Corporate social responsibility becomes important nowadays. From my understanding, Corporate Social Responsibility is that whenever the companies want to make a decision or an action, they must concern about their responsibilities toward the society also, not only about the shareholders. It is because the companies are dependent on the society so they must contribute toward society. This has been proved in statement that corporate social responsibility is a philosophy that the company’s actions include not only producing a reliable product, charging reasonable price with fair profit margins and paying an equitable wage to employees, but also concern for the environment and action on other social concerns.
Accroding to Lee, “Corporate social responsibility has been transformed from an irrelevant and often frowned-upon idea to one of the most orthodox and widely accepted concepts in the business world during the last twent years or so”. Corporate social responsibility also ensure the companies are actively comply with laws and follow the ethical standards. The company that exercise corporate social responsibilty is likely to achieve higher growth rates, better stock values and better involvement of employees. Thus, in summary corporate social responsibilty is to manage the business to give positive impacts on society for overall.
A matter of fact, corporate social responsibilty is related to ethics which is the company must act in a fair and true. The company must adopt the ethical business practices in order to ensure the welfare of society is taken care of. We can measure the awareness of the companies towards social responsibility by looking at their ethical reputation because it is depend on how serious the companies care about the society is.
The ethical level in corporate social responsibilty such as paying fair salary to employees, avoding corruption and fraud occur, eliminating child labour and care of health and safety of employee. For example, Google company provide facilities like discounted tickets, salon, gym, transportation, personal concierge and parental leave to their employees. Ethics do influence the behaviour of corporates through corporate social responsibility.
However, there are arguments on this. In agency theory between principal and agent which are shareholders and directors, the directors are accountable and responsible to shareholders but in corporate social responsibility, it involves the company that accountable and care about the society. Therefore, the commentators have criticised that company should accountable only for the shareholders, not society. Other than that, they argue that some of company just want to have an exemption of taxation by applying corporate social responsibility approach. According to RK Tiwari (2014), “Money spent on all corporate social responsibility works cannot be counted as business expenditure but certain social welfare spending activities could be considered for tax benefits”.
Last but not least, they have argued that most of companies were applying corporate social responsibility because of specific motives such as enhance their brand value, maintaining their company’s reputation and image, improving government relations, attract customer loyalty and intent to recruit and retain the employee. The commentators claimed that companies do that insincere. Therefore, company should generate profit, comply the law, act according to an ethical standard and only apply the corporate social responsibility activities that improve long-term shareholder wealth.