Qualification

Level

Module Name

Module Number

Project Title

Name of Candidate

Candidate No.

Submission Date

Word Count

1

Contents List of abbreviations .............................................................................................................................. 2

List of tables ........................................................................................................................................... 2

1 Introduction .................................................................................................................................. 3

2 Analysis .......................................................................................................................................... 3

2.1 An Organisation being socially responsible ....................................................................... 3

2.2 What organisations gain from CSR .................................................................................... 4

2.3 Practical application of CSR ............................................................................................... 6

2.4 Authors’ View ....................................................................................................................... 7

3 Conclusion ..................................................................................................................................... 8

4 References ..................................................................................................................................... 9

2

List of abbreviations

CSR- Corporate social responsibility

BMW - Bayerische Motoren Werke

CBL – Ceylon biscuit limited

FMCG – Fast moving consumer goods

SLIM – Sri lanka institute of marketing

List of tables

Table 1:- Advantages and Disadvantages ............................................................................................... 5

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1 Introduction

The ways that an organisation handles their relationships with groups that has a legitimate

interest is called the corporate social responsibility of an organisation (Moon, 2014). Similarly,

Hohnen (2007, p.2) suggests that CSR is how an organisation develops their products,

processes and services concentrating on their stakeholders, in an environmental friendly and

economical way. Furthermore, McWilliam, Siegal and Wright (2005, p.3) state that CSR is the

extra effort that a company performs beyond their corporate expectations, to do good for the

society. However, Horrigan (2010, p.34) elaborates that in the twenty first century it is

important for an organisation to follow good CSR practices to gain corporate sustainability as

CSR is largely discussed in the present world.

The purpose of this essay is to understand what CSR means and how CSR can be used for the

betterment of an organisation. First, CSR will be defined by the author. Secondly, the

advantages and disadvantages will be discussed along with business examples for benefits of

CSR. Finally, the author’s views on CSR will be illustrated.

2 Analysis

2.1 An Organisation being socially responsible

Hopkins (2012, p.15) states that corporate social responsibility is treating the stakeholders of

an organisation in an ethical and responsible way to make them feel accepted. Similarly,

Mullerat (2010, p.14) suggests that CSR is an attempt of an organisation to protect and to keep

the legitimate interests of all its stakeholders. Furthermore, Werther and Chandler (2012, p.5)

indicate that CSR as the responsibility of an organisation to not only earn maximum profits but

to be accountable to its stakeholders while achieving the corporate objectives. Similarly,

Simpson and Taylor (2013, pp.204-205) define CSR as ‘organisations considering and

managing their impact on a variety of stakeholders’. Likewise, Okpara and Idowu (2013, p.4)

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illustrate that CSR is, organisations identifying the values and needs of their stakeholders in

order to give them some attention in the organisations habitual activities. However, Sims

(2003, p.44) in his work identifies that organisations perform different activities in order to

achieve their goals and that these activities have an impact on several parties who are interested

in the business. He further interprets that CSR is the organisations’ obligation towards the

parties who are affected by the organisations’ activities. In addition, Cavusgil et al. (2014,

p.145) suggest that CSR is to operate in an ethical and legal manner that would meet or exceed

the expectations of interested parties which will eventually satisfy the stakeholders indirectly.

In contrast, CSR is what an organisation returns back to the community and society where they

operate and earn profits (Idowu and Filho, 2009).

Although authors share similar definitions about CSR (Mullerat, 2010; Weber and Chandler,

2012), there are differences between them (McWilliam, Siegel and Wright, 2005). Built on the

above argument advantages and disadvantages of Corporate Social Responsibility is discussed

in the next section.

