Critical Reflection On Corporate Social Responsibility Projects Accounting Essay

Critical Reflection On collective Social Responsibility Projects Accounting EssayThe aim of this makeup is to provide a critical reflection considering the ethical al adeptude of raft of the CSR projects which companies argon change magnitudely launching with the global emerging trend of somatic social responsibility in the business world today. The purpose is to tax the objectives of these campaigns, comparing if they atomic number 18 rather actions targeting bread or/and better collective image or if they argon truly altruistic actions driven by the increase of the c erstwhilern involving the global issues nowadays.WHAT IS THE PURPOSE OF A CORPORATION?Indubitably, this incertitude has been widely discussed for many years, as great theorists manoeuvre different point of views, arguing that either the primary objective of an cheek is to maximise range or to be devoted to its mission and essenti tout ensembley satisfy the s beat backholders needs.fundamentally there a re two main theories shareholder value scheme and stakeholder scheme. The prototypal one argues that the hardly objective of a company is to maximize profit and generate value to its shareholders. At the different extreme is the stakeholder theory, which suggests that the memorial control boardt non only should make profits and create value to the shareholders scarce also please their stakeholders, such as customers, employees, suppliers, local communities, and society at large. (Morgan Stanley, 2008) unrivalled of the earliest precursors of the shareholder value theory is Milton Friedman that emphasized onceSo the question is, do embodied executives, provided they stay within the law, apply responsibilities in their business activities other than to make as a great deal specie for their stockholders as possible? And my answer to that is, no they do not. (Friedman, 1974)On the other hand, Dave Packard the co-founder of the Hewlett Packard proposed a distinctive cause for company existenceI regain many people assume, wrongly, that a company exists simply to make money. opus this is an important result of a companys existence, we have to go deeper and find the strong reason for our being. As we investigate this, we inevitably come to the conclusion that a group of people get together and exist as an creation that we call a company so that they are able to strive something collectively that they could not accomplish separatelythey make a contri aloneion to society, a phrase which sounds trite but is fundamental. (Packard, 2002)The ground of the stakeholder theory is not out-of-the-way(prenominal) from the corporate responsibility concept or trend, which undeniably attract much attention in the move years. As the theory, CSR objective is to determine all the stakeholders and pursue a balance between the main concerns and goals of each one of those (Morgan Stanley, 2008). While Friedmans and Packards points of views represent extremes opinions, o thers have promoted a mid-term approach. Peter Drucker, for example argued that a middle ground is essential for one business to be considered favored as expandd on the statement bellowA business that does not show a profit at to the lowest degree equal to its be of capital is socially irresponsible it wastes societys resources. Economic profit operation is the build without which business cannot discharge any other responsibilities, cannot be a safe employer, a good citizen, a good neighbor. But economic performance is not the only responsibility of a business Every organization must assume responsibility for its impact on employees, the environment, customers, and whomever and whatever it touches. That is social responsibility. (Drucker, 1954)All in all, the fact is that there are many respective(a) opinions among specialists and executives. Therefore, in my opinion the CSR of one company is influenced mainly according to the beliefs and determine of its leaders, especial ly the CEO, rather than the mission statements of the organization.CORPORATE SOCIAL RESPONSIBILITY IS change magnitude AS A TREND BUT DECREASING WITHIN COMPANIES sooner analyzing more extensively the corporate social responsibility as a trend within the companies, I truly believed that the CSR practices were substantially change magnitude. However afterward reading the 2008 Morgan Stanley publication about the topic, I was surprised with the results.Considering the methodology use by Morgan Stanley, It seems that the overall real concern of CSR is diminish over the last 15 years. Although the organizations might be invest more in CSR projects, the cost/harmfulness caused by the companies is increasing on larger scale. So, this means that the interdict actions are not being covered by CSR practices. Instead, the careless with CSR is increasing much more than the projects as could be analyzed in the table below. KLD defines a set of potentiality strengths (for example, charit able giving) and a set of potential concerns (e.g., hazardous waste). For each company, KLD assigns a value of 1 if the strength or concern exists and a 0 otherwise.