Business Ethics 1398373135659
Corporate Social Responsibilities and McDonald’s

Introduction

One of the many controversial topics in business management is about the implementations of Corporate Social Responsibilities by corporations. Theoretically speaking, as companies are getting more powerful and resourceful, they are being burdened the responsibilities to do good for the society, as in the movie of Spiderman – “greater power comes with greater responsibilities”. This is not hard to understand, as when corporations are getting more and more powerful, their impacts towards the others in the society as well as to the environment can be great, and if unmanaged, may cause huge troubles or disasters for mankind. Secondly, it is also not hard to note that some companies do engage in unethical behaviors that can cause great harm to the society and the world, such as polluting the world only for short term profitability, misappropriation of company assets as well as other means of moral hazard. Thus, it is understandable as the public as well as the regulatory agencies demanded the corporations to do the correct actions and be responsible for their own actions. This is necessary to prevent the corporations from damaging the society or the world in pursuit of shirt term benefits or selfish gains. That is particularly true for multinational international firms, whereby their wide and extensive business network is so powerful and can exert huge positive or negative impacts to the society or public around the world. Fortunately, it can be seen that more and more international firms are proactively execute the expected Corporate Social Responsibilities actions and activities in the very recent time period. However, there are arguments that these international firms are doing so purely to enhance their reputation, or to be in the trend to impress the public through Corporate Social Responsibilities activities. Some people even suspect that the companies are sincerely performing the many Corporate Social Responsibilities activities for the sole benefits of the society. Thus, this article will discuss the CSR issues as well as if the corporations are doing so for the benefits of the society, or are they implementing Corporate Social Responsibilities as a way to promote their company in the competitive marketplace.

Literature Review

Before the discussion on companies’ actions as well as their Corporate Social Responsibilities activities will be discussed, the broad theoretical concepts and ideas regarding Corporate Social Responsibilities will be discussed. This is important for us to understand the context creating the demand of Corporate Social Responsibilities in the modern society. Besides, it will also provide valuable information to us on how Corporate Social Responsibilities may affect people around the world, as well as the corporations implementing Corporate Social Responsibilities activities. Thus, in this section, a review of the literature concerning the topic of Corporate Social Responsibilities will be performed.

Defining Corporate Social Responsibilities

In a review of the literature, there are wide array of definitions being used for defining the concepts of Corporate Social Responsibilities. Generally, it can be observed that Corporate Social Responsibilities is an emergent concept that a corporation or business entity should take up the responsibility to take care of the well beings of the many other parties in which the business will affect. The other parties are often called the stakeholders. From the stakeholder perspective, any business entity should exercise Corporate Social Responsibilities by balancing the interests of the shareholders, workers, customers, competitors, regulatory and governmental agencies, the mass public, the society as well as the natural environment, in an ethical manner. CSR is a proactive concept, whereby business entities are no longer required to comply with the rules and laws set forth by the regulating agencies, but also actively exercise their power to do good to the people it affecting during the course of the business operation and value delivery process to the society.

Benefits and Importance of Corporate Social Responsibilities

Apparently, most of the literatures support the notion that exercising Corporate Social Responsibilities are advantageous to the companies (Adeyeye, 2011). It is argued widely that any companies that exercise Corporate Social Responsibilities can enjoy several advantages against those other businesses that do nothing or perform ethical questionable acts that can harm society. All the advantages enjoyed by those “CSR-firms” can either bring financial or non-financial benefits, from a long term perspectives. The many possible advantages enjoyed by firms exhibiting Corporate Social Responsibilities attitudes and policies are discussed and presented in several paragraphs in the following section.

Adoption of Corporate Social Responsibilities enhances financial performance of a firm in the long run. The literatures recording evidence that firms that proactively exercising Corporate Social Responsibilities are not something uncommon. For example, Bihar & Pradhan et. al. (2010) found that banks that exhibit CSR in India tend to perform better than those banks that don’t. Apart from that, according to Higgins & Debroux (2009), it is also found that high performing companies from Asia tend to follow the trend of CSR adoption in the recent years. All these points to several observations supporting that CSR can be important to the success of an organization. Although the relationships between financial performance to adoption of CSR activities remain something complicated, as it is truly hard to pin point that it is CSR adoption that lead the many successful firms to achieve competitive advantage in the challenging and dynamic marketplace, it is found that successful corporations, nonetheless, believe in doing good to the society for long term profitability and growth. In many of the cases, firms that actively adopting the CSR philosophy are likely to show positive effects to the financial results, from a long term perspective.

