CORPORATE SOCIAL RESPONSIBILITY (CSR)

Although CSR is a relatively recent phenomenon for many companies, profit-making is the most significant conventional target that most firms uphold. There are widespread disputes as to whether or not corporations can follow CSR even though they are seeking to support owners and partners. The ability to balance the CSR efforts of an organization with their need to gain is significant. This balance is critical because the commitment of a company in CSR is a form of appeal to the company's customer base (Tran 8). The appeal to clients, in turn, results in increased revenue for the company; which is a boost to profitability. It is recognizable, however, that CSR represents a form of cost to the company. Tran explains that through the activities of giving back to the society that a company engages in, it incurs additional expenses (5). This places a strain on the profitability. Having a balance between these two objectives ensures that the revenues from the supportive clients and the expenses from CSR activities even out, resulting in a stable company. More often than not the revenue side will exceed the cost implications, which implies that the company remains profitable.

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In view of this balance, Archie Carroll is right in positing that CSR is the way to go for companies. It is undeniable that companies operate in a society. As such, there should be ways of ensuring the society in which the company operates continues to thrive even as the company pursues its profit-making activities. The stance by Milton Friedman on there being no CSR is failure to properly recognize the external environment in which a company operates. Societal stakeholders are an important component of this environment, and their needs should be met as well. Examples of companies that engage in CSR are Google, Unilever, and Coca-Cola. Their CSR activities range from environmental initiatives, community welfare activities, and society educational programs. Examples of companies that do not engage in CSR are Volkswagen and HSBC. A 2015 Forbes report indicates that Volkswagen has deliberately avoided an engagement in CSR activities citing protection of shareholder property as the reason.

SOCIAL CAPITAL

The most prevalent definition of social capital is that it refers to the norms and networks that enable people to act collectively (Field 10). Social capital is a term that became widely known as organizations began to realize that proper HR systems alone cannot suffice in building and maintaining a truly competitive organization. With the advent of digitalization and globalization came a massive dissemination of knowledge, in that everyone has access to the knowledge and content they need. Having human resources who are adept in knowledge and content is not a competitive advantage anymore as such knowledge is widespread, and just about anyone is able to acquire it. The proper competitive advantage now lies in a company’s ability to find, combine and utilize the knowledge and skills of more than one person. In essence, the context of use of the knowledge and skills overrides the content itself. A successful application of this context requires social capital.

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A company gets social capital from the employees’ professional and business networks. Networks are created by employees both inside and outside a company as they continue to interact with various aspects of a business (Huang and Wang 1617). Most of the work in companies is often done it teams. This is the basis of creating networks and connections that contribute to a company’s social capital. In addition to the teams within the company, employees interact with customers, suppliers, regulators, communities, and even competitors outside the company. These outside interactions then contribute to external networks. All rounded and effective social capital is achieved with the balance of the internal and external networks. Organizations with higher social capital are better are navigating aspects of business such as alliances, innovations, and output.

Companies spend social capital when they push their various brands through different means. For example, companies may get onto customer relationship portals to ask for feedback on their brands. This is a form of social capital expenditure. Going out to gather competitive intelligence to improve a company’s position is also spending social capital. Basically, organizations spend social capital when they use the networks that have been created by their employees to improve the performance.

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Works Cited

Dans, Enrique. Volkswagen and the Failure of Corporate Social Responsibility. Forbes, 2015, https://www.forbes.com/sites/enriquedans/2015/09/27/volkswagen-and-the-failure-of-corporate-social-responsibility/#1c87cd344405. Accessed 18 Oct. 2017.

Field, John. Social Capital: Key Ideas. Routledge, 2008.

Huang, Kai-Ping, and Wang, Yuan. “The moderating effect of social capital and environmental dynamism on the link between entrepreneurial orientation and resource acquisition.” Quality & Quantity Journal, vol. 47, no. 3, 2013, pp. 1617-1628.

Tran, Thuy. Corporate Social Responsibility and Profits: A Tradeoff or a Balance. Stanford University, 2015, http://cddrl.fsi.stanford.edu/sites/default/files/thuy_tran_cddrl_thesis_v3.pdf. Accessed 18 Oct. 2017.