Traditional to Modern CSR Has Undergone A Paradigm Shift
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In an age of intense competition, what differentiates companies is the public perception of its value system, which depends on how it handles its corporate social responsibility (CSR).
CSR has witnessed unprecedented interest and investments that evolved it completely over the last few years. Now, it becomes both contemporary and contextual issues to the company itself (both at managerial and workforce level), government and all the stakeholders.
Let’s delineate the various parameters or areas that are useful in understanding the concept of CSR and the difference between traditional and modern CSR.
Related Link: How Expanding Scope Of CSR Will Help Start-up Ecosystem
The New Order
The year was 2014, Cardiff Business School, Frank Bold (CEE region purpose-driven law firm), and Richard Howitt MEP, collectively organized a conference on the “Purpose of the Corporation” at the European Parliament.
It was attended by more than 120 participants including investors, NGOs, policymakers and representatives from various companies. This conference is considered to be the first step in showcasing the modern CSR on one of the biggest podiums.
The modern CSR is viewed in the following flow diagram that is designed by environmentalists of Norvergence:
The Fundamental Question (Role of Businesses in the Society) -> Answers Lies in the Way Forward (creating sustainable value for everyone i.e for employees, stakeholders, and the government) -> The Best Way to Get There.
CSR is no Longer a Peripheral Issue
Traditionally, many CEOs viewed CSR as a self-imposed tax and further those who follow economist Milton Friedman didn’t want to include it as for them, the only social responsibility of corporations is to increase its profits.
But now, slowly and eventually, modern CSR has become the foremost goal of various corporations. In a recent interview with Business Focus, Home Plus chairman Lee Seung-han said: “In the past, the primary goal of firms was to gain profits. Now, they also have to consider how to make the world a better place to live in by including CSR among their core values.”
He further added: “CSR should not be a one-off event carried by select few. It should be a kind of culture so that it can develop into a grassroots agenda. If you regard something as a tool, it cannot become part of your culture. Only when you make something a goal, it can become part of the culture. CSR itself should be a goal for companies so that it becomes part of their culture.”
Also, activities included in traditional CSR were not related to core business operations but at the same time focused on philanthropy and community development.
At the same time, modern CSR is strategy-based that addresses negative value-chain impacts with respect to supporting the needs of society and business.
In a recent Harvard Business Review article, Michael E. Porter and Mark R. Kramer mentioned that when modern CSR without a clear strategy is conducted, the result is a suboptimal economic impact. In clear words, it neither strengthens the organization’s value nor affects society in a positive way.
Modern CSR is more about Win-Win Strategy
The modern CSR is more about presenting an opportunity to create not only a value but shared value, for both society and organization. The modern CSR is less about ‘corporate social responsibility’ and more about ‘corporate social integration’. This helps the organization to take a complete look at the expectations of the capital market, consumer, labor, and the whole community.
Modern CSR: Individual Driven Self-Motivated Process
The traditional CSR was considered as a responsibility of the human resource department and also the agenda or the activities under it were set up by the top management. But, the modern CSR is different as it is an individual driven self-motivated process. With the help of a modern CSR approach, the organization gets the power to identify the ability of its workforce.
Modern CSR Puts an End to Long-Lasting CSR Debate
The modern CSR is more compatible with today’s world and has acquired a new resonance on the stage of the global economy. It helps employees to enhance their skills in important areas such as volunteerism, adaptability, financial management, stakeholder engagement and research.
No doubt, there is a challenge to balance economic and social growth but by opting for modern CSR, organizations can take a step further towards value creation.
CSR of Indian Multinational Corporations (Case Study of Tata Group)
The Tata group, which is one of the oldest groups in India, has been running its operations in almost every major international market. Its overseas acquisitions such as Tyco Global Network and General Chemicals in the US, NatSteel in Singapore, Daewoo Commercial Vehicles in South Korea, Brunner Mond, Tetley, Jaguar, and Land Rover in the UK has confirmed its place into top industrial houses.
The Tata group is committed to sustainable development and runs various programmes. The group under the leadership of Ratan Tata has uplifted common masses through the concept of CSR with respect to protection of environment and development of the nation.
Jamsetji Nusserwanji, founder, Tata group, said about the recognization of CSR: “In a free enterprise, the community is not just another stakeholder in business but is in fact the very purpose of its existence. Corporate social responsibility should be in the DNA of every organization. Our processes should be aligned to benefit society. If society prospers, so shall the organization…”