ESR 103 Ethical Principles and Social Responsibility Week 12

TWELVETH WEEK
Benefits and criticisms of social responsibility to corporations
Today society expects public and private institutions and organizations to take a close interest in
societal issues such as; environment, human rights, fight against corruption. Most institutions and
organizations put more emphasis on social responsibility issues sometimes by their own will and
sometimes due to social pressures. Focusing on these issues provide some benefits to institutions
and organizations, as well as the application of corporate social responsibility may arise some
problems.
When institutions and their managers act with a sense of social responsibility, they get different
gains. Acting with the awareness of social responsibility of an institution, first of all ensures the
formation of a positive corporate reputation (prestige). Corporate reputation shows the faith,
goodwill and trust that other people and institutions have in the institution. Persons and institutions
who trust the institution and have goodwill, want to work with that institution. (Jones&George,
2008, s.156)
The tangible benefits of a good corporate reputation can be listed as more profits and benefits for
the organization and shareholders making more investments. Ultimately, corporate profitability
and income of shareholders increases. This type of social responsibility applications are the right
actions as they cause an increase the institutional activities in the economic sense, and increase the
income.
The second important reason acting with awareness of social responsibility of for-profit
organizations operating in the free market, is to be folded costs of protecting stakeholders
(employees, customers, shareholders, etc.) such as public institutions and organizations.
(Jones&George, 2008, p.157) In this context, for example; aforementioned institutions and
organizations cover the health services of their stakeholders, pay the salaries of their employees
and pay their taxes to the state. Acting with the awareness of social responsibility of organizations
in a society, increases the quality of social life as a whole.
Social responsibility practices towards especially internal stakeholders (managers, shareholders,
employees) of commercial institutions and organizations, contributes to the formation of values,
norms and ethical principles in the society.
The fact that the majority of organizations are concerned about their employees and accepting their
needs as a requirement of social responsibility, promotes mutual interest in the general society.
For example, organizations operate with a high sense of social responsibility in Japan, Sweden,
Germany, Switzerland and the Netherlands. (Jones & George, 2008, p.157) As a result, crime,
poverty and unemployment rates are relatively low in these societies, literacy rate is higher. In
addition, sociocultural values in these societies encourage living in harmony with different groups
of people.
Institutional activities affect every aspect of the lives of individuals in society. Therefore, whatever
attitude all public and private institutions and organizations exhibit towards the society, similarly,
their attitude towards these institutions and organizations will develop in a similar way.
ESR 103 Ethical Principles and Social Responsibility Week 12

Benefits of Social Responsibility to Institutions

Social responsibility practices have a wide range of benefits to institutions and organizations. In
particular, it positively affects economic performance, increases confidence and contributes to the
dissemination of positive reputation. The organization named "Business in The Community",
known for its work on corporate social responsibility has classified these benefits under six
headings. (Uzkesici, 2005, s.77) These are;
Reputation management,
Risk management,
Satisfaction of the employees (employees),
Innovation and learning,
Access to capital,
Financial performance
Reputation Management: Corporate reputation is the most important value of an institution.
Reputation management; can be defined as the coordination of simultaneous activities of
incentives aimed at protecting and enhancing corporate reputation.
p.114) Reputation management depends on the relations of institutions and organizations with all
relevant stakeholders. Because every institution that attaches importance to its relations, gain the
potential support of groups to achieve its short and long-term goals and increases them over time.
People, do their attitudes and evaluations on corporate social responsibility, according to the costs
they incur and the money they spend. A study conducted; when 44% of Brits are going to buy a
product, revealed that they believe acting with awareness of the social responsibility of the relevant
business is a very important factor. According to 86% of consumers, those who strive to make the
world a better place to live has been determined that businesses have a more positive image.
Risk Management: One of the important benefits of social responsibility projects is to increase
management efficiency. Corporate responsibility can be seen as a tool for better understanding and
management of risks. Social responsibility studies, enables the development of high social
sensitivity skills in compliance with the regulations that may arise over time. (Argüden, 2010,
http://www.arge.com/)
Many institutions and organizations try to define the concept of risk, including social and
environmental issues in a long-term way. Corporate responsibility, helps organizations to reduce
avoidable losses and identify emerging problems and provides effective risk management.
Employee Satisfaction: Employees take on important tasks in any corporate activity (for example,
in relations with other stakeholders, in the production and delivery of corporate goods and
services). For this reason, employees cannot be considered separately from institutions and
organizations.
People spend a significant part of their daily lives in the institutions and organizations where they
work. Work is an important part of their lives. Each individual wants to work in institutions and
organizations that knows and enforces its responsibilities. Engaged to their institution, motivated
ESR 103 Ethical Principles and Social Responsibility Week 12

