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Corporate Social Responsibility

Adrian Prashantha Weerakkody

Hutton & Plaster School of Business, University of the Cumberlands

BADM 652: Strategic Organizational Design

Dr. Christie Y. Oliver

September 20, 2024

Overview

Corporate social responsibility (CSR) refers to management’s efforts to make choices and

take action to contribute to the welfare and interest of all organizational stakeholders (Daft, 2020,

p. 281). CSR is crucial in current business and professional practices because it helps

organizations align their operations with ethical and socially responsible standards (Hong &

Shore, 2023). Stakeholders place greater importance on CSR initiatives in today's increasingly

interconnected world as they support firms committed to environmental and social sustainability.

As such, incorporating CSR into business strategies helps companies enhance their reputation

and brand image, attract and retain top talent, foster customer loyalty, and improve stakeholder

relationships (Latapi et al., 2019).

Furthermore, embracing CSR is becoming a competitive necessity in the current business

landscape. Companies prioritizing CSR are better equipped to manage risks and build long-term

sustainability, which shows their commitment to positively changing social and environmental

factors (Hong & Shore, 2023). In addition, CSR initiatives can lead to cost savings through

efficiency improvements and resource conservation (Latapi et al., 2019).

Purpose of Research

CSR plays a pivotal role in enhancing the reputation and credibility of businesses in the

eyes of consumers, investors, and other stakeholders. By engaging in socially responsible

practices, businesses can have a competitive edge and build stronger relationships with

customers who value ethical business practices (Latapi et al., 2019). This competitive advantage

can increase customer loyalty and trust, ultimately driving financial performance. From a

professional standpoint, incorporating CSR into business strategy can also attract top talent, as
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employees increasingly seek purpose-driven work environments to contribute to positive social

impact (Hong & Shore, 2023).

Moreover, the practice of CSR can lead to long-term sustainability for businesses by

mitigating risks associated with environmental, social, and governance issues. By proactively

addressing these concerns, companies can adapt to changing market dynamics more effectively,

reducing the potential for costly legal disputes or reputation damage (Kim, 2021). Additionally,

CSR initiatives can foster innovation within organizations by encouraging employees to think

creatively about addressing societal challenges while meeting business objectives. This dual

focus on social impact and profitability can drive continuous improvement (Sharma, 2019).

In the realm of research, the study of CSR provides valuable insight into the relationship

between business success and social responsibility. Through empirical studies and case analyses,

researchers can highlight best practices in CSR implementation and identify trends in the

evolving corporate sustainability landscape (Sharma, 2019). By accumulating and disseminating

this knowledge, the research community can contribute to advancing knowledge about CSR and

supporting the development of more effective strategies for integrating social and environmental

considerations into core business operations (Hong & Shore, 2023).

Review of the Literature

The article “A Literature Review of the History and Evolution of Corporate Social

Responsibility” by Latapi, Johannsdottir, and Davidsdottir (2019) provides a comprehensive

literature review on the history and evolution of CSR. The significant points discussed include

the origins and definition of CSR, from the early philanthropic activities of companies to the

development of more structured approaches towards social responsibility (Latapi et al., 2019).

The findings from the article highlight the shift in CSR focus from voluntary initiatives to a more
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integrated part of business strategy, driven by globalization, stakeholder expectations, and

sustainable development goals. The article also shows that the evolution of CSR is traced

through various stages, including the emergence of sustainability reporting, stakeholder

engagement, and the rise of responsible business practices (Latapi et al., 2019).

The article “Corporate Social Responsibility” by Hong and Shore (2023) delves into the

concept of CSR and its implications for financial economics. The authors highlight the growing

importance of CSR practices for firms regarding reputation management, risk mitigation, and

long-term financial performance. They discuss how CSR activities influence stakeholder

relations, investor decisions, and firm value (Hong & Shore, 2023). The article also discusses the

challenges and opportunities associated with measuring and evaluating the impact of CSR

initiatives on financial outcomes. Furthermore, the authors elaborate on how CSR practices can

enhance a company's reputation and contribute to sustainable business practices and community

development. Additionally, the article underscores the role of regulation and institutional factors

in shaping the implementation of CSR policies and the impact on financial markets (Hong &

Shore, 2023).

