Disadvantages of CSR: Challenges, Risks, and Perspectives

26 Nov 2020 1160
Advantages and Disadvantages of CSR

Management and marketing students will be well-acquainted with CSR (Corporate Social Responsibility) because most of the part of CSR depends on management and marketing. There are no doubts students are asked to write assignments on corporate social responsibility every now and then, but sometimes, they face difficulties to write disadvantages of CSR. Now, they don't have to worry anymore! Here, in this blog, we will talk about the disadvantages of CSR, along with an in-depth analysis.

Overview of Corporate Social Responsibility (CSR)

Corporate social responsibility is a business model of self-monitoring that assists in establishing the good reputation of a company, its stakeholders, and the public. It works as some set of rules & regulations for businesses and guides them through its policies & strategies.

Importance of CSR to Business

CSR is a core part of a business. If an entrepreneur wants to elevate his organization, then he should work smartly for social responsibilities. It builds a company's good reputation and sets a higher position in the market. Corporate social responsibility helps in developing a loyal customer base, improves cost savings, and creates positive attention among the public.

Areas and Types of Corporate Social Responsibility (CSR)

  • Philanthropic Responsibility: Philanthropic responsibility motivates an organization to work for humanity, be the tonic for those people who are severely suffering from calamity, and up-bring their life standards and provide them necessary supplements. A company can start a donation or charity campaign for underprivileged society and people.
  • Economic Responsibility: This liability draws a picture for a company to save and grow the present economy. Economic responsibility ties a business to examine its economic actions concisely. It encourages organizations to take only those steps that can be helpful to sustain the current level of the economy and grow it further.
  • Environmental Responsibility: Environmental responsibility induces higher customer attention and becomes the major reason behind a successful business. Basically, when the audience hears about a company that is quite aware of the environment and gives a guarantee that they are not harming mother nature, then it connects them instantly with the organization.
  • Ethical Responsibility: Ethical responsibility keeps a business on the right track; it ensures that the fundamentals and principles are followed by organizations. It consists of moral duties, and these duties should be followed by the organization. Ethical responsibility develops a coherent connection between employees, suppliers, and society.

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Narrow Vs Broader View of Companies on Corporate Social Responsibility

  1. They are totally opposite to social growth.
  2. Broader view cares about the environment and provides help to the society.
  3. They think for self-monetary gains.
  4. They think for society growth.
  5. They consider reduction in workforce.
  6. Broader view provides more audience.
  7. Rather than a hike in sales, it diminishes market price.
  8. It generates more leads and recognition of companies' stakeholders.
  9. Customers are trying to detach from these companies.
  10. Customers want to attach with broader view businesses.
  11. Does not contain activities like broader view.
  12. Reducing energy consumption, minimizing carbon usage, reducing greenhouse effect are the social works that come in broader view.

Advantages Vs Disadvantages of CSR

Let's first look over the pros of CSR.

Advantages of CSR (Corporate Social Responsibility)

  1. Enlarges Brand Visibility: When a business starts to participate in social affairs and try to resolve them, then gradually, it becomes people's favorite. Society attracts towards these organizations and makes it popular across the globe.
  2. Increases Gaining Percent: It is obvious that if an organization has great value and its name has spread all over the world, then it will observe tremendous gain percent. You take it on yourself; being a management and marketing student, you will like to reach more and more audience to increase your income.
  3. Brings Creativeness & Discovery: When a business is indulged in society's benefit and development, then, first of all, they will innovate something new in the environment. Basically, good changes directly depict the creativity of a company's employees.
  4. Encourages Cost Savings: Corporate social responsibility stimulates an organization to do something good for the society, reign, country, and globe. For instance- Bill Gates, the founder of Microsoft, has helped the globe to fight against various diseases- polio, tuberculosis, HIV/AIDS, malaria, etc. Also, he and his foundation (Gates Foundation) came up with biomass conversion ideas that saved a lot of cost and expenditure of people.

Disadvantages of CSR (Corporate Social Responsibility)

  1. Escalates Work Burden: It is crystal clear that if a company takes more responsibilities, and especially of a society, then it becomes the reason behind excessive work pressure and load. An organization looks over on a particular drawback of the society, then they turn towards solving it, which leads to extra work.
  2. Danger Looms Over a Company's Reputation: Sometimes, while serving society, companies forgot their own purpose and make mistakes in their product's manufacturing. If a company has promised the best quality to the customers and fails to deliver it, then delivering low-quality products can steal its reputation.
  3. Competitive Disadvantage: When a business takes social responsibilities, then it can harm the corporation in the context of manufacturing. It is seen that the production amount of goods slightly increases, and the company's competitor wins in this race.
  4. Contrasting Ideas: The main motive of a business is to generate a good amount of money and profit. Everything is pre-planned, but when a business tries to take social responsibilities, then sometimes it creates conflicts within the organization.
  5. Stray from the Main Mission: It is also seen that in 30% of cases, companies lose their main objective and start working on other responsibilities. Driving from the main path becomes the cause behind not getting success in its own field.

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