What are the elements that make up social responsibility?

This article explores the key elements of social responsibility by mainly focusing on CSR's essential dimensions, i.e. social, economic, environmental, stakeholder, and voluntariness dimension of social responsibility on the part of corporations.
Estimated Reading Time: 8 minutes

Introduction

Social responsibility is an ethical framework in that organizations should not behave unethically. They must work and contribute to society’s welfare – comprised of various stakeholders and communities – that they operate in and interact with.[1]

 As such, the ideological notion of social responsibility is effectively taken to apply to every organizational entity, be it, a government, a corporation, institution or an individual dealing with society at large when conducting its commercial or business activities. However, it recent decades, social responsibility has come to be acknowledged as particularly relevant in terms of corporate behaviour, meaning, and how businesses and mangers conduct their activities while managing societal relationships. Social responsibility of corporations entails them being committed to socially-oriented initiatives to improve the quality of life and overall well-being of society and the environment.

Entrepreneurial scandals concerning the wrong implementation of doing socially responsible organizations have provoked the stakeholders’ emergence of cooperative initiatives to establish a typical pattern for social responsibility practices.[2] In current business conditions, the company’s work has become an essential part of society as a whole, and stakeholders attention are on the social and environmental impacts of business. Therefore, to establish a relationship that lasts long with their stakeholder in general and the customers in particular, firms need to consider and manage their business activities in accordance with the increasing concerns. Traditionally, companies have only one aim and responsibility for making a profit, but with the inception of the CSR concept, they are now responsible for more than just their owners.

Various elements make up the social responsibility notion and several related dimensions that impact companies’ business activities. For these reasons, companies must strive to teach and constantly improve their CSR practices through appropriate actions regarding social, environmental, and economic sustainability.[3]

Elements of Corporate Social Responsibility

According to the content analysis of current CSR definitions, most authors have concluded that there are three main elements of social responsibility: social, environmental, and economical, that makes up social responsibility.[4] The elements are nothing but the various dimensions of CSR that defines its importance and analyze its objectives. However, the recent literature has explored two new dimensions of CSR that are stakeholder and volunteering dimension. The dimensions involved in the social responsibility concept of corporations are selected from different definitions of CSR. Finally, this article has aimed to examine all the five dimension of CSR. The dimensions are discussed below:

The Economic Dimension

The Economic dimension of CSR is concerned with the impact on the finances of a company. Companies should be motivated by profit and put their business in the hands of consumers, investors, and other stakeholders. Corporate entities are well aware that their survival depends on sacrifice in short-term profits while getting positive results in the future, which satisfy the owners and managers as they are used to maximize profits. The economic dimensions represent that companies have to meet their economic responsibilities such as returning money to investors, guaranteeing customer’s satisfaction and loyalty, fair compensation to employees, fair prices of goods, etc. It also assumes companies’ responsibility that it will strive for long-term sustainable business, adequately respond to business risks, creates necessary security and safety for its workers, investors, and society in general.

The Social Dimension

Social responsibility is one of the significant factors in setting up the relationships between the company’s business and society. As the name suggests, social responsibility means being accountable for its social effects, either direct or indirect, on the people in society. CSR’s social dimension’s primary objective is that companies should work for the betterment of society and that they need to integrate social concerns in their business operations and consider the full scope of their impacts on exposed communities.[5]

Corporations, as a social actor, being themselves a part of the social community, should pay attention to serve internal and external human communities. Companies should realize their obligations and respond accordingly to the needs, rights, demands, and expectations for their social life’s well-being. When addressing the social dimension, the companies should use their business to benefit society by sourcing fair trade products or agreeing to pay a livable fair wage to its employees. It could also be through taking endeavours for sustainable use of resources or using the company’s’ resources to organize charitable fundraisers.[6]The CSR activities of the companies, in essence, should generate value and in the interests of the communities.

The Environmental Dimension

In recent years corporate has been viewed as the main cause of social, environmental, and economic problems. As a result of external pressures, companies have started to consider their influence on the environment and their business actions’ advantages and disadvantages. The consideration should be limited to pollution prevention and energy savings, labour improvements, and efficient use of raw material as well as control and reduction of waste.

Implementation of the environmental element of social responsibility depends on the government’s legal and administrative conditions. The interests of different groups, including the company itself regarding environmental CSR and protection activities, are with the consequential variation level.

Corporations try to gain positive public opinion and social support by implementing environment protection activities; however, it is noteworthy that this goal is the following way impossible to attain only by fulfilling legal requirements and avoiding incidents. The companies should adopt a more proactive approach and mandate the business strategies to consider environmental protection and do environmental reporting. It is true that environmental CSR activities initially add additional expenses to companies and its financial benefits are not immediately visible and easily measurable. This is often why companies don’t tend to sacrifice their profit instead of environment protection voluntarily because they don’t see a positive connection between the present expense and later gains.[7]

The Stakeholder Dimension

One of the essential elements of corporations’ social responsibility is to take care of its stakeholders’ interests. The idea of stakeholders has a traditional foundation root that sees businesses as an integral part of society and not just an isolated element for making profits for its owners, i.e. shareholders.

