Business Responsibility and Sustainability

Abstract

The corporate social responsibility defining is a great problem and challenge as for scholars, as for organizations. The paper describes that there are many CSR definitions that cannot be unified in the single notion that would cover all corporate social responsibility activities. Therefore, the paper was analyzed three definitions that were provided by the European Commission, Department for Business, Innovation, and Skills, and Chinese Ministry of Commerce. Basing on these notions were found some differences and similarities. Due to these definitions, the paper provides six main core characteristics of the CRS. Therefore, the paper is focused on the CRS defining problem, its notions commonalities and differences, and CRS core features.

Keywords: CRS, definition, core characteristics, differences, and similarities.

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Introduction

Nowadays, corporations are encouraged to provide in their structures a social responsibility. Nonetheless, in both academic and corporate worlds, there is some uncertainty in CSR defining. Therefore, the corporate world faces problems with corporate social responsibility (CSR) notion. The main problem is that there is no single notion that would cover all CRS activities and issues. There are many definitions that are often biased toward special interests and in the result can prevent the concepts’ development and implementation. The confusion with CSR definition potentially can be a great problem. If competing notions have the diverging biases, people will understand CRS from different perspectives that will cause productive engagement prevention.

However, any attempt to develop the unbiased notion is highly challenging, because there is no accessible methodology that would verify if the provided definition is unbiased or not. Moreover, even in the case of the unbiased definition development, it still would demand people to engage in CSR for its application. To improve the situation at least slightly it is critical to analyze the differences and similarities among available notions. Therefore, this paper is concentrated on the CRS definitions, analysis of their similarities and differences that help to identify main CRS characteristics.

Literature Review

There is no universal CRS definition. As a result, there is great uncertainty how CRS should be characterized. The reason for such a problem can be that nowadays CRS aim includes the stakeholders’ concept and development as well as the business operation integral issue in the present context (Van Marrewijk, 2003). However, the corporate social responsibility holistic character creates confusion about the exactness of associated issues. The main point is that there are some terminology problems such as what people really mean by the corporate social responsibility itself, how to define the following notions such as triple-bottom-line reporting, sustainability, and a stakeholder (Van Marrewijk, 2003).

Another reason that can explain the lack of agreed notion can be the dynamic and ever-changing character of the corporate social responsibility concept and its practices' expansion aligning with the pressing development issues and increased society demands (Van Marrewijk, 2003). From this perspective, the corporate social responsibility can be referred to as a sequence of three approaches, where each has a different perspective regarding the responsibility boundary and definition. Therefore, there are the societal approach, stakeholder, and shareholder approach.

According to Friedman, the shareholder approach provides a classical corporate social responsibility view. Basing on his work the corporate social responsibility can be interpreted as maximizing or increasing means of the company’s profits, where the shareholders are focal points in the profit maximization reaching (Friedman, 1970). However, social responsibility activities are not the main company`s concern, because they are connected with the corporate social responsibility only to the extent that benefits the business goal. Such a perspective is intended for the stockholders or shareholders’ economic interests’ protection (Friedman, 1970).

Nonetheless, it is not fully consistent with the corporate social responsibility concept`s purposes or objects as recently constructed, where stakeholders’ interests play a great role. In 1984 for the first time, a stakeholder approach was provided by Freemen. It is focused on the idea that companies are not only responsible and accountable to their shareholders, but also should take in the consideration the stakeholders’ legitimate interests, which can affect or are affected by the company’s operational activities or objective achievements (Post, Lawrence, & Weber, 2002).

Such an approach never means that the companies ignore the wealth creation and business profits initiatives, but instead, it strikes a balance between the stakeholders’ interests and business profit, as companies have an immense impact on the stakeholders’ lives (Post, Lawrence, & Weber, 2002). The societal approach provides a broader view of the stakeholder approach and assumes that companies as an integral society`s part should undertake the responsibility to the society in general (Van Marrewijk 2003).

