Question

Critically discuss stakeholder influence on corporate social responsibility practices 1000 words

Answer 1

Corporate social responsbility envisages that an organisaiton should not only aim at profit maximisation but also consider business ethics, enviromental issues, labour issues. Generally the stakeholders of a company are categorized into primary stakeholder namely shareholders, creditors, employees, customers and secondary stakeholders which include government, regulatory agencies, social activist groups, media. Now, all these stakeholders have different expectations from the organisation like shareholders want maximisation in their wealth, creditors expect to recieve timely payments, employees want fair wages and good working conditions, customers expect best quality products at fair prices. On the other hand, secondary stakeholders who are not directly related to the business too have expectations like government and regulatory agencies require full disclosure and transparency in transactions so that adherence to rules and regualtions can be ensured, social activists and media work too aim at transparency and fairness. With globalization and internationlisation of othe business, corporate social responsibilty has become an important issue particularly for business organisations. To ensure corporate social responsibility various guidelines from time to time are issued by various organisations like reporting guidelines issued by Global reporting initiative, ISO standards related to environmental impacts of projects of a business, guidelines issued by stock exchanges to ensure fair trading etc.

Now, stakeholders do influence the corporate social responsibility practices. Shareholders are most important stakeholder in an organisation. They can influence the decision of the business regarding CSR practices. However, it is important to establish conciliation between shareholders objective and CSR practices. Today, many organisations have been working to create awareness regarding CSR of businesses and shareholders too value the long term benefits of CSR practices. The shareholders can influence the decision regarding the composition of management, disclosure practices of the company. However, if business is not economically sound, then shareholders may question those CSR practices which prove costly to the companies and hence influence shareholders' wealth.

Employees are another pressure group who can influence corporate social reponsibility practices are they have more information about the working of the company. In today's competitive enviroment, retaining best employees is a challenge for the organisations. So, ensuring proper working conditions, paying not just minimum wages rather fair wages, non monetary benefits has become an imperative. Employees can influence CSR practices through labour unions also.C

Customers are regarding as king in marketing terms as they can turn the fortune of a company. Responsiblity of business towards them cannot be ignored. If a company is engaged in activities which are environmentally harmful, ill treats is employees or charges excessive price for products, image of the company gets tarnished in the eyes of the customers as every piece of information spreads very quickly in todays informational age.

Creditors can influence CSR practices as they required true and fair view of company's activities. Government can surely influence CSR practices by enacting various provisions. For example, Company Bill in India have made it mendatory for the companies to invest 2% of their earnings in CSR related activities. Media and other social activists too influence CSR practices as it is not possible to any business in today's age to hide any sensitive information which can tarnish the image of the company.

All in all, stakeholders do influence the CSR pracitces, however there is need to first reconcile the contrasting interests of various stakeholds.