Knowledge management (KM) is the process of capturing, developing, sharing, and effectively

using organisational knowledge.[1] It refers to a multi-disciplined approach to achieving organisational

objectives by making the best use of knowledge.[2]
An established discipline since 1991 (see Nonaka 1991), KM includes courses taught in the fields
of business administration, information systems, management, and library and information sciences.
[3][4]

More recently, other fields have started contributing to KM research; these include information

and media, computer science,public health, and public policy.[5] Columbia University, Kent State
University and the University of Haifa offer dedicated Master of Science degrees in Knowledge
Management.[6][7][8]
Many large companies, public institutions and non-profit organisations have resources dedicated to
internal KM efforts, often as a part of their business strategy,information technology, or human
resource management departments.[9] Several consulting companies provide strategy and advice
regarding KM to these organisations.[9]
Knowledge management efforts typically focus on organisational objectives such as improved
performance, competitive advantage, innovation, the sharing of lessons learned, integration
and continuous improvement of the organisation.[10] KM efforts overlap with organisational
learning and may be distinguished from that by a greater focus on the management of knowledge as
a strategic asset and a focus on encouraging the sharing of knowledge.[2][11] It is an enabler of
organisational learning.[12][13]
Contents
[hide]

1 History

2 Research
o

2.1 Dimensions

2.2 Strategies

2.3 Motivations

3 KM Technologies

4 See also

5 References

6 External links

History[edit]
Knowledge management efforts have a long history, to include on-the-job discussions,
formal apprenticeship, discussion forums, corporate libraries, professional training and mentoring
programs.[2][13] With increased use of computers in the second half of the 20th century,
specific adaptations of technologies such asknowledge bases, expert systems, knowledge
repositories, group decision support systems, intranets, and computer-supported cooperative
work have been introduced to further enhance such efforts.[2]
In 1999, the term personal knowledge management was introduced; it refers to the management of
knowledge at the individual level.[14]
In the enterprise, early collections of case studies recognized the importance of knowledge
management dimensions of strategy, process, and measurement.[15][16]Key lessons learned include
people and the cultural norms which influence their behaviors are the most critical resources for
successful knowledge creation, dissemination, and application; cognitive, social, and organizational
learning processes are essential to the success of a knowledge management strategy; and
measurement, benchmarking, and incentives are essential to accelerate the learning process and to
drive cultural change.[16] In short, knowledge management programs can yield impressive benefits to
individuals and organizations if they are purposeful, concrete, and action-oriented.

Research[edit]
KM emerged as a scientific discipline in the earlier 1990s.[17] It was initially supported solely by
practitioners, when Skandia hired Leif Edvinsson of Sweden as the world's first Chief Knowledge
Officer (CKO).[18] Hubert Saint-Onge (formerly of CIBC, Canada), started investigating KM long
before that.[2] The objective of CKOs is to manage and maximize the intangible assets of their
organisations.[2] Gradually, CKOs became interested in practical and theoretical aspects of KM, and
the new research field was formed.[19] Discussion of the KM idea has been taken up by academics,
such as Ikujiro Nonaka (Hitotsubashi University), Hirotaka Takeuchi(Hitotsubashi
University), Thomas H. Davenport (Babson College) and Baruch Lev (New York University).[3][20] In
2001, Thomas A. Stewart, former editor at Fortunemagazine and subsequently the editor of Harvard
Business Review, published a cover story highlighting the importance of intellectual capital in
organisations.[21]Since its establishment, the KM discipline has been gradually moving towards
academic maturity.[2] First, there is a trend toward higher cooperation among academics; particularly,
there has been a drop in single-authored publications. Second, the role of practitioners has changed.
[19]

Their contribution to academic research has been dramatically declining from 30% of overall

contributions up to 2002, to only 10% by 2009 (Serenko et al. 2010).[22]

A broad range of thoughts on the KM discipline exist; approaches vary by author and school. [19][23] As
the discipline matures, academic debates have increased regarding both the theory and practice of
KM, to include the following perspectives:

Techno-centric with a focus on technology, ideally those that enhance knowledge

sharing and creation.[24][25]

Organisational with a focus on how an organisation can be designed to facilitate knowledge

processes best.[9]

Ecological with a focus on the interaction of people, identity, knowledge, and environmental
factors as a complex adaptive system akin to a naturalecosystem.[26][27]

Regardless of the school of thought, core components of KM include people, processes, technology
(or) culture, structure, technology, depending on the specificperspective (Spender & Scherer 2007).
Different KM schools of thought include lenses through which KM can be viewed and explained, to
include:

community of practice [28]

social network analysis[29]

intellectual capital (Bontis & Choo 2002)

information theory (McInerney 2002)[18]

complexity science[30]

constructivism(Nanjappa & Grant 2003)[31]

The practical relevance of academic research in KM has been questioned (Ferguson 2005)
with action research suggested as having more relevance (Andriessen 2004) and the need to
translate the findings presented in academic journals to a practice (Booker, Bontis & Serenko 2008).
[15][15][32][33]

