." according to CSR researchers, McWilliams and Siegel. But I like this definition better, "CSR is a voluntary engagement of companies. It therefore does not simply refer to meeting legal requirements, but precisely to initiatives and actions of companies, groups of companies or sectors, which surpass the applicable regulations." to borrow the European Commission's version. Thus, the concept is based on principle of volunteerism and a mindset to act "beyond the law."

Despite the fact that CSR has been variously and vigorously clarified, all these recent definitions have a common theme: they all state that modern businesses must recognize the economic, social, human and environmental impacts of their operations/actions. It requires them to minimize or if not eliminate the adverse effects of such actions to the rights of persons and to our long-term survival and to maximize the consequential benefits of such actions on stakeholders and the environment. Thus, corporations must direct all their actions towards positive change in human and environmental condition.

But what about companies who are into Business Process Outsourcing (BPO)? They pay above the minimum wage or compensate their employees more than the industry average. Does that amount to CSR?

What must be noted is that, many of today's products and services have been outsourced elsewhere mostly in developing countries. The act of outsourcing to these countries does not always mean that companies are trying to help find jobs for people in poorer nations even if they gave more than the minimum wage or pay above the industry standards. CSR is judged on the motive of the action. And since we know that outsourcing is merely a business strategy to reduce cost (even if they paid more than the current standards), it does not necessarily translate to having met the ideals and principles of CSR.

CSR is a wholehearted effort of a business organization to contribute to society even if it takes to sacrifice much of its profit. CSR has higher goals to serve - even higher than those of the organization's stakeholders that it is willing to dissolve its existence for the sake of public interest, moral repercussion and the environment. It is a new paradigm in corporate existence.  

In that light, what then is the business case of CSR? (To be continued…)

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