Advantages And Disadvantages Of Using CSR Standards As A Way Of Establishing A Responsible Business Group

Advantages and Disadvantages of using CSR Standards as A way of Establishing A Responsible

Business Group

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Outline

i. Introduction

 Engaging in CSR standards ought to be a careful decision and organizations

should consider its advantages as well as disadvantages

ii. Advantages of using CSR standards

 Enhanced image

 Increased attraction as well as retention of workers

 Reduced regulatory oversight

 Capital inflow

 Clean and Renewable Energy

 Positive Publicity

 Enhanced financial performance

 Improved reputation and brand image

 Increased sales and customer loyalty

 Easy access to funds

 Approval of local communities

 Attraction of investors and less explosive stock value

 Competitive advantage

 Better quality of services and products

 Increased profits

iii. Disadvantages of using CSR standards

 Conviction of customers

 Shifting attention to profit-making initiative

 Reputation of a company takes a hitch

 Conviction of customers

 Increased cost of production

 Provision and legislation related to CSR

iv. Conclusion

Critically discuss the advantages and disadvantages of using CSR standards as a way to

establish a responsible business organization.

Introduction

Using CSR standards as a way of establishing a responsible business organization incurs

a series of advantages as well as disadvantages. Environmental and social actions that a firm

engages in bring advantages as well as disadvantages. Therefore, engaging in CSR standards

ought to be a careful decision and organizations should consider its advantages as well as

disadvantages (Tilakasiri, 2015). The paper aims at discussing advantages and disadvantages of

using Corporate Social Responsibility standards as a way of establishing a responsible business

group. Therefore, the paper comprehensively handles advantages and disadvantages of using

CSR standards as a way of establishing a responsible business group from the viewpoint of the

organization. It comprises of arguments that are economic based such as increase of profits as

well as improving the image of the company. As noted by some scholars, the idea of corporate

social responsibility is connected not only to positivism but also a certain level of criticism (Tai

& Chuang, 2014).

Advantages of using CSR standards as a way of establishing a responsible business group

Enhanced image

Using CSR standards enable a firm to gain an increased value of goodwill that serves a

double purpose that is; in the first place, people will be eager to buy products of the company

due to its clean and good image (Tilakasiri, 2015). On the other hand, other firms will be

yearning to be associated and carry out business with the corporation. Therefore, this increases

the company's prestige to a level that its name might become synonymous with goodness and

reliability. Furthermore, people like to be associated with most popular and best companies.

Therefore in this respect, the organization rises in stature and turns out to be a vital player in the

market.

Increased attraction as well as retention of workers

A company that uses corporate social responsibility standards as a way of establishing a

responsible business group finds it easy to recruit as well as retain workers (Tai & Chuang,

2014). Many people desire to work in companies that have good conditions of working and are

concerned with the well-being of their workers. Compassionate attitude towards workers is

extremely desired by recruits as well as old workers. For instance, financial help, attention, and

appraisals that are given to individual successes and special days such as birthdays make the

workers remain in an organization. Therefore, this is a vast advantage in case there is a

constricted global labor market condition. Moreover, this will enable the firm to reduce the

expense of training new workers and on the other hand increase incentives for the existing

workers. Nevertheless incentives prompt efficient work from the workers (Saeidi et al., 2015). In

short, in case the workers of a firm are happy, the firm gets more profits due to the improved

efficiency of production.

Reduced regulatory oversight

A company that uses corporate social responsibility standards as a way of establishing a

responsible business group does not get inspected by regulatory bodies like companies that do

not have CSR programs. Usually, the authorities will tend to be lenient in their directive because

they will usually feel that the firm must be adhering to all directives because it is supported by

people as well as firms for its welfare task. Furthermore, companies using CSR standards usually

work within directives to gain benefits from the CSR programs. Also, authorities will offer

organizations that use CSR standards in setting up a responsible business group a fast-track

preference. On the other hand, organizations that use CSR standards in setting up a responsible

business group might forego cumbersome paperwork that is required in setting up projects in

case the authorities feel the project is aimed at improving the community (Tai & Chuang, 2014).

