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Social Responsibility

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The Opportunities and Limitations of Strategic CSR

Corporate social responsibility is defined as the voluntary contribution of business to society in social, economic and environmental spheres. Corporate Social Responsibility (CSR) can be also seen as the strategy that shows how to do more good for your company and the community defines corporate social responsibility as a free choice in favor of improving the well-being of the community through appropriate approaches to business and the provision of corporate resources. Corporate Social Responsibility is a voluntary investment of business to society in social, economic and environmental spheres.

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The success of the implementation of CSR practices is based on a system approach and the perception of the phenomenon of CSR as a strategy for the sustainable development of the company, which requires optimization and restructuring of business processes. System implementation of CSR implies the interests of all stakeholders, that are three main groups the people (staff), the company’s customers, the public and government agencies. The definition of CSR as a voluntary contribution to society “describes the social responsibility as a range of actions, taken by the “super institutionalized norms” of their own accord (Heslin & Ochoa 2008). Legislation in this area is designed to encourage social activity and provide additional features.

The strategy of the CSR practices based on self-regulation and is designed according to the ten universal principles in the areas of human rights, labor standards, environment and anti-corruption, as articulated in the Global Compact the main international CFA Institute, created in 1999 to bring together business companies with the UN agencies, labor and community organizations. Today, the Global Compact brings together more than 9,000 members, representatives of commercial and non-profit organizations from around the world.

The question of whether the company builds its activities in accordance with the requirements of society is a subject of constant debate. The very concept of CSR has always been highly controversial. The problem in the definition of business in today’s society is to find an answer to the question: is the profit the main purpose of the company or it bears also an address to a number of social problems? In the early twentieth century some business leaders have suggested the business community to use its power and influence to the broader social goals, not only to achieve the greatest amount of profit. As a result, the basis for the modern understanding of CSR is based on the ideas of an expanded role of business in society (Kramer & Porter 2006).

Thus, first it is necessary to mention and comment the arguments in favor of social responsibility. The first one is connected with the understanding of the favorable long-term prospects for the business. Social activities of enterprises improve the lives of the local community and eliminate the need for government regulation that can be in enterprises own interests due to the benefits of participation in society. In addition, even if short-term costs of social action are high, in the long term, they can stimulate profits as consumers, suppliers and the local community formed a more attractive image of the enterprise.

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The second one is connected with the availability of resources to assist in solving social problems. As the business has significant human and financial resources, it should pass on a part of the social needs. It is also important to make the point on the moral obligation to act socially responsible. The company is a member of the society, so the rules of morality must also manage its behavior. The company, like an individual member of society should act in a socially responsible manner and strengthen the moral foundations of it. Moreover, the law cannot cover all situations, therefore, companies must assume a responsible behavior in order to maintain a society based on the rule of law and orderliness.

However, there are many arguments against social responsibility. The first one discusses the violation of the principle of profit maximization. The direction of resources for social services reduces the influence of the principle of profit maximization. The company conducts itself in the greatest measure of social responsibility, focusing only on the economic interests and social problems leaving public institutions and services, charitable institutions and educational organizations.

The second is focused on the expenditure on social inclusion. Funds allocated for social needs are for business expenses. Ultimately, these costs are transferred to consumers in the form of higher prices. In addition, the firms participating in the competition in international markets with firms in other countries, that do not bear the cost of social services, have disadvantage in the competition. This reduces their sales in international markets, leading to a deterioration of the balance of payments in foreign trade.

The next one points on the lack of ability to resolve social problems. Staff of any company is best equipped to work in the fields of economy, the market and technology. It lacks experience which enables to make significant contributions to the solution of social problems. Improvement of the society should encourage professionals to work in the relevant state institutions and charitable organizations.

Both arguments have the right to exist. In practice, when addressing the issue of corporate social responsibility, it is important to find a balance, taking into account the specific situation, the ratio of income and expenses, and other factors. It is useful to relate the “pros” and “cons” to compare their weight and formulate the detailed position of the company.

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