Corporate social responsibility (CSR) has become much popular in the last few years. A large number of companies issue reports on the Corporate Social Responsibility nowadays. Corporate Social Responsibility has become an important part of planning to get and sustain the competitive advantage in the globally competitive companies. Companies can gain great benefits from participating in CSR and that these benefits are the reasons for their engagement in Corporate Social Responsibility. Corporate Social Responsibility also affects the financial performance of the firms.
In today’s global world, organizations have many challenges to operate and earn profits. People have more knowledge about the organizations, their products and services and the way organization’s operate their businesses. People are more conscious about the organization’s work for the prosperity of the society, the environment in which they operate and earn profits. In the present world, companies are facing many problems with a new role, which is to fulfill the demands of the present generation in a socially responsible way. Organizations must take responsibility for the ways they operate in the societies and natural environment because their operations impact societies and the natural environment.
Today the corporate world is facing the concept of Corporate Social Responsibility (CSR) wherever we see. At large, corporations are encouraged to behave as socially responsible firms. The managers or administrators of organizations who have selected the Corporate Social Performance must follow the criteria, the criteria from the definition of CSR that takes under consideration an accurate explanation of where, why, how and in what way the owners of organization are linked to social responsibility, and a list of essentials and rules that govern the CSR. The stakeholders of the firms are treated ethically or in a socially responsible manner under the concept of CSR. Stakeholders exist both within a firm and outside. Consequently, human development of stakeholders both within and outside the corporation is increased by behaving as a socially responsible firm.
The following are the determinants of Corporate Social Responsibility:
This determinant shows that how much the Islamic and Conventional banks are paying for their employees and for other people in community who can’t bear their education expenses. Education is a factor of CSR. The banks which take it under consideration, earn long term profit because such type of expenses for society build the goodwill. Nowadays supporting for education is a key to success for financial institutions.
This determinant shows that how much the Islamic and Conventional banks are paying for the health of their employees and for the health of other people living in the community. Different amount of money is offered to hospitals for health and care of needy people of society. Employees of financial institutions enjoy the medical facility. Networking can create a healthy community. Hence the financial institutions must create a network between human beings and health care.
Donation determinant shows the interest of financial institutions to pay a specific amount of money to rehabilitate the society. Financial institutions provide donations to people affected by natural disasters like flood, earthquake etc. Donation is a gift offered by a physical or a legal person, usually for the charitable purpose and for the benefit of the society. It may be in the form of cash offering, service, new or used goods like clothing, toys, food and vehicle. It also includes the emergency, relief & development support or medical needs like donation of blood and organ’s transplant.
Pakistani banks are contributing as much as they can in the social well-being of society, improving the living standards by promoting education and better health facilities, protecting environment from hazardous changes. They are taking good care of their employees and stakeholders in order to build their trust and confidence. On the other hand people of developing countries like Pakistan are not much aware about the concept of CSR. They don’t have information about the firm’s contribution for the well-being of society and environment.
Managers can communicate the unique benefits of CSR and differentiate their firms and create a good and positive image. It is also important in Pakistan where companies are not using CSR as strategic planning they can use it and reduce promotion cost. Organizations in the developed nations portray themselves as socially responsible firms and enjoy its positive financial affects. These firms spend for the well-being of the societies, for improving living standard of employees, for education and health care of employees, for the better environment etc. People of developed economies also have information about the firm’s activities and stakeholders put pressure on the firms to act as socially responsible firms.