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To What Extent Is Csr Beneficial To A Company’s Performance?

1260 words - 6 pages

To what extent is CSR beneficial to a company’s performance?
 
 
 
 
  The area of corporate social responsibility has been laid great emphasis recent year. Corporate social responsibility means a company concerns its business operations in an environmental-friendly way and interacts with its shareholders and customers voluntarily (Commission of the European Communities, 2001, as cited in Dahlsrud, 2008). Nowadays a large quantity of international companies have issued their CSR report and designed separate websites about their CSR performance in order to run a better business. However, opponents believe the relationship between CSR and company’s performance is neutral ...view middle of the document...

Because its financial statements wasn’t transparent (Bratton, 2002) and earnings were overestimated largely (Healy & Palepu, 2003), it share prices plunged suddenly when people realized their fraud. Due to its irresponsible performance, “Enron”, once a reliable and notable brand name, was attributed as a biggest audit failure after the scandal. Hence, companies might concern more over CSR performance and try to increase brand value by running business responsibly to the society and interacting with its customers and shareholders. Secondly, it is suggested that corporate social responsibility performance serves as an attraction to job seekers. Psychologically, employees might have more confidence and a sense of satisfaction working in a corporate with proper CSR performance. It can be explained by Social Identity Theory (Tajfel, 1974), which indicates that an employee, as an organization member, will classify himself into a social category. Thus his self-image will be greatly influenced by the image and reputation of a group he is in. In this case, employees will feel self-respecting when they work in a company with proper CSR behavior, because these companies tend to have more notable brand name and higher reputation. With a sense of corporate identity to the company, employees are more loyalty to their employers. Furthermore, employees could gain practical benefit from corporates with CSR performance. The reason is that CSR requires employers to care about employees’ health, working

environment and further-development opportunity. Further numerical support is given by Bettina Lis’ study (2012). Therefore, no matter psychologically or practically, CSR does matter when employees assess the employer’s attractiveness. Overall, CSR might be identified as a significant contribution to sustainable human resource management. Thirdly, CSR performance leads to an improvement in consumer intentions and attitudes and nurture a good customer relationship. Data from Becker- Olsen’s studies (Becker-Olsen, Cudmore, & Hill, 2006) showed that greater than 80% of respondents believed social initiatives engagement is necessary at a corporate level. They also found 52% of respondents would boycott firms’ irresponsible actions. Thus, consumers do have expectation to CSR behavior and might reward responsible corporations through purchase behavior. In some particular business field, like food industry and cloth industry, CSR is much more concerned by customers. For instance, consumers have strong demand on food companies to produce food responsibly. Considering their health, they want to buy safe and nutritious food. Thus, even some junk food corporations, like MacDonald’s, allocate to public that its food are nutritious and healthy. MacDonald’s makes a calorie charts for every kind of burgers showing their concern to customers’ health. Also, MacDonald (2009) took engagement in CSR, like turning of lights for Earth Hour to give a good impression on customers. A...

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