Dimensions[edit]
Different frameworks for distinguishing between different 'types of' knowledge exist.[13] One proposed
framework for categorizing the dimensions of knowledge distinguishes between tacit
knowledge and explicit knowledge.[30] Tacit knowledge represents internalized knowledge that an
individual may not be consciously aware of, such as how he or she accomplishes particular tasks. At

the opposite end of the spectrum, explicit knowledge represents knowledge that the individual holds
consciously in mental focus, in a form that can easily be communicated to others. (Alavi & Leidner
2001).[19] Similarly, Hayes and Walsham (2003) describe content and relational perspectives of
knowledge and knowledge management as two fundamentally different epistemological
perspectives.[34] The content perspective suggest that knowledge is easily stored because it may be
codified, while the relational perspective recognizes the contextual and relational aspects of
knowledge which can make knowledge difficult to share outside of the specific location where the
knowledge is developed.[34]

The Knowledge Spiral as described by Nonaka & Takeuchi.

Early research suggested that a successful KM effort needs to convert internalized tacit knowledge
into explicit knowledge to share it, and the same effort must permit individuals to internalize and
make personally meaningful any codified knowledge retrieved from the KM effort. [9][35] Subsequent
research into KM suggested that a distinction between tacit knowledge and explicit knowledge
represented an oversimplification and that the notion of explicit knowledge is self-contradictory.
[14]

Specifically, for knowledge to be made explicit, it must be translated into information

(i.e., symbols outside of our heads) (Serenko & Bontis 2004).[14] Later on, Ikujiro Nonaka proposed a
model (SECI for Socialization, Externalization, Combination, Internalization) which considers a
spiraling knowledge process interaction between explicit knowledge and tacit knowledge (Nonaka &
Takeuchi 1995).[36] In this model, knowledge follows a cycle in which implicit knowledge is 'extracted'
to become explicit knowledge, and explicit knowledge is 're-internalized' into implicit knowledge.
[36]

More recently, together with Georg von Krogh and Sven Voelpel, Nonaka returned to his earlier

work in an attempt to move the debate about knowledge conversion forwards (Nonaka, von Krogh &
Voelpel 2006);[37] (Nonaka, von Krogh & 2009).[4]
A second proposed framework for categorizing the dimensions of knowledge distinguishes between
embedded knowledge of a system outside of a human individual (e.g., an information system may
have knowledge embedded into its design) and embodied knowledge representing a learned
capability of a human bodys nervousand endocrine systems (Sensky 2002).[38]

A third proposed framework for categorizing the dimensions of knowledge distinguishes between the
exploratory creation of "new knowledge" (i.e., innovation) vs. thetransfer or exploitation of
"established knowledge" within a group, organisation, or community.[34][39] Collaborative environments
such as communities of practice or the use of social computing tools can be used for both
knowledge creation and transfer.[39]

Strategies[edit]
Knowledge may be accessed at three stages: before, during, or after KM-related activities.
[40]

Organisations have tried knowledge capture incentives, including making content submission

mandatory and incorporating rewards into performance measurement plans.[41] Considerable

controversy exists over whether incentives work or not in this field and no consensus has emerged.
[10]

One strategy to KM involves actively managing knowledge (push strategy). [10][42] In such an instance,
individuals strive to explicitly encode their knowledge into a shared knowledge repository, such as
a database, as well as retrieving knowledge they need that other individuals have provided to the
repository.[42] This is commonly known as the Codification approach to KM.[42]
Another strategy to KM involves individuals making knowledge requests of experts associated with a
particular subject on an ad hoc basis (pull strategy). [10][42] In such an instance, expert individual(s) can
provide their insights to the particular person or people needing this (Snowden 2002).[30] This is
commonly known as the Personalisation approach to KM.
Hansen et al. propose a simple framework, distinguishing two opposing KM strategies: codification
and personalization.[43] Codification focuses on collecting and storing codified knowledge in
previously designed electronic databases to make it accessible to the organisation. [44] Codification
can therefore refer to both tacit and explicit knowledge.[45] In contrast, the personalization strategy
aims at encouraging individuals to share their knowledge directly.[44] Information technology plays a
less important role, as it is only supposed to facilitate communication and knowledge sharing among
members of an organisation.
Other knowledge management strategies and instruments for companies include: [10][26][30]

Knowledge Sharing (fostering a culture that encourages the sharing of information, based on
the concept that knowledge is not irrevocable and should be shared and updated to remain
relevant)

Storytelling (as a means of transferring tacit knowledge)

Cross-project learning

After action reviews

Knowledge mapping (a map of knowledge repositories within a company accessible by all)

Communities of practice

Expert directories (to enable knowledge seeker to reach to the experts)

Best practice transfer

Knowledge fairs

Competence management (systematic evaluation and planning of competences of individual

organisation members)

Proximity & architecture (the physical situation of employees can be either conducive or
obstructive to knowledge sharing)

Master-apprentice relationship

Collaborative technologies (groupware, etc.)