2.2 What organisations gain from CSR

Organisations gain advantages and disadvantages by practicing CSR (Smith, 2011; Mullerat,

2010). Consequently, Spence and Morland (2010, P.202) state that CSR is important for an

organisation to build a good company image. Similarly, Hohnen (2007, p.11) illustrates that

CSR helps an organisation to uplift the reputation by good governance. Furthermore, Paetzold

(2009, p.8) states that long term wealth of an organisation can be secured if they practice CSR

because the developed corporate image will result in repeat purchases. In addition, Frank

(2005, p.67) explains that if a company practices CSR, they can recruit highly qualified

employees easily and that the loyalty of customers will develop. Likewise, Smith (2011, p.11)

states that CSR builds a relationship between the organisation and the society that creates a

positive impact. Furthermore, Hohnen (2007, p.11) explains that innovativeness,

competitiveness and the position of the market can be influenced by CSR. However, William,

Werther and Chandler (2010, P.19) state that CSR is important for organisations as it affects

5

every aspect and activity of the company. However, there are disadvantages of practicing CSR

as well (Mazurkiewicz and Devcomm, 2004; Mullerat, 2010).

Spence and Morland (2010, P.202) illustrates that the main disadvantage of CSR for a company

is the rise of the cost in its operations. In contrast, Mullerat (2010, p.264) states that less

supervision and monitoring of CSR projects is a disadvantage as they do not meet the expected

performance levels. On the contrary Mazurkiewicz and Devcomm (2004) elaborate that small

and mid-sized organisations often suffer from the cost of CSR and that small firms are

squeezed as a result of the greater production of larger firms due to CSR. Similarly, Henderson

(2002, Ch.6) cited in Peil and Staveren (2009, p.73) believes that CSR leads to resource

misallocation as the bigger firms are more capable to adopt than the mid and small sized firms.

Moreover Brejning (2013, p.126) declares that organisations use CSR for promotion purpose

rather than to do good for the society and Brejning also claims that it is one of the biggest

negative impacts of CSR.

Built on the above argument it’s understood that although different authors share different

views about the advantages and disadvantages of CSR there are certain similarities (Spence

and Morland, 2010; Hohnen, 2007). The table below illustrates them further more.

[Source: - Author developed (2015) based on (Frank, 2005; Hohnen, 2007; Brejning, 2013)]

Table 1:- Advantages and Disadvantages

ADVANTAGES DISADVANTAGES

Builds a good company image

Builds relationships with customers

Secured long term wealth

Can recruit qualified employees easily

Competitive advantage

Innovativeness

Costly

Pressure to small firms

Cost suffered by small firms

Used for promotion purpose

Resource misallocation

6

The practicality and benefits of CSR will be discussed in the next section along with examples

of local and international companies.

2.3 Practical application of CSR

In the present business world, every organisation practices CSR in some way as it is beneficial

for the sustainability of the company (William, Werther and Chandler, 2010). Thus, many

multinational companies such as Google, Nestle, Coca-Cola, Xerox and also local companies

such as MAS holdings, Brandix and CBL consider CSR important.

Xerox is an American multinational business process and document management corporation

which also offers a range of printing equipment. Moreover, Xerox for more than 75 years has

been identified as a company that behaves as a good corporate citizen. Hence, they allocate a

lot ($13.5 million-2013) from the budget for CSR projects such as environmental affairs, for

colleges, science and technology development. As a result, Xerox is one of the companies that

has a stable and increasing profit as they have good corporate governance. Furthermore, they

have won a great number of awards, such as, the best ethical behavior award in 2015, corporate

entrepreneur award in 2014 and green supply chain award in 2014. Moreover, Xerox has a

high employment retention rate due to the above mentioned awards won by their ethical

behavior towards interested groups. In addition, Xerox has also created a strong bond with the

next generation through their CSR projects which is a benefit for the organisation in the long

run (Xerox Corporation, 2013).

Ceylon Biscuits limited is the largest local biscuit and cereal manufacturer which also caters

the international markets. In addition, CBL is well known for its CSR practices. Thus, they

have CSR projects in many areas such as education, sports, to the community and disaster

response initiatives. Due to, the above projects and many more CBL has gained a competitive

advantage over their rival companies over the years. Furthermore, they have won many awards

such as SLIM brand excellence award, youth FMCG brand of the year award and global brand

leadership award. As a result, of the above mentioned awards and the ethical behavior of CBL,

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they have a better market share than the rivals which is 55% of the Sri Lankan biscuit market.

However, by their CSR projects towards the local community, CBL has been able to place

their brand close to the underprivileged community (Munchlk, 2012).

