Hyeyeon Byeon
Word Count- 1846/PIN-10119
Rethinking of Corporate Social Responsibility and Social Entrepreneurship
Hyeyeon Byeon
In the 21st century business industry, the corporationâ€&#x;s social role has been the current issue irrespective of business type and local area. Linkage between the society and business has been more and more tighten and at the same time, corporations get higher expectation for doing business related to the social benefit. Nowadays, the key factor to be successful is mutual management, which means that corporations have to concern and interact with political, legal, cultural circumstances, and even rival within the same industry. Corporations that are only looking for their own benefit will have a hard time to stay in business. That is why, study about CSR (corporate social responsibility) and social entrepreneurship has been developed. There are two main waves of these studies, one is study for the legitimacy, and specifically what the definition is, who serve these concepts and scope of actions. The other is how to implement these two concepts into reality. Carroll (1979) made fundamental study about CSR according to the historical research and presenting four-part definitions. He said “corporations had to be judged not just on their economic success, but also on non-economic criteria.â€? (Geoffrey, 2001) During that period, social entrepreneurship also became an interesting topic to study with CSR. Since, the main actors of CSR are entrepreneurs, and social entrepreneurship has more specified norms that can give actual guide to CSR users. From this ground study, there have been several trials to define CSR and social entrepreneurship, and these concepts have come into widespread. However, so far, CSR has some ambiguity regarding concepts and controversy to the legitimacy, so it still has been modifying. In addition, current global economic-crisis brings up difficult circumstances to concern social goods when corporations manage their own business. This paper is dealing with rethinking the definition of CSR and social entrepreneurship, describing problems that might emerge and elaborating it with possible solutions. It finally will find out barriers about these two concepts and develop proper remedies for that. The definition of CSR is still up to date, as well as, debates and criticisms are going on. 1
Hyeyeon Byeon
However, trial to arrange the concept based on the last studies about CSR is on progress. Corporate social responsibility has broadly contains what „good‟ or „desirable‟ business behavior is. It plays linkage role between corporations and several complex constituents for sustaining development that has a long-term vision with society. According to Carroll (2000), there are four dimensions to explain CSR: economic, legal, ethical and philanthropic. It seems like CSR‟s development process starts from the basic purpose of corporation is related to the economic responsibility, CSR‟s roles are extended to follow legal duties, legal responsibility and overcoming legal boundaries is ethical responsibility. In the end, it reaches to the philanthropic responsibility, which is included in voluntary sector. This paper indicates that CSR has to contain all these four characteristics, and creating balance between these dimensions is the main task that has to be done by a leader. About the application, CSR has three steps to be implied by corporation: decision, adoption, and commitment. Each step requires appropriate support by a leader. (Nada K, Andrew P, Linda Lee, 2007) The social entrepreneurship is the concept developed from entrepreneur who works with the objective of creating positive social change rather than „mere‟ profit. “Classic entrepreneurship is creating and managing vision and communicating that vision to other people. It is about demonstrating leadership motivating people and being effective in getting people to accept change. Hence, social entrepreneur who serves social entrepreneurship has distinct characteristics from classic entrepreneur. Social entrepreneurs motivate people to maximize social value, do the not-for-profit activity, make organizational form based on egalitarianism, avoid competitive strategy but focused on creating and delivering social value, have broad stakeholders, interact with wide group of parties, finally have altruistic ethical reflection.” (Wickham Philip A, 2006) As compare to classic entrepreneurship, social entrepreneurship is that has more widened scope about non-profit and social sectors. But, it also contains dilemma that how it can satisfy both social and economic goal like CSR. Innately, entrepreneurship does not exist in sector of business. It has more broaden area and mainly included in voluntary works so business entrepreneurship is part of that. Social entrepreneurship is more welfare concept not exactly business idea but, for continuing social entrepreneurship in business world, it cannot ignore economical aspects. Even though, there are some features which are difficult to apply to the business industry; social entrepreneurship is meaningful concept to the CSR, since almost all CSR activities are related 2
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to the top-down management decision and, if we put whole CSR concepts into corporations, it normally brings about overall change for the company such as vision, structure and individual employee‟s behavior. “From initial uncertainty and ambiguity in understanding CSR, to moving forward to a new and concrete reality framed by deliberate leadership action.” (Nada K, Andrew P, Linda Lee, 2007) So, adjust and implementing CSR is the main tasks for leaders as entrepreneurs. GLOBE (global leadership and organizational behavior effective) uses this fact for managing CSR. It is research project, which is developed by leadership perspective. It has helped that companies corporate the CSR agenda into their core values by building personal connections and creating an environment of trust and intimacy among leaders. (Fred Robins, 2008) Therefore, CSR and social entrepreneurship are easily dealt with together. Then, what is it that makes difficult to apply CSR and social entrepreneurship into the real business industry? The problems are divided into external and