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Executive Summary

 
Human beings, the environment, and the society have a mutual relationship. Society and nature are interdependent, and therefore man is called upon to the responsibility to protect and safeguard their environment. What is envisaged in this precept is the protection of the environment. The paper has identified factors that influence firms in adopting CSR. The increased attention to initiatives for how the business are handling environmental issues has strongly suggested that market forces, for example, labor, capital, and the market for products are the aspects that can see and push for improvements of the corporate environment. The paper has analyzed how supply and demand forces influence the adoption of CSR. Scholars have applied the standard model of vertical production differentiation to capture the heterogeneity of the consumer in their willingness to pay for environmental aspects. In such a business setting where companies are involved, one of them increases the quality to reduce competition regarding price with a rival. Green products are associated with the command of premium prices, and such concept has been incorporated into other models are focused on environmental CSR aspects. The amount of environmental CSR that a firm undertakes affects the level of competition in a market.
 
 
Table of Contents
Executive Summary. 2
Introduction. 4
Examining the Factors That Influence Firms in Adopting CSR.. 5
Theoretical Perspectives. 7
The public policy life cycle. 7
The development stage. 7
Politicization. 7
Legislation. 8
Implementation. 8
The Market Forces and Environmental CSR.. 9
Demand-Side Forces. 10
The Supply Side Forces. 11
Case study: Colombia. 12
Conclusion and Recommendation. 12
Conclusion. 12
Recommendations. 14
Bibliography. 15
 
 
 
Adoption of CSR in Organizations
Introduction
Human beings, the environment, and the society have a mutual relationship. Society and nature are interdependent, and therefore man is called upon to the responsibility to protect and safeguard their environment. What is envisaged in this precept is the protection of the environment. However, with the many activities that man is engaging in the current society, factors such as scientific and technological advancements and the rapid development of the economy have increased impact on the natural settings. For example, these developments have resulted in increased ecological imbalances as well as the degradation of the environment. For these reasons and others not mentioned, legislations purposed at ensuring the protection of the ecology and environment have been passed. Besides these regulations, comprehensive legislations, in this case, the Environment Protection Act have been made to control, prevent, and reduce the magnitude of environmental pollutions. However, the applicability of these regulations are at stake, and this is attributed to the fact that the corporations are not willing to comply.
Corporations, on the other hand, are requesting for Corporate Social Responsibility (CSR). The companies are asserting that they have obliged at ensuring the care and protection of the environment as well as other human resources. The corporate social responsibility is a phenomenon that demands the companies to do undertake the right activities beyond that which the law requires them to do. The idea of corporate social responsibility is based on the concept that it is not only for the public policy to take responsibility for environment and social issues but also for the companies. Specifically, corporate social responsibility is identified as a method through which corporations are supposed to integrate the businesses they undertake with the concerns of both social and the environment. Such issues should not only be incorporated into the business activities but also with the stakeholders. A company which has been identified as a socially responsible does comply with the requirements of the law concerning human resources and the environment.