and encouraged employees are the key to success. Corporate social responsibility plays an
important role in the preference of especially talented and well-equipped employees, and keeping
them in the institution.
Innovation and Learning: Recent scientific studies shows that businesses adopting corporate
social responsibility encourage innovation and learning. (Uzkusici, 2005, p.79) The long-term
existence of especially profit-oriented institutions and organizations, depends on the ability to
understand social and technological changes and act accordingly. Because social and
environmental problems offer important opportunities to innovative companies.
Corporate social responsibility encourages learning and innovation within the organization. Thus,
it is possible to seize new market opportunities, create more effective business processes and helps
to maintain strength. (Üstünay, 2008, p.69) If the innovative capacity of institutions and
organizations can be applied to social problems, some of the things traditionally seen as costly
activities can generate profits in the long run. (Özgener, 2000, p.216) Briefly, social responsibility
projects contribute to institutions and organizations by accelerating innovation studies.
Access to Capital: Investors have historically not interested in the non-financial (social
responsibility practices, etc.) aspects of organizations. Today, the social responsibility efforts of
all kinds of institution and the organization are considered as an indicator of strong relationships
between management quality, good corporate citizenship and good financial performance.
Investors are now more closely monitoring the social and economic performance of businesses
and makes investment decisions accordingly. Entrepreneurs seeking financial resources to invest,
to develop business or to implement new projects, now see corporate social responsibility
applications as opportunities that facilitate access to capital.
Financial Performance: Corporate responsibility practices, gives a competitive power and
superiority to all public and private institutions and organizations. This is vital for profitability.
Today, most institutions and organizations have social responsibility goals beyond earning income.
These targets assist at improving and development of financial performance in the long term.
Corporate responsibility, gives opportunity to all institutions and organizations that will reduce the
costs of today and tomorrow. It improves their competitiveness, market position and profitability.
(Uzkesici, 2005, p.80)
Corporate social responsibility practices are accepted by many segments of society. The most
important reason for this is; said applications, results in favor of all segments. In addition, this
issue is understood by all relevant stakeholders.
The benefits of corporate social responsibility that will provide to businesses and all stakeholders
are briefly summarized in the table below. (Aktan, 2007, p.31)
ESR 103 Ethical Principles and Social Responsibility Week 12

Table 1: Benefits of Corporate Social Responsibility to the Business and its Stakeholders
Benefits to the Business
Value increase in stocks Attracting and retaining qualified employees

Benefit to Stakeholders
To Internal Stakeholders To External Stakeholders
To managers Be honored and pride To customers Honest price and quality product
Human resources policies Providing information in the
that will increase motivation purchasing process
hical
issues demands
To be more confident towards
employees by ethical complaints
tendencies, and analysis

Employees' adopting and manner

internalizing of business
To opponents Informative and benchmarking
purposes
example
Emergence of innovative
thoughts and practices
To the shareholders Increase of investments in all To suppliers Honesty in pricing and payment
company activities conditions
Easy funding of Financial support to suppliers that
social responsibility will support its activities
investment projects
To the society
Investment in the fields of
Sharing Information about education, health and culture
the business clearly Prevent exploitation of women
Creating social performance and child labor force
measure Contribution to sustainability
To the employees Safe working environment To the Lawlessness, struggle to
government corruption
policies
support to economic and social
conflict in labor problems
relations
To the Reducing environmental pollution
costs environment
Increase in internal Preservation of vegetation, animal
communication and efficiency lineage

rights energy saving, recycling

-efficiency
standards
ESR 103 Ethical Principles and Social Responsibility Week 12