internal problems. First, external problems are economic circumstances in these days. “CSR activity is not free and that its costs have to be borne by somebody.” (Fred Robins, 2008) Cost aspect is very influential reason that makes decision of the level of CSR activity. There is no doubt that the economic crisis aroused not only from the pervasive speculation in the banking sector but also from an expansion of loans from banks has an impact on the world economy all over the world over the last decade. (Financial times, http://www.ft.com) Due to the financial crisis, more corporations have hovered between the survival and collapse. This situation, in turn, is likely to preventing from companies practicing CSR in terms of the cost, because, as a whole investment additionally apart from activities about the core product or service of the companies has to be always concerned after making sure if the investment can make potential profit, for maintaining the company permanently. However, corporations prefer to put more efforts on acheiving their main purpose of existence under the current situation, so it leads companies to be slow in decsion about the active execution of CSR. Second, for CSR, social entrepreneurship internal problem is unclear definitions, the practical effects from these concepts. And there are no specific guidelines, how these two concepts modified in business work. As ongoing subject, it is hard to distinguish direct result from CSR and social entrepreneurship. CSR and social responsibility ranged over all business 3
Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship
Hyeyeon Byeon
activities. Sometimes, these concepts are more related to the intangible parts like vision, frame, and advertising strategy and those are fussy to compare investment and outcomes. Even though, they are put in tangible project, the effects stretch to the corporation brand image or reliability from then, these effects are hard to measure by figures. And by this time, the study about CSR and social entrepreneurship have been dealt with in top management level, so there are no specific guides how to these concepts performed by middle managers and staffs. Moreover, Fred Robins (2008) proved that “Firm‟s stock performance and its social responsibility has long been the subject of contradictory views.” To overcome obscure model and prove real effects about CSR, social entrepreneurship, this paper will choose „strategy CSR‟ concept. For adapting in business world, social entrepreneurship should modify its norms within strategy CSR scope which balances between economical and social needs as proper level, so strategy CSR can give guideline how CSR and social entrepreneurship are reflected in corporation. “Strategy CSR or strategic philanthropy is done to accomplish strategic business goals – good deeds are believed to be good for business as well as for society.” (Geoffrey P. Lanots, 2001) This concept will bring appropriate scope of CSR definition, which is not too broad or narrow, and deliver new perspective to adjust CSR and social entrepreneurship into reality. Strategy CSR especially emphasizes CSR as a strategy and asset for corporation. For example, as strategy CSR perspective, doing social goods will be brought goodwill. There exists payback, and then CSR does not anymore charity works. Strategy CSR also relies on financial problems, so like in these days, if the economical situation is not going well, it will become secondary matter. For that reason, strategy CSR makes fully investment, when return on investment is ensured. Actually, there are representative example of succeed corporation, which used this strategy, Body Shop and Ben & Jerry‟s. They actually do the social beneficial works but it is possible when these works brings positive effects on their sales. For this kind of results, strategy CSR does not only require duties to corporation, but it also imposes duties to other stakeholders. „Reciprocal stakeholder responsibility‟ means that as social has some expectation to the corporation, at the same time, corporation has expectation to the society. It contains important 4
Global Initiatives Symposium in Taiwan 2009
ideas that CSR is not for the corporation and it is also for the social parties. Until now, the main stream of CSR studies have been inclined toward corporation side, but this concept also stresses other stakeholder‟s role to complete CSR. For employees, they have to make a commitment to their corporation and try to discover idea about CSR mission and credo. For customers, they do not hesitate to pay more money for socially responsible business products and progressively deliver their opinion to corporation and participate in consumer protection activity. These mutual trials for doing CSR help make general conception to corporation who takes CSR and social entrepreneurship as essential strategy to do business. In conclusion, this paper explored several aspects about CSR and social entrepreneurship, and, finally chose „strategy CSR‟ as the most preferable model to solve CSR and social entrepreneurship‟s external and internal problems. Above all, for adjusting this concept, not only corporation but also several social parties accept CSR and social entrepreneurship and endeavor to spread these concepts. This concept helps CSR and social entrepreneurship to be generalized in business, because it references reciprocally both cost aspects for corporation and voluntary aspects for social parties. Then, CSR and social entrepreneurship are not treated as troublesome work, but valuable strategy.
Reference List A three dimensional model of corporate performance, Carroll A.B., 1979 CSR leaders‟ road-map, Nada K, Andrew P, Linda Lee, 2007 How do I engage employees in the CSR agenda?, Michael R. Kissida, 2007 Strategy entrepreneurship, Wickham Philips A, 2006 Why corporate social responsibility should be popularized but not imposed, Fred Robins, 2008 Financial times, www.ft.com, 2009-03-25 The boundaries of strategic corporate social responsibility, Goefferey P. Lanots, 2001 The four faces of corporate citizenship, Carroll, A.B., 2000
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Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship
Hyeyeon Byeon
Global Initiatives Symposium in Taiwan 2009