Question

(i) Briefly explain in your own words the concept of corporate social responsibility Explain how the practice of CSR might provide a competitive advantage. Provide an example from one of the companies that we have studied. (ii) Explain the distinction between stockholders and stakeholders and how the firm's focus on one or the other might influence its decision-making process regarding corporate social responsibility (150 words max)

Answer 1

Corporate social responsibility is basically self regulation implemented by the corporate organisation which helps it to be socially responsible. And to achieve that companies involve social and environmental concerns in their business operations and with their stakeholders. So being socially responsible increases the goodwill of the company and help in increasing the demand for its product.

ii) A stakeholder is someone who can affect a business or be affected by a business and its actions whereas a stockholder is someone who holds shares of a company. If a firm's focus is on satisfying the needs and wants of its stockholder then it might have to compromise with the corporate social responsibility as usually taking by actions towards the benefit of the environment causes money and that might lead to reducing the share of profit of the shareholder or stakeholder and they might suggest against it.