In recent decades, climate change, globalisation and business scandals, such as the “Eron-

scandal” (Maak 2008) initiated an environmental and social consciousness, which brought the

ethical behaviour of organisations more into focus. Therefore, the concept of corporate social

responsibility (CSR) has become increasingly important for large companies, as they operate

in a world with greater levels of integration between their stakeholders and local

communities. This social concept includes the adherence to regulations and societal standards

for ethical business practice, as well as the permanent consideration by organisations of their

roles, decisions and consequences towards society and environment. Supporters of CSR

believe that the corporation is obligated to promote social progress due to its dependence on

society. Opponents on the other hand argue, that these demands are unjustified and see the

only purpose of the business in increasing shareholder wealth within legal and social norms

(Morrison & Bridwell 2011). This essay briefly describes ethical organisational behaviour and

refers to the “Triple Bottom Line”. The main topic is the concept of corporate social

responsibility, which will be defined and critically evaluated. Benefits in regards to the

organisation and its stakeholders will be discussed and major critics and limitations in regards

to this theory highlighted.

Ethical behaviour in organisations is systematically developed and monitored by most

corporate leaders in the Asia-Pacific region. In supporting ethical and moral practice and

decision making, most companies construct a code of ethical conduct, in which organisational

behaviour is regulated. However, many companies need to engage in effective ethical training

to establish and foster a comprehensive corporate culture which supports ethical values and

practice. Role-modelling of leaders and top-management, transparency and disclosure of the

business practice but also a sense of diversity within the company can facilitate the ethical

standards (McShane & Travaglione 2007).

One aspect of ethical behaviour generated by an organisation is the topic of CSR. The

theory received more attention by stakeholders towards the end of the 20th century, when

environmental and social awareness increased, for example in connection with the global

climate change. During that time the rule of triple responsibility (Triple Bottom Line)

developed, which is associated with the corporate concern of the environmental and social

sphere besides the financial aspect of the company. CSR can be seen as a commitment to this

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“Triple Bottom Line” (Stanislavská, Margarisová & Štastná 2010). For instance, Branco and

Rodrigues (2006) relate CSR to ethical and moral aspects concerning the overall (internal and

external) decision-making and behaviour of the organisation. Complex issues such as health

and safety at work, environmental protection, associations with local communities, human

resources management and relations with suppliers and consumers can be linked to the social

approach. However, the current leading conception of CSR implies that corporations

voluntarily integrate in social and environmental concerns in their operations and interactions

with stakeholders. Moreover, McShane and Travaglione (2007) explain CSR with the

organisation’s moral obligation towards all of its stakeholders, such as shareholders,

customers, suppliers, employees or governments. Hopkins (as cited in Wan-Jan 2006) states

that treating its stakeholders ethically and in a responsible manner is the true concept of CSR.

This definition allows the concept to be seen as an ethical and moral stance but also as a

business strategy. Further, this characterisation solves aspects of how this concept can or

should be applied in practice (Wan-Jan 2006).

In regards to organisations’ stakeholders, the research by Alniacik, Alniacik and Genc

(2011) investigated how positive and negative information on corporate social and

environmental responsibility influences the intentions of various stakeholders by

manipulating information on CSR activities of a hypothetical firm. Their findings revealed

that positively communicated CSR enhanced not only consumers’ intention to purchase

products from the firm, but also potential employees’ intentions to seek employment with and

prospective investors to invest in the company. Further, the recent article by Filho et al.

(2010) evaluated the advantages of CSR in reference to competitive advantage, which is an

important issues for the contemporary discussion on corporate responsibility in society.

Empirically, they also found that there is a positive relationship between social responsibility

strategies and competitive advantages. This can be seen in attracting valuable employees or

enhancing the company’s image and reputation, in order to improve relations with external

parties, such as governments, suppliers and customers (Branco & Rodrigues 2006).

Galbreath (2010) who examined potential benefits of CSR in an Australian context

supports the previous studies and stated that ethical corporate behaviour of fairness, social

responsive activities, and the implementation of CSR play an important role in

communicating various positive characteristics to external stakeholders, which can lead or

increase an overall optimistic firm reputation. This in turn can reduce employee turn-over,

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attract higher-skilled employees or enhance current employees’ motivation, morale,

commitment and loyalty to the firm. Branco and Rodrigues (2006) followed a resource-based

perspective in which CSR investments can generate internal benefits by helping the

organisation in the research and development of capabilities and new resources associated

with know-how and corporate culture. Especially investing in CSR activities and disclosure

has important consequences of the retrieving of fundamental immaterial resources, related to

the workforce. McDonald and Rundle-Thiele (2008) who examined banking customer

satisfaction illustrated that CSR initiatives have also a positive impact on consumers, despite

the fact that banks in many countries are experiencing increased customer dissatisfaction. For

example a bank in Massachusetts successfully promoted new accounts (138 accounts worth

$11 million) by assisting animal species threatened with extinction with financial aids made

to the World Wildlife Fund (Lemke, as cited in McDonald and Rundle-Thiele 2008).

Porter and Kramer (2006) who suggest perceiving social responsibility as an

opportunity rather than damage control or PR campaigns, provide the approach of Nestlé as

an example of a cooperative relationship between social progress and competitive advantage.

