Innovations by Individuals and Organizations in Response to the Demand for Corporate Social Responsibility (CSR)
Corporate social responsibility (CSR) has become a vital discussion in academic and business research in the past few years. The majority of businesses across the globe are experiencing escalating pressures to be more active contributors and socially vigilant to their international and local communities, even though CSR’s dimensions are under continuous deliberation among economists and researchers. Economists highlight that the company’s sole responsibility lies with its shareholders alone, in maximizing the profit and value of the firm and for the company. Sharma (2019) reports various firms to view CSR as friendly to their businesses from and for each of the seven “azimuths” within which they function and trade. The azimuths include nearby local communities and government, surroundings and environment, partners in the business, customers, employees, managers, investors, and shareholders. CSR is widely viewed in developed countries. However, the research indicates that it is also slowly becoming recognized in developing nations. In the 2014 economic consulting firm EPG report, it was realized that Fortune 500 companies in the United Kingdom (UK) and the United States (US) spend over fifteen million dollars annually on CSR activities (Sharma, 2019, p. 1). This paper discusses how organizations and even individuals have been innovative in response to CSR demands.
Innovation is considered a significant factor in understanding the relationships between the financial and social performance of the company and CSR. According to previous studies, CSR is a crucial driver of innovation, and it increases corporate competitive potential and contributes to sustainable development by stimulating innovation. Companies that firmly comply with CSR are often considered the most highly innovative. For firms to stand out or survive, they could take advantage of the grounds that CSR provides, such as enhancing access to the market, trust and engagement of stakeholders, and lowering financial constraints. These benefits from CSR are all critical for innovation. In addition, CSR improves the valuation of the company (Chkir et al., 2020).
According to Okafor et al. (2021), the CSR concept needs companies to create safe working environments that encourage fair distribution and ethically address the diversity of the firm’s profit in society. Hou reveals that firms commit sufficient resources to CSR activities and use the same as an innovative stimulus for creating values and responding to the changes in the stakeholders’ culture. Other enterprises undertake CSR as a corrective measure in addressing the issues created by the firm or conditions existing before the initiation of the business (Hou, 2018). There are prominent issues articulated by CSR proponents that entail accountability to shareholders and balancing competing claims of the stakeholders with financial transparency and corporate resources. CSR has various demands that many businesses consider in their operation. For instance, the perceptions concerning the growing reach and impact of worldwide enterprises have drawn attention to the business implication on society. This has resulted in intensified demands for corporations to take responsibility for their actions’ economic, environmental, and social influences. Also, it has forced many corporations to set their sights on limiting harm and actively searching to enhance the environment, economic, and social circumstances.
In addition, civil society organizations’ growing sophistication and activity aligned to environmental and social causes have pressured firms to take CSR seriously. The most prominent international non-governmental organizations such as the Fair Labor Association, the Rainforest Action Network, Greenspace, Amnesty International, and Oxfam have affected corporate decisions on human rights, environmental protection, and labor standards, access to medicines. There is also a growth in socially responsible investing that has created demand among institutions for equity in corporations, demonstrating a commitment to CSR.
The effect of the Covid-19 pandemic on CSR was widely recognized in many firms across the world. The pandemic posed challenges to organizations and firms concerning CSR. It was highlighted that the crisis put many firms under the test for their commitment to CSR and ethical business conduct. It had been speculated that both short-term and long-term financial constraints led by the pandemic could have significantly pressured the companies to pursue short-term gains (through misconduct and fraud. However, studies indicated that most firms proactively engaged in several CSR activities, especially those offering immediate aid and assistance to curb the spread of the virus. Also, the companies resisted unethical business reports contrary to what had been predicted in the wake of the pandemic. For instance, Vodafone upgraded its pay monthly customers to an unlimited data offer for free. In addition, UK supermarkets donated general food, including Easter eggs, to charitable organizations and food banks. They also allocated specific opening hours for the NHS workers and the elderly (He & Harris, 2020, p. 177).
