Essay On The Impact Of Corporate Social Responsibility On Firm Values

Improved Essays
Introduction
This paper entitled ‘The Impact of Corporate Social Responsibility on Firm Value: The Role of Customer Awareness’ written by Henri Servaes and Ane Tamayo aims to illustrate the relationship of corporate social responsibility (CSR) and firm value to firms’ customer awareness. This paper also showed certain conditions on when CSR activities can add value to the firm. Furthermore, the impact of companies’ poor reputation to CSR-value relation is examined in this paper.

Article Summary
Before covering the ways in which CSR practices can enhance a firm value, the paper started to define the scope of what can be considered as a CSR activity. While this paper pointed out that there are a number of views of what can be considered
…show more content…
Therefore, it is doubtful that companies with a poor reputation to realize some instant benefits.

Critical Reflection
Corporate social responsibility is very broad notion that relates to the relationship between a company and its stakeholders. According to the United Nations Industrial Development Organization (UNIDO 2017), “Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders”.

The article made a worthy introduction emphasizing the concept of CSR as an essential piece of business activity. It specified that diverse studies have drawn divergent conclusions as to the impact of CSR activities to a company’s profitability and firm value, hence pointing out a problem statement if such activities really increase shareholders’ value as impacted by customers’
…show more content…
1421) which presented that a business’ socially responsible acts can shift positively the customers’ insights on the company’s products’ performance. Additionally, they have also noted the CSR’s benefits diminished when consumers ascertain that company’s deeds are self-interest driven as opposed to an act of kindness. The same is consistent with the findings of Kang and Hustvedt (2013, p 262) which showed that consumers’ perception of CSR efforts is a vital aspect of building consumers’ trust leading to their increased intent to subscribe socially responsible firms’ goods and

Related Documents

  • Improved Essays

    According to the article, if the framework that is used for core business is used for social responsibility, then CSR is a source of opportunity, innovation and competitive advantage. A new approach is proposed to develop a relationship between business and society that does not treat corporate success and social welfare as a zero-sum game. The framework which can be used by the companies to identify possible social consequences of action, to discover the opportunities to benefit the society and themselves, to discover CSR initiative to address, and to find the most effective way to do so. Successful corporations need a healthy society and vice versa. The effective integration of CSR can increase the opportunities, efficiency, innovation, heathy environment free from…

    • 1050 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    Social responsibility is an ethical framework which suggests that an entity, be it an organization or individual, has an obligation to act for the benefit of society at large. In simpler terms, taking consideration of the other parties that are affected by the actions of another. In business ethics everyone has this responsibility to be accountable for the best of society. It is considered wrong of one to not do so when acting in society. This role, over several years, has began to migrate towards businesses affecting their consumers and…

    • 1433 Words
    • 6 Pages
    Improved Essays
  • Great Essays

    Business sustainability is often defined as managing the triple bottom line. This is a process by which companies can refer to the areas such as: profits, people and planet financial, social and environmental risks, obligations and opportunities. These three impacts can also be commonly referred to as profits, people and planets. (Lexicon, Financial Times) Business sustainability requires firms to adhere to the principles of sustainable development. According to the World Council for Economic Development (WCED), sustainable development is development that “meets the needs of the present without compromising the ability of future generations to meet their own needs.” So, for industrial development to be sustainable, it must address important…

    • 1595 Words
    • 7 Pages
    Great Essays
  • Superior Essays

    The Global Supply Chain

    • 1342 Words
    • 6 Pages

    Assignment 2 PATRICK FORSON What are the strengths, limitations and challenges of ethical, socially responsible business practice in relation to the supply chain? This essay will examine contemporary standards of ethical and socially responsible business practice with regards to the globalsupply chain. Today there are challenges in defining and measuring corporate social responsibility (CSR) between buyers and suppliers. The main arguments will be that multinational enterprise (MNE) must use the main appropriate code of conduct to ensure suppliers adhere to its corporate social responsibility policies. Firstly, the essay will address what corporate social responsibility and profitability.…

