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Question

Using theories and concepts related to ethical leadership and stakeholder theory, discuss how you would recommend embedding or integrating CSR into a company. Use real examples to support your claims.

Detailed outline

  1. Cover page: Research title, date, word count
  2. Summary
  3. Contents page of headings and sub-headings
  4. Introduction (10%)—220 words
  5. Main section: Main body of the essay, based on research findings from literature used

-structured under appropriate headings and subheadings to reflect content reported on

-Main arguments and claims with reference to concepts and/or theory and real-life examples to support them-

-critique your own arguments; show the “other perspectives”

-Discussion may be incorporated in this section or separate discussion section may be created (60%) —- (1320words)

  1. Discussion (see above)

-Both sides of the argument (20%) —–440 words

  1. Conclusions (10%) —-220 words
  2. References
  3. Appendices

Answer

Introduction 

For corporate social responsibility (CSR) to be successfully embedded into a company, a theoretical approach is necessary. Theories and concepts related to ethical leadership and stakeholder approach are commonly used to provide a framework through which companies can embed or integrate CSR into their overall strategies. The aim of this paper is to provide a critical evaluation of these theories and concepts in relation to real-life integration of CSR in a company. Discussion of literature is presented to identify the main research findings. Both the arguments provided in this paper and the “other” perspectives are critiqued. Based on this discussion, conclusions are made. Both ethical leadership and stakeholder approaches provide valuable insights into ways of integrating CSR into a company.

Research findings from literature

Contemporary research on CSR has addressed a wide range of issues. These issues relate to both theory and practice. Many efforts have been made to outline ways in which CSR can successfully be adopted in business contexts. Some researchers have demonstrated their preoccupation with ideological aspects of implementation. However, others are keen to focus on the reality of CSR implementation in a world of increasing competitiveness.

Although many companies have awakened to the need for CSR, they have not found a clear path in terms of proceeding with this practice. They have failed to achieve far-reaching CSR goals in terms of the business actions that they take. This problem is especially common in European and African companies, where CSR is adopted, not for strategic or operational reasons, but for “cosmetic” reasons. In such practices, CSR is strongly tied to media and public relations campaigns.

It is important for businesses to construct images based on a wide range of surface CSR issues. However, at the same, this approach may ignore actual substance, thereby proving ultimately unsustainable. In such a case, a theoretical approach becomes necessary. It becomes necessary for managers of companies to focus on both theoretical and practical aspects of integrating CSR into their business strategies.

In many companies, there is too much preoccupation with glossy CSR reports showcasing the good deeds that have been achieved in the areas of social and environmental wellbeing. Whereas these efforts are useful in terms of putting the CSR debate in the limelight, the reports through which they are communicated tend to be deficient in terms of a framework that is strategically coherent and theoretically justifiable. This enhances the portrayal of the companies’ efforts as being mere “cosmetic” presentations aimed at hoodwinking the public. Such reports simply provide anecdotes about the uncoordinated initiatives undertaken by the company to demonstrate its commitment to CSR. The CSR reports provide highlights on the efforts of companies to address issues such as carbon emissions, efficiency in energy use, reduction of pollution, and proper waste management.

The lack of coordination between theoretical basis and business strategy in CSR activities is also evident in the conventional view of CSR as philanthropy. In many reports, companies go out of their way to describe the amount of money or volunteer hours spent in social welfare activities. In contrast, focus rarely shifts towards the assessment of actual impact.

Although some companies actually go beyond the cosmetic approach to CSR, they still fail to provide a clear framework of practical guidance on how a wide range of environmental and social considerations are being integrated effectively into the core business strategy and day-to-day operations of the company. Most of these companies undertake CSR activities under the assumption that a moral imperative accompanied by ethical concerns provides an absolute mandate for any company to undertake business activities in a socially responsible manner. However, in reality, these companies are compelled by circumstances to balance competing values, costs, and values. They are faced with the need to do weigh all social benefits against a myriad of factors, including the interest of the business, financial costs, and even environmental benefits in comparison to social returns. In other words, they are expected to put into consideration the needs of different stakeholders.

