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Corporate Citizenship
20 November 2008:
In recent years the concept of corporate Social responsibility has gained prominence to such an extent that the concept seems ubiquitous in popular media and is gaining increasing attention around the world among business people, media people and academics from a wide range of discipline. There are probably many reasons for attention given to this phenomenon , not least of which is the corporate excesses which continues to become manifest in various parts of the world. These have left an indelible impression among people that all is not well with corporate world and that there are problems which need to be addressed. Such incidents are too common to recount but have left ordinary people to wonder if such a thing as honesty exists any longer in business.
Formalities v. Real scenario: Investment in Real sense
Companies that are breaking the mold are moving beyond corporate social responsibility to social innovation. These companies are the vanguard of the new paradigm. They view community needs as opportunities to develop ideas and demonstrate business technologies, to find and serve new markets, and to solve longstanding business problems. [1]
Increased globalization along with increasing the opportunities for business has also brought the businesses under the scrutiny of different audiences, NGOs and media. It is predicted that in the times to come companies will be judged more by their social policies than on their delivery of products and services.
Many theorists have also argued about the economic impact of CSR, some relating it positively with the profit and some feeling that no such relationship exists. It was studied that the market is influenced by the independent CSR activities and also by the totality of these activities and the gains can be in terms of economic performance or social performance. Since CSR and corporate reputation are the two sides of the same coin.
A growing number of companies in many sectors and geographic regions have discovered concrete value and competitive advantage from socially responsible practices in pollution prevention, energy efficiency, environmentally oriented design, supply chain management, and health and sustainable agriculture initiatives, among others. For these firms, CSR has had positive impacts on profits[2]
A corporations environmental policy, the way they treat their employees and the way they treat the communities they exist in are all part of their overall behavior and this in turn is the principle factor in determining their public image. As proof of this, even though Wal-Mart makes products that have a decent quality and an extremely low price, they still have a negative public image.
Since public image is largely a result of company behavior, business ethics play a large role in determining public image since they determine behavior. And public image is important to success in most cases, which is one of the reasons as to why business ethics are important to a companys overall success.
Another reason that business ethics are important is the relationship they have to investment. When a person or an entity is considering investment in a particular stock, there are a number of things they take into account. Aside from the quantitative factors surrounding a companys profit margin a future prospects, consideration is also given to a particular company from the point of view of the qualitative aspects such as their public image and the products that they happen to sell. All of these things are taken into account before the final investment is made.
Therefore, a company that would like to encourage extra investment is a company that has a strong sense of business ethics. Part of business ethics is responsibility to the investor and for that reason companies with strong reputations in the field of ethical business behavior are also companies that tend to attract more investment from people that are new into the market. Investment is most definitely important to success.
Consumer and supplier pressure have compelled many companies to adopt formal corporate social responsibility programs, but what started as a pricking of conscience has turned into a financial benefit.
77% of executives said that corporate responsibility programs enhance profitability.[3]
Fortune 500 companies with a reputation for social responsibility averaged nearly $2.5 million more in revenue annually than companies lacking a reputation for corporate social responsibility. [4]
Active companies use it as a differentiator. And companies who dont integrate social responsibility will find themselves at a disadvantage. Companies need to understand who their customers are -- consumers or other companies -- and that they evaluate companies relative to their corporate responsibility.
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Source: Indlawnews
