Corporate Social Responsibility’s Advantages and Disadvantages

Corporate Social Responsibility (CSR) is a companies attitude toward respecting the effects that the company may have on things like, the environment, their workers, and the political landscape. Companies may opt to be socially responsible in order to remain positive in the eyes of their customers, this can be difficult for businesses that are fundamentally bad for aspects of society, such as oil or paper companies for the environment.

Corporate Social Responsibility

Some companies may take some strategic steps to ensure that they are to some effect, marketable or otherwise… socially responsible.

  • Some companies may simply take the philanthropic approach, and sponsor a charity or fundraise a cause. According to the Directory of Social Change‘s ‘The Guide to UK Company Giving’, in 2013, £658 million was given to charity and £369 million was given in 2014. However, the top 25 charitable companies donated 68% of this figure, companies such as Lloyd’s Banking Group, Tesco, and Shell.
  • Some companies use more sustainable resources, such as changing packaging, Switching their resource procurement to more sustainable or conflict free markets.
  • Some companies have co-operatives with their suppliers to ensure that their products’ profits are spread evenly among each chain of the products manufacture, distribution, and retail. Or may simply distribute shares of its company to its employees.

Advantages of Corporate Social Responsibility

  • Having a socially responsible company is marketable and attractive to consumers and buyers.
  • Positive Publicity for positive behavior.
  • Companies are less likely to be singled out or face action from pressure groups or disgruntled consumers.
  • Products are seen as high quality from consumers, even if the product may be inferior from other means.
  • Retention of current employees is more likely if the company treats them well.
  • The brand of the company appears stronger and more attractive to consumers.
  • Regulation and Authoritative Bodies are less likely to take interest in controversial practices.

Disadvantages of Corporate Social Responsibility

  • There is a greater expense in the manufacture of products if they need to be replaced.
  • There is, therefore, an increase in cost and a decrease in contribution from products.
  • If there is a mistake or products are made without renewable sources, for example, they may need to recall some of their products to ensure consistent quality and credibility in their own CSR program.

Companies that are more socially responsible are most likely going to benefit from it, however, if the cost of doing so takes a big hit on productivity, then it may be difficult to convince shareholders.

Using Government to Control Multinational Corporations

Multinational Corporations have a great influence on a lot of people, this is beneficial because it provides jobs and increases GDP, trade, and economy, however it does mean that businesses have a great deal of power, which when coupled with factors like political influence, pressure groups and the media can make a company very powerful, able to control potentially thousands of jobs and staff wages.

Common Pressure Influence

Pressure groups, though not always an insider in government can have a great deal of credibility in preventing the control from multinational corporations. Pressure groups may also incorporate radical action and anti-corporation tactics, such as driving slow through London streets or protesting on a runway. However, Pressure Groups tend to focus on the ethical activities of organisations over preventing monopolies or unfair business practices, however, there are exceptions, the majority of this work is undertaken by unions.

Consumer action by boycotting products, spreading awareness on unethical factors or irresponsible activities can make a product less profitable or cause a business to re-think its stance on a particular product or practice, however, this form of activism can sometimes have no effect on the performance of a product due to its massive success or meager opposition.

Using Government to Control Multinational Corporations

The Government is arguably the most important factor in controlling MNC’s, from maintaining fair work arrangements, breaks, pay and holiday to preventing global price fixing and implementing transnational tariffs to protect local business and economy, the government to some companies could be seen as enemy number one. It is necessary to control MNC’s to manage their growth and influence in a country. Similarly a multinational may move abroad to save money on things like manufacture, however, this is bad for local jobs, it may increase profitability for an MNC. For this reason, it is sometimes probable that a government may subsidise the company to prevent it moving abroad.

governmentvsmncs

However some massive MNC companies have profits each year greater than entire country GDP’s, this could be seen as a failure of the government to control its businesses. Finally, although MNCs need control they do provide massive benefits to a country in trade, prosperity and GDP that make them worthwhile today.