(TIỂU LUẬN) FINAL ASSIGNMENTIntroduction the emergence of corporate social resposibility

UNIVERSITY OF FINANCE – MARKETING
INTERNATIONAL SCHOOL OF FINANCE – MARKETING

FINAL ASSIGNMENT

Subject:

Name: Bùi Thị Nhật Phượng
Student ID: 1921006155

HCM, 08/2021

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Introduction - the emergence of corporate social resposibility.
The world is witnessing a genuine change in public perceptions over the role of
business in society. It is forcasted that in the next 10 years, sustainable development
will continue to be a worldwide trend, associated with the United Nations’ 2030
Agenda for Sustainable Development. As a members of the United Nations, the
Government of Viet Nam is committed to mobilizing all resources and the
participation of government ministries and agencies at all levels, organizations,
communities and the people. Obviously, while businesses contribute to a significant
increase in economic growth, wealth creation, and employment, they are also
expected to come up with solutions to many of the twenty-first century’s main social
and environmental challenges, such as water accessibility, global warming, climate
change and affordable health care. Mayer (2007) suggests that, although business is
largely seen as the source of the current environmental degradation, it is also the
potential solution to the problem. In the midst of this shifting set of expectations,

businesses worldwide face increasing pressure to adopt or improve corporate social
responsibility (CSR). In this essay, I present the some overall theories and three main
benefits companies can gain when appling effective and efficiency CSR initiatives.

Defining CSR
According to the EU Commission (2002), “CSR is a concept whereby companies
integrate social and environmental concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis.” Besides that, the United
Nations Industrial Development Organization has defined CSR as the way through
which a company achieves a balance of econmic, environmental and social
imperatives, simultaneously, it addresses the expectations of shareholders and
stakeholders. Although CSR is a relative common topic in recent, there is however
no agreed definition due to the different practical orientations of corporations
towards their responsibilities. First, CSR has been associated with different
underlying strategic purposes (e.g. legitimacy, responsibility for externality,
competitive advantage) (Table 1). Second, it varies according to its substantive
content (e.g. economic, legal, ethical, discretionary – Carroll, 1991).

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Table 1: CSR theories association with different purposes.
Author(s)
Theories
Year
(Golob, Ursa & Stakeholder Theory
Lah, Marko &
Jancic, Zlatko ,

2008)

Oppinion

CSR incorporates all societal obligations
that are expected of the companies
beyond economic (and legal) ones or
activities that are based on some ethical
or philanthropic motivation.
(Barnett, 2007) Stakeholder Theory CSR is considered as corporate
responsibilities to create value for both
shareholders and stakeholders, such as
government, customers, workers, and
local communities.
(Oliver, 1991)
Instutional Theory CSR activities focus on enhancing
credibility, sustainability, legitimacy,
social support, inner and outer
commitment, attracting personnel and
recognition.
(Branco, M.C., Resourced-based
CSR create tangible value such as
Rodrigues, L.L., Theory
improving reputation, improve the
2006)
relationship between businesses and
stakeholders, improving retention and
the attractiveness of enterprises to
potential labor resources, increasing the
motivation in productivity, engagement

and loyalty of employees.
(Deegan, 2002) Legitimate Theory CSR in the theory of legitimacy is based
on the view that the rights and
responsibilities of an organization must
come
from
society.
Business
organizations must operate within the
boundaries of society to meet society's
expectations, including by providing
better goods and services to society.
Because organizations are part of a
broader social system, organizations
need to function within the social system,
without any negative impact on society.

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Carroll’ 1979 conceptualization
Carroll (1979) – one of the early and
the most prestigious scholars in CSR
discipline states that: “Corporate social
responsibility
encompasses
the
economic,

legal,
ethical,
and
discretionary
(philanthropic)
expectations that society has of
organizations at a given point in time”.
In 1991, Carroll revisited his four-part
definition of CSR and organized the
notion of multiple corporate social
responsibilities in a pyramid construct.
This conceptualization implied that
corporations that want to be ethical
must be economically and legally
responsible (Jamali et al., 2006).