Adoption of Corporate Social Responsibilities lower the risks faced by business organizations. As argued by Arora et. al. (2011), adoption of the concepts and ideas related to Corporate Social Responsibilities can enhance the corporate governance of a firm. This is primarily because the many concepts proposed by the CSR framework are proactive means to tighten the ethical standards in a firm. Adoption of CSR philosophy can be important to  larger organization, particularly those international firms, because as the firm grow larger, normal rules and regulations set by senior management may not sufficient or effective in governing the vast operations of the internally operating business around the globe. Thus, an adoption of CSR philosophy across the globe for an organization will likely to enhance people awareness on ethical reasoning as well as behaviors in carrying out daily tasks (Enderle, 2010). When people are more ethically aware on how their actions may affect others in the process, a better corporate governance structure can be formed.

Adoption of Corporate Social Responsibilities enhances a company’s brand presence and reputation around the world. One of the great and obvious benefits enjoyed by multinational corporations (MNCs) in adopting CSR philosophy is that these MNCs may stand a chance to significantly enhance its brand equity in the global context (Cruz et. al., 2010). By involving in many charity activities to help the poor, MNCs will enhance its reputation among people in other parts of the world, particularly when most of the MNCs comes from the west, and is having different cultures from other people in other region of the world. Involving in CSR activities benefiting the society in the poorer country can enhance the people willingness to accept the MNCs in the respective country. However, not all researchers believe that such arguments is something positive, as CSR related initiatives may be considered as cultural imperialism towards the developing world (Khan et. al., 2011).

Adoption of Corporate Social Responsibilities makes the customers trust the business organizations more. One of the great psychological benefits of CSR activities is enabling or improving the trustworthiness of business corporations in the mass public. In the recent years, it can be seen that corporate scams are causing great damages and losses towards people and the society – by creating financial crises around the world in 2008. Specifically, the many irresponsible investment bankers acted unethically towards damaging the financial stability and economy of the banking and housing sectors in US and Europe, which later affect the other part of the world. Thus, to counter the adverse effects, corporations are required to act in a responsible manner to enhance the trust level by the public towards business entities.

Corporate Social Responsibilities as strategic management approaches and techniques. Indeed, there are also arguments arguing that as the importance of CSR in business management is something cannot be neglected, it should be taken as an element in the strategic management of businesses (Lamberti et. al., 2009). From such an argument, CSR should be adopted as it can contribute to attainment of competitive advantage for a firm in a business environment whereby trust is an element characterizing consumers’ behaviors towards business organizations (Trapero et. al., 2010). Thus, in strategic planning or formulation process, it is becoming very important for managers to consider how to incorporate CSR concepts in the daily management of corporations.

Corporate Social Responsibilities and its Real World Applications

However, despite having many compelling reason on why Corporate Social Responsibilities should be exercised and adopted by big business organizations, it is argued by researchers such as Karnani (2011) that the adoption of Corporate Social Responsibilities still stuck at the logical level, whereby very few firms are proactively adopting the new ideas or concepts to deliver benefits to the society and the world. Worst, there are also assertions that CSR is manipulated by the large international firms for managing consumers or public perceptions, whereby real benefits are not delivered to the society. All these are not hard to imagine, as it can be seen that there are many reasons that may prevent organizations to deliver benefits to the society at all costs, purely for CSR related reasons. However, companies indeed understand that many benefits can be enjoyed by the company when the mass public or consumers perceive that the company is exhibiting CSR philosophy, and thus having better impressions on the particular company. Thus, a company may be motivated to perform limited degree of CSR activities, but promote their achievements and CSR efforts to entice the consumers. In such a way, CSR are used only for enhancing corporate reputation, without real benefits delivered to the society.

Areas Demanding Corporate Social Responsibilities

There are many areas in which multinational companies (MNCs) should take greater care in exercising Corporate Social Responsibilities. Some of the issues to be discussed are indeed pressing matters haunting the world currently. There are three issues to be discussed, namely: (a) ownership and usage of scarce resources; (b) poverty and inequity; and (c) global warming and pollution. Firstly, as the emerging countries in the east are growing very fast, the rising living standards are giving he pressure to the resources available on the earth. If the growth and development of the world is not monitored and planned properly, human may face huge troubles in the future when the resources ultimately depleted or exhausted. Thus, being powerful MNCs should take these issues and concerns into account, and to adopt more efficient and effective business process flow or value chain to avoid wastages of resources. It is important to prevent the unnecessary wastages, as some of the resources are hardly renewable. The scarcity of certain resources may even push the prices of certain goods up, creating inflationary pressure and provoke societal instability around the world. Then, the issues of poverty and inequality are something not to be ignored as well. For example, many people in poorer countries, such as nations from the Africa region, are suffering from lack of clean living necessities, lack of health related facilities, poor infrastructure and educational system. Last but not least, another highly critical issue is about the global warming in the recent years. As the development or transformation of developing countries into industrialized nations, human are releasing tremendous amount of CO2 to the environment, creating a situation of global warming and pollution. In the recent years, the situation is being attacked by environmental activists, as people started to note how the ice bergs in the north are melting.

