MANAGEMENT ESSAY 666

Submitted By Yvette-Hill
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Pages: 10
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This essay will describe the concept of social responsibility as it applies to organisations. Explanations will be provided as to how firms in controversial industries adopt the principles of social responsibility into their strategic decision making. The scope of this essay will be limited to examples from within the mineral resources industry, and will discuss what benefits companies from within this industry wish to derive from their corporate social responsibility (CSR) strategies. This essay will be supported by examples and empirical research from scholarly sources in the field.
CSR plays a significant part in how organisations develop and implement strategies that both benefit the organisation while at the same time maintaining ethical and legal standards of business practice. Social responsibility is defined as ‘an organisation’s intention, beyond its legal and economical obligation of organisational management to make decisions and take actions that will enhance the welfare and interests of the organisation’ (Robbins et al. 2013 p.142) However, there are two schools of thought regarding CSR. The first school of thought is that of the classical view which sees that the only responsibility that management has is purely based on boosting profits (Robbins et al. 2013). Friedman (1970) maintains that to achieve a return on capital investment the only social responsibility of businesses is to maximise profits. The second school of thought is the socioeconomic view which is that management’s CSR is more focused on the welfare of society rather than maximising profits (Robbins et al. 2013). Carroll (1999) maintains this view and suggests that there are four fundamental components that make up CSR which are economic which relate to profit, legal which is to do with obeying the law, ethical in which deals with values thought to be right and wrong and discretionary responsibilities which are open to choice. These four parts are also known as the CSR pyramid. Carroll (1999) also mentions that in 1991 he analysed his four part CSR definition and by this time he was referring to discretionary as ‘philanthropic’ and stated that ‘For CSR to be accepted by the conscientious business person, it should be framed in such a way that the entire range of business responsibilities is embraced’ (1999, p.289). The above schools of thought are summarised by the work of Kaeokla and Jaikengkit (2012) who define CSR as ‘a principle that deals with the relationship between a business and society or the relationship between a business and the stakeholders’ (2012, p.233)
Building the principles of CSR into strategy is an integral part of how organisation shows the purpose or mission, does not happen without being able to think about the organisations environment and the ethics and beliefs of its management. (Galbreath 2009) A case study undertaken by Mariá and Devuyst (2011) discussed the CSR activity of SGM a United States of America (USA) mining company in the Democratic Republic of Congo and how the company designed individual and industry wide strategies in conjunction with CSR policies. The study found that 0.3 % of the organisation’s revenue goes to community development and of this, 30% goes to the legal part of CSR and 70% goes to other investments, however, in June 2010, SGM started a foundation to look after the legal part of CSR and to make it 30% of the total revenue. Another area that SGM needed to look at was the environmental issues that company faced so they signed the International Council of Minerals and Mining’s (ICMM) principles of sustainable mining (POSM) and the UN Global Compact. The POSM operates under ten principles which encompass the principles of CSR (ICMM, 2013) and likewise the UN Global Compact also has ten principles which are under four subheadings of human rights, labour, environment and anti-corruption (United Nations, 2013) and also are in line with the principles of CSR. By adhering to these
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