PHILANTHROPIC
Resposibilities
ETHICAL
Responsibilities

LEGAL
Responsibilties
ECONOMIC
Responsibilities

Economic Responsibilities – producing goods and services for profit.
At first, it may seem unusual to think about an economic expectation as a social
responsibility, but this is what it is because society expects, indeed requires, business
organizations to be able to sustain themselves and the only way this is possible is by

being profitable and able to incentivize owners or shareholders to invest and have
enough resources to continue in operation. In its origins, society views business
organizations as institutions that will produce and sell the goods and services it needs
and desires. As an inducement, society allows businesses to take profits. Businesses
create profits when they add value, and in doing this they benefit all the stakeholders
of the business.
Legal Responsibilities – obeying the law while attempting to make profit.
This is the minimal ground rules for all businesses , society expects businesses to
achieve economic goals within the legal framework and to adhere to basic norms

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and values. In many countries, this means being honest about what products or
services are sold, keeping employees and customers safe, not destroying the
environment, and paying taxes. At the same time, it is a way to protect the
organization from fines or prosecutions that affect the company's profits and
reputation and even lead to bankruptcy.
Ethical Responsibities - behaving in accordance with societal norms embodies in
the law.
Societal expectations go beyond what is required by law and regulation. Taking on
ethical responsibilities implies that organizations will embrace those activities,
norms, standards and practices that even though they are not codified into law, are
expected nonetheless. One aspect of the ethical expectation is that businesses will
conduct their affairs in a fair and objective fashion even in those cases when laws do
not provide guidance or dictate courses of action. The goal of these expectations is
that businesses will be responsible for and responsive to the full range of norms,
standards, values, principles, and expectations that reflect and honor what consumers,

employees, owners, and the community regard as consistent with respect to the
protection of stakeholders’ moral rights.
Philanthropic Responsibilities - going beyond the profit motives to act as a good
corporate citizen and living up to the societal expectations.
Corporate philanthropy includes all forms of business giving. Corporate
philanthropy embraces business’s voluntary or discretionary activities. Philanthropy
or business giving may not be a responsibility in a literal sense, but it is normally
expected by businesses today and is a part of the everyday expectations of the public.
They are guided by business’s desire to participate in social activities that are not
mandated, not required by law, and not generally expected of business in an ethical
sense.
The Triple Bottom Line (TBL)
Another theory about CSR idea is based on the Triple bottom line concept, which is
also known as 3Ps or three pillars. This concept was introduced in 1987 in
Brundtland Commission and officially named by John Elikngton in 1994. It indicates
that a company should be responsible for three features: Profit, People and Planet,
in other words that is economic, social and environmental responsibility.

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Profit

Planet

People

Profit - Similar to the economic resonsibilities, profit is a mandatory requirement

for a company to maitain and develop itself. However, the economic part of CSR is
not only about making profit, the most important task is to use it well (Księżak &
Fischbach, 2018). CSR's economic component, according to (Uddin et al., 2008), is
determined by how the company's activities affect local communities and other
stakeholders.
People - People or social dimension in TBL refers to improving the standard of
living. Achieving social sustainability by a corporation is a requierment in the TBL
CSR framework. Enterprises use CSR as a tool to build and maintain positive
relationships with the community as well as pay attention to social affairs, for
example unemployment rates, human rights, female labor force participation, health
services, educational services provided by government, etc. After determining the
community priorities, shareholders must take decisions to satisfy as much as possible
the social needs.
Planet - Planet is the habitat for a company and the people. If large corporations
pollute the environment with their actions and drive the planet to destruction, they
will be equally affected as anything else on the Earth. Natural environment is the
responsibility of everyone, and primarily of corporations, which are often the first
reason for its damage. Irresponsible usage of natural resources, producing waste or
emission of polluting by-products are the dominant negative impacts of corporations
on the environment. Therefore the least those companies can do is to minimise or
eliminate the detrimental environmental impact (Gupta, 2011)

