Corporate social responsibility (CSR) practices and its financial payoff
CSR has become a comprehensive approach for the business persons globally which contributes in the development process through investing the efforts in social, environmental and economic benefits for the stakeholders. The wellbeing of the stakeholders is the priority of the businesses these days as they are forcing the activities of CSR so fast. No matter if you do not get the financial benefits immediately, but will get the most excellent outcomes in the long-term process which will bring the positive change in the societal development. Prior theoretical/empirical evidence refers to the idea of CSR was alive back in decades, and the businesses were ensuring the practices within their organizations. Early in the twenty-first century, the concept of participating in the community services and help to protect the society by leading companies could be seen. Earlier these corporations were smartly managed public as well as their economic interest. In CSR’s perception, there is a shift that is leading the organization to set up their goals by keeping the societal/environmental responsibility in their minds. The MNC’s leveraged their assets that include technology, human resource, supply chain, international customers, access to the markets and innovation. Step to get a competitive advantage for the company also has the implementation of the CSR strategies and sustain the development of the innovative environment. The stakeholders of the company are customers, employees, government, community and the shareholders who are affected by the practices, ideas, decisions and the services of the business. The R&D practices, innovation, and creativity of a company make a product and serviceable to provide the maximum return to the customers. The return of the shareholders they get from the company after they invest their amount in different places and get profit. Companies served the government by paying the taxes and contribute to the society through investing in education, health, public services and development as a philanthropist. CSR practices not only involved in the economy and the fundamental part of operating a business but also has become the paramount debate for the scholars and the business analyst that it comes under the business roof or fall beyond the economic boundaries since a couple of de6cades. The proportion of earned profit from the business operations may be used for indirect CSR Asian Management Research Journal 2(4) © 2017 SAMR 184 activities, as companies pay tax which is a legal responsibility of an organization towards the society. The economic responsibilities of a company include operations, investment, cost-effectiveness, strategies, revenues, longterm success financially and the marketing. The most important themes that have become fundamentally important in this hyper global and competitive environment are economic performance, business environment and the sustainability of the business. That is why the baseline for all the leading company is to identify their economic problems and accomplish them fully. The laws and the regulations are the essential conditions to operate the business, but it is not enough and sufficient for the society. The requirement of the rules and regulation is to implement the strategies and ethically conduct their affairs. The response of the business must be according to the spirit of the law to enhance their skills in the ethical values of the corporate world. There are numerous theories to explain the reasons why companies engage in CSR practices and eventually get benefits as compared to those firms which don’t involve in CSR activities. These all are based on sounds perceptions like, “the business is conducted in society through a social contract which management agrees to achieve, based on some social requirements, in return for approval of its goals.” Organizations need to behave and disclose enough information for society to judge whether or not a company is a good corporate citizen. The companies perceive as “good corporate citizens” which perform according to social commitments. Likewise; “any group or individual who can affect or is affected by the achievement of an organization’s purpose.” The term ‘stakeholder’ includes a wide range of interest groups who are involved in the organization. This approach focuses on various stakeholder groups within society and accepts different views of stakeholder groups about how organizations should operate in the society. This approach considers all stakeholders affected by a firm’s behavior, including shareholders, suppliers and distributors, customers, employee, competitor, activists, media, legislators, academics, indigenous people, academia competitors, labor organizations, local communities, and government agencies. The relationship between firm CSR practices and its financial payoff can be perceived as obvious. However, it needs attention from the business researchers who can come up with theoretical and empirical evidence to justify the abovementioned relationship. Though the fact is; National/Multinational firms have moved towards robust mandatory CSR practices implementations, but the question is; whether the legal changes will be translated into actual changes. As other scholars have noted, “firms cannot upload high socially responsible standard in an environment where the government lacks checks and balances, and official corruption is high,” so far, transparency remains a significant problem. Asian Management Research Journal 2(4) © 2017 SAMR 185 Moreover, CSR is part of a larger governance setting. Thus, in addition to pushing individual firms to adopt higher CSR standards, making an improvement to the business environment, especially the governance environment is a necessary condition for effective CSR programs. This research concludes that the CSR practices and its financial payoff particularly in growing economies like Asian countries from a governance approach would help to develop a better understanding of these practices.