    • 1342 Words
    • 6 Pages
    Superior Essays
  • Superior Essays

    These leaders know this reflects great administration and a positive notoriety. Try not to belittle this impact; it can be generally as critical as your organization's money related execution. Truth be told, it might be the central element in deciding to bolster your organization. Moreover ,Corporate Social Responsibility empowers individual growth.Your staff can build up their initiative and project management aptitudes through an all around planned corporate social obligation program. This may be as straightforward as group building activities, urging your workers to shape associations with individuals they would not regularly meet (like distraught groups).Also, Corporate Social Responsibility serves to cut your business costs.Environmental activities, for example, reusing and preserving vitality increment in-house proficiency and cut expenses.…

    • 1003 Words
    • 5 Pages
    Superior Essays
  • Superior Essays

    The study of Waddock and Graves (1997) find a link between social responsibility and profitability, this supports the theory that corporate social performance and slack resource availability are positively related. Hillman and Keim (2001) used shareholder value as performance measure and they find a similar link. Firms that are socially responsible may also have better employee practices. These employee policies tend to have low costs, but can increase the loyalty and motivation of the employees and this may lead to higher productivity. The model of Stigler (1962) says that firms that take employee satisfaction into consideration may attract better applicants.…

    • 981 Words
    • 4 Pages
    Superior Essays
  • Great Essays

    Assignment 2: What are the strengths, limitations and challenges of ethical and socially responsible business practice in relation to supply chains? Discuss with reference to case studies of your choice (2000 words). A supply chain is the method of producing and delivering products and services to consumers. Contemporary supply chains constructed to operate in ethically and socially responsible manners contribute to good business practice. “Profit along with business ethics, social responsibility and sustainability are emerging as major objectives of corporate strategy” (Rath 2016, pp 153).…

    • 1185 Words
    • 5 Pages
    Great Essays
  • Great Essays

    According to the case study,there are certain disclosures which can be labelled as beneficial to the company whereas there are others which might do more harm than good. For example, Disclosure about Human Resources, risks, etc are beneficial for the organisation whereas the disclosure of marketing strategies, research and development, etc can sabotage the progress by letting vital information leak out to the competitors. Accountability, transparency, fairness, disclosure are the four bases of the modern corporate governance. Investors’ confidence and good performances, if maintained are favourable. European Union (EU) and Cadbury Committee, amongst many other European companies,emphasize upon the importance of corporate governance disclosure.…

    • 1357 Words
    • 6 Pages
    Great Essays
  • Improved Essays

    Neoclassical Model

    • 1656 Words
    • 7 Pages

    The change in the culture and mindset of employees, as well as the commitment of the leadership and management are some of the internal factors which drive the transformation of the neoclassical model evident within post bureaucracy (Stubbs & Cocklin, 2008). It is through this transformation which allows organizations to be sustainable, by prioritizing the management of social and environmental issues within a business. The significance of the role of managers and their prioritization of decisions are emphasized through the ideas of corporate social responsibility, as being the greater intentions of business’ in creating practices and policies that go greater beyond the idea of just generating profit (Wray-Bliss 2007). The role of managers is further supported by the evolution of management structures from a bureaucratic hierarchical structure to a flatter management alternative, more often portrayed as a clan or adhocracy culture (Schein 1990). This change of managerial characteristics include a subtle form of communication, domination and control (Simpson 2016) assisting in the transformation of the neo-classical model to the SBM, as managers act on the same level with its employees.…

    • 1656 Words
    • 7 Pages
    Improved Essays
  • Great Essays

    He defined social responsibility as “the obligations of businessmen to pursue those policies, to make those decision, or to follow those lines of action which are desirable in terms of the objectives and values of our society” (Bowen p.6). Bowen’s seminal book marked the beginning of the discourse on business social responsibility, earning him the nickname “Father of Corporate Social Responsibility” (Carroll 1999, p.291), through questions such as: (1) “What responsibilities to society may businessmen reasonably be expected to assume?” ;(2) “What steps might be taken, practically, to give greater effect to the broader social aspects of business decisions?” and;(3) “What are other basic ethical issues facing American businessmen today?” (Bowen p.xvii) These questions laid the foundation for what eventually became known as corporate social…

    • 1417 Words
    • 6 Pages
    Great Essays