Examining the Factors That Influence Firms in Adopting CSR

It is apparent that the activities and actions that an organization undertakes will have an effect on both itself and the external environment that it operates in. Putting into account the effect the organization has on its external environment, it is therefore paramount to note that the environment, in this case, refers to the setting under which the operations of the business take place, the local society where the business is physically located, as well as the entire international and global environment (Lyon and Maxwell, 2008). The effect a corporation has in these settings take different forms. For instance, an organization can put to use the natural resources to meet the production process requirements. Besides that, the local environment in which it is located is affected by the nature of competition of the organization has engaged in with other businesses like itself (Lyon and Maxwell, 2008). The local community is also enriched in some ways. For example, the organization may avail employment to the members and also bring some form of enlightenment at their doorsteps (Lyon and Maxwell, 2008). In this case, products that would otherwise be difficult and impossible for the residents to get are brought closer to the environment.
The business may also bring some transformation of the landscape. The landscape can be transformed in two main ways with one being that the company may extract raw materials to meet the demands of the production process (Lyon and Maxwell, 2008). An organization can also transform the environment by the manner in which they store the waste products. For example, if a company disposes wastes in a river, and on top of that, if the waste is not treated, the repercussions are that water which may have been used for drinking will no longer be available. Additionally, if the organization disposed waste on the bear ground, it would result in soil destruction and foul smell. Equally important, a company disposed of regarding gas, air would be polluted. In brief, people living near such firms will either leave due to the transformation of the environment.
Another way through which an organization can have some impact on the environment is through wealth distribution. The amount of wealth accumulated from an organization will benefit the owners of the business which in most of the times is through dividends (Lyon and Maxwell, 2008). People employed in the firm, which in this case are the local communities, unless talents needed are deported from other areas, will benefit through wages (Lyon and Maxwell, 2008). The effect of the wealth accumulated from such firms, therefore, uplifts the welfare of the people in these environments. However, an area that has been under the spotlight and is of greatest concern is the effect these corporations contribute to the change of climate (Lyon and Maxwell, 2008). Especially, firms that emit greenhouse gasses are a major concern and are the target for most regulations aimed at protecting the environment (Lyon and Maxwell, 2008). From the analysis, it is clear that a corporation has a significant effect on the external environment and that through its operations, the environment can be transformed. The transformation, in this case, has been seen that it can either be positive or negative. The different effects that a company has on the environment can in some circumstances be viewed as detrimental while others can be beneficial.

Theoretical Perspectives

The public policy life cycle

The public policy life cycle is a framework that seeks to address the relationship between the policies of the public and the strategies of a business. The relationship is analyzed through four stages which include the development stage, politicization, the legislative, and implementation stage.

The Development Stage.

The stage addresses the events that happen in an environment, and these events lead the existing public segments to become aware of the challenges and problems existing (Capaldi, 2016). Different pieces of literature have expounded on the differences that exist between complete and incomplete information models (Capaldi, 2016). The public policy life cycle enhances more on gathering and disseminating information.

Politicization

In this stage, the problem that has been identified acquires a label. Leaders of opinions begin to discuss the challenge, the issue is more covered by the media, and focus groups mobilize on the issue. The politicization stage is composed of two parts; the part indicating political entry by organized groups, and the game of influence that results after the groups have entered (Capaldi, 2016). These stages are characterized by two different costs, which include the organizing and influence costs. Organization costs are identified as the resources used before the entry to the political arena, and they include resources used in acquiring data on the problem, in this case, the pressing environmental issues (Capaldi, 2016). They also include the resources used identifying the effectiveness of the different policy alternatives, as well as those used while coordinating other parties to focus on the common strategies to achieve political influence (Capaldi, 2016). On the other hand, influence costs are those incurred after several groups have merged, and examples of such costs are funds to conduct campaigns, those used in mobilizing public opinions, as well as those used in lobbying (Capaldi, 2016). Environmental corporate social responsibility is intriguing aspects with one of them being that both types of costs can be minimized. It is, however, important to note that this stage is characterized by dramatic events that depend on the nature of the identified issue to the general public and how the stage for legislative action is set (Capaldi, 2016). For example, the incident that occurred at Three Mile Island and the discovery that the ozone layer had some hole are the kind of events herein talked about. These events are hard to forget because they strengthened the unity of the interest groups in pressing for actions to deal with the issue.

Legislation

The third stage is the legislative level and addresses the new laws created by political leaders in dealing with the issue. For instance, the events discussed in the last paragraph prompted the political leaders to tighten the regulatory standards that foresaw the activities carried by most nuclear power plants (Vapnek, Pagotto and Kwoka, 2007). They also negotiated on the Montreal Protocol which addressed o the use of substances that deplete the ozone layer (Vapnek, Pagotto and Kwoka, 2007).

