Features & Analysis

Shortcomings of CSR


Photo Source: business-ethics.com

Corporate Social Responsibility is still perceived as a result of a globalized business environment and it is viewed as specific to multinational corporations. However, small firms should also get involved in socially responsible initiatives. The necessity for small companies to carry out CSR is a result of two factors: economic proliferation of SMEs and the fact that socially responsible activities support financial interests of companies that promote CSR.

Prohibitive costs remain an important barrier for the implementation of CSR by SME’s. Analyzing the CSR from company’s perspective, McWilliams & Siegel, (2001, p.123) wrote that these practices are associated with big companies, and not with small firms. CSR generates more corporate expenses. Companies with a big production have lower unit costs than small firms with small production. Therefore multinational companies are more likely to get involve in CSR actions and not SME’s.

That is why the main challenge for SME’s is to find mechanisms which can offer them the chance to cut costs associated with CSR and so they can benefit efficiently from this profitable business strategy.

Social responsibility is not just an abstract topic that lacks consistency and practical applicability. CSR is an efficient way to support company’s financial interests on medium and long-term. For the past years CSR recorded some real progress on general awareness on its strategic role to support company’s interest on medium and long-term.

Governmental organizations and NGO’s begun offering solutions for regulating the standards used by companies to report CSR so they would put an end to any subjectivism. Until recently, companies were elaborating their own reports; researches in the field identified most efficient social indicator to measure the social corporate performances.

Lack of coherent regulations in the field of CSR can lead to an inadequate implementation of CSR. Sasse and Trahan (2007, p. 35-37) have identified three types of negative results which can lead to an inadequate or excessive implementation of Corporate Social Responsibility. The allocation of corporate resources is often made inefficiently because companies do not have the experience required to take decisions outside economic field; social issues supported exclusively by corporate initiative can be left without financial support because CSR is not compulsory; the third negative result is the distortion of free market economy system by overlapping the public and private and gaining some competitive advantages from solving social issues (Sasse & Trahan, 2007).

While preserving the voluntary and discretionary character of their actions, Corporate Social Responsibility platforms should not replace public policies.

 

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