Contents
Research Hypothesis and Main Question. 3
Research Title
Analysis of the impact of CSR on the company’s stability: A case study of Google.
Introduction
In a business environment, most of the large organizations are focused on maximizing their profits and their market stability. However, the actions caused by the corporations can have a very negative effect on the environment. The examples of the negative environmental impact caused by the corporations are for instance, spilling oil into the oceans, polluting the air with toxins and high carbon footprint, which is one of the main causes of climate change. However, in a recent past, a certain philosophy known as triple bottom line appeared. This considers 3Ps: People, Planet and Profit, which is another interpretation of the term of CSR, Corporate Social Responsibility, explained as the ethical behaviour by the company (Slaper, 2018). Google was one of the first large corporations which adopted this concept and even created the slogan” Don’t be evil!” showing the world an example of how the organizations can be socially responsible and prosper financially at the same time.
Purpose
The purpose of this research is to examine the impact of the CSR on the stability of a company based on the example of one of the largest organisations in the world Google. The company started in 1998 with an investment of 100 000 dollars. It started as a search engine online and today has covered several industries with 60 000 employees over 50 countries in the world (Google, 2018). Moreover, in 2015 a Reputation Institute ranked Google as number one company on its global corporate social responsibility. The company has been carbon neutral since 2007 and have been engaging in the environmentally friendly activities such as Google Green, which in return, apart for being positive for the environment, improved the reputation of the firm (Micheli, 2015).
Problem Statement
In 1994 john Elkington explained that a key challenge in the 21st-century business would be a difficulty of measuring social and environmental responsibilities, which are the necessary parts for achieving a financial stability. According to Elkington, the bottom line on a company’s income statement is its net income. However, to advance the goal of sustainability the companies must look beyond the profits and take into consideration social and environmental issues (Investopedia, 2018).In addition, since CSR is a growing discipline, there is a need to explore this phenomenon and gain a better understanding of its impact on the company’s stability.
During the course of this research project, it is necessary to analyse various aspects of CSR. Starting with the definition of CSR and its importance for companies. The analysis of primary goals of CSR with detailed information about its history and origin builds the base of further work.
Furthermore, the meaning of the term stability of a company in the market place would be described and different methods for achieving stability will be discussed. Likewise, CSR as practiced in google and lessons learned from them would be analysed.
Therefore, the research focus can be summarized as follows:
Analysis of current CSR methods and their impact on the company’s stability using Google as a case study
Research Hypothesis and Main Question
The research will be designed to test the following hypothesis;
H0 (Null hypothesis): There is no impact of CSR on the financial stability of a company in the market place.
H1 (alternate hypothesis): CSR has an impact on the financial stability of a company.
As stated above in the problem statement, the research question can be described as follows:
- What is the impact of CSR on a company’s financial stability?
In order to adequately answer the above-mentioned question, it is necessary to break it down in to smaller segments. These segments are as follows:
- What is the meaning of CSR?
- What is the definition of the term stability and how it is perceived in a business environment?
- Why is CSR important for the society and businesses?
- What incentives and motivation does an organization have to fulfil their CSR?
- In what ways does CSR influence the workings, decisions and processes of a company?
Background of CSR
In order to understand CSR to its full extent, it is important to review the relevant literature. A short review of the topics relevant to this research are provided below. Detailed analysis would be included in the full research paper. For this research work, analysis and understating of the following themes is necessary:
- Origin of CSR
- Circumstances leading to CSR
- Interaction of CSR with daily activities of a company
- Google Adopting CSR
- What CSR may lead to
- Financial stability of corporations in the market place
The first two themes deal with the origin of CSR providing historical data of how the term appeared in the business field and what were the circumstances that lead to inventing this approach. The third theme gives information about the interaction of CSR with daily activities of the company. Theme 4 would discuss CSR as practiced in google in detail. Theme 5 describes the measures companies take in order to fulfil their CSR. The last theme examines the term stability of the business and its correlation to the company’s CSR.
