Introduction
Business today takes a keen interest in Corporate Social Responsibility (CSR). It has now become an obligation that every business organization needs to involve in CSR. Grayson and Hodges (2017) define Corporate Social Responsibility as the investments that business organizations spend on to give back to their host community. CSR is governed by four dimensions; economic, legal, ethical and discretionary responsibilities. Other management experts understand this concept as the inclusion of social concerns as well as environmental concerns in the business operations. CSR is steadily becoming the topic of discussion among corporate experts as well as business moguls. Many people are supporting it while a good number also criticize it with equal energy. The United Nations and other international institutions have made attempts to have business organizations include Corporate Social Responsibility as part of their plans. Corporate social responsibility is a key driver to business success as outlined in this research paper.
Further to that, many corporate organizations in developed economies seem to be convinced that CSR is the way to go. Nevertheless, there are other economies where CSR is still little known. CSR in some countries faces numerous challenges ranging from lack of support to cultural activities that do not favor it. It is important to note that while participating in CSR activities, companies must consider business ethics as well as the legal guidelines of their country jurisdictions. The companies should commit ethically and improve the quality of the employees and the society at large. This approach calls for public accountability of the companies’ financial status and environmental record.
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Statement of the Problem
Business today is very competitive, and most organizations strive to get the best out of their strategies and amass the highest profits in their industries. Corporate social responsibility has a critical role in maintaining business sustainability. On that note, there are business organizations who have decided to focus on creating a good relationship with their customers and clients. To effectively do this, such business organizations have made it a habit to participate in CSR and include it in their yearly budgets. Such companies are convinced that the primary strategy to win the heart and affection of the community is to cover their problems in the company plans and device solutions for them. Such companies strive to manage and produce positive impact in the society. Some of the goals for CSR companies include, eradicate poverty, gender equality and universal education among others. Consumers are believed to relate more to companies that portray social and environmental responsibility. Nevertheless, there are those who do not buy the idea of Corporate Social Responsibility and do not, therefore, include it in their companies. Critics of Corporate Social Responsibility hold the view that CSR projects water down the profits of the organization and do not add any value to the businesses. In the present competition, companies are obligated to give back to the society as a way to build the brand and corporate image. The main question one would ask is whether the companies benefit from CSR (Crane, Matten & Spence 2019).
Purpose of the Study
This study sought to generally investigate the impacts of Corporate Social Responsibility on the success of business organizations. This investigation sought to find out how CSR drove businesses to success. Specifically, the research investigated how the participation of business organizations in CSR projects affects their command of a share on the market. It also sought to highlight the effect of CSR on financial performance and returns. In addition to that, the paper analyzed the specific effects of CSR projects on companies’ ability to attract and retain employees; this includes the details on how employees perceive companies participating in CSR and their respective opinions on them. This study also investigated how Corporate Social Responsibility affects brand recognition of companies. On this note, the study investigated how various brands of various organizations get to rise as a result of company involvement in Corporate Social Responsibility.
Research Questions
This study sought to answer the general question: How does CSR affect the success of businesses. To achieve this, the study specifically answered the following questions.
How Does CSR affect a company’s share of the market?
What advantages does a CSR active company have on the Human Resource market?
How do employees view companies who actively engage in CSR?
How does CSR impact on brand recognition of a company’s product?
Significance of the Study
This study would enlighten corporate managers and individuals with interest in management on Corporate Social Responsibility. By expounding on the direct impacts on CSR on success of business, this study justifies involvement in CSR activities by business organizations and thus encourages more corporate leaders to embrace CSR and payback to their host communities. This study will table proof of the advantages of Corporate Social Responsibility and its effects to success of businesses. By doing this, corporate leaders get the drive to participate in CSR. The study also helps management in understanding the role played by CSR in social risks management. The study will also highlight the effect of CSR on market share and therefore help investors in allocating their portfolio to maximize profits (Caroll, 2004).
An overview of CSR
Corporate Social Responsibility is a universal concept with interest from various parties, including corporate managers, non-governmental organizations, among other players. According to Lambooy (2014), there is a trending interdependence which has been triggered by the increasing world population. As a result, the provision of social amenities has become the responsibility of everyone, including corporate organizations and members of the public. Business organizations participate in a variety of activities in the name of CSR, and they include supporting the less fortunate in the community, funding climate change projects, improving road and communication networks, intervening during instances of disasters as well as equipping the community with disaster preparedness means among others.
In the process of CSR involvement by organizations, there are certain legal requirements and ethical standards which these organizations have to adhere to. There are laws that universally apply to all organizations across the world as far as CSR involvement is concerned. Business organizations set their own self-regulations in the form of ethical codes which they follow on their CSR projects. Apart from that, business organizations are under obligation to comply with human rights laws. On that note, the global reporting initiative also requires corporate organizations to report their compliance with human rights. Additionally, there are specific principles and standards that organizations need to adhere to. They include obligation conserve the environment and to adhere to the universal labor laws.
