Literature Review: Corporate Social Responsibility Reporting (Other (Not Listed) Sample)

LITERATURE REVIEW: CORPORATE SOCIAL RESPONSIBILITY REPORTING Name Tutor University City and State 11th November, 2016 Literature Review: Corporate Social Responsibility Reporting CSR Reporting as a tool for improving an organisation’s legitimacy perceptions and human ethics. While many companies have made assertions of adopting the new social responsibility, very few deliver accurately and materialised report as expected of them. Michelon, Pilonato, and Ricceri (2015) explain their concern over poor and shoddy reporting which most companies exercise in a bid to hiding critical information. The companies prefer to keep their operational details in secret so that their competitors may not know them. Multiple organisations hold this cynical notion. However, their legitimacy in the eyes of their customers depends on the amount of information that they avail to the public (Michelon, Pilonato and Ricceri, 2015). The level of disclosure influences the degree of societal appraisal, be it by the customers, the suppliers and other critical stakeholders (Cheng, Ioannou and Serafeim, 2014). Aguinis and Glavas (2012) express the value of being open to stakeholders as they are essential pressure points that the need for transparency originates. In a bid to improving the stakeholders’ perception, most companies often adopt new practices that are safe even when exposed. The influential force of the changes is the CSR report can be derived from on looking media centres and special interest groups (Hopkins, 2012). Standard changes towards environmental sustainability have been adopted by many firms (Aguinis and Glavas, 2012). Other factors that make stakeholders put pressure on businesses include improving general relations of the enterprise and self-interest. Other cases of getting involved in social activities have been emphasised in the recent past. Apparently, these adoptions have been emphasised to improve the stakeholder relations, and therefore improve a business performance (Epstein and Buhovac, 2014). On the other side, in the eyes of the stakeholders, efforts made to appease them are added efforts to improve satisfaction, by these entities. In a bid to improving the value of ethics along with business operations, most companies have been pushed to adhering to certain labour laws (Epstein and Buhovac, 2014). In a huge way, procedures and activities within an organisation have to be included in the CSR for there to be a certified indicator of the safety of users of these products. Ethical concerns of the buyers may prompt them to question the method used to produce the products, and if the workers were fully and fairly paid for their services. (Lund-Thomsen and Lindgreen, 2014). Through CSR, the two authors indicate that harmful practices such as child labour and slavery are mitigated. The openness created by the reports exposes companies to public scrutiny especially the media and NGOs. Du and Vieira (2012) ascertain the need for CSR by many firms if they need to gain a market for their goods. The two cite the controversial oil industry and indicate that for the oil producing company, critical standards have to be met. These standards have to do with pollution, and the quality of their products, as well as significant efforts that the company could be making in restoring civilisation. This brings in the social and environmental aspects of CSR. It must be appreciated that oil is mainly sourced from Middle East countries; and due to its high demand, war can erupt quickly over any disagreements over the natural resource (Du and Vieira, 2012). CRS Reporting as a Tool for Improving Customer Relations Even though there is little direct relationship between a business performance and its involvement in CSR, certain trendy factors emphasise for the practice. With the introduction of technology, especially the web 2.0, there has been an increased information sharing. Consumers can now compare competing business firms. Apparently, the assumed economic offers and incentives appear to be no more attracting consumers as prices are almost standardised (Servaes and Tamayo, 2013; Aguinis and Glavas, 2012). An established customer relation is what will move many buyers into buying a product from a given company. Homburg, Stierl and Bornemann (2013) share their thoughts on the fact that individual consumers put on the outlook of a company by its behaviours. As such, the buying decisions of a user are heavily influenced by the personal values and attributes of the managing heads of a company (Lund-Thomsen and Lindgreen, 2014). This concept can be reffered to as the business to business (B2B) relations. When open CSR reports are published, involvements of a company with social activities creates empathy among consumers. When the events are verifiable by third parties, transparency and credibility of the reports and the company is boosted. Transparency is an added advantage of a company as it makes the trading partners comfortable (Cheng, Ioannou and Serafeim, 2014). The greatest managers must embrace the new concept of CSR and use to gain consumer trust (Epstein and Buhovac, 2014). Building a strong B2B will improve a company’s portfolio in the business practise CSR arena. Equally, exercising same values to the general community will promote the philanthropic CSR. Out of the general population, raises potential consumers or trading partners, who may be influenced by a history of the company with outsiders. Use of CSR Reporting for Establishing a Proper Political Environment for a Company In most countries, governments have insisted on a regular CSR reporting. The government monitoring is crucial as it will thwart negative behaviours among businesses and regulate unfair competition among rival companies (Hopkins, 2012; Noronha et al., 2013). This concept confirms Servaes and Tamayo’s (2013) postulation; that fair competition is enhanced using CSR. Most governments have developed company laws, as Noronha et al. (2013) deCSRibes, which demand mandatory CSR reporting. The rules have been enacted in China, upon multiple unethical business activities, and as a way of enforcing order in business activities. It is apparent that only the companies that abide by these rules are allowed to operate. (Marquis and Qian, 2013). Additionally, quality of products is improved, and everyone can see what is being produced and the procedure and standards used to create the product. This regulation is because the aim of a business is not only to make a profit but to create a better life of the society it touches (Noronha et al., 2013). In light of this context, establishing a social and economic balance is in order (Zadek, Evans and Pruzan, 2013). Since most firms have noted this regulatory tendency by most governments, most business entities are willing to provide a strong report to avoid a closer look at the state. Most companies believe that if they provide a clear and sense making report, states will develop trust with their institutions (Hopkins, 2012). A critical contemporary role of the government is to ensure that crucial yet freely available resources are not abused. Water from rivers, air and other natural resources often suffer from abuse, in particular by the private sector. At times, these resources have been abused as dumping sites for gaseous, liquid and solid waste from the industries. However, the CSR has seen a change of most business perceptions, from a business attitude, with no use of society to an all rounded institution that engages sustainable business operations. Hopkins (2012) acknowledges the role of government in bringing about this change. In a view to the effort made by a firm to appear legit, there are crucial determinants of the level of effort of reporting that every firm has to do (Marquis and Qian, 2013). A key determinant of the extent of a company’s activity in response to government requirements is its ownership. Governments censure the private companies with more scrutiny, compare to the government-owned companies. The presence of any political affiliation of the company to the ruling political party determines the attitude of the government towards the business. The role of the ruling entities in a country to ensure ethical business operations have been acknowledged by many scholars. However, Marquis and Qian (2013) insist that even though governments issue directives on firms to furnish the public with these reports, political sidelining have impacted the practice negatively. All in all, what matters is that quality CSR reports are released, in a way that is pleasing to the government. Pleasant reports attract less scrutiny and provide an ample environment for the business to continue its operations. Role of CSR in Eliminating Capital Constrains on a Firm As companies do better in their CSR reports, they attract more trust from stakeholders. This increases the chances of real long-term business oriented opportunistic behaviour, as explained by Cheng, Ioannou and Serafeim (...