Origin of CSR
CSR is a product of a 21st century, however, its development started in the early 1950s. According to Patrick Murphy (Murphy, 1974), there are four CSR eras prior and after 1950. The first era was referred to as “Philanthropic” era, before the 1950s, during which most of the largest companies started donating to charity and fulfilling some of their social responsibility that way.
The second period, starting from 1953 till 1967, is noted as the era of “Awareness”, during which the firms started involving in community affairs. The third cycle started in 1968 and lasted till 1973 and was named as an era of “Issue” during which the organisations started focusing on problematic issues such as oil spills, air pollution etc
The next era started in 1974 and lasted till 1980s, called as an era of “Responsiveness” thereby the companies started taking serious steps towards management of the operations and CSR issues like working ethically and legally. Even though it is difficult to classify the eras and give them names, this was Murphy’s interpretation of the origin of CSR.
Furthermore, in the past, CSR was often referred to as SR, Social Responsibility, and the first person to touch the following topic was Howard R. Bowen in his book Social Responsibilities of the Businessman (1953). According to Bowen (R.Bowen, 1953), in that period, there were several large companies which were in charge of the power and the decision-making process of CSR. In the book, the author continued on asking about the responsibilities that a businessman had towards the society. Bowen described social responsibility as:
“It (SR) refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society” (R.Bowen, 1953).
Because Bowen was the first person who ever used the term of social responsibility, the author was called the father of the CSR in 2006 by Carroll (Carroll, 2006) who is the author of the book Business and Society: Ethics and Stakeholder Management. This book describes the ideas and explanations behind the terms “CSR”.
Keith Davis explained social responsibility of the businesses in further detail in his books and articles. Davis explained that the ideas of social responsibility are ambiguous and that it should be taken in managerial context. In addition, Davis concluded that paying attention and taking dedicated measures to improve social responsibility would bring the company a long-term economic growth (Davis, 1960).
Circumstances leading to CSR
There are several circumstances which are leading organisations to adopt CSR. According to Paul Hohnen’s book, Corporate Social Responsibility: An Implementation Guide for Business, one of the best way to fulfil CSR by organisations is to build a positive reputation of the organization and establish the term “Corporate Citizenship”. Corporate citizenship is the social responsibility which the company’s have to meet the legal, ethical and economic responsibilities (Anon., 2018) Hohnen argues that companies adopt CSR to manage good external relationships because everyone wants to work with an ethical organisation (Hohnen, 2007).
Interaction of CSR in daily activities of a company
According to Nicole Fallon (Fallon, 2017), Business Daily managing editor, there are four ways in which companies practise CSR.
- Environmental Efforts
- Philanthropy
- Ethical labour practises
- Volunteering
According to Financier Worldwide (Financier Worldwide, 2017), there are a few steps to establish CSR management through the companies and those steps are:
- CSR assessment
- CSR strategy
- CSR commitments
- CSR implementation plan
- Evaluation of the results
- Refinement
As mentioned above, a full assessment of these practices and their implementation will be discussed in the full research paper.
Google Adopting CSR
To analyse the following theme, the webpage of Google will be used as a guideline. According to Google, it started the CSR programme in 3 major fields:
- economics,
- education,
- and inclusion.
In an economic sense, Google is helping people to access opportunities through digital skills. Google is using a special platform to translate books in order to help society by providing material required for education. Furthermore, Google uses data to uncover racial injustice (Google, 2018).
What CSR may lead to
There are both optimistic and pessimistic approaches about the future for CSR. According to Steven D. Lydenberg in his book of Corporations and the Public Interest: Guiding the Invisible Hand (Lydenberg, 2004), the author argues that CSR is the major drive which changes a traditional approach of the management. According to Lydenberg, this process is more visible through European communities, however, Americans are more sceptical about regarding CSR.
On the other hand, David Vogel in his book The Market for Virtue: The Potential and Limits of Corporate Social Responsibility (Vogel, 2005) suggests that CSR cannot said to be successful until the organisations begin to show the aspect of CSR effecting the company’s past and future performances.
According to Sarah Cone (Cone, 2017), managing partner at Social Impact, CSR will not exist in the future at all. According to Cone, companies will start looking at their internal processes by looking at their supply chains, regulations and corporate governance to run the business in an ethical way.