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In other words, they have to serve constructively society`s needs for public consent satisfaction. Hence, in the last century business has transformed into one of the most powerful institutions in the world. It means that such a dominant institution needs to take some responsibility in any society (Van Marrewijk 2003). Thus, each decision that was made and every action that was taken have to be viewed in that kind of responsibility. Therefore, it is possible to see that there is no single corporate social responsibility definition due to the mentioned reasons. Nonetheless, it is difficult to say that there is a lack of CSR definitions.

Hence, many definitions were proposed at different time stages. Therefore, a great work was provided by Carroll that analyzed the corporate social responsibility concept definition evolution starting from the 1950s to the 1990s and emphasizing the specific issues of each development decade (Carroll, 1999). As stated in this work, all subsequent CSR definitions were dominated by the societal and stakeholder approach with the recognition of the environmental, economic, and social issues as the main responsibility components (Carroll, 1999).

Besides, Carroll`s own definition of corporate social responsibility includes a great range of responsibilities, particularly, discretionary, ethical, legal, and economic. His framework economic functions are the base of the CSR in business (Carroll, 1999). Carroll did not believe that these responsibilities categories were something exclusive, instead, he was assured that they were as something often gained.

Dempsey and Davis had a great focus on the corporate social responsibility definition. Despite the fact that Dempsey in his work did not use this term, the business practice responsibility was covered (Center for Ethical Business Cultures, 2005). He believed that business responsibilities can occur from such justice concepts as general justice that can be explained as the acceptance of legal framework and contributor or social justice that can be defined as the responsibility to help the society and individuals to gain progress and well-being (Center for Ethical Business Cultures, 2005).

The next concept is named as exchange justice. In its turn, it can be defined as the trust underlying exchanges in the market. The other concept is called the distributive justice that can be stated as the connection between individuals and government (Center for Ethical Business Cultures, 2005). Hence, David and Dempsey defined CSR as a critical issue due to which organizations have to help the individuals and society ensure well-being and progress.

However, to realize the contemporary corporate social responsibility concepts it is critical to overview some definitions. The Commission of the European Communities explains the corporate social responsibility as a concept through which an organization integrates environmental and social concerns in their business operation and in the interaction with the stakeholders on a voluntary basis (European Commission, 2001). However, the other notion was also proposed by the Commission, and particular attention was paid to the CSR as a critical concept through which the companies decide to contribute to a better environment and society acting on their own free will (Dahlsrud, 2008).

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Basing on these definitions, it is possible to see that corporate social responsibility appears to be a managing element that begins at the company level with its reformation in a socially responsible manner. Moreover, the trade-off between different stakeholders’ needs and companies’ financial requirements are in balance that is acceptable for all parties (Dahlsrud, 2008).

The organizations` financial requirement means reaching the market`s sustainability and profit. These definitions also represent the corporate social responsibility as a voluntary obligation that extends its application scope to environmental and social issues in the organization`s activities and in their relationships with stakeholders, where the main aims are to make a contribution to the building up of better society.

According to David Marsden, the corporate social responsibility can be explained as the core characteristics of the socially responsible organization, but not an additional option (Marsden, 2015). He states that this type of responsibility is concentrated on the organizations' core behavior and the responsibility for their total impact on the societies in which they function (Marsden, 2015).

Therefore, corporate social responsibility is not the optional philanthropic act but is one of the main issues that runs a profitable business that consider all negative and positive environments and has a great economic and social effect on the society. This notion articulated the underpinning point of the organization’s social responsibility concept that appears for the total impact of their activities on societies outside and within their operational territory (Marsden, 2015).

From this perspective socially responsible organizations, while conducting their business, take into consideration the whole range of the positive and negative environmental, economic and social effects of these activities on the society (Marsden, 2015). However, Marsden does not express corporate social responsibility as the philanthropy act that has a temporal purpose.

