Corporate Social Responsiblity

Corporate Social Responsibility (CSR) Reflective Journal

Corporate Social Responsibility has been a controversial and intriguing topic for the discussion of many politicians, businessman and academic experts. Going through the knowledge of CSR in the past few lectures has provided me with insights never occurred to me before. Some of them align with the theories but some of them piqued my interest and my own opinions may differ.

One size does not fit all
Before understanding the model of Carroll's four part CSR, I assumed that in all countries every company should follow a single standard of CSR in order to be recognized as having ethics and moral ground. However, According to Carroll's four-part model (Diagram 1), the highest level of the pyramid is the desired responsibility of the company followed by ethical which is expected and lastly is legal and economic responsibilities which are mandatory. I no longer think that demanding every single company regardless of location, size or industry to achieve the highest level—the philanthropic level is reasonable, neither possible. This is because US is the leading country in the world that promotes CSR and other countries are still behind US not mentioning developing countries like Thailand and Myanmar in South East Asia. For example, a small company in the US may be regarded a medium or even large company in Myanmar. However, consumers or governments could not demand the equal level of contributions and commitment across geographical regions. The company in Myanmar may not be able to reach the same level of CSR because it simply does not have enough capital or human resources to engage the community. It has to ensure the company has a positive profit before doing so. Therefore, one size does not fit all. I think that in the future when people talk about CSR, we should not unrealistically demand every company to reach the same standard as USA.


Diagram 1



The Irony of Going "Green"
According to Carroll and Buchholtz, CSR includes the economic, legal, ethical, and philanthropic expectations placed on organizations by society at a given point in time. Increasingly, this pressure from society is getting increasingly intense and radical even. Consumer boycotts could easily tarnish a company's reputation and end the profit line of the company. This has put companies especially companies in Developed countries like USA at a precarious position as many companies are seen to eagerly portrait an image of being green and humanity driven. In my opinion, this is a double-edge sword because a radical emphasis on this incurs unnecessary cost that defeated the very purpose. It's greenwashing when a company spends more time and money claiming to be "green" through advertising than actually implementing business practices. For exmaple, General Electric in the US announced its $90 million "Ecomagination" advertising campaign to show its commitment to address clean energy issues. But the profits from this campagin is only 17 million. this has arguably become a case of grenenwashing.
Hence, I think such behavior should not be encouraged as it is a waste of effort and capital. However, such issue is unquestionably difficult to prevent as companies with large reserves do not mind to splurge more in order to gain a "greener" reputation or simply be recognised by certain title. This could even hide deeper problems of the company. For example, some companies use the effort of green advertising to disguise the problem of their unethical behavior. Therefore, an unregulated pursue of being socially responsible may lead to the opposite.
Political power of larger organization

Corporate accountability refers to whether a corporation is answerable in some way for the consequences of its actions. Firms have begun to take on the role of 'political' actors. This shift in power is definitely encouraged because powerful corporations support government financially. For example, large banks or companies buy government bonds to help the government with liquidity issues. Furthermore, in Singapore, Temasek Holdings and SingTel have collaborated government for many projects to help the local community. From an economic perspective, by empowering more private companies, the market could become more efficient and effective. For example, in Singapore, the transportation is privatised to ensure there is competition between operators which could rightfully increase the quality of the service. Previously before learning this topic, I think that privatisation is due to insufficient fund of the government and privatisation could lead to exploitation of customers by large corporations. This turns out to be a naïve and myopic opinion as the fair is actually lowered because competitors compete for customers.

However, I think the picture is not rosy all the time, at least in other parts of the world when corporation's powers take precedence over government power. In the USA, 44 huge conglomerates do not pay the full standard 35% federal company tax during the period of 1996 to 1998 because of their sheer size and contributions. These companies include Texaco, PepsiCo, Enron and Worldcom. This has encouraged the growth of monopoly and discouraged the growth of small and medium companies.

Therefore, I think that while encouraging corporate accountability, government should still retain a sizeable amount of power to itself. Most importantly, transparency should exist in all big corporations to prevent abuse of power.

Reference

Carroll, (1979). A Three-Dimensional Conceptual Model of Corporate Social Performance, Academy of Management Review. Retrieved from http://research-methodology.net/carrolls-csr-pyramid-and-its-applications-to-small-and-medium-sized-businesses/
Top 10 Greenwashing Companies In America. (2009, May 4). Retrieved January 10, 2015, from http://www.huffingtonpost.com/2009/04/03/top-10-greenwashing-compa_n_182724.html
Staff Reporter. (20112, August 12). 3 reasons behind the surge of privatisation in Singapore market. Retrieved January 10, 2015, from http://sbr.com.sg/building-engineering/news/3-reasons-behind-surge-privatisation-in-singapore-market#sthash.lmjWpRjf.dpuf
J, Cavanagh & S, Anderson. (2000, December 4). Top 200: The Rise of Corporate Global Power. Retrieved January 10, 2015, from http://www.ips-dc.org/top_200_the_rise_of_corporate_global_power/