Corporate Responsibility in the Retail Industry

A number of theorists argue that for organisations to be continuously successful, the most crucial factor for their success is to develop understanding of the strategic implications of CSR. Discuss this view of CSR in the industry of your choice using relevant literature to support your arguments and analysis. For students who are pursuing business dissertation help, exploring the interplay between CSR strategies and organisational success can provide the most valuable insights into contemporary business practices.

Although corporate social responsibility (CSR) has been differently defined, this paper defines it as a concept that relates to how organisations manage the business process in order to produce an overall positive impact on the society (Dupire and M’Zali 2018).CSR is fairly a new paradigm and many companies treat it as an investments to bring specific benefits. For example, CSR can help a company achieve competitive advantage if the products are developed as a result of social involvement (Yu et al. 2017). Companies approach CSR differently but basically, they tend to ensure that other than offering high-quality products, they respect the needs of all stakeholders while minimising negative impact on the society and the natural environment (Frynas 2015). CSR has become fundamental to business success because firms that do not meet the society and natural environment needs are less likely to survive in the market since irresponsible behaviour leads to loss of customers (da Silva Junior et al. 2018). As such, CSR is a subject of great interest to entrepreneurs and business organisations. This paper adopts Archie Carroll’s approach to CSR which proposes that social responsibility of an organisation encompasses the economic, legal, ethical, and philanthropic expectations that a society has of organisations at a given point in tie (Carroll 2016). Carroll argues that a CSR driven company should strive to make profit, obey the law, engage in ethical practices, and be a good corporate citizen (Carroll 2016).

The economic aspect of social responsibility relates to the ability of any organisation to rationally allocate financial resource and achieve profits for its sustainability. Economic profitability is included in CSR as the primary condition for the existence of business organisations given that the society expects organisations to secure their development through balancing risks and the anticipated benefits (Carroll 2016). The legal aspect of CSR relates to the ability of a company to comply with all applicable laws and as such offer products that meet the minimum legal requirements while fulfilling legal obligations towards stakeholders (Carroll 2016). The company should also be a law-abiding corporate citizen. The ethical aspect of CSR relates to the key values and the ethicality of the activities that an organisation conducts in order to accomplish its mission (Carroll 2016). The philanthropic aspect of CSR focuses on how an organisation supports the needy in the society or groups, which is normally attained through charitable funds to achieve various social goals financed by a company (Carroll 2016).

There are various factors that create pressure for firms in the retail industry to engage in CSR, change, and continuous improvement. According to Ferreira et al. (2019), the retail industry is among the leading carbon-intensive business sectors. In agreement, Schönberger et al. (2013) note that retail stores have the one of the highest energy intensities of 500 to 1,000 kWh/m2/y. Additionally, the retailers environmental footprint is quite high in terms of direct GHG emissions and even higher in terms of indirect emissions. The key pressure influencing firms in the retail industry to engage in CSR is international regulation urging retailers into energy and carbon efficiency; such regulations include Paris Agreement, Montreal Protocol, and Energy Performance of Buildings Directive among others. In addition, the Retail Industry Leaders Association (RILA) recognises retailers’ overall environmental impact as a significant problem requiring a more comprehensive CSR sustainability-driven management approach, which in turn has forced firms in this industry to manage their environmental impacts through implementation of effective CSR policies and strategies and adoption of sustainable building practices.

Firms in the retail sector engage in CSR for various reasons. First, CSR is seen as a factor of sustainable development and competitive advantage. According to Souza-Monteiro and Hooker (2017), the retail industry is highly concentrated and therefore, individual companies make efforts to integrate social demands and contribute to the society by doing what is ethically right so they can gain a competitive advantage and sustainability. In the UK, most retailers are integrating CSR into their businesses. For example, Morrison believes that it will only succeed if CSR is fully integrated into the way the company does business. Similarly, Tesco believes that commercial success and its CSR performance are mutually dependent and as a result, these two variables permeate every level of Tesco’s business. There is no universal way for firms in the retail industry to engage in CSR but some retailers measure and benchmark their CSR achievements (Khan and Kakabadse 2014). For example, Kingfisher and Tesco report their CSR achievements using Key Performance Indicators and independent verification while Sainsbury report participating in the Business in the Community Corporate Responsibility Index. Basically, firms in the retail industry make CSR reports that capture their impact on the environment, community, marketplace, and the workplace (Jones et al. 2014).

