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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 responsibility deals 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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