Financial stability of corporations in the market place
A financial stability of the firm is a broad concept and can have many kinds of definitions.
According to Deutsche Bundesbank’s (2003) Report on the Stability of the German Financial System, financial stability is a steady state of the firm during which the company is able to efficiently perform key financial functions such as allocating resources and spreading risk while being able to deal with financial shocks and the periods of structural changes (Deutsche Bundesbank, 2003)
According to Thomasso Padoa-Schioppa, in the book The Transformation of the European Financial System (2003) the definition of financial stability is compared with a financial system, which consists of formal and informal markets, financial intermediaries, and legal provisions. According to the author, a firm can be called financially stable when it is able to deal with the shocks without using too many cumulative processes (Padoa-Schioppa, 2003).
Roger Ferguson (Ferguson, 2002) decided to define the term stability differently during the conference at the AMF in Washington D.C in 2002, saying that, to define stability it would be useful to characterize instability first. According to Ferguson, the company is unstable when it is involved in the failure in the market or externalities that can encroach on real economic activities. Ferguson interpreted financial instability according to 3 criteria:
- Important set of financial assets price fell down
- Market functioning or credit availability notably distorted
- Aggregate spending deviated or started deviating
Research Methodology
Research is the scientific and the systematic search for the information for the specific topic also described as an art of scientific investigation (Kothari, 2004). The research methodology which will be used will help the researcher to analyse the problem statement.
Research Approach
According to Dr. Deborah Gabriel, there are two approaches to research, inductive and deductive. The aim of the deductive approach is to test the theory while inductive research aims at generating new theory by considering the information from the data. The deductive approach usually starts with a hypothesis while inductive approach emphasizes on the research questions. This research paper will follow the deductive approach for the most part. The good example of a mixture of inductive and deductive research is a case study and the grounded theory (Gabriel, 2013).
Therefore, the case study of google will be the basis of this paper.
Research Design
Primary and secondary data
A research design is an overall strategy which will be used to carry research by using different components in a logical way ensuring the effective addressing of the problem. The research design outlines how the research will be done and what kind of instruments will be utilized. Moreover, the research problem defines the type of research design that should be used.
This research paper has two phases of analysis, namely primary and secondary analysis. In the primary analysis, the interviews and the information gathered from the questionnaires would be considered and evaluated. During the secondary analysis, literature and scientific data available in the form of articles and papers would be analysed to study the impact of CSR on companies.
Data Collection Methods
In this research work both, quantitative and qualitative methods will be used. However, the emphasis will be put on a qualitative approach to gathering the information.
The primary data will be collected from the interviews. The questionnaire will consist of open questions, with the maximum number of ten questions, and will be sent to a small group of people working in Google.
The secondary data will be collected from the books, academic researches, online websites and articles. Analysis of secondary data will build the knowledge base required for this research topic.
Ethical Issues
Research for a thesis is a lengthy process. Therefore, it will be ensured that everything will be done in an ethical way. All the information gathered and written will be properly referenced to make sure the ownership is given to the authors.
It is very important that the candidates who will be interviewed for the purpose of a research know the details of what kind of research has been carried out (Saunders, 2007). All the interviewees who answer certain questions for this research will be provided with the background and purpose of this research. The information provided by them will only be used for academic purpose.
The data that will be collected for the research and the information that will be gathered from the interviewees will be confidential and will not be tampered in any form. The researcher will get a letter of authorization from the university to enable the process of data collection.
Significance of the Research
CSR practices in companies are becoming common especially in big multinational companies since the awareness is increases rapidly day by day. In today modern times a single per can influence a big corporation thorough the use of social media. Hence, it’s important for the companies to take this into consideration. Therefore, assessment of the impact of CSR on company’s stability and the awareness of adopting relevant CSR practices is today more important than ever. This research paper aims to answer this question in detail.
Research Limitations
A large number of resources and interviewing some important people from Google which is required for the research will limit the research. Also, time constraint is one of the issues which may limit the search.
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