The corporate scandals of the past years have raised many questions about businesses and their public interests. To answer these questions the field of corporate social responsibility has grown to great lengths and is now an everyday word in the business world. Corporate social responsibility (CSR) is also known as: business ethics, corporate citizenship, corporate accountability, and sustainability (Overview of Corporate Social Responsibility, 1) Business for Social Responsibility defines corporate social responsibility as “achieving commercial success in ways that honor ethical values and respect people, communities, and the natural environment.” (Overview, 1) The issues that accompany a corporation’s focus of CSR vary by the type of business, the size, where it is located, and by sector. “CSR typically includes issues related to: business ethics, community investment, environment, governance, human rights, marketplace, and workplace” (Overview, 1) Even though CSR has grown to great lengths in the past years, it still faces many challenges. This paper will examine both the benefits of companies that are corporate citizens, as well as t

A company with good business ethics may also find themselves having an increase in sales and customer loyalty. Studies have shown that customers buy from their business not only based on criteria such as price, quality and availability, but also other values-based criteria such as “sweatshop-free” and “child-labor-free”, and other socially responsible acts (Overview, 3). “A 2001 Hill&Knowlton/Harris Interactive poll showed that 79% of Americans take corporate citizenship into account when deciding whether to buy a particular company’s product; 36% of Americans consider corporate citizenship an important factor when making purchasing decisions”(Overview, 3).

There are many factors that have shaped corporate social responsibility into what it is today. The most active factor is increased stakeholder activism. Recent scandals have focused attention more than ever on companies’ commitment to ethical and socially responsible behavior. The public and various stakeholders are increasingly pressuring social and economic issues onto businesses (Overview, 4). “There is a growing and sophistication of activist groups to target corporations they perceive as not being socially responsible, through actions such as public demonstrations, public exposes, boycotts, shareholder resolutions, and even “denial of service” attacks on company websites” (Overview, 4). According to Business Ethics, they feel that companies should have a responsibility to serve not “only their stockholders, but [a] variety of stakeholders” (Peter Asmus, 2). Stakeholders are not just company suppliers or employees; it includes the community; minorities and women, the environment, and customers (Asmus, 2).

Another factor that has helped make CSR what it is today is the expansion of boundaries of corporate accountability. Businesses are not only accountable for their own practices, but of the practices of their partners throughout the entire value chain “with a special focus on supplier environmental, labor, and human rights practices” (Overview, 4).

Other benefits of a company being socially responsible are reducing operating cost and increasing productivity and quality. CSR initiatives that are aimed at improving environmental performance-“such as reducing emissions of gases that contribute to global climate change or reducing use of agrochemicals”-lower costs. “Many recycling initiatives cut waste disposal costs and generates income by selling recycled materials” (Overview, 1). Improvements in productivity and quality can happen when a company makes efforts to improve working conditions, lessen environmental impacts or increase employee involvement in decision-making. “For example, companies that improve working conditions and labor practices among their suppliers often experience a decrease in merchandise that is defective or can’t be sold” (Overview, 2).

The third challenge that CSR may face is whether or not employees of a company can fully trust top management in terms of their commitment to business ethics. In other words: “Do employees of companies claiming to be good corporate citizens see their employer’s citizenship activities as a diversion or cover-up to charges of bad leadership and poor management practices?” (Vogl, 19). Surveys done by Mercer Human Resource Consulting show that only a third of 2,600 workers agreed that they could trust management to always communicate honestly. Also only 49 percent believe their senior leaders are “people of high personal integrity” according to Walker Information (Vogl, 19). Some employees of organizations who boast about corporate social responsibility feel that it is just to make top management look good. If that is the case then corporate citizenship will never get “under an organization’s cultural skin” (Vogl, 19).

Using McDonald’s as an example again proves how stakeholders can help bring about ethical change in business

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