Corporate Social Responsibility

CSR can be defined as situations where the firm goes beyond compliance and engages in actions that appear to further some social good, beyond the interest of the firm and that which is required by law. The term CSR was first coined in the 1950s and it gained peculiar attention in management studies in the 1970s. Predominantly, the activities under the umbrella of CSR fall into three categories: economic growth, ecological balance and social progress.

The accepted influence of CSR involves its impact on organizational FP and social performance. In the case of CSR, the literature indicates two schools of thought that predominantly debate and describe business primary activity as profit maximization or business society interaction for the welfare of society. However, the construct has been related to many aspects of a business, such as stakeholder expectations, increasing social performance/FP and compliance with government regulations. Sharp and Zaidman studied CSR from a strategic perspective and concluded that incorporation of CSR into a firm’s strategic management process can yield better outcomes for organizations.

The dominant paradigm about the proponents of CSR earliest starts from the work of Carroll, who has described the range of activities included in CSR from philanthropic activities till larger social benefits. According to Carroll, companies are expected to generate profits, obey the law, operate in line with social norms and do well in society beyond the society’s expectations. According to Clarkson and Surocca et al, CSR is about meeting the needs of wider stakeholders in the society. Therefore, CSR discourse is becoming multidimensional, including social needs, stakeholder management and profit maximization, whereas certain researchers, such as Luetkenlorst, identify CSR from compliance and engagement to harm minimization and value creation.

According to Jamali and Mirshak, many businesses in developing countries are taking into account voluntary CSR practices as philanthropy, whereas on the management front the benefits of CSR in human capital issues management and worker’s safety and satisfaction are increasing.

Garrriga and Mele categorized CSR theory into instrumental, political, integrative and value theories, which, from all dimensions, lead to sustained development. The principle of social responsibility is leading companies to a concept of triple bottom line for decisions of social responsibility that include economic, social and climate care. Carroll has also defined the role of CSR as a strategic management issue, according to which CSR might be done to accomplish organizational strategic goals and to achieve long-term profit goals. Novak identifies a firm’s extra legal social responsibilities, which would be of direct benefit to the business, such as communication to all stakeholders, establishing a sense of community respect and protecting moral ecology.

Jarzabkowski introduced a model of strategization of CSR that advocates that as CSR is goal directed it can be strategic in nature, and CSR practices can be widely adopted throughout the organizational community because of the value creation feature of CSR.

In sum, the central thesis of CSR is predominantly oriented toward contribution to FP and also toward normative basis, which incorporates human values. Most of the research has focused on the relationship between CSR and economic performance or FP. This is probably to advocate the need of establishing a strong case of practice for all organizations proving CSR’s benefits (as investment incurred may not have an immediate payoff).

Branco and Rodingues have described CSR as an important resource for organizations from a resource-based perspective. According to Barney, organizations can capitalize on their unique resources for sustainability, whereas the resources should meet the criteria of resource-based view (RBV), that is, should be valuable, inimitable, rare and immobile. CSR can help an organization build such unique resources, such as reputation, employee capabilities, and knowledge and network of relationships. Oliver also defined strategic use of CSR from an institutional and resource-based perspective to achieve sustainability in the organizations.

On the basis of previous literature, the research divides CSR into two dimensions: external CSR practices and internal CSR practices.

The most common operationalization of CSR has been done in the work of Carroll, who provides the foundational concepts of CSR. The firm’s CSR practices should encompass its economical, legal, ethical and voluntary activities for social responsibility, whereas more and more emphasis is only on the voluntary practices that may include philanthropy, corporate volunteerism and corporate citizenship.

Researchers have also documented an internal dimension of CSR that generally covers the employee’s well-being at work, particularly including their health and safety and also development and talent identification. Another addition to the dimensions of CSR is the 2001 Green Paper by Commission of European Communities that identifies the typology of CSR as its internal and external dimensions.

Generally, research in social responsibility has focused on only the external CSR, that is, community development and environmental protection, and literature is lacking in the internal dimension of CSR and the link between these two. This study will focus on both dimensions of CSR to build an integrated model of CSR practices for strategic use of CSR as an important organizational resource.