Coursework Example: Fleming and Jones’s analysis of CSR

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Introduction

In this essay, the theoretical perspectives of corporate citizenship and stakeholder perspective are being examined and analysed based on Fleming and Jone’s analysis of Corporate Social Responsibility. The “End of Corporate Social Responsibility: Crises and Critiques” are written by Peter Fleming and Marc T. Jones. They seek to redress CSR advocacy from the critical and political viewpoint providing a much-required critique on CSR practices and scholarship. They used a stringent approach of utilising a vast number of case studies to present the argument that most companies are adopting CSR to gain legitimacy from employees and consumers.

While unpacking and exploring the theoretical perspectives of corporate citizenship and stakeholder views, this essay aims to disagree with some of the critiques of Fleming and Jone’s analysis of Corporate Social Responsibility. However, this is muted using examples of real-life companies and their CSR approaches with the key emphasis on how they provide non-financial values. However, it is not wrong to mention that providing non-financial matters to the company through CSR is associated with financial benefits.

For instance, increasing brand reputation or employees’ retention, which are non-financial values given by CSR implementation in an organisation, leads to an increase in customers’ satisfaction, their ren and growth in sales, which eventually enhance the company’s profitability. Therefore, this essay is not limited to exploring the nonfinancial values of CSR practices in an organisation but also explains CSR’s financial benefit.

The essay comprises the key sections of discussion of stakeholder theory and corporate citizenship theory, an explanation of the non-financial benefits of CSR considering examples of key real-life companies and a conclusion. The discussion of stakeholder theory and corporate citizenship theory will be done while discussing and disagreeing with the critiques presented by Fleming and Jone by presenting counter-agreements.

Discussion of Stakeholder Theory

From the perspective of capitalism, stakeholder theory focuses on the interconnected association between a business and its suppliers, customers, investors, employees and communities who have a stake in the company (Bonnafous-Boucher & Pesqueux, 2005). According to this theory, an organisation must create value for all stakeholders, not just shareholders. The stakeholder theory was first introduced by R. Edward Freeman in 1984 while describing and recommending methods by which the management of an organisation can respect the interests of wider groups associated with the organisation (Silvestri & Veltri, 2019).

Concerning the critiques Fleming and Jones presented against stakeholders’ theory, they revealed that stakeholders do not have equal power as shareholders. Therefore the interests of less-powerful stakeholders can be ignored if they contradict the interests of more powerful stakeholders. According to Fleming and Jones, stakeholder theory runs a considerable risk of considering the interests of many, which eventually diverts the attention of the company’s management from the primary cause of maximising the interests of those who invested in the company (Fleming & Jones, 2013).

According to their analysis, the companies use stakeholder theory as a form of containment; which relatively can be said as right in some contexts; for instance, it is useful in the oil sector, which is generally examined as a riskier business and the spill associated with this industry comes with acceptable risks. In order to control this risk, the oil sector focuses on achieving the interests of less-powerful groups of stakeholders.

On the other hand, another point mentioned by Fleming and Jone is that stakeholder theory doesn’t account for power differential in the supply chain, which is even more intensified in the context of a global economy; this can also be accepted, for instance, taking the example of the fast fashion industry such as Marks & Spencer, that donates returned clothing and business surplus to the Charity New life (Marks & Spencer, 2022). Like this and many other initiatives, the fast fashion industry is exploiting its female workers in the global South so their women in the West can access cheap clothing.

However, arguing the critiques of Fleming and Jone, it is demonstrated that their critique is ironic as they claimed that companies must not get involved in communities but for some stakeholders like the government. The main thrust of the argument is to achieve the goals of more powerful stakeholders (Zhoubi, 2021).

Discussion on the Corporate Citizenship Theory

According to Orlitzky and Swanson (2021), corporate citizenship is regarded as a company’s recognition that its business has cultural, social and environmental responsibilities to the community in which it operates and to the shareholders and immediate stakeholders it seeks financial and economic benefits. On the other hand, it is argued by Hetze (2016) that corporate citizenship theory is a belief that organisations should take active responsibility for the lives of their employees and have a social responsibility to the wider community even if it costs money to the company. The central concentration of Fleming and Jone’s work is to explore the systematic damage inflicted to the companies due to their CSR approach. In this scenario, a series of “Giga trends” such as climate change, the rise of BRIC nations, depletion of natural sources and over-population are argued to deeply intertwine the company’s financial interests.

On the other hand, their critique of corporate citizenship that companies can’t be citizens as they are undemocratic, unelectable and unaccountable can disagree with the statement that a cooperative can be democratic, electable and accountable based on its nature and type of business it is operating. For instance, CHS Inc. is the leading international agribusiness owned by ranchers, farmers and cooperatives across the United States.

This company can be said to be significantly accountable, democratic and electable based on its primary objective of formation, which is to help its farmer-owners, customers, and other stakeholders grow their businesses through international and national business. Listen to NASDAQ; the company is diversified in its functions, such as it supplies crop nutrients, energetic materials, livestock feed, grain marketing services, food ingredients, and other business solutions such as financial and risk management services and insurance (CHS Inc., 2022).

