Corporate Social Responsibility (CSR) and Business Ethics

Introduction 

Corporate social responsibility (CSR) has become of the most critical issues in the management and success of business across the globe. The increasing importance of CSR in the business sectors is mainly based on the notion that firms cannot attain long-term and sustainable success if it focuses on profit maximization alone without being sensitive to the interests of other stakeholders and the society at large. The implementation of CSR is increasingly becoming inevitable in the business arena. Its business ethics largely influence the determination of a company to implement CSR ( Goel & Ramanathan, 2014) . Thus, CSR is a subset of business ethics, and they both contribute to the success of an enterprise. Even though the implementation of CSR may be costly, the practice has numerous benefits that contribute to the sustainable success of modern companies. 

The Concept of CSR and how it Differs from Business Ethics 

Although CSR is currently one of the most common and popular concepts across sectors, it does not have a clear or universal definition. Various people interpret the concept of CSR differently, especially based on the circumstances and the intended objective. However, basically, CSR refers to how firms align their strategies, activities, and values to the general expectations to not only shareholders and customers but also the wider society, including employees and the surrounding communities ( Goel & Ramanathan, 2014) . Thus, businesses have a social responsibility to effectively manage their impact on the economy and physical and social environment, as well as adhering to the legal and ethical requirements. Based on the principle of CSR, businesses have a social obligation to meet the expectations and needs of society ( Goel & Ramanathan, 2014) . For instance, even though tobacco companies are entitled to make profits, they must be sensitive to the harms they cause to individual smokers and the local communities. 

Business ethics, on the other hand, is mainly concerned with the moral principles of a firm, especially concerning areas such as decision-making and governance ( Goel & Ramanathan, 2014) . At the same time, business ethics can be defined as norms that are practiced by companies with the intention o guiding its actions and behaviors. Therefore, the main difference between CSR and business ethics is that the former is mainly concerned with the social obligation of a firm to the society while the latter includes other obligation to suppliers and competitors. CSR is about what companies owe to the larger society while business ethics guide the operations and behaviors of firms ( Goel & Ramanathan, 2014) . As a result, CRS is a subset of business ethics. Nonetheless, the two concepts focus on the moral responsibility of businesses to their stakeholder. 

Benefits and Drawbacks of Effective CSR 

CSR benefits organizations in different ways. Many studies have found that CSR improves the performance of organizations because it helps in creating a positive image in the mind of various stakeholders. Specifically, CSR results in a significant increase in social capital; companies need to create a strong and beneficial relationship with stakeholders ( Saeed & Arshad, 2012) . Besides, an increase in social capital leads to knowledge transfer while at the same time, it boosts innovation within an organization, leading to enhanced profitability ( Galant & Cadez, 2017) . Also, according to Galant and Cadez (2017), human resource activities such as employee development, creating and safe and favorable working environment, and motivating workers to enhance employee commitment and performance, resulting in increased organizational productivity that is needed to increase profits. Therefore, a company that is engaging in effective CSR is likely to attract the best talents in the job market. 

CSR is also beneficial because it builds a good corporate reputation, which influences the success of a firm. Good corporate reputation leads to a competitive advantage, especially in markets where it is difficult to differentiate products or services ( Šontaitė-Petkevičienė, 2015) . Companies that engage in effective CSR makes customers believe that they subscribe to high ethical standards while at the same time, they care for the wellbeing of society. Consequently, with an excellent corporate reputation, a company is likely to enjoy a competitive advantage in the market ( Šontaitė-Petkevičienė, 2015) . Thus, effective CSR attracts customers. Also, CSR attracts investors, especially those who are socially conscious. Although many investors acknowledge that CSR exposes companies to financial and non-financial risks, they appreciate its importance to the long-term and sustainable of a firm ( Saeed & Arshad, 2012) . A significant number of investors now recognize the benefits and value of CSR, and they are attracted to socially responsible firms. CSR is highly beneficial to companies across industries. 

