Corporate Social Responsibility (CSR)

Question

What is CSR and how does a business use it?

Answer

CSR stands for Corporate Social Responsibility; it is the idea that businesses should act in ways that support society. It has been an increasingly popular and important concept among business and is gaining recognition. It partly originates from the business ethics ‘Stakeholder Theory’ of Freeman (1984), which states that business should give consideration for all its stakeholders. Stakeholders are more than just shareholders and managers, but includes customers, employees, local communities, government and many others. Many advocates of CSR state the ‘business case’ for CSR, that good CSR – such as helping local communities, paying fair wages and caring for the environment – can result in a stronger brand and thus better revenues. Others have criticised CSR as companies pretend to care about ethics only to create more profit, with CSR efforts being superficial. Others, such as Friedman, state the duty of business is only to its shareholders, and to operate within the law. Friedman believed that taxes were a business’s contribution to society, and that governments were better placed to look after external stakeholders. Whichever view is taken, CSR has become an important part of business management, and is increasingly expected by consumers – those with weak CSR programmes risk losing customers.

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