Knowledge repositories (databases, bookmarking engines, etc.)

Measuring and reporting intellectual capital (a way of making explicit knowledge for
companies)

Knowledge brokers (some organisational members take on responsibility for a specific "field"
and act as first reference on whom to talk about a specific subject)

Social software (wikis, social bookmarking, blogs, etc.)

Inter-project knowledge transfer

Motivations[edit]
There are a number of claims as to the motivation leading organisations to undertake a KM effort.
[46]

Typical considerations driving a KM effort include:[30]

Making available increased knowledge content in the development and provision
of products and services

Achieving shorter new product development cycles

Facilitating and managing innovation and organisational learning

Leveraging the expertise of people across the organisation

Increasing network connectivity between internal and external individuals

Managing business environments and allowing employees to obtain relevant insights

and ideas appropriate to their work

Solving intractable or wicked problems

Managing intellectual capital and intellectual assets in the workforce (such as the expertise
and know-how possessed by key individuals)

Debate exists whether KM is more than a passing fad, though increasing amount of research in this
field may help to answer this question, as well as create consensus on what elements of KM help
determine the success or failure of such efforts (Wilson 2002).[47] Knowledge sharing remains a
challenging issue for knowledge management, while there is no clear agreement barriers may
include time issues for knowledge works, the level of trust, lack of effective support technologies and
culture (Jennex 2008).[48]

KM Technologies[edit]
Knowledge Management (KM) technology can be divided into the following general categories:

Groupware

Workflow

Content/Document Management

Enterprise Portals

eLearning

Scheduling and planning

Telepresence

Groupware refers to technologies that facilitate collaboration and sharing of organizational

information. One of the earliest very successful products in this category was Lotus Notes. Notes
provided tools for threaded discussions, sharing of documents, organization wide uniform email, etc.
Workflow tools allow the representation of processes associated with the creation, use, and
maintenance of organizational knowledge. For example the process to create and utilize forms and
documents within an organization. For example, a workflow system can do things such as send
notifications to appropriate supervisors when a new document has been produced and is waiting
their approval.
Content/Document Management systems are systems designed to automate the process of creating
web content and/or documents within an organization. The various roles required such as editors,
graphic designers, writers, and producers can be explicitly modeled along with the various tasks in
the process and validation criteria for moving from one step to another. All this information can be
used to automate and control the process. Commercial vendors of these tools started to start either
as tools to primarily support documents (e.g., Documentum) or as tools designed to support web
content (e.g., Interwoven) but as the Internet grew these functions merged and most vendors now
perform both functions, management of web content and of documents. As Internet standards
became adopted more and more within most organization Intranets and Extranets the distinction
between the two essentially went away.
Enterprise Portals are web sites that aggregate information across the entire organization or for
groups within the organization such as project teams.
eLearning technology enables organizations to create customized training and education software.
This can include lesson plans, monitoring progress against learning goals, online classes, etc.
eLearning technology enables organizations to significantly reduce the cost of training and educating
their members. As with most KM technology in the business world this was most useful for
companies that employ knowledge workers; highly trained staff with areas of deep expertise such as
the staff of a consulting firm. Such firms spend a significant amount on the continuing education of
their employees and even have their own internal full-time schools and internal education staff.
Scheduling and planning tools automate the creation and maintenance of an organization's
schedule: scheduling meetings,notifying people of a meeting, etc. An example of a well known
scheduling tool is Microsoft Outlook. The planning aspect can integrate with project management
tools such as Microsoft Project. Some of the earliest successful uses of KM technology in the
business world were the development of these types of tools, for example online versions of
corporate "yellow pages" with listing of contact info and relevant knowledge and work history.[24]
Telepresence technology enables individuals to have virtual meetings rather than having to be in the
same place. Videoconferencing is the most obvious example.