2.4 Authors’ View

Based on the above, the author defines CSR as organisations being concerned about their

stakeholders in order to satisfy stakeholder expectations while giving something back to the

society as suggested by (Hopkins, 2012). Similarly, Sims (2003) illustrates that CSR is also

the social obligations of organisations which results the long term sustainability and a better

future.

Indeed, it is understood that there are advantages and disadvantages when a company practices

CSR. However, the author believes that advantages are greater than disadvantages as suggested

by (Paetzold, 2009; Brejning, 2013). Furthermore, many multinational and local companies

practices CSR in the present business world. For instance Xerox, Nestle, Brandix and CBL are

recognised for their CSR. The author states that the main advantage of CSR is, the developed

corporate image, which is the way that the general public sees the company. In contrast, the

main disadvantage according to the view of the author is the increased cost of operations as

suggested by (Spence and Morland, 2010).

The author also believes that the success of companies like Xerox and CBL discussed in the

analysis, is mainly because of their CSR practices. In conclusion of the view, the author

indicates that it is beneficial for a company to practice CSR as suggested by (Frank, 2005).

Discussed above is the authors view on the analysis and the literature developed in the essay.

In the next section the author will conclude the essay along with any key points discovered.

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3 Conclusion

After a brief introduction to the essay, the meaning of CSR was discussed according to the

views of different authors (Mullerat, 2010; Horrigan, 2010; Moon, 2014). Furthermore, Sims

(2003, p.44) states that CSR is the activities of an organisation that effects the stakeholders.

However, there are contrasting views to CSR as well (McWilliam, Siegel and Wright, 2005).

Next, why an organisation should practice CSR and what organisations gain from CSR have

been discussed. Generally, what organisations gain from CSR are the advantages such as

increased profits, competitive advantage as suggested by (Paetzold, 2009; Hohnen, 2007).

However, the disadvantages are the increased cost and resource misallocation. Furthermore,

the practical application of CSR has been discussed along with regard to multinational (Xerox,

Coca-cola) and local (CBL, Brandix) examples. Finally, the authors’ view and analysis on the

essay have been discussed in the above section as required.

9

4 References

Brejning, J. (2013) Corporate Social Responsibility and the Welfare State. Ashgate Publishing,

Ltd.

https://books.google.lk/books?id=2QqR_bHqXH0C&dq=disadvantages+of+CSR&source=g

bs_navlinks_s (Accessed: 2nd April 2015)

Cavusgil,S.T., Knight,G., Reisenberger,J.R., Rammal,H.G., Rose,E.L.(2014) International

Business. Pearson Australia.

https://books.google.lk/books?id=KcSaBQAAQBAJ&dq=what+is+CSR&source=gbs_navlin

ks_s (Accessed: 2nd April 2015)

Ceylon Biscuits limited (2012) CSR overview [online]. Available at:

http://www.muncheelk.com/csr

Frank, R. (2005) What Price the Moral High Ground. Princeton University Press.

https://books.google.lk/books?id=kfdNPwAACAAJ&dq=What+Price+the+Moral+High+Gr

ound?+Ethical+Dilemmas+in+Competitive+Environments&hl=en&sa=X&ei=47pUVeXKP

NK8ugSLgYGwBg&ved=0CBsQ6AEwAA

Hopkins, M. (2012) Corporate Social Responsibility and International Development.

Earthscan.

https://books.google.lk/books?id=4IqtKZ8JlCwC&pg=PA15&dq=what+is+csr&hl=en&sa=

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X&ei=sj8SVerVE4n98AXgyYKwDg&sqi=2&ved=0CBsQ6AEwAA#v=onepage&q=what%

20is%20csr&f=false (Accessed: 25th March 2015)

Horrigan, B. (2010) Corporate Social Responsibility in the 21st Century. Edward Elgar

publishing.

https://books.google.lk/books?id=XSOcUn5BkFMC&dq=importance+of+CSR+in+21st+cen

tury&source=gbs_navlinks_s (Accessed: 10th April 2015)

Idowu,S.O and Filho,W.L (2009) Professionals ́Perspectives of Corporate Social

Responsibility. Springer Science & Business Media.

https://books.google.lk/books?id=AgEifBoKFPEC&dq=whats+CSR&source=gbs_navlinks_

s (Accessed: 5th April 2015)

