CORPORATE SOCIAL RESPONSIBILITY
Introduction
In this paper, the author analyzes the topic that has received too much attention over the years. In this view, it has received many dispute, confusion and debate. The topic is corporate social responsibility.
Social responsibility first burst into popularity in the late 1960s. During that time, it was conceived to be controversial that others suspected it to be inconsistent with the free enterprise system itself. Yet despite this, social responsibility has become an obligation for businesses today. On the corporate scene, it has become a permanent fixture.
One thing that should be standard amongst researchers, management scientists and practitioners is to agree that corporate social responsibility is an extremely difficult concept to measure. Social responsibility is an important function that affects organizational performance and corporate standing in the community. (1999) found that to ensure commitment to social concerns, many corporations have created a permanent, board-level committees to monitor social responsibility and ethical functions. These committees, often called “social responsibility” or “public policy” committees, serve two functions within an organization. They lend legitimacy to the consideration of a social and ethics agenda at the highest level of organizational decision making. And, they symbolically communicate to employees and external stakeholders of the organization their commitment to high social and ethical principles in conducting business.
These committees are much needed today as businesses are, according to (1989), being pushed, pulled, shoved, and criticized (and only occasionally applauded) from all sides on what is proper and correct for them to do in the area of social responsibility . Numerous business today still have only minimum awareness of what social responsibility is, what it means, or what they should do (if anything) about it. Many of the smaller and medium-sized businesses (and even a few of the larger businesses) do not have a major or separate functional area within their business enterprise assigned to handle such problems. They find it no simple matter to formulate and implement socially responsible actions and programs. In spite of these problems, all businesses today must become concerned and involved in this area.
Business
The following is a definition of business from , an online free encyclopedia.
In, economics, business is the social science of managing people with the general purpose of generating revenue. The etymology of “business” refers to the state of being busy where one is doing something practical and profitable. The term “business” has at least three usages, depending on the scope – the general usage (which we mentioned above), the singular usage to refer to a particular company or corporation, and the generalized usage referred to a particular market sector. However, the precise definition of business is arguable as is business philosophy.
In spite of this broad coverage of businesses, much of the emphasis on being socially responsible is borne by "big" business and "selected"
industries. Big business is highly visible for many reasons (well-known name,
national advertising and distribution, multiple products) and is thus more often in the critical eye of the public, which in many instances equates bigness with "power" and "badness." Small and medium-sized businesses, nonnational businesses and businesses such as department stores may not receive as much critical scrutiny because they are not as highly visible, do not manufacture dangerous products, or emit large volumes of pollutants.
Even though much emphasis is being focused on the large businesses, sight cannot be lost of the fact that many of the same problems that exist for large businesses also exist for the small and medium-sized businesses. In many instances the rules and regulations impose hardships upon the smaller businesses because of their limited work force and financial resources; they may, therefore, require and in some instances deserve special consideration in certain situations.
Society
Society may be defined as a grouping of people having certain common interests, manner of life, activities, purpose, values, traditions, or goals and objectives. A society can thus be composed of individuals or small groups of people such as found in a local PTA, or larger organizations such as found in a local or state government. These groups or societies can be working for the same or similar goals and objectives, have some overlapping goals and objectives, be in direct opposition to one another, or any combination thereof. Most of these groups serve their own self-interests and their power is widely decentralized. This society maximizes freedom of expression, action, and responsibility; this in turn results in a widely diversified set of loyalties to many different causes and organizations and minimizes the danger that any one leader of any one organization will be left uncontrolled. All of these advantages and disadvantages, along with its structure and composition, are in part some of the cause for the differences in viewpoint on what social responsibility is, what it should be, what it should encompass, and what it should accomplish.
Social Responsibility
and (1982) showed that the concept of social responsibility, or social responsiveness as some now prefer to call it, is a continually evolving concept and means different things to different people. The concept of social responsibility has been with us since the beginning of mankind and has slowly evolved to its present state.
In 1971, the Committee for Economic Development (CED) in the US published a book in which they treated the relationship between business and society as a social contract between the two groups, with business’ major obligation being the providing of those goods and services that society needs. This traditional contract between business and society has been changing because of the addition of new social value responsibilities placed upon business.
and (1984) found that many people and groups feel that business has a moral obligation to correct the social problems that beset society; at the same time, many of these stakeholders feel that much of the business community has not and is not adequately dealing with many of these social problems of concern. This is agreement with (1983), whom according to him, all these forces place pressure on business to respond to the emerging major social issues of the day.
Many businesses today, in order to respond effectively and efficiently to the major social issues and demands, must integrate into their corporate strategy corporate social policies.
Why Get Involved in Social Responsibility?