On the other hand, it is also argued that the analysis of Fleming and Jone is based on the lack of empirical evidence as they presented most of the proofs and backed up their claims with cherry-picked examples. Due to the lack of empirical evidence, the analysis of Fleming and Jones cannot be disregarded the importance of corporate citizenship and corporate social responsibility for the organisations and wider communities.

Non-Financial Benefits of CSR

This essay aims to disagree with the evaluation of the CSR approach provided by Fleming and John; therefore, this section highlights some of the non-financial benefits of CSR that can be delivered to an organisation. The concept of corporate social responsibility has gained significant growth since the beginning of the twentieth century, when adopting policies and programs by the companies have extended beyond profit-making objectives. In this regard, it is revealed by Mayorova (2021) that the concept of CSR – corporate social responsibility has been embedded across the physical and psychological frontiers of the companies developing on ethical, philanthropic, regulatory and economic aspects.

Brand Reputation

The foremost non-financial benefit associated with adopting CSR is increased brand reputation. It is demonstrated by Kucharska (2020) that corporate social responsibility as a strategy generally affects an organisation’s performance, eventually expected to enhance brand equity. In the past, addressing social issues and improving the quality of life of societies was the responsibility of the governments and non-governmental agencies. Still, it has gained significant importance for the companies while providing them with the benefits of increasing competitive advantage and brand reputation. On the other hand, Cowan and Guzman (2020) explore that adopting appropriate CSR practices within the organisation helps it to build brand equity by establishing a positive image in the customers’ minds.

According to research conducted by Hur, Kim and Joo (2013), the association between societies and organisations is based on the social contract that is evolved with social alterations and expected results. In this manner, a company is observed to legitimise its existence, establish its brand equity, and enhance its brand reputation. Companies are taking corporate social responsibility as a strategy of differentiation in the industry to generate new demands and gain premium pricing for their products and services by providing quality. Considering this, customers repeatedly consume their products, presenting some of their brand loyalty, brand recognition and consciousness.

There are several examples of multinational companies in real scenarios that enhanced their profitability and performance growth based on increasing brand reputation by opting for CSR in their operations. For instance, Nike has been reported to be involved in CSR through social justice, which eventually proved to be highly beneficial for the company in improving its brand reputation and boosting its revenues (Eyada, 2020).

The company’s CSR and Sustainability programs, such as Diversity and Inclusion Program, Community Support Program, the recent response to Covid 19 pandemic, and Nike’s Sustainability Program, are significantly boosting its overall brand reputation as an ethical and corporate social enterprise in the respective industry. The Diversity and Inclusion Program is centred on providing a healthier and tolerant working environment to its employees; the Community Support Program deals with encouraging more gender inclusivity and equality within the respective societies, covid 19 response is centred on the implementation of appropriate health and safety protocols addressing the pandemic and Sustainability programs are about promoting environmental sustainability practices and initiatives. Based on these initiatives, the company is committed to considering CSR activities as an important investment in boosting its overall brand image and corporate value (Pratap, 2021).

Employees’ Benefits

Another argument against the critique of Fleming and John and in favour of non-financial benefits provided by CSR to companies is employees’ benefits. There are many ways reported by different researchers which demonstrate that CSR proves to be highly beneficial for the employees in the context of improving their productivity level, performance, creativity and satisfaction. For instance, Koch and Adam (2019) highlighted that adopting CSR develops an understanding amongst employees that their organisation is doing the right thing, and they actively engage in corporate behaviours with the organisation and other employees. It leads towards better employee-employer and employee relationships.

On the other hand, Lin, Liu and Lin (2022) explore that when the employees acknowledge that their organisation is corporate and social responsibility, they experience a greater sense of identity with the business they operate for.Moreover, Koch and Adam (2019) demonstrated that employees working in corporate socially responsible companies are more committed to their employers and show fewer turnovers than companies that do not adopt CSR practices. In this regard, a study was conducted by Lee and Chen (2018) in Asia, considering leading chain department stores as case organisations. The study examined the association of CSR practices with employees’ retention rate. According to the results, it was revealed that the stores’ efforts on corporate social responsibility could enhance the fulfilment of employees’ ERG needs, eventually influencing employees’ satisfaction and retention intention. The employees’ retention rate is reported to be positively associated with CSR practices adopted by the companies.

Another study was conducted by Zeinee and Putech (2020) on Generation Y, which is reported to be a new emerging workforce and more daunting, influencing and possessing strong bargaining power. The study investigated the impact of CSR on the retention level of Generation Y employees in the accounting profession. The results revealed that CSR practices adopted by financial institutes operate in the best interest of their employees, enhancing their satisfaction level and retention rate within the companies. There is positive interaction between employee retention and CSR initiatives, as reported in this study.

It is also highlighted that employees tend to work in CSR companies when they apply. Apart from this, employees working in Corporates Social Companies performed better with high productivity and increased creativity. They are more satisfied with high morale; when their company shows values and passion through CSR approaches, they are more inspired to develop better and new working methods.