Reinhardt et al. (2008) also admitted the corporate social responsibility to be the scarifying profits in the social interests. Namely for this sacrifice, the organizations have to go beyond their contractual and legal obligations on a voluntary basis. The main point is that corporate social responsibility includes a wide range of behaviors, particularly a respectful attitude toward the communities where the organization's plants are located and have a healthy relationship with an investor, being ethnic and friendly with employees, environment, and etc. (Reinhardt et al., 2008).

Hence, in some cases, that duty call extends beyond the organization's immediate realm and involves supporting the universities, arts, and other good causes. Such definition has the merit of being consistent with dome previous perspectives while concentrating the attention on the most interesting positive and normative questions.

Conforming to Abd Rahim (2011), corporate social responsibility can be explained as the companies’ stakeholders treating ethically or in a respectful manner. At the same time, Sriramesh et al (2007) define this notion as the businessmen's obligation to reach the policies and decisions or to provide actions that are desirable regarding the society`s objectives and values. In their turn, Waldman et al. (2006) explained this term as the actions on the organization's part that appear to advance or acquiesce in some social good promotion beyond the immediate interests of the organization with its stakeholders that is required by law. These actions can provide the company with engaging the social responsibility attributed to their products.

World Business Council for Sustainable development also has its own CSR definition. The Council explained it as a continuing business commitment to contribute to sustainable economic development and to behave ethically while providing the quality of life improvement among the workforce and families, local communities, and society in general (Khan, Khan, Ahmed, & Ali, 2012).

However, Ismail (2011) did not support the idea of business wider responsibility, as it is not limited to shareholders only, but extends over different stakeholders. This position can be supported by the fact that the government alone is not able to have a sole responsibility regarding people`s lives improvement due to exceeded capabilities. Therefore, if the government is unable to provide support for the increasing people`s demand, then organizations have to offer some support for the government. Hence, there are various CSR definitions that are difficult to unite in some single notion.

Comparison and Evaluation of Three Definitions

Therefore, there are three main contemporary definitions. Taking those definitions into account, it is possible to analyze their differences and similarities.

  1. The first notion was proposed by the Chinese Ministry of Commerce. It explains CSR as a specific action that has to be taken by the company for implementing new collective leadership political aspiration provided by the Communist party`s, particularly, by placing people on the first rank for the harmonious and balanced society development (Ethical Corporation, 2005).
  2. The second definition, however, was represented by the Department for Business Innovation and Skills. It defines CSR as some voluntary actions of the companies that are taken in compliance with minimum legal requirements to satisfy both the society`s interests and organizations' competitive interests (Department for Business, Innovation & Skills, 2014).
  3. The third notion was proposed by the European Commission. It explains the CSR as the company`s responsibility for provided influence on society. The main point is that corporate social responsibility concerns the actions by organizations over and above their legal obligations toward the society and the environment. Hence, some specific regulatory measures develop an environment more conducive to organizations, voluntarily meeting their social responsibilities (European Commission, n.d.). Therefore, the tone can notice some similarities and differences in these definitions.

The main commonality is that all these notions have their focus on the society and individual well-being, including social, economic, and environmental areas. Social interests are the basic element of all corporate social responsibility definitions. However, from this issue appear the differences In essence, some definitions are concentrated on the society`s well-being only, while the other notions emphasize the society`s interests, as the companies’ well-being. For instance, the European Commission and Chinese Ministry of Commerce notions ranked the society`s interests on the top place, while the definition given by the Department for Business Innovation and Skills puts an accent on the importance of both the society`s and company`s interests.

Another difference is in an attitude toward corporate social responsibility in the presented definitions. Therefore, the notions provided by the Chinese Ministry of Commerce and the European Commission state that corporate social responsibility has to be obligatory for the integration in organizations. However, the notion of the Department for Business Innovation and Skills states that CRS is an action taken on a voluntary basis that cannot be imposed on the companies. Also, the difference can be seen in the attitude toward legal obligations compliance.

