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Factors that Influences CSR

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The policies of Corporate Social Responsibility make an organization socially responsible so that they can sustain in the global competitive environment (Wang, et al., 2016). There are certain factors which influence the CSR of a company by reducing or enhancing its effectiveness for the organisation. Such factors involve lack of participation from the communities, lack of transparency, decision drivers, internal enablers and others. The purpose of CSR initiatives in a company is to support the growth of communities but lack of participation of the communities can cause hurdle in the CSR activities of the company.

The lack of interest of the individuals of society can impact on the contribution and participation of the company along with reducing the confidence in people. The main cause of such hurdle is the lack of communication between the community and organization which hurdles the communities to participate in the CSR initiatives of the organization. This factor not only reduces the effectiveness of CSR but also impact on the sustainability of company in the market by reducing the support of community to the company. Although, this factor can be eliminated by making the communities aware about the benefits of CSR for them by communicating with them.

The transparency is also a factor which has influenced the CSR activities of companies. The organisations do not share proper information of their CSR initiatives such as funds, address concerns and others. It causes negative impact as the employees do not trust on the initiative of the company because of which they restrict their participation in the initiatives. As per Grigoris (2016), lack of transparency can also restrict the trust building process between the society and companies. It reduces the impact of CSR activities of company on the society which reduces the effectiveness of the benefits gained by organisation from its CSR policies.

The business organisations can avoid this factor by providing adequate information to the people such as objective of CSR initiatives, funds and others. Beside of lack f transparency, there is also a factor which can influence the CSR activities of the business organisation that is lack of consensus. According to PytlikZillig and Kimbrough (2016), lack of consensus is the lack of engagement of every individual who are part in the CSR activities of the company such as management, employees, local agencies and society.

The main impact on the CSR due to lack of consensus is duplication of activities from corporate houses in their intervention areas. It results into the unhealthy competition among the local agencies that plays important role in implementation of CSR policies. The lack of consensus can minimise the ability of companies to assess the impact of their initiative at various time period. The influence of this factor can be avoided by companies by adapting a collaborative approach.

The decision drivers are also the factors which influence CSR of a company. These are the factors which are considered as critical, case action or enhancement improvements in the company. These drivers are the workforce, relation of management with the external stakeholders and care for environment. The organisations are required to consider all these factors while designing their CSR policies so that the CSR policies of company will not cause any impact on the operations activities of the company. As per Trianni, et al., (2016), decision drivers are the activities that can be proactive or reactive for a company. In the present business environment, the lack of support from the workforce can cause hurdle in the CSR initiative of the company as it also involves providing solutions to the issues of workforce.

The lack of understanding between the management and stakeholder can also influence the CSR of a company in a negative manner as the stakeholders has very crucial role in implementation of CSR of a company. The alignment of CSR to the corporate strategy is an internal enabler which can also influence the CSR of a company. As per Engert and Baumgartner (2016), the corporate strategy involves the management of resources, management of risk and gaining competitive advantage to the organisation. In other words, the corporate strategy provide framework for the efficient operations and profits of the company. The CSR policies are designed for fulfilling the responsibility of organisation towards stakeholders and society.

The corporate strategy can cause hurdle in the objective of CSR as it focuses on the growth and profit of the company and CSR focuses on ethics and responsibility of company. The distinction in the am of both can cause lack of effectiveness in CSR therefore the company is required to align the CSR policies with the corporate strategy. The alignment of CSR policies with corporate strategy enhance the involvement of every factor which is required for implementation of CSR from management to stakeholders thereby enhancing its effectiveness.

Beside of these factors there are also some factors that are: competition and ethical consumerisms are also influence the CSR initiative of a company. The increasing competition makes the company to implement different strategies such as low price whose implementation requires use of substitute resources which can be contrary to the CSR policies of the company. The impact of competition can also be positive for CSR if they are using CSR policies as a tool of competitive advantage by gaining trust of customers and building positive image in the market.

The ethical consumerism is also a factor which can impact the CSR but in a positive way. The ethical consumerism makes the companies to use environment friendly resources and supply chain which can enhance the effectiveness of CSR (Kang and Namkung, 2018). The awareness of consumers about the raw material, methods of production, transportation, image of company and workforce makes the organisation more inclined towards CSR initiatives. therefore, the ethical consumerism is a factor which has positive influence on the Corporate Social responsibility of the company.

References

  • Engert, S. and Baumgartner, R.J., 2016. Corporate sustainability strategy–bridging the gap between formulation and implementation. Journal of cleaner production113, pp.822-834. https://www.sciencedirect.com/science/article/pii/S0959652615018259
  • Grigoris, G., 2016. The challenges of corporate social responsibility assessment methodologies. International Journal of Economics & Business Administration (IJEBA)4(1), pp.39-55. https://www.ersj.eu/repec/ers/pijeba/16_1_p3.pdf
  • Kang, J.W. and Namkung, Y., 2018. The effect of corporate social responsibility on brand equity and the moderating role of ethical consumerism: The case of Starbucks. Journal of Hospitality & Tourism Research42(7), pp.1130-1151. https://journals.sagepub.com/doi/full/10.1177/1096348017727057
  • PytlikZillig, L.M. and Kimbrough, C.D., 2016. Consensus on conceptualizations and definitions of trust: Are we there yet?. In Interdisciplinary perspectives on trust (pp. 17-47). Springer, Cham. https://link.springer.com/chapter/10.1007/978-3-319-22261-5_2
  • Trianni, A., Cagno, E. and Farné, S., 2016. Barriers, drivers and decision-making process for industrial energy efficiency: A broad study among manufacturing small and medium-sized enterprises. Applied Energy162, pp.1537-1551. https://www.sciencedirect.com/science/article/abs/pii/S0306261915002639
  • Wang, H., Tong, L., Takeuchi, R. and George, G., 2016. Corporate social responsibility: An overview and new research directions: Thematic issue on corporate social responsibility. https://journals.aom.org/doi/abs/10.5465/amj.2016.5001

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