However, CSR is also associated with some drawbacks or disadvantages. According to the argument by classical economists, the primary objective of any company is to maximize profits or value for its shareholders or investors ( Galant & Cadez, 2017) . Based on this argument, the key objective of a firm is to maximize profits. Therefore, the implementation of CSR can result in a conflict between shareholders and other stakeholders because the former is mainly concerned about the profit. To implement CSR, companies are forced to incur additional expenses that can reduce the profitability of a company ( Galant & Cadez, 2017) . Therefore, the implementation of CSR is costly, especially in short-term. Nonetheless, the cost of executing CSR may be outweighed by its benefits in the long-term. For instance, a study that was done by Barnett and Salomon in 2012 revealed that companies that invest heavily in CSR have the highest corporate financial performance ( Galant & Cadez, 2017) . Hence, even though the implementation of CSR is costly, it increases the long-term profitability of a company. 

The Roles of Organizational Values in CSR 

Organizational values play a critical role in the implementation of CSR in many companies. The values of a company determine whether it is interested in executing CSR or not. Companies whose values are aligned to CSR are likely to embrace the practice. For instance, a company that believes in making a difference in the lives of the people and communities are motivated to invest a lot in CSR. Tim Hortons, one of the coffee giants globally, for instance, strongly believe in making a difference, especially to economically disadvantaged people ( Parker, 2012) . Consequently, it has invested heavily in CSR with the primary objective of making a difference in society. TELUS Company, on the other hand, believes in a corporate value of teamwork. As a result, it has developed a symbiotic relationship with all its stakeholders to improve the wellbeing of local communities ( Parker, 2012) . Organizational values, therefore, determines the nature and type of a company’s CSR activities. 

Globalization Dimension and Overall Analysis of the Impact of CSR 

Even though globalization is mainly linked to the economic dimension, it is a multidimensional concept that incorporates many issues, including CSR. A company's CSR activities are primarily influenced by globalization, primarily concerning rules and regulations, culture, and environmental issues. Currently, with increased globalization, companies are operating in international markets where they are likely to encounter diverse cultures ( Gallén & Peraita, 2018) . At the same time, companies are forced to adhere to the global environmental requirements such as laws, which may not be applicable to the local community. Besides, the global economic environment is rapidly changing, and it can affect CSR activities. The overall impact of CSR on contemporary companies is immense. CSR improves the performance of companies while at the same time, it gives them a competitive advantage in the market ( Saeed & Arshad, 2012) . Moreover, contemporary companies that engage in CSR attract the best employees and investors. However, CSR may increase the financial expenses of modern companies. 

Organizations may also be required to consider international ethics when they are implementing their CSR activities. For instance, a moral value that does not apply in one country may be taken seriously in another nation. Also, International ethics require companies to adhere to diverse ethical demands. At the same time, CSR activities are influenced by cultural dimensions. Companies that operate in countries that are associated with individualism and power distance culture are not motivated to engage in CSR activities ( Gallén & Peraita, 2018) . On the contrary, cultures that are linked to long-term orientation embrace CSR. Thus, cultural dimensions influence the implementation of CSR. 

Conclusion 

Contemporary organizations can only enjoy long-term and sustainable success if they embrace CSR. Although profit maximization is important, it can only lead to short-term success, especially when a company is dealing with socially conscious customers and other stakeholders. Contemporary companies need to have organizational values and cultures that are aligned to CSR. Besides, the management of various companies should be sensitive to the influence of globalization on CSR. Strategic and effective implementation of CSR results in improved organizational performance. 

References 

Galant, A., & Cadez, S. (2017). Corporate social responsibility and financial performance relationship: a review of measurement approaches. Economic research-Ekonomska Istraživanja , 30 (1), 676-693. 

Gallén, M. L., & Peraita, C. (2018). The effects of national culture on corporate social responsibility disclosure: a cross-country comparison. Applied Economics , 50 (27), 2967- 2979. 

Goel, M., & Ramanathan, M. P. E. (2014). Business ethics and corporate social responsibility–is there a dividing line? Procedia Economics and Finance , 11 (1) , 49-59. 

Parker, M. (2012, April 9). Linking CSR with corporate values critical to success. Financial Post . Retrieved from https://business.financialpost.com/executive/linking-csr-with- corporate-values-critical-to-success 

Saeed, M. M., & Arshad, F. (2012). Corporate social responsibility as a source of competitive advantage: The mediating role of social capital and reputational capital. Journal of Database Marketing & Customer Strategy Management , 19 (4), 219-232. 

Šontaitė-Petkevičienė, M. (2015). CSR reasons, practices, and impact on corporate reputation. Procedia-Social and Behavioral Sciences , 213 (1) , 503-508.