There are many arguments that can be presented to justify why a company should and must get involved in and support social responsibility; however, (1967) probably summarizes the reasons in two short points as well as most people do in a full page of arguments. Petit asserts that even though people such as , , and have different views on the subject of social responsibility, they all agree on his two fundamental points: "(1) Industrial society faces serious human and social problems brought on largely by the rise of the large corporation, and (2)
managers must conduct the affairs of the corporation in ways to solve or at
least ameliorate these problems." This definition has at least two major implications associated with it. First, many of the social problems that are faced by industry today were brought on by the growth of business itself. Second, business must take a leading role in rectifying these problems may get worse and business itself may have trouble surviving in the future. Business must either police itself or society in general may alter business conditions through pressure and law changes in a manner that will not permit some businesses to survive.
Major Arguments Supporting Social Responsibility
Today, in a greater extent that ever before, most people support companies becoming involved in social responsibility. Among the other major popular arguments for business supporting social responsibility activities are:
(1) It is in the best long-run interest of the business to become intimately involved in and to promote and improve the communities in which it does its business. (2) It can and should improve the corporate and local image of the company. (3) It is in the stockholders best interest. By making communities a better place to live, it can entice superior and happier workers to the company who in turn will put out better products and increase profits. (4) Social actions can be profitable to the company if handled with care and forethought. (5) It increases the visibility of the business firm and the business system and places them in a more favorable light and makes them a more viable institution with the general public. (6) It will help prevent possible unpalatable and even destructive government regulations. (7) Business is partially responsible for getting themselves in the mess they are in so they should help to get themselves out of it. (8) Ethical-moral and sociocultural norms require it. (9) It will help maintain and gain customers. (10) Investors prefer to invest in socially responsible firms. (11) Government agencies have miserably failed to solve many of the existing social problems. Business has the necessary talent, money, and know-how to solve these problems so they should be encourage to do so. (12) It is better to prevent the problems from occurring in the first place. And, (13) It is better to take some positive action than to take no action at all.
Major Arguments Against Social Responsibility
Major arguments against a company becoming involved in social responsibility activities are:
(1) Society would be better off if it asked businesses only to maximize their efficiencies and thus lower costs. (2) It violates the policy of profit maximization, and as a result, stockholders will suffer. (3) It will increase the price of the end item, and as a result, purchasers of the end item will suffer. (4) Most corporate executives lack the knowledge, perception, skills, and patience to deal with and solve society’s problems. (5) Social actions cannot be measured, so why participate in them? (6) The trade balance against any country will suffer. Higher priced domestic goods will cause purchasers to buy foreign goods and local money will leave the country. (7) Businesses already have too much power. Increased activity in the social arena will only increase its power to remold society to their way of thinking. (8) Business is not directly accountable to the public; therefore, the public would have little or no control over where and how deeply a company became involved. (9) It decreases short-run profitability. (10) Stockholders are unhappy for numerous reasons. And, (11) Governments should pass the laws they want obeyed and enforce them and not expect business to go beyond the law in solving the problems of society.
Businesses Performing Social Responsibility Activities
The question is not really whether a company should become involved in
social responsibility activity, but rather how deeply a company should become
involved in social responsibility activity. Every company most certainly must
obey all social responsibility-oriented laws and requirements. They must also
have a minimum code of morals and ethics to which all of their employees
must agree and adhere; otherwise, each employee will establish and operate
under his or her own standards to the possible detriment of the company
and society as a whole.
Finally, in the area of philanthropy, each company must examine its physical capabilities, desires, and economic resources to determine just how far they want to go and can go in this area.
A Case Study
Improving organizational productivity is an issue that has been with us
for some time and will continue to be important. All types of organizations need to be as productive as possible to best utilize their precious
resources, to meet their customers needs, and to stay competitive with
similar organizations. Productivity improvement is also important at a
national level. As we continue to improve our national productivity,
inflation is moderated, our standard of living improves, and jobs are
created or retained.
There are two basic approaches to improving productivity within an organization. One can change technology or one can change how people work. The former is the realm of the engineer, the second is the realm of the behavioral scientist. Our approach is the latter. Although improving technology is, of course, important to long-range productivity growth, it is how people use this technology that makes it a worthwhile investment to the organization. Thus, our concern is how to structure work so that people can and will want to behave in a way that will maximize their productivity.
6ixXteen Electronics, Inc. is a company that manufactures electronic computer components. It has approximately 485 employees and is situated southwest of South Korea. It demonstrated a strong commitment to employees by providing support for social activities for employees, preventing layoffs, and encouraging supervisors to resolve performance problems rather than fire employees. In addition, trust and open communications among all levels of the organization were highly valued. In addition to this commitment to worker satisfaction, management was constantly searching for new ways to improve operations and increase productivity.
The company’s interest in improving its productivity was to further increase equilibrium in distribution of the monthly and quarterly productivity awards.
Project Unit. The large organization was divided into two. Team A to whom the current change will be implemented first, and, Team B to whom the traditional order is still in effect.
Team A duties included inspecting electronic components for loose wires, unacceptable levels of dirt, and unclear markings and labels; correcting problems by cementing and soldering electronic pieces; applying protective coatings to components; and taking the components to final inspection. If final inspection found any errors in the finished products, the unit also was responsible for
correcting them.
