Business Management and Entrepreneurship Assignment
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“Corporate social responsibility (CSR)” is a self-regulatory business model that enables a corporation to be socially accountable—to itself, to its stakeholders, and the general public. Corporate social responsibility, commonly known as “corporate citizenship”, enables businesses to be aware of their influence on all facets of society, especially “economic”, “social”, and “environmental” (Dion, 2017).When a corporation engages in “corporate social responsibility (CSR)”, it implies that it operates in ways that benefit “society” and the “environment”, rather than in ways that detract from these benefits (Bianet al., 2021).
In the forthcoming sections, CSR theories in the context of Amazon INC. will be vividly discussed. In contrast to Amazon, a different organization will also be examined and the evaluation of the contrasting approaches will also be done to achieve a better understanding of the subject matter.
Corporate Social Responsibility and Its Theories
CSR is a term with several definitions and one that is gaining traction in the corporate world today. According toWesselink and Osagie (2020), CSR is viewed as the cure for resolving global poverty, social marginalisation, and environmental deterioration. According to van Aaken, and Buchner (2020) corporate social responsibility is aimed at assisting the transition to a socially and environmentally sustainable future using voluntary company operations. Bari? (2017) defined corporate social responsibility as “a broad term that refers to a firm’s duties to society and the stakeholders within that society.” Lee and Yoon, (2018) defined CSR as the status and actions of an organisation in relation to its considered community duty. CSR is gaining traction in the domains of ethics, marketing, and management. Ethics is divided into three categories, namely macro-, meso- and micro-level concerns. The macro-and meso- relate to stakeholder interaction, whereas the micro- is the focal point of a particular issue, such as a code of ethics.CSR is viewed as the cure for resolving global poverty, social marginalisation, and environmental deterioration as per Wesselink and Osagie (2020).
There are three CSR theories that are used to describe and inform contemporary corporate social responsibility (CSR) practice:
- Business ethics theory of CSR
- The Stakeholder Theory of CSR.
- The Shareholder value theory of CSR.
a. Business ethics theory of CSR
It is possible that corporations have responsibilities that extend beyond earning profits and involve the greater good of the community. Corporations are entities with “economic”, “legal”, “ethical”, and “charitable duties’, according to corporate social responsibility theory as a distinct concept. “Economic”, “social”, and “environmental” sustainability are all important goals for corporations with a triple bottom line strategy (Ferrell et al., 2019). Stakeholder theory informs corporate ethics, which aims to include all people who are impacted by a company in the decision-making process.Business ethics is a philosophy that is founded on a broader social commitment and the moral obligation that corporate has to society. This thesis rationalises CSR on three distinct but connected ethical grounds:
- Social reactivity and social aspirations to specific social problems are changing and evolving.
- Eternal or intrinsic core standards are always influenced by Kantian ethics and signified by certain normative and universal concepts such as social justice, equity, and human rights.
- Corporate citizenship, on the other hand, refers to a business acting as a leading player in a community in order to contribute to societal well-being.
According to corporate ethics theory, CSR duties are primarily humanitarian and ethical in nature, instead of legal and economic in nature. CSR takes the initiative when legislative obligations lapse.
b. The shareholder value theory of CSR
The shareholder value theory, which was coined by Nobel Laureate Milton Friedman in 1970, contends that the sole social duty of business is to maximise profits while adhering to legal requirements. Hayek and other neoclassical economists argue that the role of business is to conduct business in a way that benefits society and the economy, and that this function should never be mistaken with other social duties carried out by not-for-profit organisations or by governments. Aside from that, this is not the most efficient method of distributing resources in a competitive market. A common belief among economists, such as agency theorists, is that the owners of a business serve as its managers and that stakeholders act as its agents, with a fiduciary obligation to serve the interests of shareholders rather than those of others.
Corporate social responsibilities are often viewed as a strategic weapon for a company’s competitive advantage and increased profits, even when increasing shareholder profit is rationalized as the most important or sole corporate duty (Surrocaet al., 2020).
c. The stakeholder theory of CSR
Since the 1990s, the stakeholder theory has gained prominence as a direct counter-argument to the shareholder value theory (Freema and Dmytriyev, 2017). It claims that the variety of stakeholder pressure groups has increased significantly since the 1960s and that the effect of stakeholder forces on business cannot be ignored. As ethical and pragmatic as business success should be, it assumes a broader range of stakeholders’ interests than the shareholder’s interest alone. The stakeholder hypothesis places a premium on unique social relationships rather than on those that are unconnected to the company. Thus, CSR is defined as a company’s obligation to its stakeholders.
