Corporate Social Responsibility

Corporate social responsibility has grown in popularity. This concept can provide benefits in employee morale, risk management, and brand differentiation. When a business sees that their competitor is advertising more in a particular market, the business can either advertise in that market to compete for that share or find another market to advertise in to gain a similar share. Similarly, when the competition is donating more to charity or building parks, the business has two options to minimize the impact on the business’s current market share. The business can either improve the positive impact they have on the community or reduce the negative impact. Auto manufacturers are competing on reducing the negative impact on the environment.

In 1997 Toyota started mass production of the hybrid-powered Prius. Today Honda, Ford, Chevy, Saturn and Cadillac all have hybrid-powered vehicles on the market. Market share and consumer pressure are a couple of reasons for an auto manufacturer to move into the hybrid market. However, the manufacturers would like the consumers to believe that providing hybrid-powered vehicles is their contribution to the environment. As the competition for better gas mileage continues, advertising those efforts will continue as well. However, touting better gas mileage might just be smoke and mirrors.

Implementing corporate social responsibility programs may also be done to distract the consumers from other weakness. For example, in my software development company, we have implemented a paperless policy. The company does not create business cards and no paper invoices are sent via postal. Instead, advertising is done on the web and invoices are emailed. Having a paperless business is an example of corporate social responsibility. However, the original reason was that my small business could not afford the additional expenses. The idea that my business was being environmentally friendly was used to distract my customers. My small developing software company had in place a paperless policy that much larger companies strive for. The paperless policy is environmentally friendly and cost efficient and may have been the edge in several winning proposals.

Some companies may use corporate social responsibility primarily as a marketing tool. In most large corporations, every significant contribution is followed closely by a press release. Even though this can be looked at with cynicism, the fact remains that a contribution has been made. The market continues to ask for more ethical and responsible business practice and businesses must respond.

Competing for market share and improving the value of the business will always come down to a cost/benefit analysis. Corporate social responsibility may not always be for the right reasons. Any benefit to the business will be coupled with a benefit to the employee, community, consumer, or the environment. The auto manufacturers will continue to compete to get the best gas mileage until our vehicles are not dependent on gasoline at all. Software companies like mine will continue to make the world digital. The possibility exists that in the future, in order to gain market share, businesses will be compelled to become more involved in the community, the same way they do over television advertising.