Implementation

The fourth stage is the implementation stage where the administrative agencies explain the details of the new legislation. After that, the police, regulators, and the courts enforce it (Vapnek, Pagotto and Kwoka, 2007).
Through assumption, the traditional public policy life cycle pressures are solved through the government. This practice is no longer the case because the non-governmental organizations have left the legislative process and are now engaging directly with the corporations (Bardach, 2015). Therefore, the third and the fourth stages, which are legislative and implementation, have been replaced by private politics. In other words, the legislation does not occur in the third stage, but instead it is the stage where the NGOs negotiate and make demands on the businesses for their environmental and social activities (Idowu and Leal Filho, 2009). Here, the NGOs have two options which are either promise of rewards if the company agrees to their terms or issue threats in the chance that the organization does not comply. Threats issued can either be negative media campaigns or boycotts while rewards may be in the form of endorsements (Idowu and Leal Filho, 2009). In this circumstance, if the corporation declines the offers, the NGO goes to implement the threats. The final stage of implementation as per the private politics involves the process of resolution of the corporation-NGO dispute (Idowu and Leal Filho, 2009). The process is characterized with bargaining between the two organizations where either the firm the corporation admits to making improvements its social and environmental profile. The NGO in return agrees not to harm the business (Idowu and Leal Filho, 2009). Therefore, as seen in this review, the NGO plays a predominant part in environmental CSR.

The Market Forces and Environmental CSR

The increased attention to initiatives for how the business are handling environmental issues has strongly suggested that market forces, for example, labor, capital, and the market for products are the aspects that can see and push for improvements in the corporate environment. In this section of the paper, an analysis of how supply and demand forces influence the level of environmental CSR is put to detail.

Demand-Side Forces

Today, businesses that focus on producing and selling products ranging from hybrid cars to organic food, which is environmentally friendly are projected to grow. The growth in green consumption have been looked into by many scholars and to determine the reason behind the rigorous growth (Salcines, Babiak, and Walters, 2013). The researchers have applied the standard model of vertical production differentiation to capture the heterogeneity of the consumer in their willingness to pay for environmental aspects. In such a business setting where businesses are involved, one of them increases the quality to reduce competition regarding price with a rival (Salcines, Babiak, and Walters, 2013). Green products have associated the command of premium prices, and such concept has been incorporated into other models are focused on environmental CSR aspects (Salcines, Babiak, and Walters, 2013). The amount of environmental CSR that a firm undertakes affects the level of competition in a market. As noted by Salcines, Babiak, and Walters, (2013), if there is high competition for market products that are less friendly to the environment, their prices tend to go low which makes the consumers change their preference to greener products. On the other hand, if the same products have market power such that their prices are high, consumers will still change their preference to green products (Salcines, Babiak, and Walters, 2013).
The role of green investors in motivating companies to embrace greener practices have also been looked into in the past. It has also been identified that the investors allocate their wealth either in charitable donations, savings, or in obtaining shares of a socially responsible firm (Visser, Magureanu and Yadav, 2015). Therefore, I the chance that an investor chooses to make a charitable donation by investing in socially responsible corporations either to avoid taxation of corporate profits, the CSR can increase the value of the firms by attracting them.
Labor markets also have the capacity to avail incentives for corporate social responsibility. Most people want to derive prestige from the companies they work for and also want to be part of the greater community that works to see the world as a better place (Visser, Magureanu and Yadav, 2015). It has been identified that one of the methods through which companies can attract and also retain well-talented employees is by coming up with environmental commitments that align with the values of these employees (Visser, Magureanu and Yadav, 2015). Such employees are willing to work for lower salaries in firms that carry out activities that are socially and environmentally responsible.

The Supply Side Forces

Some forces motivate companies to embrace greener production. Many businesses have enhanced the manner in which they use their resources whereby they have reduced costs as well as pollution. The fact that waste products are present does not mean that pollution abatement has been identified as a negative value enterprise (Visser, Magureanu and Yadav, 2015). Most companies are embracing the practice of cutting down costs by improving their environmental efficiencies. In fact, it has been postulated that businesses can reduce their expenses by doing away with human resources and outbound logistics by enhancing environmental efficiencies (Visser, Magureanu and Yadav, 2015).
Even in absence of opportunities for reducing costs, corporations that produce products that are not environmental friendly, such that these commodities cannot be perfect substitutes for the current products in the market, the firms can reap benefits by colluding with intentions to reduce the production of the less environmental friendly products (Visser, Magureanu and Yadav, 2015). The collusion raises the price of these products, and in turn, the demand for green products goes high. If those in the market were knowledgeable about the opportunities for waste reduction, and in the chance that the transactions costs were tending to zero, they would embrace the pollution abatement strategies without the looking forward to the intervention of the government (Visser, Magureanu, and Yadav, 2015).

