The debate concerning if Corporate social responsibility (CSR) policies contribute to bottom line in organizations has been in existence for many years (Archie & Kareem, 2010). Some people feel that these policies have negative impact because companies spend to do good without obtain returns, while others feel CSR has a positive impact to organizations because of several factors. The reward of doing well to the society is positive and therefore companies which establish CSR polies in their operations realize positive results in their bottom line in a number of ways.
Although CSR is not a marketing gimmick for companies anymore, it plays a significant role in building bond between a company and its bottom line (Barot, 2015). If the policies are executed and communicated effectively to the staff members, they can prove to be a fundamental driver in staff and stakeholder engagements.
Companies which use SCR policies attain good workforce because employees like working with organizations which are socially responsible in their operations (Archie & Kareem, 2010). When the workforce is good, companies have high possibilities of getting better revenue because of increased production, high quality services, team work and so forth.
Engagement of companies in social initiatives assists the management to establish good rapport among stakeholders, which in turn creates positive image of the company. It also assists in increasing the outreach in remote areas and popularizing brand in different areas. Positive influence attracts investments which is fundamental for expansion, more so in todays competitive markets (Namporn, 2014). All these benefits are normally reflected in the bottom line of an organization through increased revenues and profits.
CSR policies are fundamental in business operation because it assists companies to relate positively with the public. Being socially responsible concerns making alliances and partnerships with social agencies so as to address deeper social issues. Strategically aligning a business with agencies to deliver social changes is more than brand positioning because it allows the company to exercise its values and missions in a tangible manner (Vogel, 2008). If the company mission is to deliver high quality service, or to be the best in the eyes of clients and shareholders, then some part of attaining that mission should be through investing in communities that the employees and clients live.
When firms visibly invest in the communities, they change to a place where everyone wants to work (Vogel, 2008). When agents are engaged with employers who give back, they tend to feel they are part of contributing to better community. Apart from establishing a productive environment, customers expect companies to be socially responsible.
Implementing corporate social responsibility policies is beneficial in the company’s bottom line because working to improve the communities helps in setting the organizations apart from their competitors because being connected with the community enables the company to attain positive image (Archie & Kareem, 2010). According to the recent research, firms which value corporate social responsibility enjoy competitive advantages, lower employee attrition, higher brand recognition, reputation and better employee engagement.
CSR policies enable companies to relate positively with customer which in turn leads to increased revenue. When customers build loyalty with an organization, they always purchase products from that company because they tend to feel that it is the only firm which can satisfy their needs for a particular product (Vogel, 2008). When this happens, the company realizes increase in sales and revenue because products keep moving from production to the consumer.
CSR policies creates social goods and brand reputations. This assists an organization to maintain its customers because the society likes being associated with companies which are socially good (Oliver & Stephan, 2013). This factor assists in the bottom line because such companies do not realize decline in sales because of various issues like competition, changes in consumer buying behavior and so forth.
Corporate social responsibilities enhance reputation and thus customer base. Customers always consider the public image of companies where they purchase their products and services (Selena, 2017). If a company has good CSR policies and uses them as selling point, they are likely to realize increased profits. Organizations which do not establish reputation through being socially responsible do not attain increased profits because consumers do not like being associated with such companies.
Another factor which makes it right to argue that implementing CSR policies is beneficial in companies bottom line is that CSR policies enables companies to improve their brand image which in turn leads to increase in profitability. When a company competes with other firms which do not have positive brand image to the public, the chances of winning competition are always high because customers like buying products or services from companies with positive brand image (Chad, 2015). Being social responsible increases brand image in the fact that community feels products from socially responsible companies are good and worth purchasing.
Based on the rate at which the CSR is assisting organizations, implementation CSR policies in the future will no longer be simply a nice thing to do, but will also be an important component in firm’s business model and culture because of assisting companies to attain competitive advantage and bottom line impact (Sally, 2015). Companies which do not implement these policies in their operations may find a challenge of increasing revenue because consumers seem to like being associated with companies which are socially responsible.
In conclusion, it is right to argue that implementing social responsibility policies is beneficial for companies’ bottom line because it contributes in profit maximization in a number of ways. Some of these ways include improving brand image, enhancing reputation, assisting an organization to attain a competitive advantage, increasing customer loyalty and so forth (Oliver & Stephan, 2013). Companies which want to see direct contribution of SCR in revenue maximization understand that these policies contribute in profit maximization in direct or indirect ways.
Customers always like purchasing from socially responsible companies and employees wants to work with firms which operate based on CSR policies. This in turn leads to increase in revenue because increase in purchases lead to increase in periodic sales while good workforce leads to increase in production. The final results of these two factors are increase in revenue. This means although CSR may not directly contribute to an organization, it plays a significant role in other factors which lead to positive impact in the bottom line.
Archie, B. C. & Kareem, M. S., 2010. The business case for corporate social responsibility: A review of concepts, research and practice.. international journal of management review, 12(1), pp. 81-105.
Barot, G. C., 2015. Cost Benefit Analysis of Corporate Social Responsibility (CSR). Advances in Management, 8(5), pp. 455-502.
Chad, V. W., 2015. Integrated Value Creation (IVC): Beyond Corporate Social Responsibility (CSR) and Creating Shared Value (CSV). Journal of International Business Ethics, 8(1), pp. 567-600.
Namporn, T., 2014. Ethical Organization: The Effects of National Culture on CSR. Organization Development Journal, 32(3), pp. 44-56.
Oliver, F. & Stephan, H., 2013. Corporate social responsibility: Doing well by doing good. Business Horizons, 50(3), pp. 247-254.
Sally, S., 2015. An Examination of Corporate Social Responsibility Practices and Firm Performance in U.S. Corporations. Academy of Strategic Management Journal, 14(2), pp. 415-434.
Selena, A., 2017. A Comparison of Content Analysis Usage and Text Mining in CSR Corporate Disclosure. International Journal of Digital Accounting Research, 17(1), pp. 345-401.
Vogel, D., 2008. Market for virtue. washington: Brookins institution press.