The Impact of Corporate Social Responsibility Put in Place to the Employees’ Engagement Towards Organization

Master Thesis

Subject: The impact of corporate social responsibility put in place to the employees’ engagement towards organization. In which extent can company transform CSR to new motivational factor – comparative mixed-designed analysis within different business sectors and cultural environments.

Katarzyna Trzos – Skurska

International MBA, VIII edition

Chapter 1: Introduction: What is Corporate Social Responsibility?                                               Definition and examples.

1.1 Definition and conceptual evaluation of Corporate Social Responsibility

Corporate Social Responsibility (CSR) can be defined as a unique business model with awareness of its impact on community, environment, economics and other processes. Since 1950s corporate social responsibility has been explained through different perspectives.  The discussion started in United States and at the era after Second World War most                              of economists believed that profit maximization should be the main objective of every business. In 1958, Harvard Business Review published the article written by Theodore Levitt that was entitled “The dangers of Social Responsibility.” Fortunately, at that time Howard Bowen was not afraid to propose the new directions – as a pioneer he asked the question about the possible accountability of business towards the society (Bowen, 1953). The social movements of 1960s such as civil rights and women’s movements advanced the discussion about social responsibility of business. In late 1970s the conceptualisation of this thought has been designed by Carroll under the famous Carroll’s pyramid of CSR that later served as a basis for many theorists. This four-part framework will enable to characterize CSR and understand better its definition.

1.2 Carroll’s pyramid of CSR

Carroll’s pyramid was based at the statement that” Corporate social responsibility encompasses the economic, legal, ethical and philanthropic expectations that society                         has of organizations at a given point in time” (Carroll, 1979). It enabled to identify 4 main pillars of the concept such as:

1. Economic responsibility:

This baseline requirement can be translated as a mandatory condition for each business to sustain. The society sees its needs to have delivered the goods and services that are in demand. The shareholders obtain the incentives with the profits, but the society requires additionally financial effectiveness from business.                          This principle incites the competitive business world. The examples of economic responsibility are simply: creating the value, employing people and pay them salaries, paying taxes to the government.

1. Legal responsibilities

This pillar is composed of laws and regulations. It includes extensive range of federal, state and local rules that given business needs to meet. The examples of legal responsibilities are: having properly registered operational structure, putting in place occupational health and safety, privacy and information protection.

1. Ethical responsibilities

The society treats law as essential but not sufficient pillar. Each business is expected to conduct all operations in ethical way. This can be translated as additional obligation to apply activities, norms and standards even though they are not codified into law. The expectancy includes societal mores and ethical norms and forces business to become good corporate citizeng. The examples of ethical responsibilities shall be explained in separate dimensions:

1. Responsibility to employees

Treating all employees in same manner is not always straightforward way to do for a business but it should apply policies to make all employment-based decision on morality condition not only on profit-based criteria.

1. Responsibility to customers

Respecting consumer rights by making sure the offered product brings value                  in terms of price, quality, safety and others. When the business discovers its product has a potential issue it is expected to assume it and to make proper corrections.

1. Responsibility to supply chain

Each business belongs to specific supply chain. The principle ethical obligation is to act honestly in all transactions to ensure at the end the consumer will obtain a reasonable price.

1. Responsibility to environment

The business operates within the system of relationships with external                               and internal stakeholders. The organisation shall be able to respond to changes that are constant in its surroundings. The environmental obligations can be though understood as well as conservation of biodiversity of business but also                               in preventing employment in local community.

1. Philanthropic responsibilities

Over all above, the society has the sense that business will “give back” something additional through voluntary or discretionary activities. The companies rarely engage in such activities just for pure altruistic motivation, very often they find it as                                      a practical way to prove their good citizenship.  The example of such activities can be to give for free the products within the educational campaigns in regions affected by poverty as example of Colgate Company or to propose to employees to engage in voluntary project which is practised by IBM and Deloitte or to give paid days just for voluntary actions – in the last example Novo Nordisk company is a leader when offering to its employees 10 days per year. It was proven that this action enabled Novo Nordisk to decrease the staff turnover by 5 %. (Strandberg Consulting, 2009).

To summarize the framework presented above it shall be highlighted that economic and legal responsibility are “required” by the society, ethical one is “expected”                                  and the philanthropic responsibility is “expected/desired” (Carroll, 2016, p. 4)

Carroll’s conceptual framework of CSR is presented in the Figure 1 below:

[pic 1]

Figure 1. Carroll’s pyramid of CSR (Carroll, 2016, p. 5)

        When each company defines the operational mode that will enable them to answer to all corporate social responsibility pillars it adjusts their policies and standards to the chosen balance that will best fit their needs in terms of profit maximization and building their reputation. For many years the benefits of respecting challenges of corporate social responsibility have been mainly discussed regarding external relationship with customers or internal with shareholders. Nowadays (Jun et al., 2016) highlights that CSR and employee engagement are two of the most discussed issues in the business environment.