The notion suggested by Carroll particularly the hierarchical order of the CSR pyramid which has the economic dimension at the base, followed by legal, ethical, and philanthropic, respectively is not global. In the retail industry, the primary concern of firms is to remain economically viable but in order to attain this; they have increasingly invested in reducing negative impact on the environment and the society in which they operate (Dupire and M’Zali 2018). In fact, environmental issues have emerged a primary agenda for retail firms in the UK; a review of top ten companies in the UK retail industry conducted by Jones et al. (2014) reveals that environment is a key driver for CSR agenda. In addition, these firms have massively invested in charitable works with an aim of reaching and impacting the entire society. Therefore, the hierarchical order of the CSR pyramid in the retail industry has the economic dimension at the base, followed by philanthropic, followed by legal, and the ethical dimension at the top of the pyramid.

CSR has its advantages and disadvantages to firms in the retail sector. According to Bachmann and Ingenhoff (2016), CSR is a means for companies to gain legitimacy and in the same vein; Kumar et al. (2019) write that CSR is a way for organisations to gain the licence to operate and goodwill in the public eye. This means that for companies in the retail industry, CSR disclosures are worth making for a company to enhance its legitimacy. In addition, Pomering et al. (2013) assert that when retailers are perceived to be adhering to social norms through their CSR actions, they gain legitimacy and support from consumers within the community. In the UK retail industry, the many retailers have a range of impacts on the communities within which they operate, and as a result, these companies have gained legitimacy. For example, the intention behind Kingfisher developing its stores in various locations is to make sure it is a good neighbour in the community it serves. As such, the company makes cash donations, gifts, and employee time as part of its investment in the community. On the other hand, Morrison’s development planning includes facilities for the benefit of the local community as well as commissioning public works of art to reflect local heritage. While CSR has been used by companies to gain legitimacy, some researcher argue that CSR reporting does not always enhance legitimacy. For example, Pomering et al. (2013) warn companies that CSR is likely to result in tarnished legitimacy especially if the community perceives CSR reports as a self-promoter paradox. In agreement, Elving et al. (2015) write that although the publics expect companies to engage in CSR, they so not appreciate corporate communication about CSR: if companies try too hard to gain legitimacy through CSR, they run the risk of losing it. Further, Vollero et al. (2016) argue that stakeholder scepticism about a company’s CSR reports is associated with a tendency to disbelief and distrust the credibility of the CSR reports. Still, Quick et al. (2013) argue that the actions of business organisations are always strategic and persuasive, which gives publics the reason to be sceptical towards CSR disclosures. Therefore, we recommend that companies in the retail industry should continue engaging in CSR but when making CSR reports, the companies should just focus on key performance indicators rather than using this information to market themselves, which implies that CSR reporting should be made with the primary function of informing the publics.

Therefore, CSR remains a valuable tool through which companies responds to the needs of the wide range of stakeholders. In the retail industry, legislation and regulation are the primary factors pressuring firms to engage in CSR. In response, individual companies engage in CSR in order to gain a competitive advantage. While Carroll’s pyramid of CSR remains popular, it does not work in the retail industry as the notion of CSR represents a pyramid that has the economic dimension at the base, followed by philanthropic, legal, and ethical and the top. The outstanding advantage of CSR for retail firms is enhancing legitimacy but this has its negative side given that publics perceive organisations to have strategic and persuasive actions and therefore they tend to be sceptical about CSR disclosures. Therefore, retail firms should aim at informing the public rather than persuading them when making CSR reports in order to gain legitimacy.

References

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Carroll, A.B., 2016. Carroll’s pyramid of CSR: taking another look. International journal of corporate social responsibility, 1(1), p.3.

da Silva Junior, A., de Oliveira Martins-Silva, P., Feu, K.S., Komino, A.C., da Silva, V.C. and de Araújo Vasconcelos, K.C., 2018. Corporate social responsibility in the perspective of Brazilian management students: the inversion of the pyramid. Social Responsibility Journal.

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