Corporate Social Responsibility and Its Importance

Corporate Social Responsibility
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Corporate Social Responsibility The financial performance of business organizations is integral to the sustainable growth and development of business organizations. However, it is important to recognize the fact that the underlying factors contributing to the financial performance of business organizations are heavily dependent on the organization’s relationships with its stakeholders. Hence, it is advisable for the leadership and management of business entities to invest on maintaining good relationships with all its stakeholders for sustainable growth and development of their organizations. The concept of corporate social responsibility (CSR) provides an excellent framework for business organizations to establish good relationships and reputations with all its stakeholders for sustainability (Liang, 2017). Maintaining long-term profitability and revenue generation, for instance, is a corporate social responsibility that safeguards the investors’ interests. It extends the organization’s lifeline through the shareholders’ continuous investments on the business organizations. However, failure to meet the interests and expectations of consumers and other stakeholders may threaten the sustainability of business entities. It suffices, therefore, that business organizations need to embrace corporate social responsibility as an integrated approach for maintaining good relationships with all its stakeholders towards achieving the sustainable growth and development objective. Provided herein is a research proposal on the concept of corporate social responsibility highlighting its importance, application, and perceived implications on the financial performance of business organizations. Importance of Corporate Social Responsibility (CSR) The relationships between corporate or business organizations and their stakeholders are often characteristic of policies and principles guiding their operational interactions. These policies and principles play the significant role of ensuring that business organizations conduct their operational activities in ways that meet the desired objectives and values of the society (Hirigoyen, 2015). In essence, corporate social responsibility refers to the obligations of business organizations to develop and implement operational policies, procedures, and principles of conduct that meet the desired objectives and values of society. The relationship between business organizations and its stakeholders including consumers, governments, and the public informs the latter’s perceptions of the organization’s values and principles across the social, political, and economic domain (Hirigoyen, 2015). The ensuing perceptions of an organization’s values and principles affects it overall performance in the market. Negative perceptions would negatively affect the consumers’ purchasing decision toward an organization’s products and thus hurting its financial performance. For instance, the increasing public awareness and concern for human rights and environmental preservation accounts for the surmounting pressure on corporate entities to embrace labor practices and production activities that meet the public expectations on the protection of human rights and environmental conservation, respectively (Israel, 2018). Failure to meet society’s expectations on such premises would reflect negatively in the organization’s financial performance. Liang (2017) echoes the same sentiments, claiming that organizations with higher levels of prosocial CSR activities tend to enjoy higher demands and preferences for their goods and services. These prosocial activities may include a wide ranges of activities such as upholding government regulations on taxation and consumer protection, timely payment of suppliers, compliance with the labor polices, and participating in social development initiatives (Hirigoyen, 2015). It is also important to reiterate that even maintaining an organization’s long-term profitability and revenue generation is a corporate social responsibility endeavor to both the shareholders and other stakeholders. It is not only the shareholders who stand to benefit from profit maximization but also the employees and other entities across the supply chain through the organization’s sustainability (Israel, 2018). It suffices, therefore, that corporate social responsibility has become an integral factor influencing the financial performance of business organizations due to its implications on the business entities’ relationships with all its stakeholders. Methodology An integrated approach would be effective in the collecting key data and information for investigating the correlation between corporate social responsibility and the financial performance of business organizations. For instance, an integration of quantitative and deductive research methodologies would be appropriate for studying the relationship between CSR and the financial performance of business entities. Quantitative research methodology would be highly effective because the study involves statistical analysis and evaluation of available data on the financial performance against CSR activit...