CorporateSocial Responsibility Old Versus New
Inthe recent past, a group of stakeholders have turned toorganizations, instead of governments, in addressing the continuingenvironmental problems that include fisheries depletion, forestdegradation, climate change, mining destruction, and social problemssuch as human and employee rights. Stakeholders can use boycotts inmaking organizations pay for their externalities that are noted intheir operations. Besides, stakeholders can also use tactics such associal and eco-labeling, environmental certification, and boycottcampaign in order to appeal directly to organizations to enhancetheir environmental management processes and performance as well ashow they treat employees and effects of their activities in thesurrounding that they operate (Mareș44). This entails promoting the corporate social responsibility.According to the corporate social responsibility, organizations needto consider the interests of their stakeholders and act accordingly.The aim of this paper is to explain the emergence of the newcorporate social responsibility. Reasons concerning to why the newcorporate social responsibility emerged and its comparison with theold corporate social responsibility will be discussed.
Corporatesocial responsibility critism comes from the left wing and the rightwing. According to the right wing argument, the corporate socialresponsibility can be viewed as a distraction from the responsibilityof organization. The right wing view the only responsibility oforganizations as making profit. On the other hand, the left wingcriticism rises from individuals who see the corporate socialresponsibility a con job, which is designed with a motive of foolingpeople into thinking better of an organization that is actuallyharming individuals and the environment or stealing of the resourcesof a nation (Mareș64). Before the renewal of the corporate social responsibility,dealing with environmental and social issues was not sustainable.After 2005, a renewed approach to company management emerged, the newcorporate social responsibility. The new model was aimed atsustaining the corporate relationship network on the ground ofintegrating the economic, environmental, and social dimensions aswell as keeping on with the sustainable development paradigm.
Theold corporate social responsibility efforts focused on corporatephilanthropic activity, which had very little to do with anorganization’s core business practices. These efforts werestimulated particularly in the US by favorable tax law. The effortshave led to the generation of Carnegie libraries and socially andenvironmentally active foundations such as Rockefeller Brothers whosecharitable contributions have nothing to do with handling any socialor environmental challenges. In contrast, the new corporate socialresponsibility has a focus on internalizing an organization’snegative externalities. Rather than explicitly or implicitlydiverting attention from the environmental or social problem arisingfrom an organization’s core business activity, the new corporatesocial responsibility occurs when organization officials take care ofthe issues directly. Therefore, builders of corporate image applyingthe new corporate social responsibility seek to show tahtt theirorganization is actively encouraging environmental and socialstandards that have a role in regulating or altering their corepractices (Horrigan116). Organizations usually actively engage in such activities inorder to depict that they are ahead of their rivals. Supporters ofthe new corporate social responsibility argue that through followingthe dynamics of showing care to the social and environment issuesdirectly and be successful, such actions can lead to an organizationhaving a top position as organizations compete for the title of themost socially and environmentally responsible entity (Mareș74).
Comparingthe new and the old corporate social responsibility, the oldcorporate social responsibility takes profit maximization as the mostsignificant responsibility, which shifts its focus to theshareholders. In this case, shareholders are usually given aninterest because they are considered to be part of the organization’scapacity to maximize their profits. Philanthropy is not considered akey element within the organization, which implies that it is anoption that an organization can do out with (Horrigan54). However, when it comes to the new corporate socialresponsibility, stakeholders of a company are usually given a focusstakeholders include, employees, customers, suppliers, buyers, andthe government among others. Therefore, within the new corporatesocial responsibility, an organization has a greater role compared towithin the old corporate social responsibility. This is because anorganization is not only focused in the maximization of profit, butit is also engaged in the social and environmental issues.
Inthe 21stcentury, the concept of corporate social responsibility has been abuzzword because governments are seeing the commitment to corporatesocial responsibility as an answer/solution to the problems occurringin the 21stcentury. In the 21stcentury, it has been noted that the environmental and social problemsfacing the globe can be solved through embracing the corporate socialresponsibility. Thus, many debates hae been held to discus how thesocial and environmental challenges can be mitigated or eradicatedthrough the corporate social responsibility (Horrigan108). On the other hand, it has become a buzzword in the 21stcentury because it is during the century that corporate socialresponsibility has been facing a newly established dimension.
Therewere different reasons for the shift from the old corporate socialresponsibility to the new corporate social responsibility. One of thechief focus for the shift to the new corporate social responsibilitywas the need to protect the environment from harm (Segerlund84). Supporters of the new corporate social responsibility argue thatorganizations have a prime role role of protecting the environment inorder to support life. It has been noted that there has been a globaldepletion of resources emanating from the practices of organizationsfocusing on profit maximization only. For instance, there has been adepletion of fisheries, where even some of the fish species havebecome extinct due to practices of companies that do not care aboutthe environment. Apart from the depletion of fisheries, there is alsoa considerable number of organizational practices that have led toforest degradation. Forests have been cut down leading to soilerosion in order to benefit organizations in maximizing theirprofits. Besides, practices of companies have led to the destructionof the environment, which has subsequently led to global climatechange (Segerlund88). For instance, carbon emission and cutting down of trees providecompany practices that have contributed to global climate change. Inaddition, as a result mining practices associated with themaximization of profits, mining sites have been destroyed leading toenvironmental destructuction.