Capital inflow from many sources

The image of a corporation plays a major role in the attraction of investors. In case a firm

engages in corporate social responsibility standards, its image gets boosted, and so many persons

invest heavily in its operations (Saeidi et al., 2015). Therefore, in this way, the organization will

attract capital globally thereby helping the mother country to gain valuable foreign exchange. On

the other hand, the company will also attract investment from other industries as well as forms,

and it will, in the long run, become a name that can easily gain trust. Additionally, even the

mother country of the organization will be willing to invest in the firm, and this will lead to red-

tapism and lesser regulation (Tai & Chuang, 2014).

Clean and Renewable Energy

In case an organization engages in an environmental Corporate Social Responsibility

program, it makes sure that its actions and operations do not affect the environment in whatever

way. Therefore, it works hard to invent techniques and machines that can reduce harmful effects

of its operational activities (Slack, Corlett & Morris, 2015). In doing this, the company gives the

society a clean environment. Consequently, the company that uses environmental CSR standards

gets a chance of exploring the use of renewable energy for its operational activities. Therefore,

this reduces the company's cost of obtaining fossil fuels. On the other hand, this may reduce the

company's cost of production by just investing in production using renewable energy (Tai &

Chuang, 2014).

Positive Publicity

A company that uses corporate social responsibility standards as a way of establishing a

responsible business group gains good publicity. Additionally, a good CSR standard acts as an

advertisement for the organization. Publicity gained enables the company to be known and by

being known, it will sell its products to a large market (Saeidi et al., 2015). Additionally,

publicity enables a company to be set apart from its rivals. Rival companies might be selling a

similar commodity at slightly low rates but a firm that engages in CSR standards can keep the

interests of its community and environment intact, and people do not get bothered by an extra

charge because of this thoughtfulness (Slack, Corlett & Morris, 2015).

Enhanced financial performance

A company that uses corporate social responsibility standards as a way of establishing a

responsible business group is usually ‘stakeholder balanced,' and usually, stakeholder balanced

companies have a growth rate as well as eight times growth rate in employment as opposed to

those companies that focus on profit maximization and shareholders (Tai & Chuang, 2014).

Improved reputation and brand image

A company that uses corporate social responsibility standards as a way of establishing a

responsible business group can benefit from its reputation from the business community as well

as its improved reputation with the community by attracting more trading partners as well as

capital (Slack, Corlett & Morris, 2015). Furthermore, perfect employee, community and

customer associations are important compared to strong shareholder returns.

Increased sales as well customer loyalty

A company that uses corporate social responsibility standards as a way of establishing a

responsible business group gains a large market for its services and commodities (Tai & Chuang,

2014). While organizations must satisfy the key buying criteria of the consumers such as quality,

price, taste, appearance, availability, convenience, and safety, there is also a growing desire of

purchasing related to other value-oriented criteria such as ‘child labor-free' and ‘sweatshop-free'

clothing, commodities that have small impacts on the environment as well as absenteeism of

genetically modified ingredients as well as materials.

Easy access to funds

A company that uses corporate social responsibility standards as a way of establishing a

responsible business group has a fast increasing access to capital that might not have been

available (Reverte, Gómez-Melero, & Cegarra-Navarro 2016). This is prompted by the fact that

the company addresses social, environmental and ethical issues that attract many firms including

the government and other international bodies as well as companies to invest in the organization.

Approval of local communities

A company that uses corporate responsibility standards as a way of establishing a

responsible business group gains the approval of the local communities. Therefore, the socially

responsible behavior of the company helps it to operate unperturbed (Slack, Corlett & Morris,

2015). On the other hand, a company that engages in CSR standards is easily distinguished from

others. Additionally, by a company representing itself as a forerunner of a responsible attitude, it

easily stands out of the crowd hence induces consumers into purchasing its commodities as well

as supporting it in various ways.

