An ever-increasing issue in the corporate world is corporate
social responsibility.
With the increasing number of scandals occurring in the U.S.,
companies are trying to establish trust with their stockholders
and customers through corporate social responsibility. In the
history of corporate social responsibility, there have been many
models developed in an attempt to classify corporate responses
to social issues. In the early stages it was argued that a
company's main goal should be to gain legitimacy in society
through different strategic approaches. This model had three
ways in which a company responds to social issues. The first is
social obligation, in which companies only respond to the legal
requirements. This is below the standards of society. The second
level is social responsibility which refers to the company
acting at society's standards. The final level is social
responsiveness which is the company exceeding society's
standards.
The next step in corporate social responsibility is a
three-dimensional outline for corporate performance.
The first dimension of corporate social
responsibilitydeals with motivation for socially responsible
activities, mainly economic, legal, discretional and ethical
activities. The second dimension deals with societies' concerns,
like environmental and product safety issues. The third and
final dimension has to do with the range of the different levels
of response, going from doing nothing, to going above and beyond
everyone's expectations. These two models show the degree to
which a company is committed to being socially responsible.
Companies are beginning to notice the benefits of corporate
social responsibility. An Interactive poll showed that 79
percent of Americans take corporate citizenship into account
when deciding whether to buy a particular company's product."
This shows just how important it is for companies to be
concerned about how society views their company. If society
learns about a scandal within the company, they will lose trust
in the company and might purchase a competitors product. However
if they keep high standards they will gain loyalty with their
customers.
An overwhelming percentage of company executives believe that
the development of a corporate social responsibility plan will
lead to an increase in business benefits but a heavily debated
issue is if there really is a relationship between corporate
social responsibility and a company's financial performance.
A socially responsible company can gain access to extra capital
through investment capital. Many investors take notice if a
company is socially responsible and are more likely to invest in
a socially responsible company. Socially responsible investing
is one of the most dynamic and rapidly growing areas in the
financial world.
By keeping an eye on the trends within society, one can build
the trust and loyalty needed to ensure a bright sustainable
future.
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