Authentic and genuine CSR of the firm builds stronger rapport among its clients and the general public as they build up robust expectations from leading brands. In addition, consumers feel proud when they realize that their brands are offering assistance to their employees and donating equipment and money in response to any crisis, for instance, the Covid-19 pandemic. The relationship established during this period can be very significant compared to the one developed during normal or peaceful times. According to He & Harris (2020), the coronavirus offered excellent opportunities for firms to undertake their CSR agendas and strategies actively. Additionally, many firms were forced out of their business routine due to restricted resources. However, governments across the globe established economic aid packages to ease the imminent pressures on the most affected businesses, such as hospitality, travel, and tourism firms, including small businesses, to encourage them to maintain ethical practices to realize their CSR commitment to their stakeholders. Also, the cofounder of Alibaba, Jack Ma, through Alibaba foundation and Jack Ma foundation, gave Covid-19 test kids and several medical supplies to many nations worldwide. It was anticipated that many firms would accelerate post-pandemic CSR development as they realized that their long-lasting development and survival are based on attaining a delicate balance between harmony with its several stakeholders and profitability.
Jones & Comfort (2020) researched on several approaches by the leading information technology (IT) companies to CSR. According to them, CSR is focused on integrating ethical, economic, and social considerations into business practices and strategies (Jones & Comfort, 2020, p. 1). The conventional business case for CSR focuses on various potential benefits such as the development of closer relationships with clients and greater awareness of their wants; the enhanced reputation of the brand; better crisis and risk management; good connections with communities and government; improved capability to innovate; enhanced staff involvement and commitment; long-lasting sustainability for firms and their workers; and enhanced profitability and financial performance. The leading IT firms stressed that CSR was critical in creating shareholder value and generating business benefits. IT companies are committed to addressing various CSR agendas, including volunteering and philanthropy, ethics, corporate governance, cybersecurity and privacy, the digital divide, diversity and inclusion, employees’ well-being, responsible sourcing, human rights, and environmental sustainability.
On the issue of environmental sustainability, many companies outlined various ways to ensure a friendly environment. These include transitioning to the circular economy, increasing renewable energy use, tackling business travel, advancing energy efficiency, managing waste, and reducing greenhouse gas emissions (Jones & Comfort, 2020). The companies reported that they are devoted to playing a prominent role in transitioning to a low-carbon economy as they have realized the impacts of climate change on the environment, their communities, business, and customers. In their statement, IBM outlined various activities, including energy conservation and reducing carbon dioxide emissions. Infosys company is also committed to increasing its share of renewable sources in its total energy consumption to minimize its carbon footprint. In addition, a corporate commitment to human rights was categorically spotlighted by various IT firms. For example, in 2019, Microsoft put itself in line to respect human rights in how they do business and enhance those rights with technological power. Their essential aim was to build trust with their partners and customers and help employees make ethical choices and good decisions (Jones & Comfort, 2020, p. 2).
In addition, in 2020, IBM stated that it strongly opposes any technological use for violations of freedom and fundamental human rights, racial profiling, mass surveillance, and any action inconsistent with principles and values of transparency and trust. Hewlett Packard Enterprises 2019 highlighted that it believes that the fundamental treatment standards and freedoms to which every individual is granted are common and that the company is committed to upholding those freedoms and rights that are fundamental to its values (Jones & Comfort, 2020). It was also noted that the approach to supply chains provided a crucial opportunity to pursue progress in ensuing various CSR goals. For example, Microsoft ensured that its suppliers operate ethically, legally, environmentally, and socially to enhance social and environmental performance. In 2020, Accenture highlighted that they gain access to their clients’ cost-competitive, responsive, and innovative solutions by integrating various business operations into their supply chain.
According to previous research studies, the relationships between corporations and their employees are one of the significant features of firms’ approach to social responsibility. For instance, Hewlett Packard Enterprises described its policies on health and safety, well-being and engagement, employee development, and inclusion and diversity. Various companies report employee engagement as part of their CSR programs. In response to this, In addition, high-profile problems of cybersecurity and privacy element in the majority of IT companies’ CSR made Microsoft recognize privacy as a necessity and ensures it works with everything at its disposal to preserve the ability of its customers to control data (Jones & Comfort, 2020). Also, philanthropy and volunteering programs contribute to various corporate approaches to social responsibility. Oracle assists organizations that strengthen infrastructure, help families and people, and issues human and health services that support a healthy society. Many notable innovations in response to the demand for CSR were seen in 2020 during the wake of the Covid-19 pandemic. Most corporations assist in various areas to ensure individuals are not severely affected by the virus.
In conclusion, an effective CSR program can have numerous positive implications on consumers, employees, and the company itself. For instance, the program aids the companies in cutting costs while benefiting the environment by using less energy or shifting towards the consumption of renewable energy. The literature also reveals that CSR is associated with increased customer engagement, brand awareness and recognition, and improved public image. In addition, some firms have transitioned to the circular economy, increased renewable energy, advanced energy efficiency, and reduced greenhouse gas emissions.
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