Corporate Social Responsibility

Introduction

Over the last couple of decades, an ever growing emphasis has been placed on addressing global problems such as environmental degradation, poverty, and labor and human rights violations. The great amount of concern over such issues on the part of societies, governments, and the international community at large, has put pressure on businesses to develop socially responsible practices and to be proactive in addressing these problems. As a result, throughout the 1980s and the 1990s, many major corporations have incorporated into their strategies the promotion of social values and have voiced their commitment to various social causes. The term most commonly used to describe this new, "do-good" type of corporate behavior is "corporate social responsibility."

Corporate social responsibility (CSR) is defined as "a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis" (DG Enterprise and Industry, European Commission 2009). It has a number of aspects. Besides functioning as a built-in mechanism enabling businesses to monitor their adherence to national and international laws and ethical standards, it also manifests a company's readiness to take responsibility for its impact on the environment, communities, employees, and society at large. Last, but not least, it encompasses the proactive promotion of social values and causes on the part of businesses through their participation in various initiatives encouraging "community growth and development" (DG Enterprise and Industry, European Commission 2009).

Over time, factors such as government regulations, increased social awareness and activism, and ethical concerns among consumers have made "doing and being good" - in other words, being socially responsible, ever more important for companies' success. Changing circumstances have created an interrelationship between "doing good" and "doing well", and an increasing number of businesses have become aware of this interrelationship, realizing that socially responsible corporate behavior benefits them as well as society, that "doing good" pays off. As a result, ever more businesses have started to view CSR practices as "a source of opportunity, innovation, and competitive advantage" (Porter and Kramer 2006, p.80) and to integrate them into their overall business frameworks.

In the following paragraphs, this essay will address the major interlinkages between corporate social responsibility and business success, by analyzing the factors that turn socially responsible practices into an advantage for companies. The companies' avoidance of negative consequences through the adoption and implementation of CSR practices, or "doing good", will also be regarded as an aspect of success, or "doing well." The analysis itself will focus on finding the answers to the following questions: what are the main factors driving the adoption of CSR practices by companies and how are they related to companies' welfare?

Observing government regulations

As mentioned earlier, governments have played a major role in promoting socially responsible corporate behavior by enacting laws that define and control companies' CSR policies and monitor the conduct of business (Gunu 2008). Common areas of government regulation concern labor rights, environmental protection, and corporate integrity. A pattern has emerged over recent decades whereby the adoption of CSR practices by businesses is rewarded by governments, while the failure to do so leads to facing government sanctions