Thus,through organizations not limiting some of their practices like theones discussed above, there has been a problem of environmentaldestruction. As a way of curbing the environmental destruction,supporters of the new corporate social responsibility saw the need ofmaking organizations adopt the new regulations guiding the newcorporate social responsibility, which are against environmentaldestruction. According to the supporters of the new corporate socialresponsibility, organizations have the responsibility of protectingtheir environment by avoiding practices that lead to environmentaldestruction. Therefore, it was critical to shift to the new corporatesocial responsibility in order to protect the environment from harm.
Anotherchief focus for the shift to the new corporate social responsibilitywas to eradicate social problems. There was a need to shift to thenew corporate social responsibility because most organizations werenot concerned with the social issues affecting individuals. Forinstance, in most of their practices such as hiring, oraganizationsdid not respect individual rights such as providing the right pay andoffering job to individuals that are over 18 years. Even in someother cases, organizations engaged in practices that affect thesocial lives of individuals, thus making life difficult orunbearable. Through discussions, it was noted that the socialproblems can be dealt with through the new corporate socialresponsibility. Since social problems can be eliminated throughethical considerations, the element of ethical consideration becameincorporated in fthe new corporate social responsibility. Hence,there was a need to shift to the new corporate social responsibilityin order to eliminate social problems.
ChangesDuring the Second Half of the 20thCentury
Priorto 1970, corporate social responsibility was described as a virtuethat was driven mainly by corporations themselves, having theobjective of appealing to the public and regulators in the pursuit ofpolitical agendas. The advent of societal change commencing at theconclusion of the 60s and beginning of 70s shifted the drivers ofcorporate social responsibility away from the corporations into thehands of the public. Therefore, corporate social responsibilitychanged from being supply-driven to demand-driven. As a result ofthis change, stakeholder activism became high. This subsequentlyresulted to social cost being associated with organizations. Becauseof stakeholder activism, the public could force organizations to paya given social cost associated with it. This gave the the leasders oforganizations a hard task of accepting the social cost since withoutpaying the social cost, the public could do away with theorganization, which implies that the organization could lose itspublicity. Therefore, this change made organization leaders to workextremely hard in ensuring that they met the social costs that thepublic identified with the operations of the organization. Accordingto the stakeholder activism, an organization must be ready top payfor any externalities that emerge as a result of its operations(Segerlund96).
Onthe other hand, another change that occurred during the second halfof the 20thcentury was taking corporate social responsibility, not as anobligation required by the government, but as an obligation that isabove the law that organizations have to identify with in order tomaintain a competitive advantage. After the public took theresponsibility of demanding for action from an organization in caseof an externality associated with the operations of an organization,corporate social responsibility became something usual and demandingthat organizations perceived it like an obligation that they have toidentify with in order to maintain the competitive advantage. Thisreally affected the morale of leaders since they had to ensure thattheir organizations were on the forefront of considering theincorporation of corporate social responsibility in theirorganizations. In this case, organizations were not forced toidentify with the corporate social responsibility, but insteadadopted the philosophy as a way of ensuring competitiveness.Therefore, not many organizations could ignore the idea ofincorporating corporate social responsibility in their corporateobligations.
Corporatesocial responsibility has shifted from an old one to a new one. Inrealizing this transformation, changes in the drivers of thecorporate social responsibility took place. Initially, the corporatesocial responsibility was driven by the government, where thegovernment took charge in making organizations be accountable fortheir operations. However, this was changed and the public took overthe responsibility of making corporations stand accountable for theiractivities. In this case, the public could use social andeco-labeling, environmental certification, or boycotts in making anorganization pay for externalities associated with its operations.After the public took the responsibility of demanding for action froman organization in case of an externality associated with theoperations of an organization, corporate social responsibility becamesomething usual and demanding that organizations perceived it like anobligation that they have to identify with in order to maintain thecompetitive advantage. Comparing the new and the old corporate socialresponsibility, the old corporate social responsibility takes profitmaximization as the most significant responsibility, which shifts itsfocus to the shareholders. However, when it comes to the newcorporate social responsibility, stakeholders of a company areusually given a focus stakeholders include employees, customers,suppliers, buyers, and the government among others. The chief focusfor shifting from the old corporate social responsibility to the newcorporate social responsibility was the need to deal withenvironmental and social problems.
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Mareș,Radu. TheDynamics of Corporate Social Responsibilities.Boston: Martinus Nijhoff Publishers, 2008. Print.
Segerlund,Lisbeth. MakingCorporate Social Responsibility a Global Concern: Norm Constructionin a Globalizing World.Farnham, Surrey, England: Ashgate, 2010. Print.