Attraction of investors and less explosive stock value

Investors look for responsible firms to invest in. Therefore, the ethical values of an

organization that uses CSR standards attract wealthy investors that are willing to contribute to

the organization's gain of profit as well as success. On the other hand, companies that engage in

CSR standards have low chances of being criticized publicly and are less risky thus lowering the

price of the stock (Reverte, Gómez-Melero, & Cegarra-Navarro 2016).

Competitive advantage

A company that uses social corporate responsibility standards as a way of establishing a

responsible business group creates a competitive advantage for itself. This is because it creates a

positive image and can, therefore, attract members of the community and customers because it

maintains an accountable representation. Additionally, a company that uses CSR standards

shapes good relations with its stakeholder and shows that the needs of its stakeholders are

paramount to it (Slack, Corlett & Morris, 2015). On the other hand, the workers of a company

that uses CSR standards are usually motivated and inspired. Therefore, the high motivation and

morale of the workers, the company's work efficiency, and performance increases rapidly.

Moreover, the current potential customers are usually careful in their shopping. Therefore, many

buyers choose those brands that have a reputation for their CSR even when they have to be

overcharged for socially and ecologically friendly commodities.

Better quality of services and products

An organization that engages in CSR standards as a way of establishing a responsible

business group retains good workforce and attracts new talents because people usually want to

work for firms that have a good reputation. On the other hand, reformation of labor practices as

well as protecting human rights increases the organizational commitment of employees.

Additionally, the rate of employee errors decreases due to the training programs (Reverte,

Gómez-Melero, & Cegarra-Navarro 2016). Moreover, the rate of employee turnover declines

thus leading to savings on relentless recruitment and training of new personnel. Additionally, by

a company reducing overtime, it causes less waste because when the workers work long hours

with no break, workers are tied and make more mistakes that could be avoided.

Increased profits

A company that uses CSR standards can easily come up to the position of a leader in the

sector. Moreover, a company engaging in CSR standards is adopting a perfect positioning

strategy because CSR increases the value of the organization’s brands (Slack, Corlett & Morris,

2015). Therefore, this might lead to improved influence of an organization in the industry. Some

corporate practices such as reducing wastes increase operational efficiency thereby making

production cost effective as well as improving profits.

Disadvantages of Corporate Social Responsibility

The role given to a leader is to guide business organization towards achieving sustainable

responsibility of business is complex and vast growing organizations. To implement such form

of initiative, it requires the use of a unique array of enormous and intricate skills that essentially

needs one to borrow from other people (Dhaliwal et al., 2014). Use of different leadership

capabilities and styles has become most prevalent amongst leaders where organizations have

experienced changes in strategy and focus. The works have demonstrated the use of socially

achievable behaviors. Many disadvantages are encountered when a firm improvises the use of

CSR standards in various organizations. Some of the common disadvantages include;

Shifting attention to profit-making initiative

Many economic specialists have become critical to the use of CSR in firms. In many

occasions, CSR shifts the focus of the organization from being a financial entity. In this case, the

company forgets all the obligations given by stakeholders that they are supposed to make profits

for them. Instead of focusing their mind towards profit making initiatives, they are interested in

engaging themselves in the implementation of CSR programs that use funds and consumes most

of community welfare. The company does not concentrate on profit making initiatives but

instead focuses on the outflow of cash without fulfilling the obligations given to them of profit

making. Many stakeholders invest in various organizations with the aim of making profits that

will be essential in improving their livelihood and helping get some other cash to invest in other

places (Mahoney and Roberts, 2014). Implementation of CSR in organizations has taken a hitch

because many view the minimal use in firms without taking into consideration any positive

outcome that will be realized when corporate social responsibility is implemented in an

organization.

Reputation of a company takes a hitch

The requirement of CSR where companies are supposed to disclose the shortcomings that

they face will affect the running and performance of the companies to a greater height. Most

firms work hard in not disclosing any problem that they face because of the fear that would later

turn to haunt them in their relation to customers whom they serve. It is not easy for companies to

disclose some of the common strains that they face making them violate the provisions of CSR

program. For example, when a car manufacturing company manages to call back their vehicles,

there is a possibility of losing many customers who had expressed interest in using their services

in the future. The recalling process will in most cases gallop their reputation because there are

needs where various individuals are required to adhere to the rules and regulations of the

program. This has become one of the most frustrating things to many companies because of the

image that they create to consumers when implementation of CSR is solely observed by the

organization. The recalling initiative in the case of car manufacturing firms will cause

inconvenience to consumers thus losing their trust in the manufacturer.

