The role of Corporate Social Responsibility (CSR) in Creating Brand image essay

In modern society there is an increased attention to issues of social responsibility. The implementation of social projects has become an integral part of the image of any  corporation and its success in the competition struggle. Business has great possibilities and therefore society expects to use them for solving social problems. These social commitments of business open up new possibilities in building  their favorable image.

Nowadays in all developed countries, the policy of social responsibility is an integral part of any successful  company. The success of the company in the longterm depends largely on the amount of its investment in the social sphere of the country. In general, the image of a socially responsible company brings good results in the long run. However, different companies have different understanding of social responsibility.

In this paper it is necessary to consider the concept of corporate social responsibility, its importance and value to the company’s image.

CORPORATE SOCIAL RESPONSIBILITY (CSR) AND CREATION OF BRAND IMAGE

In 1950 – 1960-s of the last century, the concept of social responsibility appeared in corporate sphere in the United States and Canada. But it basically related to the issues of corporate philanthropy, social security of employees, as well as assistance to local authorities on a professional basis, and sponsorship. This work was connected with the functions of corporate public relations – PR. But socialization of business, which is one of the major trends of contemporary socio-economic development, appeared in the early 1990-s. (Wood D., 1991)

International Conference on Sustainable Development held in 1992 in Rio de Janeiro was a turning point, which recorded new demands from the international community to corporations to improve their social responsibility. It was a powerful impetus in the study of the role of large companies in solving social problems, and development of certain policies at the corporate, national and international levels, defining the scope of social responsibility and social functions of the business. Social responsibility has been regarded as a philosophy of corporate behavior and the concept of alignment  of its activities on the most important, firstly, in terms of its strategic goals, and secondly, in terms of society’s needs, directions.

Hohnen P. and Potts J. (2007) argue that “responsible business is good business” and describe social responsibility of business as a voluntary contribution of the private sector in social development through the mechanism of social investment. Social responsibility is also seen through the prism of  strategic business objectives, one of which may be the formation of a favorable image of the company. Practice shows that high corporate social responsibility can create a positive image of the company or enterprise. (Hohnen P. and Potts J., 2007, p.5)

According to the World Business Council for Sustainable Development, CSR is “the business contribution to sustainable economic development”. (World Business Council for Sustainable Development 2001)

The working definition of CSR introduced by the Working Group on Social Responsibility is “responsibility of an organisation for the impacts of its decisions and activities on society and the environment through transparent and ethical behaviour that is consistent with sustainable development and the welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behaviour; and is integrated throughout the organisation.” (Hohnen P. and Potts J., 2007, p. 15)

Kotler P. (2004) pointed a number of factors that give importance to the company’s ability to adequately assess the role of its activities in the field of social responsibility.
The first factor is associated with increased regulatory control. Perhaps most of all, it is felt in the field of environmental protection, health and safety in the workplace. Many of these requirements impose positive obligations on the business of keeping records and providing information as well as the introduction of monitoring and reporting system. In a broader sense, a stimulus for social responsibility of business comes from partners and stakeholders. This pressure takes many forms, the most common of which are:

– Pressure from partners, which may considered social activities as an indicator of good corporate governance and an essential element in the formation of attractive investment profile of the company.

– Pressure from the structures of ethical investment, which has become common practice in evaluating the performance of the company to examine a wide range of parameters associated with its programs of social responsibility.

– Pressure from customers and potential business partners.

– Potentially more transparent activities of the company, due to the rapid spread of information through the Internet.

– The public demand that the company must voluntarily provide the results of its work on general issues of social responsibility (for example, an already well-established trends to provide a report on the activities of companies in the field of environmental protection). (Kotler 2004)

Many authors (Best R. J., 2004; Grayson, D. and Hodges, A., 2004) point out benefits that the CSR can bring to the company. Among the most important benefits can be called:

– helps to create positive image

– helps in expanding its customer base, strengthening partnerships;

– makes more easy and constructive the interaction with government agencies;

– provides the ability to attract / retain highly skilled professionals;

– strengthens the position both in the domestic and international markets.

It is important to note that the image can be both  external (perceptions and attitudes of society, customers, partners) and internal. In building an internal image, the determining factor is the opinion of organization’s employees, which work directly to ensure the organization’s activities, creation of products and services.

In the framework of social policy, the internal image is formed in the following areas:
– social guarantees to the employees;
– safety of working conditions of employees;
– opportunities for professional development;
– health care protection of employees (especially in hazardous industries);
– delegation of the company’s employees. (Segal 2002)

The greatest impact internal social responsibility programs have on the growth of employees’ motivation and loyalty, as well increase of the company’s attractiveness as an employer.

Morsing M. and Schultz M. (2006) argue that the external image of the company is related to specific relationship of the various target groups. In implementing its social policy the company interacts with the following stakeholders:

1. Public (municipal) institutions that interact with the organization in the political, legal, economic and other spheres macro-environment. The social policy of the company  with respect to the state is defined by the following  principles:
   – Compliance with legislation
   – Creation of new jobs
   – Support for the principles of corporate citizenship
   – Support for socially important institutions, classes of the society, etc.
2. Shareholders and investors. The most important factors for this group of stakeholders are:
   – Reliability, that is economic, social and environmental sustainability of production.
   – Transparency of the company. The guarantee of transparency for investors is publication of corporate social report.
3. Customers, who give their resources in exchange for a product offered by the organization to meet their material needs and also the need for involvement in any  decision of social problems. Some consumers try to learn about the level of responsibility of the company before making purchases.
4. Business community and business partners of the organizations, which have formal and informal business relationships, provide commercial and noncommercial services to the organization and receive similar services from it. Here the formation of the image of a socially responsible company depends on the implementation of good business practices, and compliance with the declaration of the highest professional standards and ethics activities.
5. The local community, which interacts with the organization, and is associated primarily with the formation of social and ecological environment of the organization. This area of ​​socially responsible policy includes not only large-scale environmental programs (for example, of various companies operating in the mining and other hazardous industrial areas). But many organizations involve their employees in different social activities and social projects, that also help to form a favorable image of the organization in the eyes of the community. (Visser et al., 2004)

While formation the image through the mechanisms of social responsibility, it is necessary to keep in mind that the internal and external image of the company are connected – it is impossible to build a favorable external image with a negative internal and vice versa.

Conclusion

Social responsibility of business, that is understanding of its impact – social, ethical, and relating to pollution of the environment – is becoming an increasingly important issue for many companies. In order to operate successfully, to stay competitive, companies must be socially responsible. It is necessary above all to create and maintain a positive image with customers, partners, staff and community. For tat purposes organizations in the 21st century pay much attention to and invest in social projects, which can take the form of charity, philanthropy, social marketing programs, sponsorships, etc. Despite the fact that each concept has its own peculiarities, it can be said that all these concepts deal with social help. Such activities not only benefit the society, but actually help to improve the company’s image, that affects its financial results.