Stakeholders are the major part of the system that influences corporate decisions-making processes to bring all sides of the business in balance via fulfilling everyone’s needs without causing harm to other parts of the system. To work in their interests while managing company’s operations is key elements of social responsibility of the organizations. The definition of stakeholders as given by Mahoney (2012) is as follow:

“…those persons and groups who contribute to the wealth-creating potential of the firm and are its potential beneficiaries and/or those who voluntarily or involuntarily become exposed to risk from the activities of a firm… Thus, stakeholders include shareholders, holders of options issued by the firm, debt holders, employees (especially those investing firm specific human capital), local communities, environment as latent stakeholders, regulatory authorities, the government, inter-organizational alliance partners, customers and suppliers”[8]

There are different categorizations of stakeholder inter alia one of them focus on attributes of power, legitimacy, and urgency. Managers can combine these attributes to generate the concerned group of shareholders that must be paid attention to.[9] Since it’s impossible to manage all the stakeholders’ needs, the managers should seek balances and minimize the conflicts between stakeholders and prevent all unethical behaviours. That’s why companies implement CSR activities in their operation to improve their relationship with stakeholders.

Moreover, sustainability is a very crucial part of the stakeholder dimension of CSR. Companies need to take social responsibility for a wider group of direct and indirect collaborators, consider the whole supply chain, and establish such a level of collaboration that all socially irresponsible and unsustainable practices are detected and prevented at the earliest.

The Voluntariness Dimension

The Voluntariness dimension assumes organisations’ discretionary rights to make decisions that are not imposed by any duty to fulfil certain conditions. Voluntariness is primarily associated with the pro-activity that transcends the imposed standards, values, and rules. The dimension indicates overcoming the minimum prescribed standards related to products’ quality and safety, support for the community, employees, and engagement in social projects through volunteering and establishing corporate foundations and charitable institutions.

The Voluntariness dimension focuses on ethical and philanthropic responsibilities and is inextricably related to the CSR practice of business ethics. One concept understands corporation as a legal entity with the power to own, buy, and sell the property to enter into contracts, to sue and to be sued, certain rights over people because of their financial influence and power and position to cause injuries to employees, consumers, and environmental damage of course. Thus, business ethics clarify that corporations have the responsibility to avoid said bad actions to prevent corporate social irresponsibility (CSI). The perceived social responsibility of corporations guides them on the relevance of ‘doing good’ and ‘avoiding bad’.[10]

Conclusion

Being a socially responsible company can bolster a company’s reputation and build its brand image. Social responsibility empowers the organizations to leverage the corporate resources at their business disposal to do good for society and, most importantly, reduce their business operations’ negative impact. Consideration of the above-mentioned significant elements of social responsibility by corporations can boost organizational growth, ethical values, and morale and lead to greater productivity in the workforce, mainly through the stakeholder dimension or through CSR’s social and voluntariness dimension.

Businesses that follow good CSR practices have already incorporated social responsibility policies that hold them accountable to themselves, their shareholders, employees, stakeholders, environments, communities, or society at large by considering all the above dimensions. Therefore, corporations must incorporate CSR practices and norms in their management to ensure their smooth operation without compromising on society’s expectations and safety and the environment.  


[1] Brigitte Planken, Definitions of Social Responsibility, last assessed Jan 25th 2021, at https://link.springer.com/referenceworkentry/10.1007%2F978-3-642-28036-8_476.

[2] Gonzalez-Rodriguez, R., Diaz-Fenandez, C., Simonetti, B. (2015). The social, economic and environmental decision of corporate social responsibility: The role played by consumers and potential entrepreneurs. International Business Review, 24, 836-848.

[3] European Commission, (2011). A renewed EU strategy 2011-14 for corporate social responsibility. Bruxelles, Belgium: European Commission.

[4] Nikolau, I., Evangelinos, K., Allan, S. (2013). A reverse logistics social responsibility evaluation framework based on the triple bottom line approach. Journal of Cleaner Production, 56, 173-184.

[5] Nasrullah, N.M., Rahim, M.M. (2014). CSR in Private Enterprises in Developing Countries. CSR, Sustainability, Ethics, and Governance, https://doi.org/10.1007/978-3-319-02350-2_2.

[6] Sharma, A., Gupta, N. (2003). The new era of Corporate Social Responsibility. International Research Journal of Management Science and Technology, 5(1), 191-2015.

[7] Wagner, M., Van Phu, N., Azomahou, T., Wehrmeyer, W. (2002). The relationship between the  environmental and  economic  performance of  firms: an  empirical analysis  of  the European paper industry, 9, 133-146.

[8] Mahoney, J.T. (2012). Towards a stakeholder theory of strategic management. University of Illinois at Urbana- Champaigne.

[9] Mitchell, R.K., Agle, B.R., Wood, D.J. (1997). Toward a theory of stake-holder identification and  salience:  Defining  the  principle  of  who  andwhat  really  counts.  Academy  of Management Review, 22, 853-866.

[10] Lin-Hi, N., Miller, K. The CSR bottom line: Preventing corporate social irresponsibility, (2013).

Most Read Articles

Hey there!

come here often?

Login To Come In