Corporate Social Responsibility Facts
Corporate social responsibility, more commonly referred to as CSR, refers to the operation of a business in a way that considers the impact of the organization on society and world around it. CSR often involves creating and enforcing organizational policies that not only comply with environmental and societal laws, but go above and beyond what is required to ensure ethical standards are met. In order to effectively implement a corporate social responsibility plan within an organization, it is essential to know and understand the facts.
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History
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The term "corporate social responsibility" first became widely used in the business world in the 1960s during the civil rights movement. At that time, widespread social changes led to the expectation of consumers that businesses should act in an ethical manner. Leaders in this relatively new movement believed that business should not only stop creating problems for society, but should also take action to solve problems previously created during the course of business. Existing views of CSR typically maintain that organizations should exist for the betterment of society.
Significance
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Corporate social responsibility is not just about giving to charity or putting the needs of society above those of the organization. There are many benefits to the organization of implementing CSR policies. For example, some consumers actively seek to do business with socially responsible companies. Organizations that visibly participate in CSR often employ marketing strategies designed to target these individuals. Additionally, companies that adhere to strict ethical standards are far less likely to avoid litigation than those who simply follow the law.
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Stakeholder Theory
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Stakeholder theory is a common concept in corporate social responsibility management. According to the Value Based Management website, "The Stakeholder Values Perspective emphasizes responsibility over profitability, and sees organizations primarily as coalitions to serve all parties involved." This means organizations are managed with the goal of creating benefits to all stakeholders, rather than benefiting only the owners or shareholders. This involves creating a careful balance between the needs of shareholders and the needs of other stakeholders, including suppliers, employees and the community.
Warning
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When considering the implication of corporate social responsibility actions, it is essential to consider the organization's responsibility to make money. While this may seem counter-intuitive, an organization does have a responsibility -- not just to its owners or shareholders -- to earn money. Without the success of business organizations, stakeholders including employees, customers and the community cannot hope to succeed. Successful businesses pay taxes and help support the community infrastructures, such as roads and utilities, which are necessary to do business and maintain the community as a whole.
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References
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