Is CSR Really An Obstacle In Realising A Company’s Profit?

CSR (Corporate Social Responsibility) is a company’s responsible action to respond its social role. Each company decides their own CSR role in its society based on stakeholder’s expectation, global environment and company’s business area.

To realize the company’s responsibility, it should spend the resources: time, people and money. Especially, for SME’s (small and medium-sized enterprises), the cost-benefit is crucial issue to maintain their business.

It is here where the company should overcome the CSR and profit confrontation. From researcher’s data, there is a tendency that SME’s spend less for CSR activities and CSR activity is highly vulnerable to economic recession, while Research and Development expenditure is roughly stable.

Is CSR really an obstacle in realizing a company’s profit?

I would answer no, but it depends on the company’s business area.

Generally, Business to Consumer companies have a larger CSR impact than Business to Business companies.  Additionally, there are some conditions that leads to positive impact from CSR.

  1. The company has a good reputation from its customers.
  2. CSR activity is well recognised.
  3. CSR activity is persistent in the company’s past activity.

By satisfying with these conditions, a positive correlation between CSR activity and company’s value will be created.

Furthermore, if the company can regard “profit” as broad concept, not limited to financial profit, the CSR is deserving of the company’s profit.

Through the CSR activity, a company showcases its own image and create its brand. Equally, as for price, design or function, CSR is an important index by which the customer selects the company/products.

Developing CSR is not only the passive action to respect the rule or respond to the social obligation, but also the value created action for both company and society.

Written by

Jun Kume

Reference

“The Impact of Corporate Social Responsibility on Firm Value: The role of Customer Awareness” (2013) Henri Servaes, Ane Tamayo

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