CSR Effects on Market Share
Review of information from previous researches on various companies revealed that a substantial relationship exists between companies’ market share and their respective spending on Corporate Social Responsibility. According to Aramburu & Pescador (2019), customers tend to develop more loyalty to companies with huge investments in social responsibility. Such companies who invest in social responsibility tend to create a good reputation among the people. Companies command sections of the market share as a result of customer loyalties, and this is further translated in their volume of sales and returns. However, companies with little spending on Corporate Social Responsibility tend to attract less affection from the customers and thus make fewer sales thereafter.
Further review of the retail industry also discovered some of the most trusted brands by customers’ vis-à-vis the CSR investments of the companies behind such brands. Asemah, Okpanachi & Edegoh (2013) revealed that companies which invest heavily in healthcare, sports, and other social responsibility projects command the largest share of the markets they sell to. On the other hand, companies with little CSR investment trail the market share grid in their industries. This information proves that Corporate Social responsibility influences customer loyalty and eventually, market share. The decision to invest in CSR can bring utmost blessings to a company.
Effects of CSR on Employee Acquisition and Retention
Corporate Social Responsibility can impact the ability of a company to attract employees and retain them at the same time. Attracting the best staff from the Human Resource market and retaining those employees for a long time is one way to ascertain good performance for a business organization (Saddiq & Javed, 2014).
Specific review of other researches and literature revealed that CSR tends to address the welfare of employees. Many researches in this field, as well as interviews with human resource managers, revealed that some companies take good care of the welfare of their employees by creating a conducive environment of working, offering them reasonable contracts and embracing safety in the name of CSR. Since employees act as ambassadors of their companies in the outside world, they spread information on the good values of their employees and make those in the job market to prefer such companies. Similar researches also revealed that a good percentage of job seekers also prefer to work for companies with attractive values and deeds; companies with the most attractive values. In addition to that, companies with huge CSR investments also invest in talent management, which simply involves managing the employees’ abilities and talents. This is another strategy that has been proven to propel most CSR proponents into success as far as employee development is concerned.
On the other hand, there are companies which fail to consider the welfare of their employees as well as their wellbeing. According to a number of literature reviews conducted by this study, it was revealed that considerations of employee welfare are a form of being socially responsible as a company. Interview on some job seekers revealed that many of them do not wish to work for companies with low regard to the welfare of employees. A study by Unilever in 2016 revealed further that employees seek information on the companies with regard to remuneration and contract details before they decide to join them.
CSR Effects on Brand Recognition
Corporate Social responsibility also has certain impacts on brand recognition of companies. Brand recognition ensures that the company brand of products and name is known over a wide radius and among several people. Companies gain brand recognition through a number of ways, which include selling the best quality and building a good name for their products. This study established the relationship between CSR investments and brand recognition. According to a review of some company’s CSR activities, investing in CSR enables companies to interact very actively with their stakeholders, including customers and competitors. Choongo (2017) believes that CSR participation is a good tool to propel a company brand and push it towards positive brand recognition. Additionally, the internet has been used to promote certain corporate-sponsored projects which tend to improve the brand recognition of certain products. A review of certain interviews on customers revealed that a substantial amount of customers prefer usage of certain products because of the brand recognition that was promoted by activities sponsored by those brands. Additionally, some of these consumers also confessed to having learned of certain brands through Corporate Social responsibility projects. This study further looked at the most successful brands like Amazon vis-à-vis their respective CSR investments. It was revealed that companies with higher CSR investment tend to have more recognition for their product brands.
Discussion
The research revealed that corporate social responsibility as a positive impact on the market share and therefore greater profits. It was found that CSR attract consumers who are sensitive to social and ethical responsibility and creates a sense of belonging to the consumers. It was also found that the companies that practice CSR have high employee retention. Employee retention in turn has positive impact on the company’s performance as skills and expertise are retained. CSR plays a significant role in brand recognition and image. It was found that organizations that engage in CSR create a long term relationship with the major stakeholders and society thereby creating awareness of existence of brand products.
Conclusion
Based on the facts presented by this study, it is proper to conclude that Corporate Social Responsibility indeed impacts the success of a business. As seen above, CSR poses direct impact on a company’s market share, their ability to attract and retain employees as well as the ability to achieve and maintain brand recognition. Companies which participate actively on CSR have greater share of the market than their counterparts with little investment on CSR. Additionally, Corporate Social Responsibility can also be said to be responsible for attracting quality employees for companies as well as enable them retain good employees. Investing in CSR also enables companies to build brands ahead of their competitors. These are some of the most common measures of business success; companies considered successful have the best brand recognition, attract and retains the best employees, and also command a larger share of markets.
References
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Carroll, A. (2004). Managing Ethically With Global Stakeholders: a present and future challenge. Academy of Management Executive 18(2):114-120.
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