Introduction
There are many corporations today that practice corporate social responsibility like supporting the communities around the company by volunteering to implementing environmentally friendly practices.There are many benefits for companies that practice corporate social responsibility like sustainability, saving on costs, and an increase in customer engagement. Although there are many benefits for companies to be socially responsible, it is still very difficult for corporations to implement these kinds of programs. In Rangan’s “The Truth about CSR”, he states that there are many corporations who try to implement corporate social responsibility programs, but “many companies’ CSR initiatives are disparate and uncoordinated… firms cannot maximize their positive impact on the social and environmental systems in which they operate” (43). As explained by Ragan, implementing CSR programs can be very difficult for companies without the correct guidance. In this review, I will discuss the key points made in “The Truth about CSR” and strength of these points.
Background Information The article “The Truth about CSR” is a collaborative work written by Kasturi Rangan, Lisa Chase, and Sohel Karim. Their work discusses corporations’ CSR programs and the similar objective to “contribute to the well-being of the communities and society they affect” (42). Ragan brings up a point that many CSR programs implemented by corporations don’t align with the values of the firm because many of these firms are pressured into implementing CSR programs to “dress up CSR as a business discipline and demand that every initiative deliver business results” (42). In Rangan’s article, he shines a light on these companies CSR movements and wants to bring them to their original purpose. This article review of “The Truth about CSR” will be judging the work through content from lecture as well as my own personal experience.
Summary Rangan begins his article by introducing the goals of corporate social responsibility activities and programs are for companies to give back to the communities they are in and CSR programs try to pursue shared value. Shared value is explained as “creating economic value in ways that also create value for society” (42). Rangan then brings up the problems with corporations and the CSR activities they pursue. He claims these CSR activities do not “align with the corporation’s social and environmental activities with its business purpose and values” (42). Rangan backs up his argument through research through interviewing CEOs, directors, and managers on CSR strategies, as well as over one hundred surveys with managers and dozens of case studies.
Rangan claims the problem with CSR programs is that they are misaligned with the company’s values and purpose and are run without the oversight of the CEO. This is why corporations are unable to take advantage of the impact of the environmental and social systems they are in. Rangan wants to solve this by having corporations create orderly CSR programs and having the activities divided into three categories called “theaters”. The first theater is focusing on philanthropy, this theater is designed not to “directly improve business performances or produce profits” (43). The second theater is improving operational effectiveness. This theater is designed “to deliver social or environmental benefits in ways that support a company’s operations across the value chain” (43). The third and last theater is transforming the business model. This theater’s intent is “to address social or environmental challenges”. CSR programs and activities must align with all theaters for a corporation to maximize the benefits.
After going through and explaining the theaters, Rangan explains how to implement CSR strategies in four steps. The first step is to align the programs back with each of the theaters. Most of the CSR programs do not align with the theaters and are poorly coordinated. There is poor coordination across theaters as well. Rangan states CSR programs and activities need to be coherent between theaters to begin implementing CSR strategies (44). The next step is developing metrics to gauge performance. This step revolves around defining “success” and what constitutes it. Success is measured differently for every corporation and by measuring success differently, you can gauge whether or not a program is “successful” (45). The third step is coordinating programs across theaters. The programs must be “mutually reinforcing and consistent with the firm’s business proposals and values” (47). The final step is to develop an interdisciplinary CSR strategy. One of the problems of a companies’ CSR was not being coordinated; the solution to this problem is have a CEO or another executive to head the program so they can ensure the program is maintained consistently across theaters (48). It doesn’t make sense for corporations to all implement the same CSR programs because these programs are “driven by diverse factors including the industry and the societal environments in which businesses operate” (49). One example Rangan pointed out is a manufacturing company is better pressed to reduce their environmental impact vs a financial services company (49).
Rangan concludes the article by stating “some of their (the companies) initiatives indeed create shared value; some, though intended to do so, create more value for society than for the firm; and some are intended to create value primarily for society” (49). But all CSR programs have one thing in common and that is “they are aligned with the companies’ business purpose, the values of the companies’ important stakeholders, and the needs of the communities in which the companies operate” (49).
Evaluation Rangan’s article provides very informative context for companies and corporate social responsibility programs. He points out the big problem in corporations’ CSR programs and how they are losing focus from their original purpose. One way for the article to be even better would be for the author to include real world examples of how certain companies lost their focus. But the author only uses interviews and surveys as his proof and research.
Rangan’s article formulates the implementation of CSR programs into three categories called theaters. These theaters are: focusing on philanthropy, improving operational effectiveness, and transforming the business model. Ragan’s theater structure compares similarly to what was taught in lecture about the five characteristics for corporations to become good corporate citizens. Those five characteristics are: engage with the community in philanthropic activities, legal compliance, be innovative and transformative, and integrate sustainability.
The article could also be improved on by comparing these two aspects. It is important for the activities of a corporation must be within the bounds of the law. It is important for corporations to ensure that their CSR activities are legal because it is possible for CSR activities to be illegal despite its intention for good. For example, if a corporation wants to assist third world countries abroad, they may want to do good for those countries, but they can break the law if the process in which they are doing good is not within the boundaries of the laws in that country.
One really important aspect of the article Rangan could have added to strengthen his argument is how the three theaters can be coherent. He explains the important of each theater and that it is important for them to be coherent, but he never explain why it is important for them to be coherent. Rangan tries to explain why it is important through the three theaters, but he only goes over examples and is not able to explain how a corporation’s CSR can align. This methodology to shift corporations CSR seems to be the most difficult to implement and because the author is unable to fully flush out his argument, it overall weakens his point.
Conclusion
It is vital for corporations to implement corporate social responsibility programs and activities. Without them, corporations will be left behind by other firms that practice corporate social responsibility. Corporations have an immense amount of influence and resource to implement corporate social responsibility programs, so there is no reason for them not to. But as Rangan said, it is easy for corporations to not understand the purpose of corporate social responsibility programs. Many corporations implement these programs so they can give an impression that their firm does good for society. But, these corporations cannot just implement CSR to look good, they must be relevant and actually do good