Corporate social responsibility reflects a social expectation today. People expect are from all
public and private institutions and organizations to be better corporate citizens and contribute to
the social welfare of the society in which they live. Corporate social responsibility has now become
a necessity.
Corporate social responsibility practices; contribute to a livable environment and human
development as well as more equitable and sustainable. Corporate social responsibility; an integral
part of the basic mission and vision of all institutions, and it should be a value/principle that
managers believe in.
With the developing technology, there is a density of information in every field today. The
contributions of institutions to social issues, enhances the depth of their relations with people, its
density and intimacy. The fact that institutions and organizations act in cooperation with voluntary
and reputable organizations in certain fields also increases their social contribution.
Organizations' management skills and resources, when combined with the experience of voluntary
organizations with expertise in specific subjects, the effectiveness of the solutions offered to the
community increases. (Lembet, 2012, p.9)
Problems in Social Responsibility Practices
Corporate social responsibility practices and the reasons for their implementation, attracts interest
of all stakeholders (society, employees, consumers, investors, etc.) for various reasons. Problems
that may arise in applications can lead to misunderstanding of the subject and/or loss of faith in
the aforementioned practices. On the other hand, professional competencies of institutions and
organizations may also be questioned that are taking part in directing social responsibility activities
(for example, consulting companies, customer relations management, etc).
In a study, the problems encountered in the application of corporate social responsibility (CSR) in
our country are listed as follows. (Uzkesici, 2005, p.81)
-
the reasons related to the
existence of companies, make it difficult to internalize the subject.
Those such as; non-governmental organizations, government, etc. want to get rid of oppression
on CSR practices from stakeholders, are trying to save the "as if they are doing" situation.
the thought of seizing the opportunity
to raise the corporate identity also confuses the aim of the concept.
existence of campaigns in company's own
field of activity.

People's trust in for-profit institutions and organizations is generally low and their efforts to do
good for the public can be perceived as self-serving. Especially charitable work directly related to
ESR 103 Ethical Principles and Social Responsibility Week 12

the activities of for-profit organizations can be evaluated as (Uzkesici,

2005, p.81). Institutions and organizations that implement social responsibility practices, may not
make a special effort to publicize such activities in order not to be exposed to prejudiced criticism.
In this case the aforementioned institutions and organizations can be blamed
, too. In fact, the institutions and organizations that fulfill their social
responsibilities face a dilemma between society's expectations in this direction and the course of
action they will choose.
Insincere or deceiving purpose in corporate social responsibility practices, which are punished
very heavy when noticed by the stakeholders. The reputation that an institution loses in this way
can be large as irreversible. (Aktan, 2007, p.29)
The main disadvantages of social responsibility that are identified by the researchers can be listed
as follows (Öztürk et al., 2013, p.23):
As social activities are reflected in product costs, prices may increase, which may cause
loss of market.
New human resources may be needed for social activities.
Owners, partners or managers of for-profit institutions and organizations even if they are
too sensitive to the issues, they move away from the organizational goals.
There may also be various institutions and organizations that ignore social responsibility issues,
or worse, disregarding organizational ethical principles. Such institutions and organizations may
experience problems such as; loss of social trust, loss of image, loss of effectiveness in group work,
loss of institutional communication, loss of self-esteem, decreased sense of commitment, loss of
employment, increase in turnover (labour turnover rate), lack of motivation and loss of
performance. (Aktan, 2007, p.79).
The points to be considered in CSR applications can be listed as follows: (Uzkesici, 2005, s.82)
CSR practices should not be directly related to the activities of institutions.
CSR issues should not be considered as marketing and communication tools. These topics
should be adopted by the top management of the institutions. Subjects with corporate vision
should be associated, resources should be allocated, and should be applied meticulously
within the scope of targets and strategies. (http://kssd.org/kss-nedir/)
CSR is not a commercial activity. It should not directly increase sales. Institution and
organizations should not expect a commercial gain from CSR practices.
CSR should have a transparent and accountable feature. All stakeholders should be
informed about such apps and about appropriate communication channels.
References:
1. Sorumluluk,
o:4
2. Jones, R.Gareth, George, Jennifer M. (2008), Contemporary Management, Fifth Edition, Mc
Graw Hill Publications
ESR 103 Ethical Principles and Social Responsibility Week 12

3. http://kssd.org/kss-nedir/
4. http://www.arge.com/tr/makaleler/kurumsal-sosyal-sorumlulugun-faydalari/
5. Lembet, Zeynep (2012), Markalar ve Kurumsal Sosyal Sorumluluk, Hacettepe Üniversitesi
-Dergisi, 29 Mart, s.1-23
6. Uygulama,
Tezi
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8. Beklentilerinin
s.69-84
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