Tension has been simmering in the corporate social responsibility sector onto the legitimacy of the corporate responses to the concerns. This is because it meets the legal issues of the government like the human rights and investment in the community. Criticism is rife that governments elected by the people solve problems to the society. The resources for corporate social responsibility are not fit to tackle these societal problems.
On the other extreme, there is a call for corporate to adopt CSR; this is not withstanding the situation that responsibility of addressing outstanding CSR issues lays on the government. There is a proposition to shift powers and acknowledge the role of private sector in the discourse. OECD reports on 100 biggest global Economies, as per GDP measurements, 51 of the corporations are corporation’s indices in the US. Economic power is therefore shifting to the corporations; these corporations, therefore, should be according space to address the increasing social problems. A compelling example is the role that private corporations can have in enforcing government regulations aiming at furthering a social goal. Policies set by the government on working conditions may remain a perfect theory, but with corporate goodwill, such policies are enforced. A firm cannot downplay the plight of the society within which it operates, poverty, unrest or stretch on natural endowments impact on a corporation. For instance, the abundant resources of the industrial revolutions are by far less today and leading to adverse social effects such as pollution.
Naturally, there is an imposition of extra costs on the corporations, which may impose relocations or discontinuation operations. One perspective holds that companies may face inadequacy of equipment that will aid in addressing some the social and/or environmental challenges. There is also another perspective, contending that matter the equipment constraint companies remain the in the best position of addressing the problems. It is impertinent to note that, no corporation will carry on with a policy that generates non-positive cash flows. Stakeholders make investment in any corporation, with expectations of highest risk Adjusted returns. In response to this reality, socially responsible firms must have bottom-line benefits to guarantee sustainability. Key benefits court socially responsible firms in performance. However, there is a key challenge of out of time congruence with the cost and benefits. Costs are usually immediate while the benefits accumulate over a long-term period. Socially responsible firms enjoy improved social standing through a good reputation. This consequently offers them goodwill.
Companies that demonstrate social responsible may encounter lower risks that emanate from negative social events, although rare. A company that ignores the chance of encountering environmental or social externalities might be taking too lofty a chance. Companies that are not responsive to CSR, face three categories of risks: corporate governance related risks; chances of transparency and less corruption are more likely to prevail within a company that adopts CRS principles. Second types of risks environmental related, not CSR compliant firms are likely to pay higher pollution levies than compliant ones. Lastly, social cost also accrue to non-CSR compliant firms this is specifically through faulty products and reduction of social reputation. Such firms are likely to incur high recall costs, lose market share and reputation too. In some situations, social responsibility merges with cost reduction of a firm. For instance, reduction of travel routes or better packaging may also take down production costs among other overheads. As such, CRS principles could also offer a managerial challenge that requires the adoption of more efficient approaches and processes.
Studies indicate that companies perceived as having a strong commitment to CSR, enjoy an ability to retain their current employees and attract new ones. This leads to reduced employee turnover and low costs that would otherwise accrue through recruitment, training and hiring. Studies also indicate that an employee is alive to their company’s adherence to some CSR policies, such as those protecting their rights. This inclination makes them assess the conflict that is occasioned by non-adherence on their personal endeavors. Non-compliant companies may often present conflicts between the firm and personal values. For instance, some firms may put the profit goals before their employee’s values, forcing them to overlooks their value consideration. As s result, such non-compliant companies became popular for driving a culture of fear, disloyalty and mistrust. CSR aid in cementing a culture that espouses improved working conditions of employees, wages commensurate to services and good worker morale. The cost associated with this process is costly to the company, however, improvement in worker productivity; quality and positive culture generate cash flows that cover these costs. Thus, firms may stand to reap hugely from CSR agitation and adoption.
It incumbent upon any responsible scholarly work to clarify aspects likely to be misconstrued. The ease with which literature correlates adoption of CRS culture with an institutional success is to be deceiving. The aspect arises out of the difficulty of quantifying that a socially responsible firm reaps. Additionally, CSR policies have a tying with all processes of a firm, this makes its measurement more complicated since it cannot be measured in isolation. Firms should as be cautious in reaping into inordinate expectations. Corporate social responsibility must however, remain within a firm as part of its moral duties and conscience. Financial gains must not get an allowance of stealing the show of this responsibility that defies a definition based on a financial angling.