The notion of “corporate social responsibility” has developed to be universal enough that it has gained its own acronym in business arenas: CSR. The term refers to the fact that a corporation should be accountable to a community, as well as to shareholders, for its actions and operations Moreover it is the balance between business profit objectives and ethical and responsible business actions. When a corporation adopts a CSR policy, it should be able to demonstrate a goal of keeping ethical values, as well as valuing people, communities and the environment. Dilemmas appear when companies must choose between saving money and working responsibly with respect to shareholder interests and the community and the environment. Small businesses have some advantages and some challenges relatively to bigger organizations in managing responsibilities.
But what happens when companies engage in socially responsible behavior?
Pros of CSR
A CSR procedure enhances the profitability, the value and the image of a company. The notion of energy usefulness and waste recycling reduces operational costs and improves the environment. More precisely, for small businesses, CSR has also many benefits because of many factors: The more limited scope and geographic area that small businesses interact with, the fewer people and levels involved in the decision-making processes and the localization in a smaller community of the business activities and responsibility standards. For example, a company wanting to address environmental issues can connect with local environmental recycling programs.
CSR improves the company’s accountability and its transparency with the media, stakeholders, local communities and investors. According to a study conducted by the branding company Landor Associates and cited by the University of Pennsylvania’s Wharton School, 77 percent of consumers think that companies should be socially responsible. Consumers are attracted to companies that are known in adopting CSR. A research at Tilburg University in the Netherlands revealed that consumers are willing to pay a 10 percent higher price for products they judge to be socially responsible.
Cons of CSR
A major disadvantage of CSR is for small businesses in the involved costs: investing in the right equipment, hiring service providers, adding new space and investing in employee education and training. However, a small business can make use of social media in order to promote its CSR policy but this will take extra time and may involve hiring new employees for this. Another challenge for companies adopting CSR is the possible negative vision of shareholders: Businesses must balance the financial expectations of company owners with the social and environmental requirements of entities. Some shareholders may be happy to invest in businesses that operate with CSR others may not be ok with the expenses of working under CSR strategies.