Conviction of customers

Previously, customers were pleased when they saw companies that they were interested

in get engaged in programs of social welfare. Many people are convinced that the use of such

programs will be of good use and will finally take them to a good cause. The customers will later

grow wary of the initiative if they do not see the required form of results. The use of social

welfare programs will later be seen as mere PR stunts when they do not notice the outcome as

helpful as initially thought. These activities will become hard in convincing customers to

continue waiting pending the outcome of the results and showing that the company had good

intentions to the society (Yin and Jamali, 2016). The actions of trying to convince people about

the intended outcome will become fruitless each day because a lot of impatience will be

observed from customers and there should be an initiative of constantly appeasing their wait for

the positive outcome. In this case, CSR will make customers of the organization lose patience to

the outcomes thus making conviction to customers hard.

Increased cost of production

CSR standards increase the cost of production of a company. The implementation process

takes time and influences the way in which a company runs and the extra cost that will be

experienced. CSR and increased cost of production is reflected in the cost of products. This is

because prices hike and customers are supposed to pay more to get the required services. In some

cases, large corporations can absorb the high cost of using CSR and will work hard in

implementing the program because of the outcomes that are experienced in large firms. CSR

standards may not bring financial benefits to the organization, but small organizations have to

increase the prices of their product so that they can be able to match the financial muscles that

are exhibited in the competitive market (Mahoney and Roberts, 2014). The increased prices will

help one to meet the expenses that have increased so that the use of CSR can be effective to the

whole organization.

Provision and legislation related to CSR

Provisions and legislation imposed on an organization regarding the use of CSR are

meant to vary from one organization to another (Joutsenvirta and Vaara, 2015). The use of CSR

differs in various contexts depending on their usage and the geographical location of the intended

firm. Some of the common features that affect the use of CSR standards include culture,

environmental conditions and the legal framework that are put forward by various countries.

Therefore, legal factors are critical in showing the strength and ability of an organization to adapt

the requirements and provisions of using CSR that does not have the economic advantage to

various organizations. CSR is concerned with emphasizing the use of official behaviour of

individual firms. The program later expanded it to include the use of supplier needs where the

produced products are disposed as they are also used (Cooper, 2017). Despite the many

disadvantages experienced by various organizations, CSR has become one of the most common

forms of business practices in the current time.

Conclusion

Corporate social responsibility is concerned with fulfilling the responsibility of treating

all stakeholders of various firms well and in a responsible manner. By use of responsible or

ethical means then stakeholders are treated in an acceptable and civilized manner. Social

responsibility includes the work of ensuring there is economic stability. Stakeholders exist both

within and outside the firm such as the natural environment. The main aim of using CSR

standards is to create acceptable social standards that are acceptable to various people,

corporations and stakeholders found outside and within the organization. Successful initiatives of

CSR have managed to take teams beyond the legislation and compliances that enable them to get

respect and ethical honour from various people, natural environment, and surrounding

communities. CSR enables firms to start activities that can take place without affecting the

normal running of the organization and achievement of business goals. The use of CSR has

become vital than environmental responsibility which employs the use of recycling policy.

Furthermore, corporate social responsibility involves the consideration of the whole business

picture, internal processes of clients and ability to take various steps in improving day-to-day

operations. For many years, the use of CSR has proved to be using the policy of self-regulatory

mechanism where business organizations monitor compliance to the law, national norms and

ethical standards that help the organization goals to be successful. Furthermore, CSR is a broad

concept that manages to address different topics such as corporate governance, human rights,

safety, and health. CSR standards ensure that there is adherence to human rights and good

working conditions thus improved economic performance and transparency. Many companies

have become successful by using unique initiatives of CSR that are difficult to be on the

forefront of aspects of CSR.

References

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