Social and Cultural

Corporate Social Responsibility (CSR) is the idea that that a corporation's responsibilities contain other stakeholders and includes other responsibilities above and beyond a return for shareholders. These responsibilities incorporate legal, ethical and philanthropic responsibilities in addition to economic responsibilities (Trevino and Nelson, 2005, p. 31). Other stakeholders could contain workers, suppliers, the clients, the community and others. Types of responsibilities the corporation might possibly hold beyond a return for shareholders could incorporate, protecting and or improving the atmosphere exactly where the enterprise operates, improving conditions for the community where the firm resides, etc...

Corporate Governance refers the way in which the corporation governs itself. Governance includes the way the business reports earnings, pays Directors, etc... Recognizing that improper governance can have massive consequences for employees and shareholders, the government calls for corporations to adhere to Corporate Governance laws and recommendations that are created to reduce the threat of fraud, and financial ruins such as these that brought on the demise of corporations like Enron, WorldCom and International Crossing.

Solid Corporate Governance that protects investors and staff from accounting fraud, conflict of interest, etc., can be noticed as a part of any corporation that is acting socially responsible. Since a CSR business is acting in a way above and beyond what is needed of it by law to defend stakeholders in the company, solid Corporate Governance of a CSR oriented firm could be viewed as a way in which the company can assure that the interests of lots of directly associated and dependent on the corporation can be protected, including employees, buyers, the communities that depend on tax revenues and employment, etc... Solid Corporate Governance can be seen as an critical initial step of any CSR oriented organization. Without having it, it risks conflict of interest of its board members, CEO, uncertain economic and accounting practices and other dangers which could have devastating negative impacts on all stakeholders. For example, Enron's collapse due to failure of Corporate Governance to prevent fraud and deceit hurt thousands of staff, the community of Houston, where most staff lived, the tax revenues that supported public works, the effect on households and couples who lost retirement savings, health insurance coverage coverage, and so on... In fact, just before Enron's accounting fraud became recognized, many would have deemed Enron a solid socially responsible citizen given that of its much recognized funding of museums, hospitals and several other organizations in the community where they operated (p. 163). On the other hand, all the communities would have been superior off in the long run, if Enron had never contributed a dime to these social responsible activities, but had rather provided solid Corporate Governance over its internal operations. If Enron had completed this, thousands would not have lost jobs, communities would have maintained higher tax revenues, retirements would have been much more secured for thousands, wellness insurance would have been secured by a great number of far more, returns would have been greater for investors and shareholders, and so on...

Corporate Governance should certainly be observed as a prime priority of any company seeking to be a beneficial corporate citizen. Much more good can be done by a corporation ensuring solid corporate governance, than other activates quite often observed as necessary for Socially Conscious organizations. Additionally, a great deal more pressure really should be exerted on organizations to establish fantastic social governance than should certainly be exerted on firms to sponsor other socially responsible activities and stakeholders in communities, the press, the government, etc., must also recognize and applaud organisations who may well put more effort on Corporate Governance even though they may very well lack other social activities. Governance ought to be noticed ad rewarded as the leading priority.

References:

Trevino, L., and Nelson, K., (2005). Corporate social responsibility and managerial ethics. Hoboken, NJ: John Wiley and Sons, Inc.