Customers’ Loyalty

Another argument in favour of non-financial benefits due to CSR is the increase in customers’ loyalty that enables them to use the company’s products and services again and provides financial benefits to the company in terms of increasing sales. Along with customers’ loyalty, CSR initiatives adopted by companies help improve their customers’ satisfaction. In this regard, Yuliati (2017) determines the positive influences of CSR on customers in three ways: creating positive PR with customers, enhancing customers’ loyalty and enabling them to increase company sales. It is revealed that when companies engage in corporate social responsibility activities such as increasing their recycling efforts, donating to a worthy cause or helping their employees, they provide a better platform for their customers to recognise their efforts in the community’s best interest.

A study was conducted by Cole (2017) and revealed that corporate social responsibility could be could effective than advertising and marketing when it comes to attracting customers. The study was conducted using secondary research and based on past research studies. As a result, the evidence reported that perhaps, CSR is found to be of greater worth in enhancing customers’ loyalty.

This impact emerged as the result of gengeneralisedciprocity whereby an organisation is rewarded by its customers for the direct benefits they provide to the company when its CSR activities positively affect the wider society. The study also recognised that loyal customers enhance the companies’ financial position through their willingness to make frequent purchases, spending more per transaction, resisting competitors’ marketing efforts and providing positive word-of-mouth recommendations. Moreover, it is demonstrated that loyalty becomes more powerful when it comprises attitudinal and behavioural components. For instance, the combination of emotional attachment and repeat purchase behaviour helps companies enhance customer loyalty that is enduring and robust.

The hospitality industry can be seen as an important example in which customers’ loyalty is highly associated with CSR activities adopted by the companies. In this regard, it is revealed by statistics that Word of Mouth plays an important role in enhancing customers’ loyalty, and its impact on profits is considerable. Hotels provide economic benefits to the communities and employees, enhancing their positive corporate image and attracting customers. For instance, Marriott Hotels, a popular name in the hospitality sector, strongly believes in making communities where it operates a better place to work, visit and live.

The company seems strongly committed to CSR activities supporting sustainable development and resilience in these communities. The company’s CSR initiatives, such as investing in natural resources and vitality of children and delivering addition to needy individuals and societies, are sufficient to retain its existing customers, enhance their loyalty to the company and attract potential-new customers (Home – CSR-Marriott, 2022).

Non-Profit Companies Engaged with CSR Initiatives

Moreover, analysing the adoption of CSR initiatives by non-profit companies and its importance in providing them key benefits, it is demonstrated that such organisations largely operate on corporate citizenship and stakeholders’ theories. Their competitive advantage, brand reputation and significant growth and development also disagree with the analysis of Fleming and John’s critiques against CSR. Non-profit organisations are found to be actively operating with key advantages associated with CSR; for instance, increased volunteerism, more media coverage, positivity in the working environment, better public image and reduced costs. These benefits are reported to create long-lasting effects on non-profit organisations, such as reputation development and organisational value creation.

Conclusion

The following are key concluding points of this essay:

• This essay has successfully achieved its objective of examining and analysing the theoretical perspectives of corporate citizenship and stakeholder perspective while disagreeing the Fleming and Jone’s critique of Corporate Social Responsibility. This essay also highlighted some of the key nonfinancial benefits that CSR can pose to companies.
• It is concluded that Fleming and John’s critique is ironic regarding stakeholders theory. According to this theory, an organisation must create value for all stakeholders, not just shareholders. From the perspective of capitalism, stakeholder theory focuses on the interconnected association between a business and its suppliers, customers, investors, employees and communities who have a stake in the company.
• On the other hand, concerning corporate citizenship theory, the analysis of Fleming and Jone is based on the lack of empirical evidence as they presented most of the evidence and backed up their claims with cherry-picked examples. Corporate citizenship is regarded as a company’s recognition that its business has cultural, social and environmental responsibilities to the community in which it operates and to the shareholders and immediate stakeholders in which it seeks financial and economic benefits.
• This essay reported that the foremost non-financial benefit of adopting CSR is increased brand reputation. It is concluded that demonstrating a positive association between brand reputation and CSR, there are several examples of multinational companies in a real scenario that enhanced their profitability level and performance growth based on increasing brand reputation on account of opting CSR approach in their operations.
• Another argument against the critique of Fleming and John and in favour of non-financial benefits provided by CSR to companies is employees’ benefits. There are many ways reported by different researchers which demonstrate that CSR proves to be highly beneficial for the employees in the context of improving their productivity level, performance, creativity and satisfaction.
• Moreover, another argument favouring non-financial benefits due to CSR is the increase in customers’ loyalty that enables them to use the company’s products and services again and provides financial help to the company in increasing sales.
• Finally, it is concluded that non-profit organisations largely operate on corporate citizenship and stakeholders’ theories. Their competitive advantage, brand reputation and significant growth and development also disagree with the analysis of Fleming and John’s critiques and report in favour of CSR practices.

References

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