Corporate Social Responsability Armstrong Handbook 2014
Corporate Social Responsability Armstrong Handbook 2014
Corporate Social Responsability Armstrong Handbook 2014
09
Corporate social
responsibility
K e y co n c e p t s a n d t e r m s
Corporate social responsibility (CSR)
Stakeholder theory
Strategic CSR
Value statement
L e a r n i n g o u tcom e s
On completing this chapter you should be able to define these key concepts. You should
also understand:
●● The meaning of corporate social responsibility (CSR)
●● CSR activities
●● CSR strategy
●● Developing a CSR strategy
●● The rationale for CSR
106 Part 1 The Practice of Human Resource Management
– considering what social issues to focus on and and employment rights are upheld and HR policies
to what extent. As Porter and Kramer (2006: 85) and practices provide for the fair and ethical treat-
observed: ‘It is through strategic CSR that the com- ment of employees.
pany will make the greatest social impact and reap
the greatest business benefits.’ They also observed
that strategy is always about choice – organizations
that ‘make the right choices and build focused, CSR activities
proactive and integrated social initiatives in concert
with their core strategies will increasingly distance CSR activities as listed by McWilliams et al (2006)
themselves from the pack’ (ibid: 91). include incorporating social characteristics or fea-
CSR strategy needs to be integrated with the tures into products and manufacturing processes,
business strategy but it is also closely associated adopting progressive HRM practices, achieving
with HR strategy. This is because it is concerned with higher levels of environmental performance through
socially responsible behaviour both outside and recycling and pollution abatement, and advancing
within the firm – with society generally and with the the goals of community organizations. The infor-
internal community. In the latter case this means mation set out below was obtained by Business in
creating a working environment where personal the Community research.
Source review
The CSR activities of 120 leading British treatment of customers, providing appropriate
product information and labelling, and on the
companies – Business in the Community impacts of products on customer health.
(2007)
●● Workplace – this was the strongest management
●● Community – skills and education, employability performing area as most companies have
and social exclusion were frequently identified as established employment management frameworks
key risks and opportunities. Other major activities that can cater for workplace issues as they
were support for local community initiatives and emerge. Companies recognized the crucial role of
being a responsible and safe neighbour. employees to achieve responsible business
●● Environment – most companies reported climate practices. Emphasis was placed on internal
change and resource-use as key issues for their communications and training in order to raise
business: 85 per cent of them managed their awareness and understanding of why CSR is
impacts through an environmental management relevant to them and valuable for the business.
system. More attention was paid to health and well-being
issues as well as the traditional safety agenda.
●● Marketplace – the issues most frequently More work was done on diversity, both to ensure
mentioned by companies were research and the business attracts a diverse workforce and to
development, procurement and supply chain, communicate the business case for diversity
responsible selling, responsible marketing and internally.
product safety. There was a rising focus on fair
Business in the Community also reported a growing risk to creating opportunities. A survey conducted
emphasis on responsible business as a source of com by Industrial Relations Services (Egan, 2006) found
petitive advantage as firms move beyond minimizing that:
108 Part 1 The Practice of Human Resource Management
and soft ideas? Are they letting the country in for Much research has been conducted into the
a nightmare return to feudalism by forgetting that relationship between CSR and firm performance.
they must be businessmen first, last and almost For example, Russo and Fouts (1997) found that
always?’ He did write that CSR can be used as there was a positive relationship between environ-
‘a way of maximizing the lifetime of capitalism by mental performance and financial performance.
taking the wind out of its critics’ sails’ (ibid: 43). Hillman and Keim (2001) established that if the
But, writing as an unrestructured capitalist, he sug- socially responsible activity were directly related to
gested that: ‘The essence of free enterprise is to go primary stakeholders, then investments may benefit
after profit in any way that is consistent with its not only stakeholders but also result in increased
own survival as an economic system’ (ibid: 44). shareholder wealth. However, participation in social
The Chicago monetarist Milton Friedman (1962: issues beyond the direct stakeholders may adversely
133–34) questioned the ability of business managers affect a firm’s ability to create such wealth.
to pursue the social interest. He asked:
If businessmen do have a social responsibility
other than making maximum profits for The basis for developing
stockholders, how are they to know what it is?
