In recent years, many businesses have been counted accountable for the social consequences of their action. Thus, they should look beyond achieving financial growth and business objectives. As a result, businesses have improved their acts towards social and environmental dynamics. Here, Corporate social responsibility represents a continuing commitment by an organisation to behave ethically and contribute to the economy while improving the quality of life of its employees, the local community, and community (Watts and Holme, 1999). Due to the rise in competition and globalisation, organisations tend to adapt to changes in their operational environment, including more corporate social action with long term goals. Thus, organisations have started addressing issues related to society and the environment. The activities for corporate social responsibility are multidimensional as volunteering programs and initiatives to reduce environmental impact from production and industrial plants (Rondinelli and Berry, 2000). In addition, the development of sourcing and marketing activities that protect social welfare and commit to environmental benefits also falls under the category of CSR (Roberts 2003; Szmigin et al. 2007). It can also define as the set of practices and behaviour that firms adopt towards their labour force, toward the environment in which their operation is in process, towards authority and civil society (Foran, 2001). Global impact on the economy, climate change, wildlife, and natural resources has imposed a threat on businesses, so most firms have accepted the need for CSR. CSR allows organisations to develop long-term relationships with stakeholders and increase opportunities for their growth in the market. This paper will analyse corporate social responsibility and why it is essential for business organisations to adopt it in today’s environment. It will also include a discussion of the impact of CSR on a firm’s performance. Moreover, it will identify primary opportunities and challenges associated with the CSR practices in the organisation’s followed by a conclusion.
Importance of Corporate social responsibility:
Corporate social responsibility is a commitment of businesses concerning the community improvement, economic development, environmental development, and well-being of their workforce. Business organisations should adopt management practices that have a positive impact rather than negative ones. At present, CSR tends to be an essential dimension for business activities similar to financial, marketing and sales actions. Thus, businesses need to develop a strategic action plan that also includes initiatives towards corporate social responsibility. The demand for heightened corporate attention to corporate social responsibility has come from disparate groups include customers, employees, the community, and non-governmental organisations. The primary benefit for these organisations comes from return on investment and focuses on issues that are important to both the success of the company and the well-being of society at large (Choi and Wang, 2009; Doh et al., 2010).
Organisations investment in CSR activities improves their brand image and differentiate them from competitors in the market. These generate more interest for the company in the eyes of its stakeholders. In addition, corporate social responsibility creates a competitive advantage by integrating non-economic factors for firms (Porter and Kramer, 2006). Hence, it is a situation where society and business both have an advantage. Thus, corporate social responsibility is a concept of volunteering. So, organisations need to be aware of the impact of their activities on society and the environment and taking measures to prevent the damage accordingly. (Fischer & Sawczyn, 2013), investigates that corporate social responsibility is a dependent variable that is affected by firm performance. A financially strong firm is more involved in corporate social responsibility and innovation. Thus, according to (Hull & Rothenberg, 2008) investigation, a positive relationship between corporate social responsibility and firm performance enhances due to innovation and level of differentiation. Corporate social responsibility is a durable investment. So many local and international firms have increased their focus on changing their overall business strategies and turned towards sustainability and environment-friendly products.
Opportunity and challenges:
Managing the CSR initiatives of the firm in terms of doing things better than and different from how competitors do them can contribute to competitive success in the same way that other aspects of competitive strategy do (Porter and Kramer, 2006). The prime aim of CSR in businesses is to make corporate responsibility sustainable in three main areas s
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