Corporate Social Responsibilities and McDonald

McDonald is a corporation very famous around the world, as it is almost very easy to find franchisees of McDonald in cities around the world. It is also a company worth studying, mainly because the company has been engaging actively in activities related to Corporate Social Responsibilities. Besides, the company is also worth researching because there are many controversial ethical issues related to the value offering of McDonald.

Anyway, it is not hard to observe the many CSR activities launched by McDonald, as all of thee CSR activities are widely promoted by the company in the value offering process, or via the communications to society or shareholders.  For example, from time to time, the food served by McDonald is wrapped with materials promoting how McDonald is helping the poor people in other regions of the world. In the corporate website of McDonald, there are CSR reports to be downloaded. Not only is that, in the annual reports, the CSR activities performed by the company is also presented in a colorful and attractive manner. In fact, CSR activities of McDonald, such as to fund green movement for better, greener and clean environment is also recorded in literature review, such as one that is presented by Livesey (1999). In fact, there are more to be discussed, as interested readers may refer to the CSR as well as sustainability reports published by the corporation in its corporate website. However, that is not the real intention of this report to outline the activities, but it is the objective to investigate if the company is doing at their very best, in sincere manner to serve the society.

Despite the many CSR activities performed by McDonald, it is found that while the company is apparently doing good to benefit the society, it is also engaging in ethical questionable issues, primarily in providing highly fattening fast food for the consumption of the public. Arguments on such topic are presented in literature such as Nettleton et. al. (2007), Lee et. al. (2009), and Schroder et. al. (2005). According to these researchers, the foods serve by McDonald is not healthy, and people consuming too much of that fast food is prone to modern diseases. Thus, from such a perspective, it is unsure if McDonald is truly adopting Corporate Social Responsibilities, to take good care of the consumers and society interests.

However, from a more critical review of the CSR initiatives by McDonald, it is also understandable that it is not easy for the corporation to change the types of foods served. Anyway, it can be witnessed that McDonald indeed does spent the efforts to reduce poverty and helping those necessary people from poorer regions or countries. The company had also sponsoring a lot of financial resources for better and greener environment. Although those efforts may be insufficient, it is indeed hard to argue against their proactive initiatives to adopt certain requirements or expectation proposed by the CSR philosophies. The debate if McDonald is sincerely in carrying out CSR activities to benefit the society and environment remain debatable, as many of the activities is deemed to have direct or indirect benefits to the company. It is then not unreasonable for people to suspect that McDonald is practicing selections in adoption of certain CSR activities, which can bring advantages to the corporations. However, it is also not rational to expect the company to spent resources to cater for the needs of the society, as the businesses are indeed funded and supported by the corporations and shareholders. Balancing the interests of various stakeholders can be tricky here.

Conclusion

In this paper, it is discussed how the changes in the business environment are demanding business entities to pay more attentions in their responsibilities to act in good manner and intention to the society and environment. Indeed, it is found that there are many benefits for a corporation that able to proactively utilize CSR philosophy for superior benefits, from both financial and non-financial dimensions. However, the implementation of CSR remain challenging, and yet, the debates on how firms are utilizing the concepts of CSR to benefit the society sincerely or to purely manipulate the mass public impressions remain unclear. Anyway, it can be expected that the move toward embracing CSR by corporations, particularly those MNCs are not avoidable, as not only the mass public are demanding so, and the governments around the world is watching any unethical behaviors of the corporations closely. In this paper, McDonald is used as a case study on how CSR activities are implemented, and how CSR are affecting the business of McDonald around the world.

As a concluding remark, it can be seen that firms may adopt certain ideas of CSR that benefit them. They may or may not adopt other CSR activities that may not bring great benefits to the corporations. Even powerful firms must also balance the needs of the corporations to the needs and expectations of the mass public. Although these many not be the ideal case for the society, at least we are seeing improvement as corporations are taking up certain responsibilities to cater for the needs of society, ablest there are still many areas that can be further improved upon.

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