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Business benefits of CSR
A numerous growing researches suggest that CSR activities have a significant
influence on several consumer-related outcomes such as consumer product

responses (Pirsch et al., 2007), attitudes toward that company and its products
(Brown & Dacin, 1997), corporate and brand images (Webb et al.,1998), purchase
intention (Smith. and Alcorn, 1991), as well as consumer-company identification
(Sen and Bhattacharya., 2001). (Weber et al., 2008) indicates 5 reasons for CSR:
positive effect on organization‘s image and reputation; positive effect on employee
motivation, retention and recruitment; cost savings; revenue increases from higher
sales and market share; and CSR-related risk reduction or management. In addition,
according to (Bhattacharya et al., 2004), CSR activities generate more immediate
outcomes such as word-of-mouth; resilience to negative company information; and
consumers’ awareness, attitudes and attributions about why companies are engaging
in CSR initiatives.
CSR and Firm’s Reputation
CSR initiatives have great impacts on firm’s image or reputation (Lii et al., 2011)
and enhance the reputation of a company (CARROLL, 1979). Many theoretical and
empirical studies have demonstrated that CSR has a significant positive effect on the
corporate image and reputation of a company. For instance, (Abdullah et al., 2013)
indicated that initiation and effective management of CSR programs is important for
a company because it shapes the corporate identity of the company and strategically
ensures the achievement of the ultimate business asset-corporate reputation in the
long term. According to (Turban & Greening, 1997), independent dimensions of
corporate social responsibility are positively related to firms’ reputation. Thus, CSR
has been identified as a tool to create and maintain favorable reputations and
safeguard their interests in the event of socially irresponsible conduct (Brammer &
Pavelin, 2005). Similarly, (Demetriou et al., 2010) argue that if a company
participates in CSR initiatives, consumers have a better feeling towards its brands.
CSR and Consumer-related outcomes
On the other hand, CSR activities have very important role in what products or
services customers choose to purchase. According to (Castaldoet et al., 2009),
several surveys report that customers are influenced by the CSR activities of the
organization. Recent studies have concluded that CSR initiatives rise firms’

reputations and indirectly enhanced consumer perceptions of product quality

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(Grewal et al., 1998), increase the competitive advantage of enterprise (Pirsch et al.,
2007). (Fombrun & Van Riel, 2003) posit that a good reputation helps launch new
products and enter new markets easier, by influencing consumers when choosing the
same product in offered by various market competitors. Moreover, good reputation
improves customer loyalty and provides an indicator of product quality when
consumers are challenged with a choice between competing products (Shapiro,
1983). In addition, firms with a strong reputation are typically viewed as providing
greater value, allowing them to charge higher prices and achieve above-average
returns, which contribute to their superior financial performance and profitability.
Most of the research that showed positive results concluded that good reputation
improves a company’s image, strengthen its brand and raise their overall
performance in terms of its profitability, sales growth, and market share.
CSR and Stakeholders
The more times firms engage in CSR initiatives, the more possitive influences they
create to the sustainable development in both the environment and economic. (Moon,
2007) points out that long-term business success is bound up with social well-being,
or ‘legitimate business cannot succeed in failing societies’ (Wade, 2005). (Moon,
2007) proveds embedding sustainable development as part of building competitive
edge and engaging more widely in societal governance. When employees understand
their business participating in CSR activities, this makes them proud to be a part of
that business (You et al., 2013). (Cable & Turban, 2003) claim that CSR strategy
can raise employee morale, increasing productivity, improving recruitment and
retention. Moreover, prior research finds that those employees, who participate in

CSR initiatives, often gain concrete skills that can be carried over to their job
(Bhattacharya et al. 2007). For example, an employee put in charge of a volunteer
program may learn valuable managerial skills.
Besides, there is ample reason to believe that CSR activity provides many
stakeholders with tangible benefits. Obviously, CSR initiatives lead to an
improvement in corporate performance (increase firm’s reputation, boost sales and
sales volumes, etc…), which in turn have a possitive related to firm’s intangible
value such as stock market, hence, investors can be expected to receive greater
returns on their stock market investments. Moreover, (Krueger, Wrolstad & Dalsem,
2010) examined stock market performance contemporaneous with changes in
corporate reputation and provide evidence that firms with improved reputations
enjoy lower volatility in their stock prices than firms with diminished reputations.

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Conclusion
Socially responsible business models should be promoted by all businesses and by
all countries. In addition to the positive influence when applying CSR in business
on the environment as well as society, business owners also receive enormous
benefits such as enhance firm’s reputation, boost sales and sale volumes, retain and
attract potential employees as well as increase the company value. To this end,
organizations need to assess what they and others are getting and giving up from
their CSR decisions (Carroll, 1991).

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