These categories are neither rigidly defined nor exhaustive. Workflow for example is a significant
aspect of a content or document management system and most content and document management
systems have tools for developing enterprise portals.[10][49]
One of the most important trends in KM technology was the adoption of Internet standards. Original
KM technology products such as Lotus Notes defined their own proprietary formats for email,
documents, forms, etc. The explosive growth of the Internet drove most vendors to abandon
proprietary formats and adopt Internet formats such as HTML, HTTP, and XML. In addition, open
source and freeware tools for the creation of blogs and wikis now enable capabilities that used to
require expensive commercial tools to be available for little or no cost. [33][50]
One of the most important ongoing developments in KM technology is adoption of tools that enable
organizations to work at the semantic level.[51] Many of these tools are being developed as part of
the Semantic Web.[52] For example the Stanford Protege Ontology Editor.
Corporate social responsibility (CSR, also called corporate conscience, corporate
citizenship or responsible business)[1] is a form of corporate self-regulation integrated into
a business model. CSR policy functions as a self-regulatory mechanism whereby a business
monitors and ensures its active compliance with the spirit of the law, ethical standards and
international norms. With some models, a firm's implementation of CSR goes beyond compliance
and engages in "actions that appear to further some social good, beyond the interests of the firm and
that which is required by law."[2][3] CSR aims to embrace responsibility for corporate actions and to
encourage a positive impact on the environment and stakeholders including consumers, employees,
investors, communities, and others.
The term "corporate social responsibility" became popular in the 1960s and has remained a term
used indiscriminately by many to cover legal and moral responsibility more narrowly construed. [4]
Proponents argue that corporations increase long term profits by operating with a CSR perspective,
while critics argue that CSR distracts from business' economic role. A 2000 study compared
existing econometric studies of the relationship between social and financial performance,
concluding that the contradictory results of previous studies reporting positive, negative, and neutral
financial impact, were due to flawed empirical analysis and claimed when the study is properly
specified, CSR has a neutral impact on financial outcomes.[5]
Critics[6][7] questioned the "lofty" and sometimes "unrealistic expectations" in CSR. [8] or that CSR is
merely window-dressing, or an attempt to pre-empt the role of governments as a watchdog over
powerful multinational corporations.
Political sociologists became interested in CSR in the context of theories
of globalization, neoliberalism and late capitalism. Some sociologists viewed CSR as a form of
capitalist legitimacy and in particular point out that what began as a social movement against

uninhibited corporate power was transformed by corporations into a 'business model' and a 'risk
management' device, often with questionable results.[9]
CSR is titled to aid an organization's mission as well as a guide to what the company stands for to its
consumers. Business ethics is the part of applied ethics that examines ethical principles and moral
or ethical problems that can arise in a business environment. ISO 26000 is the recognized
international standard for CSR. Public sector organizations (the United Nations for example) adhere
to the triple bottom line (TBL). It is widely accepted that CSR adheres to similar principles, but with
no formal act of legislation.
Contents
[hide]

1 Definition

2 Consumer perspectives

3 Approaches
o

3.1 Cost-benefit analysis

4 Scope

4.1 Supply chain

5 Implementation

5.1 Engagement plan

5.2 Accounting, auditing and reporting

5.3 Ethics training

5.4 Common actions

5.5 Social license

6 Potential business benefits

o

6.1 Triple bottom line

6.2 Human resources

6.3 Risk management

6.4 Brand differentiation

6.5 Reduced scrutiny

6.6 Supplier relations

7 Criticisms and concerns

o

7.1 Nature of business

7.2 Motives

7.3 Misdirection

7.4 Controversial industries

8 Negative impact of corporate psychopathy

9 Stakeholder influence
o

9.1 Ethical consumerism

9.2 Socially responsible investing

9.3 Creating shared value

9.4 Public policies

9.5 Crises and their consequences

10 Geography
o

10.1 UK retail sector

11 See also

12 References
o

12.1 Notes

12.2 Sources

13 External links

Definition[edit]
Business dictionary defines CSR as "A companys sense of responsibility towards the community
and environment (both ecological and social) in which it operates. Companies express this
citizenship (1) through their waste and pollution reduction processes, (2) by contributing educational
and social programs and (3) by earning adequate returns on the employed resources." [10]
A broader definition expands from a focus on stakeholders to include philanthropy and volunteering.
[11]

Consumer perspectives[edit]
Most consumers agree that while achieving business targets, companies should do CSR at the
same time.[12] Most consumers believe companies doing charity will receive a positive response.
[13]

Somerville also found that consumers are loyal and willing to spend more on retailers that support

charity. Consumers also believe that retailers selling local products will gain loyalty.[14] Smith (2013)
[15]

shares the belief that marketing local products will gain consumer trust. However, environmental

efforts are receiving negative views given the belief that this would affect customer service.
[14]

Oppewal et al. (2006) found that not all CSR activities are attractive to consumers. [16] They

recommended that retailers focus on one activity.[17] Becker-Olsen (2006)[18] found that if the social
initiative done by the company is not aligned with other company goals it will have a negative impact.
Mohr et al.(2001)[19] and Groza et al. (2011) [20] also emphasise the importance of reaching the
consumer.

