This assignment will critically discuss three approaches to Corporate Social Responsibility (CSR) which are as follows: CSR as value creation; CSR as risk management and CSR as corporate philanthropy. For the purposes of this assignment, the definition of CSR will be based on Carroll’s CSR Pyramid (1991) which states that the economic, legal, ethical and philanthropic responsibilities of the organisation are dependent upon their particular context (Crane and Matten 2010). This first section of the assignment will critique CSR in terms of value creation.
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Value creation can be interpreted in two ways. Firstly, there are the values created by the organisation which influences its CSR practices such as their role, ethical stance and stakeholder management (Crane, Matten and Spence 2014). Secondly, there is the value created by the delivery of these CSR practices. This may include an economic value, such as the reduction in pollution costs, and a social value, in terms of a reduced negative impact on society (Griseri and Seppala 2010). The model of Carroll’s CSR pyramid (1991) argues that the economic and legal responsibilities of an organisation are expected by society, such as the payment of taxes and operating within the law. However the changing context of society also expects an organisation to undertake both ethical and philanthropic responsibilities, particularly in response to the increased power and influence of organisations within society (Crane and Matten 2010). An organisation undertaking these greater levels of responsibility can arguably create value both for themselves and the society in terms of responding to a wider societal need in terms of harm reduction and the creation of benefits and value. However, critics of CSR suggest that there is no tangible link between CSR and value creation, but this may be in part due to the difficulties in measuring these links (Crane, Matten and Spence 2014). In order to assist in an assessment of CSR, ISO26000 offers a pathway for organisations to improve and report their CSR activities but this is a voluntary scheme (International Standards Organisation 2013). Other CSR value creation methods include triple bottom line reporting which includes the measurement of value in terms of economy, society and environment. However it can be difficult to measure how these three merge together to contribute to value creation and often, each element is measured individually (Blowfield and Murray 2011). The traditionally held viewpoint of an organisation is as a creator of economic value for its shareholders (Friedman 1970). However CSR as a value creation tool argues that both economic and social value must be considered and this needs to include a wider view of stakeholders (Haigh and Jones 2012). Organisational initiatives which may decrease harm in terms of pollution or natural resource usage could create value for the organisation in terms of lower economic costs, in addition to creating societal value in terms of a reduction in pollution.