Corporate Social Responsiblity Essay

1221 Words Feb 29th, 2012 5 Pages
CHPATER 2

LITERATURE REVIEW

The concept and framework of CSR has been established by the European Union in relation to promote the CSR to the business society and environment. Corporate Social Responsibility refers to the “firm’s consideration of, and response to, issue beyond the narrow economic, technical, and legal requirements of the firm…(to) accomplish social benefits along with the traditional economic gains which the firm seek.”(Husted 2003).

CSR was defined by European Commission (2007) is “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with the stakeholders on a voluntary basis” following increasingly aware that responsible behaviour leads to
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Thus, companies are expected to carry out activities that are acceptable by the community. Legitimacy also implies that companies will take cautions to ensure their activities and performance acceptable to the community given a growth in community awareness (Wilmshurst & Frost 2008). Corporate social disclosure can be used to appease some of the concerns of the relevant publics and also as a proactive legitimation strategy to obtain continued inflow of capital and to please ethical investors (Haniffa & Cooke 2005). However, Guthrie and Parker (1989) failed to confirm legitimacy theory as an explanation for societal disclosures in their longitudinal study of BHP, an Australian mining and manufacturing company.

Economic theory reflects the degree of association of CSR and financial performance by taking consideration of cost-related advantages, market advantages and reputation advantages (Chamburi & Wan Noramelia 2004). In the business, CSR is concerned with employment, lifelong learning, consultation and participation of workers, equal opportunities and integration of people towards restructuring and industrial change. Basically, the formation of policies is influenced by the authority employment strategies, the initiatives on social responsible restructuring, the initiatives to promote quality and diversity in the workplace and health and safety strategy.

The social issues include

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