Approaches[edit]

CSR Approaches

Some commentators have identified a difference between the Canadian (Montreal school of CSR),
the Continental European and the Anglo-Saxon approaches to CSR.[21] It is said that for Chinese
consumers, a socially responsible company makes safe, high-quality products; for Germans it
provides secure employment; in South Africa it makes a positive contribution to social needs such as
health care and education.[22] And even within Europe the discussion about CSR is very
heterogeneous.[23]
A more common approach to CSR is corporate philanthropy. This includes monetary donations and
aid given to nonprofit organizations and communities. Donations are made in areas such as the arts,
education, housing, health, social welfare and the environment, among others, but excluding political
contributions and commercial event sponsorship.[24]
Another approach to CSR is to incorporate the CSR strategy directly into operations. For instance,
procurement of Fair Trade tea and coffee.
Creating Shared Value, or CSV is based on the idea that corporate success and social welfare are
interdependent. A business needs a healthy, educated workforce, sustainable resources and adept
government to compete effectively. For society to thrive, profitable and competitive businesses must
be developed and supported to create income, wealth, tax revenues and philanthropy. The Harvard
Business Review article Strategy & Society: The Link between Competitive Advantage and
Corporate Social Responsibility provided examples of companies that have developed deep linkages
between their business strategies and CSR.[25] CSV acknowledges trade-offs between short-term
profitability and social or environmental goals, but emphasizes the opportunities for competitive

advantage from building a social value proposition into corporate strategy. CSV gives the impression
that only two stakeholders are important - shareholders and consumers.
Many companies employ benchmarking to assess their CSR policy, implementation and
effectiveness. Benchmarking involves reviewing competitor initiatives, as well as measuring and
evaluating the impact that those policies have on society and the environment, and how others
perceive competitor CSR strategy.[26]

Cost-benefit analysis[edit]
In competitive markets cost-benefit analysis of CSR initiatives, can be examined using a resourcebased view (RBV). According to Barney (1990) "formulation of the RBV, sustainable competitive
advantage requires that resources be valuable (V), rare (R), inimitable (I) and non-substitutable
(S)."[27][28] A firm introducing a CSR-based strategy might only sustain high returns on their investment
if their CSR-based strategy could not be copied (I). However, should competitors imitate such a
strategy, that might increase overall social benefits. Firms that choose CSR for strategic financial
gain are also acting responsibly.[3]
RBV presumes that firms are bundles of heterogeneous resources and capabilities that are
imperfectly mobile across firms. This imperfect mobility can produce competitive advantages for
firms that acquire immobile resources. McWilliams and Siegel (2001) examined CSR activities and
attributes as a differentiation strategy. They concluded that managers can determine the appropriate
level of investment in CSR by conducting cost benefit analysis in the same way that they analyze
other investments.
Reinhardt (1998) found that a firm engaging in a CSR-based strategy could only sustain an
abnormal return if it could prevent competitors from imitating its strategy.[29]

Scope[edit]
Initially, CSR emphasized the official behavior of individual firms. Later, it expanded to include
supplier behavior and the uses to which products were put and how they were disposed of after they
lost value.

Supply chain[edit]
Incidents like the 2013 Savar building collapse pushed companies to consider how the behavior of
their suppliers impacted their overall impact on society. Irresponsible behavior reflected on both the
misbehaving firm, but also on its corporate customers. Supply chain management expanded to
consider the CSR context. Wieland and Handfield (2013) suggested that companies need to include
social responsibility in their reviews of component quality. They highlighted the use of technology in
improving visibility across the supply chain.[30]

Implementation[edit]
CSR may be based within the human resources, business development or public
relations departments of an organisation,[11] or may be a separate unit reporting to the CEO or
the board of directors. Some companies approach CSR without a clearly defined team or
programme.

Engagement plan[edit]
An engagement plan can assist in reaching a desired audience. A corporate social responsibility
individual or team plans the goals and objectives of the organization. As with any corporate activity, a
defined budget demonstrates commitment and scales the program's relative importance.

Accounting, auditing and reporting[edit]

Main article: Social accounting
Social accounting is the communication of social and environmental effects of a company's
economic actions to particular interest groups within society and to society at large. [31]
Social accounting emphasizes the notion of corporate accountability. Crowther defines social
accounting as "an approach to reporting a firms activities which stresses the need for the
identification of socially relevant behavior, the determination of those to whom the company is
accountable for its social performance and the development of appropriate measures and reporting
techniques."[32] Reporting guidelines and standards serve as frameworks for social accounting,
auditing and reporting:

AccountAbility's AA1000 standard, based on John Elkington's triple bottom line (3BL)
reporting

The Prince's Accounting for Sustainability Project's Connected Reporting Framework [33]

The Fair Labor Association conducts audits based on its Workplace Code of Conduct and
posts audit results on the FLA website.

The Fair Wear Foundation verifies labour conditions in companies' supply chains, using
interdisciplinary auditing teams.

Global Reporting Initiative's Sustainability Reporting Guidelines

Economy for the Common Good's Common Good Balance Sheet[34]

GoodCorporation's standard[35] developed in association with the Institute of Business Ethics

Synergy Codethic 26000[36] Social Responsibility and Sustainability Commitment

Management System (SRSCMS) Requirements Ethical Business Best Practices of
Organizations - the necessary management system elements to obtain a certifiable ethical
commitment management system. The standard scheme has been build around ISO 26000 and
UNCTAD Guidance on Good Practices in Corporate Governance.The standard is applicable by
any type of organization.;

Earthcheck Certification / Standard

Social Accountability International's SA8000 standard

Standard Ethics Aei guidelines

The ISO 14000 environmental management standard

The United Nations Global Compact requires companies to communicate on their

progress[37] (or to produce a Communication on Progress, COP), and to describe the company's
implementation of the Compact's ten universal principles.[38]

The United Nations Intergovernmental Working Group of Experts on International Standards

of Accounting and Reporting (ISAR) provides voluntary technical guidance on eco-efficiency
indicators,[39] corporate responsibility reporting,[40] and corporate governance disclosure.[41]

The FTSE Group publishes the FTSE4Good Index, an evaluation of CSR performance of
companies.

