Question

Why would a company focus its efforts to be seen as socially responsible? How do you convince a Board of Directors to spend money to improve the corporate social responsibility of an organization when it reduces earnings per share?

Answer 1

THE FOLLOWING ARGUMENTS STRESSES UPON THE NEED FOR SOCIAL RESPONSIBILITIES IN BUSINESS ENTERPRISES:-

1)IRON LAW OF RESPONSIBILITY-SOCIETY GIVES BUSINESS ITS CHARTER TO EXISTAND THAT CHARTER CAN BE AMENDED OR REVOKED AT ANY TIME IF IT FAILS TO LIVE UP TO THE EXPECTATIONS OF THE SOCIETY.IN ORDER TO RETAIN ITS EXISTING SOCIAL ROLE AND SOCIAL POWER BUSINESS MUST RESPOND TO SOCIETY'S NEEDS CONSTRUCTIVELY.THIS IS CALLED THE IRON LAW OF RESPONSIBILITY.IN THE LONG RUN THOSE WHO DO NOT USE POWER IN SOCIALLY RESPONSIBLE MANNER ,WILL TEND TO LOSE IT.

2)LONG -TERM SELF INTREST:A BETTER SOCIETY WOULD PRODUCE A BETTER ENVIRONMENT IN WHICH THE BUSINESS CAN BE PROFITABLE IN THE LONG RUN .SUCH AN ENVIRONMENT CAN BE CREATED BY IMPLEMENTING SPECIAL PROGRAMMES WHICH REDUCES CRIMES, LABOUR TURNOVER AND ABSENTEESM ,AND IMPROVE PUBLIC HEALTH AND EDUCATION .RECRUITMENT OF LABOUR BECOME EASIER .

3)BETTER PUBLIC IMAGE:-GOOD PUBLIC IMAGE IS NECESSARY FOR A BUSINESS FOR A BUSINESS TOSECURE MORE CUSTOMERS, BETTER EMPLOYEES AND HIGHER PROFITS .BUSINESS CAN CAPTURE A FAVOURABLE PUBLIC IMAGE BY SUPPORTING THE SOCIETY'S INTREST AND SOCIAL GOALS.

4)CONVERSION OF RESISTENCE INTO RESOURCES-:BUSINESS HAS THE INNOVATIVE ABILITY TO TURN SOCIAL PROBLEMS INTO ECONOMIC OPPORTUNITIES AND FUNCTIONAL CAPACITY CAN BE INCREASED MANY TIMES.

WHEN A COMPANY REDUCES EPS then BOD should invest money to improve CSR because...

socially responsible business practices and financial performance are linked positively .studies and surveys reveal that overall financial performance are linked positively.studies and surveys reveal that overall financial performance of socially responsible companies have been much better than that of other companies.improved financial performance results in stable socio-political -legal environment,enhenced competitive ,advantage,improved employee recruitment,retention and motivation,better stakeholders relation and a more secure environment to operate.