Corporate social responsibility (CSR) is becoming a core part of business practice in the current and dynamic business environment. Previous research has shown that corporate social responsibility (CSR) and organizational social value are directly related to companies that have high consumer awareness, as confirmed by advertising and promotional expenditures. This has been the cause as to why organizations report every year on the company’s website which activities they undertake for social responsibility. They do this by illustrating the significance they have attached to such SCR purposes. According to Servaes and Tamayo (2012), many research studies have concluded more positively, that there is a direct relationship between corporate social responsibility and profitability resulting in the corporate social value of the firm. This review, therefore, will try to evaluate uncertainties of normative implications of research on the relationship of corporate social responsibility and corporate social value Servaes and Tamayo (2012).
Corporate social value review rational
The rationale of reviewing corporate social value is the determination of the association between how an organization is socially responsible in the activities in which it engages in and its value which has always remained an ambiguous aspect specifically because of procedural reasons (Margolis and Walsh, 2001). This is largely influenced by the followed channels being unclear to the parties participating to influence the relationship between how responsible an organization is socially and its social value. Various theories have confirmed the existence of a positive correlation between organizational CSR and its social value. In this article, we will take an indirect connection between organizational CSR and its social value. The impact of corporate social responsibility (CSR) on organizations’ corporate social value relies heavily on its capability in influencing organizations’ stakeholders.
The social value is enhanced by the modification of the socially responsible activities which an organization engages in such as creating awareness to customers on the existence of these activities.
Additionally, Servaes and Tamayo (2012), argue that consumers may not respond to corporate social responsibility activities even after being made aware of its existence not unless corporate social responsibility activities are in alignment with the company’s reputation.
According to Porter and Kramer (2011), creating shared value is far much more than corporate social responsibility in directing the investments of firms in their societies. CSR activities focus mostly on enhancing organizational reputation, therefore having little connection to justify how the business generates revenue in the future. In contrast, Porter and Kramer (2011), share that creating shared value (CSV) is the core part of the firms’ competitive and profitability position. The creation of shared value is achieved through the enhancement of values in society. Shared value is also attained when an organization develops policies that enhance its competitiveness while promoting the economic environment in which it is operating. This in return raises the well-being of the communities that surrounds it. An organization can achieve this by redefining the markets, chains of production and having areas that support the operations in the attainment of the shared value.
This review articulates four major points. The first point is the fact that CSR programs resulting from rigorous advertising campaigns improve high organizational public awareness thus promoting a firm’s social value (Servaes & Tamayo, 2012). Nevertheless, firms with high public awareness pay more concerning corporate social responsibility concerns. Following this, is the fact that organizations in which the public has got no or have little awareness always encounter less or completely no corporate social value due to its CSR.
Next, is that advertising has none or unbearable effect on the relations between corporate social responsibility and firm value especially where there is some inconsistency in linking a firm’s overall reputation and its corporate social responsibility. Finally, it was evaluated that after adding a firm’s fixed effects the direct relation between its corporate social responsibility and its corporate social value is not seen (Servaes and Tamayo, 2012).
If the assumption is that the consumer’s channel is one of the key channels in which corporate social responsibility (CSR) influence firm value, then this evaluation outcome presents several managerial repercussions: if a company engages in corporate social responsibility (CSR), but does not undertake its activities in an intensive advertising environment, its administration should re-evaluate its corporate social responsibility (CSR) efforts, or search for opportunities to improve the benefits of corporate social responsibility (CSR).
In conclusion, I would suggest that there are many avenues for further research. The connection between performance and corporate social responsibility through the consumer’s channel is the only route in which corporate social responsibility will influence firm value. Any organization operating in a business environment should understand that its success is dependent on the community which surrounds it and that an organization that enriches its surrounding will end up being competitive. This is because it can create wealth for this community and provision of jobs for a healthier environment. According to this corporate social value review, it is evident that future researchers will highly benefit if they focus their future research on other channels.
Margolis, D. & Walsh, J. (2001). People and profits: The search for a link between a company’s social and financial performance. Lawrence Erlbaum Associates: Mahwah, NJ.
Porter, M. & Kramer, M. (2011). How to reinvent capitalism and unleash a wave of innovation and growth. Harvard Business Review; HBR Reprint R1101C.
Servaes, H. & Tamayo, A. (2012). The Impact of Corporate Social Responsibility on Firm Value: The Role of Customer Awareness. London; London School of Economics.