CSR can sometimes be good for the companie's profit margins but Essay

CSR can sometimes be good for the companie's profit margins but sometimes not - Essay Example Studies on corporate performance of different companies show â€Å"a positive correlation between a company’s financial performance and how it practices CSR† (Horrigan 2010: 273). According to a Harvard University study, companies which had a sense of CSR showed four times the growth rate compared to companies focusing primarily on profit maximization (Fernando 2009: 11). Often when employers are unable to achieve a raise in profit margins, they blame it on CSR rather than on incorrect implementation. Also, CSR may not prove to be advantageous for a company when certain obstacles like â€Å"lack of awareness and conviction among managers† (Fernando 2009: 11) are not removed which can quite effectively drag a business down, so timely identification of any obstacles is highly important for reaching desired targets. It is argued that when integrated into business model, sometimes CSR leads to better financial performance and overall reputation while at other times i t simply may not. This essay basically aims at contemplating the extent to which CSR can prove to be effective for a company’s profit margins and what relevant literature has to say on the subject when CSR does not help in improving the financial position of a company. CSR is a broad ideology and covers all responsibilities and obligations that companies or organizations owe to the society in which they operate at any point in time (Crane 2008: 201-202). It helps to ensure that business is being operated in a manner which complies with both local ethical standards and international norms. CSR basically operates out of this philosophical idea that companies can and should operate ethically (Miller & Jentz 2007: 68). It works by inculcating this sense in the employers’ or managers’ minds that all kinds of business activities should inflict a positive influence on the employees, consumers, stakeholders, communities, and environment. When the idea of social responsi bility in relation to business activities first made appearance in the business world in the late 1960s, it was considered controversial by many (Karake-Shalhoub 1999: xi). It is believed that despite a growing body of research identifying association of CSR with enhanced financial performance and organizational reputation, this business model still remains a controversial subject and continues to attract a large collection of opponents who argue that the whole concept of CSR is virtually irrelevant to business success (Freeman & Liedtka cited in Asongu 2007: 27). It is this conflict regarding the efficacy of CSR which will be discussed and scrutinized in the essay to determine the extent to which it could be related to business growth and sustained development and the extent to which those who argue against its credibility could be taken seriously. There is also a large percentage of people who despite knowing that CSR is not irrelevant to business still think that this is a bad id ea to be incorporated into the organizational framework (Banhegyi 2007: 325). However, it is increasingly believed that CSR encourages a business organization to identify all members of the society who may be considered as stakeholders and then incorporate their needs into the strategic decision-making process (University of Miami cited in Asongu 2007: 28) so as to strengthen the relationship between business and the community in which it is based.