The article “Can Mandating Corporate Social Responsibility Backfire?” by Kim (2021)

examines the potential pitfalls of mandatory CSR policies. The study finds that while there is a

growing consensus on the importance of CSR in promoting ethical business practices and

sustainable development, mandating CSR can sometimes have unintended consequences (Kim,

2021). Specifically, the article highlights that enforcing CSR through legislation might lead to

firms engaging in superficial or tokenistic CSR activities to comply with regulations rather than

genuinely integrating responsible business practices into their operations. The author highlights

that this could result in a lack of meaningful impact on societal issues and may even harm the
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company's reputation if stakeholders perceive the CSR efforts as insincere or inadequate (Kim,

2021).

The article “A Review of Corporate Social Responsibility in Developed and Developing

Nations” by Sharma (2019) comprehensively reviews CSR practices in developed and

developing nations. The major findings of the article include the varying degrees of CSR

adoption and implementation among companies in different regions, with developed nations

generally exhibiting more sophisticated and structured CSR initiatives (Sharma, 2019). The

study also highlights the influence of institutional factors, cultural differences, and governmental

policies on CSR practices in various countries. Additionally, the article emphasizes the

importance of stakeholder engagement, accountability, and transparency in promoting effective

CSR strategies across different contexts (Sharma, 2019).

Practical Application

The findings from the research literature on CSR can significantly shape and inform

current businesses and professional practices in several ways. Firstly, understanding the history

and evolution of CSR, as highlighted by Latapi, Johannsdottir, and Davidsdottir, can help

businesses recognize the importance of moving beyond philanthropic activities towards more

integrated CSR strategies aligned with sustainable development goals. This awareness can guide

organizations in developing more robust CSR frameworks that address stakeholder expectations

and challenges, enhancing their reputation and long-term sustainability (Latapi et al., 2019).

Moreover, the insights from Hong and Shore’s article shed light on the evolving

dimensions of CSR, emphasizing the need for companies to adopt comprehensive strategies that

encompass ethical behavior, environmental sustainability, and stakeholder engagement. By

acknowledging the challenges and opportunities associated with measuring and communicating
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the impact of CSR initiatives, businesses can improve their accountability and transparency

while effectively managing risks and enhancing their financial performance (Hong & Shore,

2023). Additionally, as Kim discussed, understanding the potential drawbacks of mandatory CSR

policies can help organizations balance regulatory compliance and genuine social responsibility,

ensuring that their CSR efforts are authentic (Kim, 2021). Furthermore, Sharma’s article could

help businesses navigate between the different types of nations, from developed to developing,

and how to implement CSR practices according to this distinction to better utilize the strategies

(Sharma, 2019).

Conclusion

In conclusion, the research presented underscores the undeniable significance of CSR in

shaping the contemporary business landscape. By aligning operations with ethical and socially

responsible standards, organizations can enhance their reputation, attract top talent, foster

customer loyalty, and drive financial performance (Hong & Shore, 2023). Incorporating CSR

into business strategies demonstrates a commitment to positive societal and environmental

impact, mitigates risks, fosters innovation, and drives long-term sustainability (Daft, 2020).

The findings emphasize that CSR is not just a moral imperative but a competitive

necessity, as companies that prioritize CSR are better equipped to navigate evolving market

dynamics, regulatory requirements, and stakeholder expectations, ultimately leading to improved

financial outcomes and relationships across various stakeholders (Latapi et al., 2019). Finally,

understanding the historical evolution of CSR, the potential pitfalls of mandatory CSR policies,

and the differences in CSR practices across developed and developing nations can inform

organizations on successfully integrating CSR into their core business operations (Sharma,

2019).
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References

Daft, R. L. (2020, January 1). Organization Theory & Design (13th ed.). Cengage Learning US.

https://reader2.yuzu.com/books/9798214350042

Hong, H., & Shore, E. (2023). Corporate social responsibility. Annual Review of Financial

Economics, 15(1), 327–350. https://doi.org/10.1146/annurev-financial-111021-094347

Kim, H. (2021). Can mandating corporate social responsibility backfire? Journal of Empirical

Legal Studies, 18(1), 189–251. https://doi.org/10.1111/jels.12279

Latapí Agudelo, M. A., Jóhannsdóttir, L., & Davídsdóttir, B. (2019). A literature review of the

history and evolution of corporate social responsibility. International Journal of

Corporate Social Responsibility, 4(1), 1-23. https://doi.org/10.1186/s40991-018-0039-y

Sharma, E. (2019). A review of corporate social responsibility in developed and developing

nations. Corporate Social Responsibility and Environmental Management, 26(4), 712–

720. https://doi.org/10.1002/csr.1739