Organising and managing Corporate Social Responsibilities in Amazon
Amazon was started in 1994 in Seattle, Washington. Jeff Bezos started this firm with the goal of establishing an online marketplace for books. However. As the firm prospered, it diversified its offerings. Amazon has also entered sectors that are completely unrelated to retail, such as cloud computing and artificial intelligence. Additionally, we are facilitators of new technologies in the industrial revolution 4.0. This publicly listed corporation earned around 280 billion dollars in sales in 2019. This amount exceeds the GDP of a number of countries. This magnitude of activities is not without its detractors. Several of the most significant critiques levelled towards Amazon arise from the following steps:
- Degradation of the environment as a result of the huge volume of packing (Singh and Misra, 2021).
- Other activities that contribute to carbon emissions include logistics and manufacturing.
- Significant energy use at their corporate headquarters and cloud servers.
- Concerns about data privacy.
- Promoting excessive consumerism and a thoughtless purchasing culture.
- Toxic work environment
Indeed, around 400 employees have gone on record to express their dissatisfaction with the environmental damage. it occurs at a time when Amazon has extremely stringent regulations against public criticism of the corporation. Additionally, it is extremely difficult for the firm to quantify the real impact of its global activities.Amazon has a few rebuttals to the environmentalists’ criticisms. To begin, online businesses mitigate part of the carbon footprint associated with travel by eliminating the need for individuals to go. The amount of gasoline saved by internet shoppers compensates for a large portion of the environmental deterioration caused by packing. However, a counter-argument to this is that individuals often purchase far more than they would via an offline channel.Additionally, the corporation has defended itself by citing its pro-environmental initiatives. It is one of the few corporations in the world that has committed to becoming carbon neutral by 2040 (Ertem-Eray, 2020). This is more than a decade before the Paris agreement’s official mission. Now, we’ll take a look at an overview of several of Amazon’s most visible CSR initiatives.
As per Turner et al.(2019) corporate social responsibility encompasses the organization of a business in a responsible manner toward its shareholders, employees, clients, and suppliers, the relationship of the business with state (local and national) institutions and norms, and the business as a responsible member of the society in which it operates (Tritt and Teschner, 2019). Examining stakeholder theory on Amazon, itcould not achieve cent percent success in the arena of business ethics of CSR as the activities of Amazon’s CSR are controversial (Fantin, 2020). While evaluating Amazon, it became obvious that the corporation makes use of the two remaining theories; stakeholder and shareholder value theories of CSR properlyand fulfil the primary objective, which is to maximize shareholder profits. And for this Amazon.com Inc. continues to pursue corporate social responsibility programmes that are directed at the company’s primary stakeholder (shareholders, employees, clients, and suppliers) groups.
Organizing and managing Corporate Social Responsibilities in Tesco
Tesco is dedicated to conducting business activities in a socially responsible manner, as well as in an ethical way. It upholds a code of behaviour for its employees and suppliers for the sake of environmental protection, and it does so by using business muscle to put its beliefs into action. Tesco practices corporate social responsibility (CSR) in its commercial operations, acknowledging its duty to society (Nyame-Asiamah and Ghulam, 2019). The corporation believes that CSR is neither an added burden on the company nor a diversion from offering services to consumers.Ethical standards are those that should be followed in all aspects of one’s life, regardless of the situation. Following ethical principles is vital in business as well; doing so will allow the company to operate in a proper and accurate manner (Student, 2021). Organizations that adhere to ethical standards will distinguish themselves from other businesses in the marketplace. Supermarkets in the United Kingdom are expanding and developing internationally, making record-breaking profits while diversifying into other items outside food, such as mobile phones, electronics, and so on.
