CSR should be voluntary 2017 2018 Winter Semester

CSR should be voluntary 2017 -2018 Winter Semester / Management 2 Ing. Ondřej Částek, Ph. D. Ayaz HASANOV Orçun Can YÜCEL

Corporate Social Responsibility (CSR) : Definition The broadest definition of corporate social responsibility is concerned with what is – or should be the relationship between global corporations, governments of countries and individual citizens. More locally the definition is concerned with the relationship between a corporation and the local society in which it resides or operates. Another definition is concerned with the relationship between a corporation and its stakeholders.

CSR should be voluntary Clarkson (1995), Maignan, Ferrell, and Hult (1999), and Wood & Jones (1995) all assert that businesses bear no responsibility to society. Rather, their sole responsibility is to their stakeholders. This school of thought maintains that violation of profit maximization argues against social responsibilities. The classical viewpoint holds that businesses’ main responsibility lies in maximizing profits. Its interests are purely economic, with social responsibilities only diluting its purpose. They also point out that socially responsible activities can be costly and that these costs may be passed on to consumers through higher prices.

Claim: CSR should be voluntary CSR Is per definition of voluntary. Whether you are responsible or not, it is consequence of a choice you are taking. Deeply connected with values, not with laws. Values cannot be forced, they can be promoted, taught or awaken.

CSR Should be voluntary Whether companies choose to be responsible or not, has to be left to their discretion. Sooner or later they will be aware of the benefits of being responsible (or the disadvantages of being irresponsible). WHY ? Because of market economy, if one company observes the benefits of CSR is conducted by its competitor it will definitely try to do itself as well.

CSR Should be voluntary If someone is forced to do something, there will always be a temptation to skip the rules. Sometimes fraud cannot be discovered so easily. On the other hand, If law forces CSR, political and partisan interests will probably interfere. Who wants to leave CSR in the hands of political fights?

CSR should be voluntary convictions commitment Voluntary CSR is connected to convictions and commitment. It’s something that comes from inside the company, with a desire to change things and create value. It has a psychological explanation: Mandatory CSR is imposed from outside the company and it may not be perceived as own.

CSR should be voluntary Motivational inputs driving the commitment to CSR. First, following a utilitarian perspective, CSR can be viewed as an instrument useful to help achieve its performance objectives defined in terms of profitability, return on investment, or sales volume. Second, according to the negative duty approach, businesses are compelled to adopt social responsibility initiatives in order to conform to stakeholder norms defining appropriate behavior. Third, the positive duty view suggests that businesses may be self-motivated to have a positive impact regardless of social pressures calling for CSR initiatives.

CSR should be voluntary Some typical benefits of properly implementing the CSR strategy are; Enhanced Employee Relations, Productivity and Innovation Enhanced Brand Reputation Better Access to Capital It balances Power with Responsibility Reduction in Operation Costs Attracting New Customers

CSR should be voluntary Public expectation necessitates that firms commit themselves to social responsibility. The public now expects businesses to pursue social objectives in addition to economic ambitions. Long-term profits also encourage such commitment. Businesses viewed as socially responsible are more secure in long run profits. Dedication to CSR enhances community relations and contributes to a favorable public image.

CSR should be voluntary Jenny Dawkins and Stewart Lewis found that over half the population in their sample ranked forms of corporate responsibility such as community commitment as the most important factor in forming an impression of a firm. Therefore, CSR has two forms of potential financial return for the firm – a positive incremental gain as a reward for positive behavior and a mitigation of consequences from negative firm behaviors.

CSR should be voluntary Reputation Institute, a private global consulting firm based in New York, invited about 47, 000 consumers across 15 markets to participate in a study that ranked the world’s 100 most reputable companies–all multinational businesses with a global presence. In addition to finding the companies with the best reputations, the study discovered that people’s willingness to buy, recommend, work for, and invest in a company is driven 60% by their perceptions of the company, and only 40% by their perceptions of the products.

CSR should be voluntary Example on relation of profit maximization and CSR Turkish Airlines launched a “Fuel efficency Program” with motivation on increase transport performance and reduce fuel consumption with envorinmental care intencions. -Fuel consumption per ATK (Available Ton-Km) in 2007 was 27. 05 liters whereas it is now 21. 93 liters. -Compared to 2007, Turkish Airlines absolute carbon emission reduction is measured to be more than 1 Million tons of CO 2.

CSR should be voluntary

CSR should be voluntary Why Fuel Efficiency ? Fuel is the biggest cost item for an airline comprising more than 35% of all operational costs. Effectively managing fuel consumption contributes to profitability and long term economic sustainability of the company. It is the environmental responsibility of the company in the attempt to prevent climate change as 1 kg of fuel burn will emit 3. 15 kg of CO 2 to the environment in return.

CSR should be voluntary According to clause 135 of the Companies Act 2013, certain companies subject to their net worth or net profit have to make a mandatory spending of at least two per cent of their average net profits before tax (average of three years profits) towards CSR activities.

CSR should be voluntary The annual study, released yesterday, is compiled by the Reputation Institute (RI), a Boston-based reputation-management consulting firm. It tracks social responsibility reputations by zeroing in on consumers’ perceptions of company governance, positive influence on society and treatment of employees, scoring each with its proprietary Rep. Trak Pulse system. The 10 Companies With The Best CSR Reputations In 2017 1. Lego 2. Microsoft 3. Google 4. Walt-Disney Company 5. BMW group 6. Intel 7. Bosch 8. Cisco systems 9. Rolls-Royce Aerospace 10. Colgate-Palmolive In the United States, CSR has been traditionally defined much more in terms of a philanthropic

CSR should be voluntary Despite the lack of regulations in the United States requiring companies to disclose, increasingly more and more companies are issuing CSR reports for a variety of reasons. Research suggest that there are three main theories for this increasing trend (Dawkins and Ngunjiri, 2008): (a) to manage the perceptions of key stakeholders, which is explained in signaling theory; (b) to convey the organization’s values to the public, which is called impression management theory; and the most widely cited reason (c) to establish that the organization’s activities are in line with social norms, which is legitimacy theory (Campbell, Craven, and Shrives, 2003). Although Japan and the U. K. do not have mandatory CSR disclosures, most companies in these countries choose to participate. In 2005 90% of Japanese companies and 71% of U. K. companies participated in CSR reporting, compared to only 32% of U. S. companies (KPMG, 2005).

REFERENCES 1. David Crowthler & Guler Aras Corporate Social Responsibility (2008) p 10 2. Bhavesh Sarna Voluntary CSR vs. Mandatory CSR – The sound of employees(2016) p 27 3. Peloza, John Corporate Social Responsibility as Reputation Insurance (2005) p 9 4. Isabelle Maignan* and David A. Ralston Corporate Social Responsibility in Europe and the U. S. : Insights from Businesses' Self-Presentations p 3 5. Ezekiel S. Asemah, Ruth A. Okpanachi, Leo O. N. Edegoh Business Advantages of Corporate Social Responsibility Practice: A Critical Review(2013) P 50 -51 6. Almerinda Forte Corporate Social Responsibility In The United States And Europe: How Important Is It? The Future Of Corporate Social Responsibility 7. Lianna Cecil Corporate Social Responsibility Reporting in the United States