Moon,J (2014) Corporate Social Responsibility. Oxford University Press.

https://books.google.lk/books?id=zG_DBAAAQBAJ&dq=brief+introduction+to+CSR&sour

ce=gbs_navlinks_s (Accessed: 2nd April 2015)

Mullerat, R. (2010) International Corporate Social Responsibility. Kluwer Law International.

https://books.google.lk/books?id=POKTUI3GyZoC&pg=PA14&dq=definition+CSR&hl=en

&sa=X&ei=e0MSVYHyD4zIuATvkIHwCg&ved=0CCEQ6AEwAQ#v=onepage&q=definiti

on%20CSR&f=false(Accessed: 25th March 2015)

Okpara,J and Idowu,O. (2013) Corporate Social Responsibility. Springer Science & Business

Media.

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https://books.google.lk/books?id=6wu7BAAAQBAJ&dq=Fredrick+1994+CSR&source=gbs_navlinks_s

(Accessed: 2nd April 2015)

Paetzold, K. (2010) Corporate Social Responsibility. Diplomica Verlag.

https://books.google.lk/books?id=Xsl5wn5LU98C&dq=advantages+and+disadvantages+of+

csr&source=gbs_navlinks_s

Peil, J and Staveren, I (2009) Handbook of Economics and Ethics. Edward Elgar Publishing

https://books.google.lk/books?id=YahcdBQ5nqQC&dq=negative+impacts+of+CSR&source

=gbs_navlinks_s (Accessed: 02nd June 2015)

Simpson,J and Taylor,R. (2013) Corporate Governance Ethics and CSR. Kogan Page

Publishers.

https://books.google.lk/books?id=XuXyGWRFu5oC&pg=PA204&dq=what+is+CSR?&hl=e

n&sa=X&ei=0UkSVZzmGsyvuQTDlYDQCw&ved=0CEUQ6AEwBw#v=onepage&q=what

%20is%20CSR%3F&f=false (Accessed: 25th March 2015)

Sims,R. (2003) Ethics and Corporate Social Responsibility. Greenwood Publishing Group.

https://books.google.lk/books?id=aqUNKdqMC2cC&pg=PA43&dq=definition+of+CSR&hl

=en&sa=X&ei=PwEnVfXZEcKzuASC2IGQDQ&ved=0CBwQ6AEwAA#v=onepage&q=de

finition%20of%20CSR&f=false(Accessed: 29th March 2015)

Spence, L and Morland, P.(2010) Ethics in Small and Medium Sized Enterprises. Springer

Science & Business Media.

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f+csr&source=gbs_navlinks_s

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Werther, B., Werther,Jr and Chandler,D.(2010) Strategic Corporate Social Responsibility:

Stakeholders in a Global Environment. Sage.

https://books.google.lk/books?id=4si6VV5RGNcC&printsec=frontcover&dq=what+is+CSR

?&hl=en&sa=X&ei=0UkSVZzmGsyvuQTDlYDQCw&ved=0CCgQ6AEwAg#v=onepage&

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02nd June 2015)

JOURNALS

Hohnen,P (2007) ‘Corporate Social Responsibility: An Implementation Guide for Business’,

IISD, p.2,[online].available at: http://www.iisd.org/pdf/2007/csr_guide.pdf(Accessed:10th

April 2015)

MacWilliams,A., Siegal,D., Wright, P (2005) ‘Corporate Social Responsibility: Strategic

Implications’, Rensselaer Working Papers in Economics, 2nd draft, p.3,[online].available at:

http://www.rpi.edu/dept/economics/(Accessed: 10th April 2015)

Mazurkiewicz, P and Devcomm. (2004) ‘Corporate environmental responsibility’, [online] .

available at: http://www.bms.lk/download/Degree-year-1/2015-

file/Tutorials/Himashi/APSS%20Supporting%20Documents/csrframework%20(1).pdf

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Smith, R. (2011). ‘Defining corporate social responsibility: a systems approach for socially

responsible capitalism’,[online].available at: http://www.bms.lk/download/Degree-year-

1/2015-file/Tutorials/Himashi/APSS%20Supporting%20Documents/fulltext.pdf