Tesco has offered significant assistance whenever the globe has been hit by unexpected calamities such as the Tsunami. It has made a donation to the British Red Cross organisation in the amount of about £310,000. It has also provided educational support in the form of computer equipment for schools and assistance with foreign education, among other things. CSR is a concept under which Tesco integrates environmental and social issues into their business operations and relationships with stakeholders on a voluntary basis. The modern evolution of ethical viewpoints necessitates that the organisation places a premium on ethical perspectives. These present changes will emphasise the ethical imperatives necessary to fortify the relationship between society and business. These ideas are predicated on the principles of promoting and preserving the environment and society’s health. Tesco, in a similar manner, emphasises the importance of becoming local and operating locally. Tesco also emphasises its dedication to local resources in comparison to its worldwide operations. It adopts strategies for building positive relationships with local and international stakeholders. Other recent initiatives include Customer Question Time, Healthy Living Clubs, Behaviour and Operational Skills development, Regeneration and Reclamation of Disadvantaged Groups, and the use of Key Performance Indicators and energy-saving schemes.
Tesco asserts that Corporate Social Responsibility is an important component of the organization’s broader context of corporate governance and has been fully integrated into existing processes and management. Tesco has a cross-functional team of senior executives or experts ready to give leadership on CSR, and the organization’s Corporate Responsibility Review is a critical tool for conveying the company’s CSR performance and policy. Tesco’s senior executives claim that CSR has been an important part of their business and has evolved into a brand (Field, N.D.).
From the discussion done above and utilizing the business ethics theory, it can be asserted that Tesco’s CSR activities are philanthropic rather than entirely profit-oriented as in the case of Amazon. Tesco has been engaged in serving people for a long time by its corporate social activities. The company does not see its CSR activities as a burden or offering to society rather it treats these works as its responsibilities as a concerned corporation. Tesco makes use of its stakeholders properly to get to be benefitted from the employees, shareholders, customers in such a way that it can contribute to each aspect related to it so that Tesco can share the advancement of it with the others which in turn would enhance its brand’s success.
Introduction to business and stakeholder theory has been much controversy over the last several decades about the move from marketing theory and practices to relations-based marketing, which views the company as a coalition of several stakeholders. This stakeholder theory identifies the specific members of the corporate environment who contribute significantly to the firm’s success. This has been emphasized in the summarized diagram of the stakeholder theory (Crane, 2008). The method is applicable to organizational management and to the ethical elements of the business.
Examining crucially and scrutinizing from the microscope of the stakeholder theory and the shareholder value theory it is evident that the ethical elements of Tesco’s business concern the morality within the business premises in order to maintain the company organization’s image. The theory provides a strategic perspective on the groups that comprise the firm’s stakeholders and makes recommendations that really can contribute to the groups’ healthy coexistence with the. Tesco’s stakeholders’ theory is linked to CSR in that it outlines the firm’s terms and policies for the aim of ensuring the firm’s integrity. On the other hand, investors provide cash to a business in exchange for a ready market for its products and services.
Thus, it can be said from the assessment done above that Amazon’s CSR activities and Tesco’s activities are contrasting with each other in the aspect of all the three theories.
Evaluating The Contrasting Approaches Taken by Amazon and Tesco in Managing and Organising Their CSR
From the preceding discussion, it is well evident that the application of the mentioned theories by the two chosen companies is quite different, in terms of their approaches towards CSR. While Amazon treats its CSR initiatives as a tool for enhancing its business performance, Tesco treats it like its responsibility (Nyame-Asiamah and Ghulam, 2019). Amazon’s application of shareholder theory suggests that the company, through its CSR activities wants to capture the attention of its investors and keep them appeased. Tesco on the other hand wants to contribute towards the well-being of the world and society through its CSR. The financial outcomes of its activities are received by the company, but it is not the purpose behind the CSR initiatives. The application of the stakeholder theoryby the two companies shows that Amazon focuses mostly on its investors and the customers since these groups make the greatest financial contribution (Fantin, 2020). Tesco on the other hand focuses equally on each of its stakeholder groups. Finally, the business ethics theory evinces that although both the companies consider it very important to make a positive impact on the environment and the larger society, the approach of Amazon still tends towards being a mercenary one; whereas the approach of Tesco is mostly founded upon the principle of philanthropism; although it would be wrong to deny the fact that Tesco’s approach to has a financial angle associated with it.
In a nutshell, it can be said that the discussion is done in the preceding segment vividly described the three CSR theories, Amazon’s CSR activities and the linkage to the CSR theories. Along with these Tesco’s CSR activities, the application of the theories in its activities was also meticulously described. Last but not least evaluation of the contrasting approaches between the Tesco and Amazon instilling three different CSR approaches was also done.
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