The organisation established local sources of milk in an impoverished Indian district, called

Moga. Nestlé set up refrigerated dairies in each Moga Town and sent its trucks together with

nutritionists, veterinarians, agronomists, and quality assurance experts to these milk collection

points. Financial and technical assistance by Nestlé increased milk production, reduced

calves’ death rate by 75%, improved farmers’ irrigation systems and endorsed Nestlé to pay

higher milk prices to farmers than those regulated by the government. Moga’s standard of

living improved dramatically and meanwhile the company altered the competitive context in

ways that created remarkable shared value for both, the region and the company.

Those messages about corporate socially responsible initiatives support the idea of

CSR as a beneficial ethical approach and a business strategy to achieve and meet the “Triple

Bottom Line” but also to evoke strong and often positive reactions among stakeholders.

Governments and the media have also shown greater attention to companies who execute the

ethical concept (Porter & Kramer 2006). However, while the theory could be seen as an

inevitable priority for business leaders and managers, CSR messages can also attract critical

attention (Eron or Shell). In fact, Vallentin (as cited in Morsing and Schultz 2006) suggests

that the more companies expose their ethical and social ambitions, the more likely they draw

critical stakeholder attention or they can even trigger questions of disbelief. In some cases, an

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extreme focus on externally communicating CSR makes stakeholders think that the company

wants to hide something. (Brown & Dacin, as cited in Morsing and Schultz 2006). Also,

stakeholders’ expectations towards CSR can be dynamic and must be carefully considered on

a frequent basis (Morsing & Schultz 2006).

Furthermore, there are those who consider CSR to be a misleading and faulty concept

altogether. Opponents argue that CSR activities should be outside the definition of business as

it reflects an unrealistic expectation for corporations. Milton Friedman (as cited in Husted &

De Jesus Salazar 2006) is one of the major critics of this ethical concept. The economist

concludes that the sole purpose of an organisation is to maximise the financial return to its

owners and shareholders. These shareholders can then freely choose, how and if to use these

profits for the improvement of society and environment. Friedman argues that it is illogical

for leaders of a corporation to go beyond the legal and social norms which shape the business

environment. Additionally, the responsibility to make decisions about the improvement of

society lies in the hand of the current elected government. Following the concept of CSR,

Friedman claims it can actually weaken the focus on competitiveness and potentially cause

bankruptcy (Husted & De Jesus Salazar 2006).

Morrison and Bridwell (2011) explain the perspective of the consumer which can be

in conflict with the concept of CSR. Most consumers nowadays pursue their individual self-

interest by seeking the most price efficient products despite their social consciousness. The

authors feel that the only reason for CSR is for positive public relations. An additional aspect

is that the social and ethical change of the general population as well within the companies is

now grounded and regulated by legislative obligations or social norms which challenge the

concept of CSR.

However, Kallio (2007) refers to CSR as no more than a social construct. Managers

create an artificial image of their organisation or their products in the name of social and

environmental responsibility. This is easier and cheaper than to actually adjust their products

as “green” rather than undertake expensive and risky investments in equipment and processes

to reduce environmental impacts. Also, Levy (as cited in Kallio 2007) argues that the analysis

of corporate environmentalism reveals the presence of economic and political forces prepared

to offer considerable resources to shape the ‘meaning of greening’ to suit their own interests.

Corporations however, need to be aware that this behaviour of “window-dressings” even in

unintended small amounts can have a serious impact on their credibility and authenticity

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towards their stakeholders (Maak 2008). Kallio (2007) refers to the three taboos of CSR

which are silenced by most scholars. This is a) amoral business and is associated that often

one part of the operation is untrue, b) the impossibility of continuous economic growth, which

relates to Friedman’s perspective and the political nature of CSR, which is often not

recognized by everyone.

Despite minimising its expenditures towards CSR, for example Apple has enormous

product and financial success. For instance the company created the most shareholder value

and retains the highest stock market capitalisation in the world (Satariano, as cited by

Morrison & Bridwell 2011). Apple has undergone several complaints in regards to its social

responsibility but still fulfils the minimal social and legal norms of its business culture. There

are reasonable measures administered to ensure it does so, and when the company finds a

violation, it takes immediate action to correct it (Morrison & Bridwell 2011).

In conclusion, the research literature gives great support that CSR will become

increasingly important to competitive success. With the rising environmental and social

consciousness of the population in recent years and the expectation from shareholders and

investors for companies to meet and actually go beyond ethical and social standard,

organisations are forced to integrate social and ethical aspects in their daily decision-making

and practice. The advantages of an implementation of CSR are numerous and not limited to

increased customer satisfaction, reduced employee fluctuation as well as increased optimistic

business reputation in order to facilitate their competitiveness and meet the “Triple Bottom

Line”. However, businesses which seem to focus extremely on CSR behaviour, can trigger

disbelieve in their stakeholders. Critics, like Friedman go even further and describe the

concept as misleading, as he regards the sole purpose of a business in maximising profits to

its shareholders. Consumers might clash with the concept in reality, as they still seek the most

price efficient products and most of the business trade however is regulated by the legislative

and social norms of our society. Nonetheless, other opponents see CSR as nothing more than

a label which managers use as a cheap way to get their company and products associated with

environmental and social responsibility, such as the “meaning of greening”. It is to say that

for some companies CSR can be a very promising concept altogether, as illustrated with the

example of Nestlé where a competitive advantage was gained through the support of a local

community. However some organisations can be scrupulous and use CSR for their self-

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interest. In the sense of caveat emptor, the stakeholders should be aware of and consider the

real intentions behind the businesses operating CSR.

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