(Morgan Stanley, 2008)In conclusion, besides the strengths are increasing, the concerns are rising more rapidly and the net value of the strengths minus concerns is decreasing each year. Evidently, that the result presented could be argued and probably other studies with different methodologies could show diverse outcomes. However, I personally like the methodology because not only shows what companies are doing well but also consider what they are doing wrong. Nevertheless, in my opinion does not matter if they are investing more if they are depreciating even more.Even though, companies are not emphasizing CSR as I would expected so, unquestionably the trend is increasing within the society, followed by the pressure for new management practices and concerns with the environment.A good evidence to illustrate that hypothe sis is the rise of the relevance and coverage of this topic at the universities. One view conducted by Lisa Jones Christensen in 2007, aimed to further investigate the importance of CSR, morals and Sustainability at the top 50 global MBA course of instructions. The results showed that 84% of the schools that responded oblige students to take courses of one or all of these subjects. Even more 25% delineated a stand-alone course. Comparing with The Ethics Resource Center study conducted in 1988, when 75% of Ethics, CSR, and Sustainability Education were a required part of the program and only 5% of the MBA programs required a separate course on ethics. (Christensen, Peirce, Hartman, Hoffman, Carrier, 2007)Summarizing, in my point of view CSR is a relevant subject and it is an increasing trend among the society, however companies are not giving the importance they should to these practices. Moreover, as testament be presented on the next section, companies could gain more profits with a different approach of CSR.COMPANIES INVEST IN CSR AS kernel TO MAXIMIZING VALUE OR TO DO THE RIGHT THING AS AN END ITSELF?As Michael Jensen discuss in the article Value Maximization, Stakeholder Theory, and the Corporate Objective Function, published by the Journal of Applied Corporate finance in 2001, there are two alternative reasons for organizations to finance CSR initiatives. The first one is known as the moral theory, which CSR considers organizations as good corporate citizens by losing profits when necessary to serve other stakeholders, including society at large (Jensen, 2001). Above all, corporations have responsibilities to their customers, employees, and communities that should be given at least equal priority with their economic goals for their shareholders. On the other hand, the economic theory for CSR suggests it as a positive-NPV investment. More simply, presume CSR as the same as any business investment decision Invest in all essential stakeholders if ther e are expected returns, at least alike to the cost of capital. (Morgan Stanley, 2008)Nevertheless, the main question to address is why companies are investing in CSR? For economic reasons, expecting returns, or they are really concerned and are investing with moral arguments? To answer that question, once again I will reference the Morgan Stanley study.The article states the premise that corporations that are more disposed to repress shareholder returns for stakeholders would probably invest not only to increase their CSR strengths but also to decrease their CSR concerns. In other words, those organizations would adopt the idea of First, do not harm. Therefore, such companies would make efforts both to increase their CSR strengths and reduce their CSR concerns. In contrast, companies concerned with the returns of the investment in CSR would give priority on expression their strengths, as many of them do it to make a public display of ones progress, instead of focusing their effo rts to address the weaknesses. Especially because usually is very pricy to eliminate many CSR concerns.As I predicted, the results shows that companies invest on CSR projects in the first place to maximize value rather than endorse stakeholder commitments as an end in itself. This means that businesses are financing CSR to strengthen their attributes instead of eliminating the CSR concerns.However, the most raise factor is that the same research found that companies with more CSR strengths or fewer CSR weaknesses presented higher returns. This suggests that financing CSR initiatives generates profit and long-term value maximization, as could be observed in the graph below. Even more, companies which focus on reduce the concerns and thinks primarily on the stakeholders rather than profits, in a long draw in makes better results that corporations which allocate resources on strengthen their CSR attributes and have the economic approach. In other words, being ethic and altruistic c onsidering the investments is more profitable (Morgan Stanley, 2008)(Morgan Stanley, 2008)