Ethical leadership theory

In ethical leadership theory, focus is primarily on moral and ethical principles. According to Brown (2006), the emerging construct of this theory is normally defined in the context of a shared concern for a moral dimension in leadership. In this dimension, a lot of emphasis is on authentic and transformational approaches to leadership. The discourse also draws from the intersection of literatures on ethics and leadership. Brown (2006) argues that one of the antecedents of ethical leadership is genuine concern for social responsibility on the part of the company. In this case, the assumption is that if companies genuinely seek to pursue CSR activities, they are likely to achieve improvement in performance.

Nevertheless, many aspects of ethical leadership are yet to be fully explored. This means that researchers have numerous opportunities for discovering new insights. At the same time, corporate leaders have opportunities for improving their effectiveness by, among other things, showing concern and appreciation for society through CSR activities. Most importantly, the leaders have opportunities for gaining new ideas on how to embed CSR into their business strategies.

In ethical leadership theory, leaders are expected to be the primary providers of ethical guidance for their employees (Brown, 2005). In response to dearth in literature on the ethical dimension, Brown (2005) proposes the social learning theory in efforts to create a constitutive definition of the construct of ethical leadership. In this theory, ethical leadership is defined in terms of honesty, trust, and consideration behaviour in the leader. In terms of embedding CSR in the business strategy, the suggestion is that the ethical leader should implement his business strategy in such a way that CSR efforts are not neglected or sidelined. Honest efforts need to be undertaken to create room for CSR in all business activities. For example, the ethical leader may encourage his followers to engage in those CSR activities that enable them derive job satisfaction.

One of the greatest challenges posed by the ethical leadership theory is that it fails to equip businesses with practical guidelines on ways of allocating their budgets to various CSR projects such as dividends to shareholders, funds for disadvantages children, and the construction of social amenities. It also fails to create structures and frameworks for employees and their managers to spearhead the processes of developing new innovations for promoting sustainable production. In other words, the ethical leadership theory adopts a normative approach to CSR in a company.

Stakeholder theory

In the stakeholder theory, focus is on creating as much value to the stakeholders of a company as possible. In stakeholder management, focus is on the actors and interests that affect or are affected by the company. Companies seek to evaluate and assess stakeholder relationships with a view to navigate the private and public environments of their business operation. By so doing, the companies account for responsibilities, relationships, and interactions in the way they formulate and implement strategy.

In stakeholder theory, the most important question is on which stakeholder deserves or does not deserve the attention of management. This means that relationships between stakeholders and organizations must be based on exchange transactions, claims of legitimacy, and power dependencies. Different stakeholder relationships call for the adoption of different influence strategies for a company (Balabanis, 2001). The aim of adopting these strategies is to gain legitimacy of business operations. Legitimacy is the generalized assumption that a company’s actions are appropriate, proper, or desirable in the context of specific social values, beliefs, definitions, and norms.

Managers are expected to think and act in ways that show respect to all their key stakeholders as well as the world at large. In extending the scope of this theory, Basu (2010) proposes a process model that can enable managers make sense of the impact of their firms’ CSR. Basu (2010) adds that such an approach can generate new directions in research agenda on the link between organizational strategy and CSR character.

Some scholars have argued that the stakeholder theory is not sufficient in terms of providing an explanation for the pervasive phenomenon of CSR (Doh, 2006). According to Doh (2006), the pervasive nature of CSR is particularly evident in European companies. At the same time, differences in expectations of stakeholders tend to persist in Europe and Africa. These differences, in turn, affect the expectations that people in Europe and Africa have regarding companies’ responsibilities to society. The differences are usually manifested in corporate strategy, government policy, and NGO (non-governmental organization) activism.

Some of CSR-related the issues that are often debated in the context of the stakeholder theory include global warming, pricing of anti-viral drugs in poor countries, and trade related to genetically modified organisms. These are some of the issues that continue to shape the debate on the stakeholder theory in the context of CSR. Doh (2006) emphasizes on the need to extend the scope of the stakeholder theory to cover “other” perspectives such as political legacies and institutional structures. These perspectives can enhance the contemporary understanding of differences in CSR practices in Europe and Africa.

Institutional variation greatly influences the way CSR activities are carried out. It does this by creating differences regarding the legitimacy of different social issues that are articulated by different professional bodies, interest groups, and NGOs. The resulting perceptions, in turn, affect the way various CSR-related public policy issues are articulated and resolved. They influence the way companies take responsibility for various stakeholders, including environmentalists, suppliers, employees, and local communities.

Discussion

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