Case study: Colombia

In the developing countries, most regulatory systems are weak, and therefore international markets are held responsible for environmental CSR. An analysis of how Colombia responds to CSR is put to detail.
Colombia identified as an exporter of the cut flower to most foreign countries such as Europe and the United States of America (Acosta, 2015). However, clients with origins from Europe have started, and already begun selecting their suppliers based on the activities and practices concerning pesticide use (Acosta, 2015). Dues to these demands, Colombia has come up with programs aimed at ensuring that environmental laws are being implemented. One such program is the Florverde which addresses the members to adopt practices that are environmentally friendly (Acosta, 2015). By the end of the year 2006, the program had acquired more than 137 member companies and exported more than 700 million stems of the flower by the end of the same year (Acosta, 2015). On the same note, CSR activities are discouraged when they find that their standards are uncertain according to how the consumer perceives them based on their labels.

Conclusion and Recommendation

Conclusion

In conclusion, Human beings, the environment, and the society have a mutual relationship. Society and nature are interdependent, and therefor man is called upon to the responsibility to protect and safeguard their environment. What is envisaged in this precept is the protection of the environment. It is apparent that the activities and actions that an organization undertakes will have an effect on both itself and the external environment that it operates in. Putting into account the effect the organization has on its external environment, it is, therefore, paramount to note that the environment, in this case, refers to the setting under which the operations of the business take place, the local society where the business is physically located, as well as the entire international and global environment.
The paper also identified factors that influence firms in adopting CSR. The increased attention to initiatives for how the business are handling environmental issues has strongly suggested that market forces, for example, labor, capital, and the market for products are the aspects that can see and push for improvements of the corporate environment. The paper has analyzed how supply and demand forces influence the adoption of CSR. Scholars have applied the standard model of vertical production differentiation to capture the heterogeneity of the consumer in their willingness to pay for environmental aspects. In such a business setting where companies are involved, one of them increases the quality to reduce competition regarding price with a rival. Green products are associated with the command of premium prices, and such concept has been incorporated into other models are focused on environmental CSR aspects. The amount of environmental CSR that a firm undertakes affects the level of competition in a market. Regarding supply-side forces, many companies have enhanced the manner in which they use their resources whereby they have reduced costs as well as pollution. The fact that waste products are present does not mean that pollution abatement has been identified as a negative value enterprise. Most companies are embracing the practice of cutting down costs by improving their environmental efficiencies.

Recommendations

From the paper, it has seen that there are market forces that influence the adoption of CSR. It is recommended that the companies to comprehend that CSR is not a method of advertising their services and products to improve their image. On the contrary, it is a method of management that requires collaboration with the members of the society where concerns are part of the strategy.
Also, businesses should be taught that though CSR is a form of voluntary commitment, it also involves the companies to comply with both international and local laws. Additionally, such laws do address not only the environment aspect but also the conditions of the employees and the society in which the company thrives in as a whole.
 
 

Reference List

Acosta, P. (2015). Political CSR as Deja Vu: A Case of the Sedimented Nature of CSR in Colombia. Academy of Management Proceedings, 2015(1), pp.14942-14942.
Bardach, E. (2015). A practical guide for policy analysis. 1st ed. Los Angeles, Calif: SAGE.
Capaldi, N. (2016). New (Other?) Directions in Corporate Social Responsibility. International Journal of Corporate Social Responsibility, 1(1).
Idowu, S. and Leal Filho, W. (2009). Global practices of corporate social responsibility. 1st ed. New York: Springer.
Lyon, T. and Maxwell, J. (2008). Corporate Social Responsibility and the Environment: A Theoretical Perspective. SSRN Electronic Journal.
Salcines, J., Babiak, K. and Walters, G. (2013). The Routledge Handbook of Sport and Corporate Social Responsibility. 1st ed. Hoboken: Taylor and Francis.
Vapnek, J., Pagotto, I. and Kwoka, M. (2007). Designing national pesticide legislation. 1st ed. Rome: Food and Agriculture Organization of the United Nations.
Visser, W., Magureanu, I. and Yadav, K. (2015). The CSR international research compendium. 1st ed. London: Kaleidoscope Futures.