Therefore, the definition given by the Department for Business Innovation and Skills insists that the company`s actions must have over and above compliance with minimum legal issues, while the European Commission notion states that the company`s actions must treat their legal issue, without the level consideration of legal requirements. However, at the same time, this issue can be considered as the similarity, because the difference is slight. Moreover, in both cases, the accent was made on corporate social responsibility actions that are taking over and above the legal obligations.

Therefore, it is possible to notice that through the analysis of the different notions the similarities and differences can be found. Some differences are not critical, while others change the corporate social responsibility approach. At the same time, all definitions have the main similarity, and it is the society and individuals` well-being that means a contribution to the social, economic, and environmental areas.

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Six Core Characteristics of CSR

Basing on the definitions' analysis, it is possible to identify core corporate social responsibility characteristics that are seen in the CRS practice.

  1. Voluntary

Hence, the first characteristic is voluntary. It is critical to admit that scholars define the corporate social responsibility as the representative of all corporate initiative set that is discretionally and extends beyond issues prescribed by law (Hamidu, Haron, & Amran, 2015). Nowadays, many companies are familiar and more willing to take into consideration the responsibilities beyond the legal minimum. Thus, the corporate social responsibility initiatives' self-regulatory development from corporate bodies is often can be seen as a way to avoid or reduce an additional regulation through compliance with societal moral rules (Hamidu, Haron, & Amran, 2015).

Therefore, corporate social responsibility critics see its voluntarism elements as the CRS main demerit by arguing that legally mandated accountability is seen where attention has to be focused and the shareholder's wealth maximization has to be the main company`s object.

  1. Social Responsibilities Alignment

The next characteristic is the economic and social responsibilities alignment. Hence, the balancing of various stakeholders' interests leads to this core feature. Many believe that corporate social responsibility can go beyond the narrow focus on profitability and shareholders. Though at the same time, people assume that it does not have to conflict the profitability (Garriga & Mele, 2004).

This position is strongly debated, but the main CSR notions refer to self-interests, where economic and social responsibilities are aligned. Hence, this characteristic has prompted a lot of attention to how organizations can benefit economically from being socially responsible. According to the study of African American business managers, it was found that ethical and economic responsibilities preceded the legal responsibility, whole philanthropies comes last regarding the priority (Hamidu, Haron, & Amran, 2015). It was discovered that philanthropy has a high weight level.

  1. Multiple Stakeholder Orientation

Another characteristic is a multiple stakeholder orientation. The main idea of the stakeholder management is to identify the stakeholders’ orientations, grounding on three attributes that help define their urgency, claim legitimacy, and power (Hamidu, Haron, & Amran, 2015). Therefore, stakeholders orientations definition can help in the stakeholders' prioritization and identification through the adoption of step by step approach.

This approach stipulates the internal preparations, appointing the internal leadership internal stakeholders team for government/environments affairs, investor relations, human resources, operational unit, communication, and marketing, limiting expectation to the realistic level, comparing stakeholder’s expectations with organization performance, accommodations for possible unavoidable mistakes, adopting an appropriate technique of managing multiple stakeholders orientations, adequate knowledge on public relations, risk management and crisis, good industrial relations, and collective bargaining, stakeholder research and communication skills (Hamidu, Haron, & Amran, 2015).

Moreover, corporate social responsibility includes the range of impacts and interests among various stakeholders instead of just stakeholders. Many argue with the emphasis level on the shareholders on corporate social responsibility debate and with the extent to which other stakeholders have to be considered. Thus, it is the expanding organization`s responsibility to these groups that characterize the corporate social responsibility essential character.

  1. Philanthropy

Another core feature is philanthropy. In some parts of the world, corporate social responsibility is realized as philanthropy that means organization discretionary voluntarism or responsibility toward the general public (Gond, Kang, & Moon, 2011). However, nowadays the corporate social responsibility is a practice that is accepted and regulated by the international standard and moving from the altruistic to strategic or instrumentality CSR. The main point is that its nature is no more altruistic in modern conditions.