Can self-selected private individuals decide what a CSR strategy
the social interest is? Can they decide how great a
burden they are justified in placing on themselves The basis for developing a CSR strategy is pro-
or their stockholders to serve that social interest? vided by the following competency framework of
the CSR Academy (2006), which is made up of six
In 1970 Friedman argued that the social responsi- characteristics:
bility of business is to maximize profits within the
bounds of the law. He maintained that the mere 1 Understanding society – understanding how
existence of CSR was an agency problem within the business operates in the broader context and
firm in that it was a misuse of the resources entrusted knowing the social and environmental
to managers by owners, which could be better used impact that the business has on society.
on value-added internal projects or returned to the 2 Building capacity – building the capacity of
shareholders. others to help manage the business effectively.
These outspoken views may no longer be sup- For example, suppliers understand the
ported so openly but they still exist and are still business’s approach to the environment and
acted on. There is much evidence that CSR is not on employees can apply social and environmental
the agenda – for example, UK banks that made money concerns in their day-to-day roles.
by selling worthless investments or insurance policies 3 Questioning business as usual – individuals
and then failed to respond adequately to complaints. continually questioning the business in
And, less egregiously, a glance at the ‘Your Problems’ relation to a more sustainable future and
column in the Observer reveals plenty of instances being open to improving the quality of life
of businesses indulging in antisocial behaviour. It is and the environment.
necessary, therefore, to have a convincing case for 4 Stakeholder relations – understanding who
the benefits of CSR. the key stakeholders are and the risks and
opportunities they present. Working with
them through consultation and taking their
Benefits of CSR views into account.
5 Strategic view – ensuring that social and
Benefits from CSR listed by the CIPD (2003: 4) environmental views are included in the
include, ‘offering distinctive positioning in the market business strategy so that they are integral to
place, protecting reputation, building credibility and the way the business operates.
trust with customers and employees, redefining cor 6 Harnessing diversity – respecting that people
porate purpose or mission and securing the company’s are different, which is reflected in fair and
licence to operate’. transparent business practices.
110 Part 1 The Practice of Human Resource Management
Questions
1 Is it necessary to have a business case for CSR and, if so, what is it?
2 What is the role of HR in promoting CSR?
3 What sort of approaches to CSR can an organization adopt?
References
Baron, D (2001) Private policies, corporate policies Husted, B W and Salazar, J (2006) Taking Friedman
and integrated strategy, Journal of Economics and seriously: maximizing profits and social
Management Strategy, 10 (1), pp 7–45 performance, Journal of Management Studies,
Business for Social Responsibility (2007) Annual 43 (1), pp 75–91
Report, [email protected] [accessed 5 October 2008] Keynes, J M (1923) A Tract on Monetary Reform,
Business in the Community (2007) Benchmarking London, Macmillan
Responsible Business Practice, bitc.org.uk, Levitt, T (1958) The dangers of social responsibility,
accessed 5 October 2008 Harvard Business Review, September–October,
CIPD (2003) Corporate Social Responsibility and pp 41–50
HR’s Role, London, CIPD McWilliams, A, Siegal, D S and Wright, P M (2006)
CIPD (2009) Corporate Social Responsibility, Corporate social responsibility: strategic
London, CIPD implications, Journal of Management Studies,
CSR Academy (2006) The CSR Competency 43 (1), pp 1–12
Framework, Norwich, Stationery Office Moran, P and Ghoshal, S (1996) Value creation
Egan, J (2006) Doing the decent thing: CSR and by firms, Academy of Management Best Paper
ethics in employment, IRS Employment Review, Proceedings, pp 41–45
858, 3 November, pp 9–16 Porter, M E and Kramer, M R (2006) Strategy and
Freeman, R E (1984) Strategic Management: society: the link between competitive advantage
A stakeholder perspective, Englewood Cliffs, and corporate social responsibility, Harvard
NJ, Prentice Hall Business Review, December, pp 78–92
Friedman, M (1962) Capitalism and Freedom, Russo, M V and Fouts, P A (1997) A resource-based
Chicago, IL, University of Chicago Press perspective on corporate environmental
Friedman, M (1970) The social responsibility of performance and profitability, Academy of
business is to increase its profits, New York Times Management Review, 40 (3), pp 534–59
Magazine, September, p 13 Wood, D J (1991) Corporate social performance
Hillman, A and Keim, G (2001) Shareholder value, revisited, Academy of Management Review,
stakeholder management and social issues: what’s 16 (4), pp 691–718
the bottom line?, Strategic Management Journal,
22 (2), pp 125–39