These duties were very different from those performed in the assembly teams and created special problems for the measurement and evaluation of Team As productivity. First, the fact that different tasks were performed by Team A made it difficult to compare the productivity of Team A with the other teams. Second, Team A was not in control of many aspects of their own production. The component assembly process began with the assembly teams, who controlled the pace of their own work. When they worked harder, their output went up. Team A, however, served as an in-line inspection and repair group and could work only on the components finished by the assembly teams. Consequently, Team A's output levels depended on the flow of components from the assembly units. Simply working hard was not enough to ensure high output. This problem was complicated by management, who set a monthly output quota for each team. Team A often was prevented from achieving their output goal because they did not receive enough components from the assembly units. When this happened, they were unable to meet their goal, no matter how hard they worked. This
prevented them from receiving recognition for their performance and substantially reduced their morale. The Team A supervisor knew that their productivity would eventually suffer because of this unfair situation.
Project Design. Designing the productivity measurement system was accomplished by the typical four steps: develop products, develop indicators, develop contingencies, and put the system together.
Development. Change of focus toward products was accomplished fairly quickly. Amongst the new goals by Team A are: (1) maintain a high level of production. (2) Make highest quality components possible. (3) Maintain high attendance. (4) Change hours to contracts accurately and completely. (5) Follow proper housekeeping and maintenance procedures. (6) Strive to cut production costs. And, (7) maintain team rapport.
Consequently, during product development, the facilitators questioned the Team A members about these products and urged the team to consider whether they could be measured. Because individuals typically made suggestions for cutting production costs only once or twice every year or two, it was argued that cutting production costs occurred too rarely to have a substantial impact on the system. It was further argued that maintaining rapport would show up in other products, that is, rapport affects production, quality, and attendance. However, the Team A incumbents were not persuaded by these arguments. They continued to assert that these were important objectives of the unit and should, therefore, be included in the system. The facilitators, on the other hand, still believed that the two products did not belong in the system.
This was the first time in the development process that there was a serious disagreement between the Team A members and the facilitators. The facilitators were in conflict about allowing the system to be totally the product of the ideas of Team A and needing the system to be valid. The Team A members, on the other hand, did not understand why the facilitators were "interfering" with their system. The conflict was resolved when the facilitators decided to postpone any further argument.
Lessons Learned with Personal Concerns. The first lesson was that the correct composition of the design team is very important in efficiently designing a high-quality productivity measurement system. In this project, the design team included all Team A incumbents. The high proportion of incumbents to supervisors encouraged incumbent participation but had the effect of diminishing the relative input from the Team A supervisor. Supervisory input is extremely important, because it provides a perspective that incumbents do not have.
The second lesson gained from this project was the clarification of the facilitators' role. The facilitators are responsible for three distinct tasks: leading or moderating the meetings; recording product, indicator, and contingency information; and watching and directing group dynamics.
A third lesson about personnel issues was that the facilitators need to be concerned about the conflicting priorities between project participants.
Lessons Learned with Product Development. Two major lessons emerged from the process of product development. First, the facilitators must keep the design team focused on products that represent the work of the whole group. Second, the fact that some products may be multidimensional must be kept in mind.
Future of Corporate Social Responsibility
Agree with it, disagree with it, like it, or dislike it, social responsibility and social responsiveness are here to stay and everyone must live with them. This does not mean that if there are parts of them with which one is not in full agreement that one should not try to do something to correct or modify them.
Government, business, and society are going to have to work together more closely in the future if reasonable standards and progress are to be made in this area.
If government continues in the direction in which it has trended over the past 50 years, it will only get more powerful, more oppressive, and more righteous than it already is. There is no argument that there were many social ills that needed to be rectified and still do need to be improved upon. Business certainly has some responsibility to society in helping resolve these problems, but as , chairman of the board and chief executive officer of the Gulf Oil Corporation, implies, society also has some responsibilities to business. If government and society will work with business then everyone can fulfill their commitments and obligations.
Even more recently, a new system of value education has been introduced into the school system and has gained great influence in teacher training schools. It is called "values clarification" and rather than being taught as a separate course in most schools, it is a methodology of learning that is promoted in courses that prospective teachers take. Although it claims to be a theory of moral education, it has the reverse affect; it focuses on procedures and is indifferent to outcome -- this is part of its appeal. In this system, teachers try to 'flush out' or clarify students' own value systems; they should 'be concerned with the process of valuing and not particularly with the product.
Much of business also has been lax in the area of communicating social responsiveness on their part and educating the employees and the outside world on what is going on in this area. This can be improved through the use of house organs, annual reports and shareholders reports, special social responsiveness reports, speakers bureaus, and advertising and public relations firms.
In some areas, vast improvements have been made; in other areas it appears that the remedy has been worse, or at least created more or worse problems than it fixed. Only by continued and improved effort and cooperation on the part of government, business, and society can meaningful progress be made.
References
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