In nations such as France, legal requirements for social accounting, auditing and reporting exist,
though international or national agreement on meaningful measurements of social and
environmental performance has not been achieved. Many companies produce externally audited
annual reports that cover Sustainable Development and CSR issues ("Triple Bottom Line Reports"),
but the reports vary widely in format, style, and evaluation methodology (even within the same
industry). Critics dismiss these reports as lip service, citing examples such as Enron's yearly
"Corporate Responsibility Annual Report" and tobacco companies' social reports.
In South Africa, as of June 2010, all companies listed on the Johannesburg Stock Exchange (JSE)
were required to produce an integrated report in place of an annual financial report and sustainability
report.[42] An integrated report reviews environmental, social and economic performance alongside
financial performance. This requirement was implemented in the absence of formal or legal

standards. An Integrated Reporting Committee (IRC) was established to issue guidelines for good
practice.

Ethics training[edit]
The rise of ethics training inside corporations, some of it required by government regulation, has
helped CSR to spread. The aim of such training is to help employees make ethical decisions when
the answers are unclear.[43] The most direct benefit is reducing the likelihood of "dirty hands",[44] fines
and damaged reputations for breaching laws or moral norms. Organizations see increased
employee loyalty and pride in the organization.[45]

Common actions[edit]
Common CSR actions include:[46]

Environmental sustainability: recycling, waste management, water management, renewable

energy, reusable materials, 'greener' supply chains, reducing paper use and
adopting Leadership in Energy and Environmental Design (LEED) building standards.[47][48][49]

Community involvement: This can include raising money for local charities, providing
volunteers, sponsoring local events, employing local workers, supporting local economic growth,
engaging in fair trade practices, etc.[50][51]

Ethical marketing: Companies that ethically market to consumers are placing a higher value
on their customers and respecting them as people who are ends in themselves. They do not try
to manipulate or falsely advertise to potential consumers. This is important for companies that
want to be viewed as ethical.

Social license[edit]
Social license refers to a local communitys acceptance or approval of a company. Social license
exists outside formal regulatory processes. Social license can nevertheless be acquired through
timely and effective communication, meaningful dialogue and ethical and responsible behavior.
Displaying commitment to CSR is one way to achieve social license, by enhancing a companys
reputation.[52]

Potential business benefits[edit]

A large body of literature exhorts business to adopt measures non-financial measures of success
(e.g., Deming's Fourteen Points, balanced scorecards). While CSR benefits are hard to quantify,
Orlitzky, Schmidt and Rynes[53] found a correlation between social/environmental performance and
financial performance.

The business case for CSR[54] within a company employs one or more of these arguments:

Triple bottom line[edit]

"People, planet and profit", also known as the triple bottom line form one way to evaluate CSR.
"People" refers to fair labour practices, the community and region where the business operates.
"Planet" refers to sustainable environmental practices. Profit is the economic value created by the
organization after deducting the cost of all inputs, including the cost of the capital (unlike accounting
definitions of profit).[55][56]
This measure was claimed to help some companies be more conscious of their social and moral
responsibilities.[57] However, critics claim that it is selective and substitutes a company's perspective
for that of the community. Another criticism is about the absence of a standard auditing procedure. [58]

Human resources[edit]
A CSR program can be an aid to recruitment and retention,[59][60] particularly within the
competitive graduate student market. Potential recruits often consider a firm's CSR policy. CSR can
also help improve the perception of a company among its staff, particularly when staff can become
involved through payroll giving, fundraisingactivities or community volunteering. CSR has been
credited with encouraging customer orientation among customer-facing employees. [61]

Risk management[edit]
Managing risk is an important executive responsibility. Reputations that take decades to build up can
be ruined in hours through corruption scandals or environmental accidents. [62] These draw unwanted
attention from regulators, courts, governments and media. CSR can limit these risks. [63]

Brand differentiation[edit]
CSR can help build customer loyalty based on distinctive ethical values. [64] Some companies use
their commitment to CSR as their primary positioning tool, e.g., The Co-operative Group, The Body
Shop and American Apparel[65]
Some companies use CSR methodologies as a strategic tactic to gain public support for their
presence in global markets, helping them sustain a competitive advantage by using their social
contributions as another form of advertising.[66]

Reduced scrutiny[edit]
Corporations are keen to avoid interference in their business through taxation and/or regulations. A
CSR program can persuade governments and the public that a company takes health and safety,
diversity and the environment seriously, reducing the likelihood that company practices will be
closely monitored.