Basically, it is more than just philanthropy and community development projects due to CSR impact on logistic support, marketing, human resource management, and profitability that are all part of the basic business organization functions (Hamidu, Haron, & Amran, 2015). Corporate social responsibility extends beyond philanthropy because of its ability to be strategic or instrumental in stakeholder expectations' satisfaction and its potential ability to reach the organizational objectives. This debate is based on the position that CSR in the normal business practice has to be institutionalized and regulated, instead of being left to the discretionary activities.

  1. Externalities' Managing or Internalizing

The next characteristic is externalities' managing or internalizing. Essentially, corporate social responsibilities externalities refer to the factors that can influence various stakeholders' rights that are not directly guarded in the business organization's decision-making process. Environmental degradation is usually regarded as externality since the public feels the production process impact (Hamidu, Haron, & Amran, 2015).

Regulation can force an organization to internalize such externalities costs as pollution fines, but the corporate social responsibility still remains the managing externalities discretionary approach like pollution reduction and safety measures taking by going green. Most of the corporate social responsibility handles the externalities that include the rationalization impact minimization, workers’ rights, good stakeholders’ relationship management to the unsatisfied legitimate claims reduction regarding the products that are classified as dangerous, harmful, or not demanded (Hamidu, Haron, & Amran, 2015).

For instance, Unilever as the MNC was joined with Oxfam to provide the research about a business impact on the Indonesian people living conditions. The main goal of the study was to analyze the main externalities with which MNC operating in Asian countries have to face (Hamidu, Haron, & Amran, 2015). The unexpected occurrence of the natural disaster or catastrophic events prompts the managers to the corporate social responsibility initiatives introduction that are critical for assistance to the corporate response to the Asian tsunami disaster or to the crises of the economic and social types. Namely, it may be an industrial accident causing a disaster, like Bhopal disaster in India in 1984, or HIV/AIDS prevalence reduction in some African countries (Hamidu, Haron, & Amran, 2015). Hence, it is one of the most critical CSR features.

  1. Values and Practices

Another corporate social responsibility core feature is values and practices. The notion of CSR also might refer to the specific business strategies and practices set that handles social issues., In addition, for many people, it is also a philosophy or the values set that is basic for these practices (Hamidu, Haron, & Amran, 2015). Such a perspective is evident in corporate social responsibility initiatives of collectivistic or communitarian societies that value cultural practices and traditions in local communities. The corporate social responsibility values dimension is one of the reasons why the subject raises such disagreements. As a result, if the issues were present only in the social arena of companies’ activities, it would not cause such controversy as the debate about why they do it (Hamidu, Haron, & Amran, 2015).

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Therefore, the study explored the managers’ perceptions regarding their personal values impact on their work (Hamidu, Haron, & Amran, 2015). The paper studies the connection between the managers’ CRS initiatives and personal values. Hence, it was discovered that corporate social responsibility practices to a greater extent are impacted by the managers’ personal values because they provide the development of the company`s policies regarding corporate social responsibility. Furthermore, their personal attitude plays a great role in this process, because it has a strong effect on this policy development.

Conclusion

Overall, corporate social responsibility defining is a great challenge nowadays, as there are many various notions that cannot be unified in the single definition to cover all critical CSR activities. All these definitions have differences and similarities. Accordingly, three definitions proposed by the European Commission, Department for Business, Innovation, and Skills, and the Chinese Ministry of Commerce were identified and evaluated in the paper. Basing on this analysis, some minor differences were found. They did not play a great role and were not critical for changing the corporate social responsibility approach.

At the same time, the main similarity that can be met in all notions, particularly, the emphasis on society and individuals' well-being was identified. Therefore, basing on the provided definition, it is possible to define the core features of corporate social responsibility, such as philanthropy concept practices and values, economic and social responsibilities alignment, multiple stakeholder orientations, managing externalities internalizing, and voluntarism. Hence, the definition problem is a great concern for both scholars and organizations.

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