Supplier relations[edit]

Appropriate CSR programs can increase the attractiveness of supplier firms to potential customer
corporations. E.g., a fashion merchandiser may find value in an overseas manufacturer that uses
CSR to establish a positive imageand to reduce the risks of bad publicity from uncovered
misbehavior.

Criticisms and concerns[edit]

CSR concerns include its relationship to the purpose of business and the motives for engaging in it.

Nature of business[edit]
Milton Friedman and others argued that a corporation's purpose is to maximize returns to its
shareholders and that obeying the laws of the jurisdictions within which it operates constitutes
socially responsible behavior.[67]
While some CSR supporters claim that companies practicing CSR, especially in developing
countries, are less likely to exploit workers and communities, critics claim that CSR itself imposes
outside values on local communities with unpredictable outcomes.[68]
Better governmental regulation and enforcement, rather than voluntary measures, are an alternative
to CSR that moves decision-making and resource allocation from public to private bodies.
[69]

However, critics claim that effective CSR must be voluntary as mandatory social responsibility

programs regulated by the government interferes with peoples own plans and preferences, distorts
the allocation of resources, and increases the likelihood of irresponsible decisions. [70]

Motives[edit]

A story of CSR promoted by Azim Premji Foundation in India[71]

Some critics believe that CSR programs are undertaken by companies to distract the public from
ethical questions posed by their core operations. They argue that the reputational benefits that CSR
companies receive (cited above as a benefit to the corporation) demonstrate the hypocrisy of the
approach.[72]

Misdirection[edit]
Another concern is that sometimes companies use CSR to direct public attention away from other,
harmful business practices. For example, McDonald's Corporation positioned its association

with Ronald McDonald House as CSR[73] while its meals have been accused of promoting poor eating
habits.[74]

Controversial industries[edit]
Industries such as tobacco, alcohol or munitions firms make products that damage their consumers
and/or the environment. Such firms may engage in the same philanthropic activities as those in other
industries. This duality complicates assessments of such firms with respect to CSR. [75]

Negative impact of corporate psychopathy[edit]

Main article: Psychopathy in the workplace
As corporate psychopaths have little or no conscience or care or empathy, it follows logically that
they are not driven by any notion of social responsibility or commitment to employees or to the wider
public.[76]

Stakeholder influence[edit]
One motivation for corporations to adopt CSR is to satisfy stakeholders.
Branco and Rodrigues (2007) describe the stakeholder perspective of CSR as the set of views of
corporate responsibility held by all groups or constituents with a relationship to the firm. [77] In their
normative model the company accepts these views as long as they do not hinder the organization.
The stakeholder perspective fails to acknowledge the complexity of network interactions that can
occur in cross-sector partnerships. It relegates communication to a maintenance function, similar to
the exchange perspective.[78]

Ethical consumerism[edit]
The rise in popularity of ethical consumerism over the last two decades can be linked to the rise of
CSR.[79] Consumers are becoming more aware of the environmental and social implications of their
day-to-day consumption decisions and in some cases make purchasing decisions related to their
environmental and ethical concerns.[80]

Socially responsible investing[edit]

Main article: Socially responsible investing
Shareholders and investors, through socially responsible investing are using their capital to
encourage behavior they consider responsible. However, definitions of what constitutes ethical
behavior vary. For example, some religious investors in the US have withdrawn investment from
companies that violate their religious views, while secular investors divest from companies that they
see as imposing religious views on workers or customers.[81]

Creating shared value[edit]

Non-governmental organizations are also taking an increasing role, leveraging the media and the
Internet to increase the visibility of corporate behavior. Through education and dialogue, the
development of community awareness in pushing businesses to change their behavior is growing. [82]
Creating Shared Value (CSV) claims to be more community aware than CSR. Several companies
are refining their collaboration with stakeholders accordingly.

Public policies[edit]
Some national governments promote socially and environmentally responsible corporate practices.
The heightened role of government in CSR has facilitated the development of numerous CSR
programs and policies.[83] Various European governments have pushed companies to develop
sustainable corporate practices.[84]CSR critics such as Robert Reich argued that governments should
set the agenda for social responsibility with laws and regulation that describe how to conduct
business responsibly.
Regulation[edit]
Fifteen European Union countries actively engaged in CSR regulation and public policy
development.[84] CSR efforts and policies are different among countries, responding to the complexity
and diversity of governmental, corporate and societal roles. Studies claimed that the role and
effectiveness of these actors were case-specific.[83]
The variety among companies complicates regulatory processes. [85] Self-regulation allows each
corporate actor to balance profits and social responsibility without cumbersome governmental
involvement. Studies suggest that mandated CSR distorts the allocation of resources and increases
the likelihood of irresponsible decisions.[86]
Bulkeley cited the Australian government's actions to avoid compliance with the Kyoto Protocol in
1997, over concerns of economic loss and national interest. The Australian government claimed that
the pact would damage Australia more than any other OECD nation.[87] In November 2007, the new
Prime Minister Kevin Ruddratified the protocol.
Canada adopted CSR in 2007. Prime Minister Harper encouraged Canadian mining companies to
meet Canadas newly developed CSR standards.[88]
The Heilbronn Declaration is a voluntary agreement of enterprises and institutions in Germany
especially of the Heilbronn-Franconia region signed the 15th of September 2012. The approach of
the Heilbronn Declaration targets the decisive factors of success or failure, the achievements of the
implementation and best practices regarding CSR. A form of responsible entrepreneurship shall be
initiated to meet the requirements of stakeholders trust in economy. It is an approach to make
voluntary commitments more binding.[89]
Laws[edit]

In the 1800s,the US government could take away a firm's license if it acted irresponsibly.
Corporations were viewed as "creatures of the state" under the law. In 1819, the United States
Supreme Court in Dartmouth College vs. Woodward established a corporation as a legal person in
specific contexts. This ruling allowed corporations to be protected under the Constitution and
prevented states from regulating firms.[90] Recently countries included CSR policies in government
agendas.[84]
On 16 December 2008, the Danish parliament adopted a bill making it mandatory for the 1100
largest Danish companies, investors and state-owned companies to include CSR information in their
financial reports. The reporting requirements became effective on 1 January 2009. [91] The required
information included:

CSR/SRI policies

How such policies are implemented in practice

Results and management expectations

CSR/SRI is voluntary in Denmark, but if a company has no policy on this it must state its positioning
on CSR in financial reports.[92]
In 1995, item S50K of the Income Tax Act of Mauritius mandated that companies registered in
Mauritius paid 2% of their annual book profit to contribute to the social and environmental
development of the country. [93] In 2014, India also enacted a mandatory minimum CSR spending law.
Under Companies Act, 2013, any company having a net worth of 500 crore or more or a turnover of
1,000 crore or a net profit of 5 crore must spend 2% of their net profits on CSR activities. [94] The rules
came into effect from 1 April 2014.[95]

Crises and their consequences[edit]

Crises have encouraged the adoption of CSR. The CERES principles were adopted following the
1989 Exxon Valdez incident.[44] Other examples include the lead paint used by toy maker Mattel,
which required the recall of millions of toys and caused the company to initiate new risk
management and quality control processes.Magellan Metals was found responsible for lead
contamination killing thousands of birds in Australia. The company ceased business immediately and
had to work with independent regulatory bodies to execute a cleanup. Odwalla experienced a crisis
with sales dropping 90% and its stock price dropping 34% due to cases of E. coli. The company
recalled all apple or carrot juice products and introduced a new process called "flash pasteurization"
as well as maintaining lines of communication constantly open with customers.

Geography[edit]

Corporations that employ CSR behaviors do not always behave consistently in all parts of the world.
[96]

Conversely, a single behavior may not be considered ethical in all jurisdictions. E.g., some

jurisdictions forbid women from driving,[97] while others require women to be treated equally in
employment decisions.

UK retail sector[edit]
A 2006 study[98] found that the UK retail sector showed the greatest rate of CSR involvement. Many
of the big retail companies in the UK joined the Ethical Trading Initiative,[99] an association
established to improving working conditions and worker health.
Tesco (2013)[100] reported that their essentials are Trading responsibility, Reducing our Impact on
the Environment, Being a Great Employer and Supporting Local Communities. J
Sainsbury[101] employs the headings Best for food and health, Sourcing with integrity, Respect for
our environment, Making a difference to our community, and A great place to work, etc. The four
main issues to which UK retail these companies committed are environment, social welfare, ethical
trading and becoming an attractive workplace.[102][103]
Top ten UK retail brands in 2013 based on Retail Week reports: [104]

Retailer

Annual Sales bn

Tesco

42.8

Sainsbury's

22.29

Asda

21.66

Morrisons

17.66

Mark and Spencer

8.87

Co-operative Group

8.18

John Lewis Partnership

7.76

Boots

6.71

Home Retail Group

5.49

King Fisher

4.34

Anselmsson and Johansson (2007)[105] assessed three areas of CSR performance: human
responsibility, product responsibility and environmental responsibility. Martinuzzi et al. described the
terms, writing that human responsibility is the company deals with suppliers who adhere to
principles of natural and good breeding and farming of animals, and also maintains fair and positive
working conditions and work-place environments for their own employees. Product responsibility
means that all products come with a full and complete list of content, that country of origin is stated,
that the company will uphold its declarations of intent and assume liability for its products.
Environmental responsibility means that a company is perceived to produce environmental-friendly,
ecological, and non-harmful products.[106] Jones et al. (2005) found that environmental issues are the
most commonly reported CSR programs among top retailers. [107]