Corporate Social Responsibility: The Roles in Company

Topic: Business Ethics
Words: 2290 Pages: 8


The concept of corporate social responsibility (CSR) implies that a company voluntarily assumes additional obligations to society. In other words, it not only pays taxes and produces high-quality and safe products but invests in its employees, the environment, and the territory in which it operates. Corporate social responsibility does not deny the economic motive of profit maximization, but considers it subordinate in relation to other strategic goals. It is not the system of prices that ultimately determines economic development, but the system of cultural values on which the economy rests.

Characteristics of CEOs and boards: the Ability to Inspire

There is no universally recognized system that measures the effectiveness of a CEO because each CEO’s goals and objectives are different. One needs to get the company out of the crisis, another wants to attract new investors, and a third seeks to expand the firm’s presence on the market. However, they all have one thing in common — all are leaders who inspire their employees and lead teams to achieve business goals through their leadership qualities. The capability to inspire makes employees work more efficiently and helps reduce employee turnover. For employees, the fact that the place where they work takes care of the environment or donates money to charity can be a great motivator. The ability of top management to inspire employees is directly related to the development of the organization’s corporate social responsibility.

The Ability to Adapt to Changes

Anticipating results in a changing environment is one of the hallmarks of a leader. Society is changing so rapidly that it is impossible to say exactly what will happen in the next five years. However, CEOs are responsible for strategic development, and they need to look ahead in order to make plans (McDonald & Westphal, 2010). That is why leaders are chosen among those who can excel in the unknown and are comfortable with change. Thus, an effective CEO must adapt quickly to market transitions without changing brand values. The faster a company grows, the more often it must revise its growth strategies. Foresight as a characteristic of the board of directors and CEOs helps in choosing the most interesting areas of CSR development.

The Ability to Achieve Goals

The CEO is responsible for the fulfillment of tasks and the achievement of goals. This management function was formulated by Henri Fayol, one of the outstanding executives of the last century and the founder of the classical school of management. The definition is still relevant today, although approaches to managing a company, personnel, as well as ways of setting tasks and goals are changing. At the present stage, one of the goals of the company is to create a positive image for clients. It is the CEO who ultimately approves certain decisions regarding what the company’s image will be. CEO’s support of initiatives on development of corporate social responsibility will certainly make the company more attractive for clients. That is why such a director’s characteristic as the ability to achieve goals is a precondition for the development of CSR in an organization.

The Ability to Identify the Key Stakeholder

In the classic business model, the main stakeholders are shareholders. However, nowadays, customers and the government become active participants in the business and are vital to the company (Mitchell et al., 1997). The task of the new board of directors is to determine who is a key stakeholder and to act in its interests (McDonald & Westphal, 2010). As a rule, innovative companies focused on new products do not pay much attention to what happens to the state or shareholders who invested money. They need to surprise users and do everything to make their clients believe them. Therefore, if customers expect a company to do minimal harm to the environment or donate money to charity, that is precisely what they should do.

The Ability to Form a Long-Term Strategy

In today’s world of uncertainty, instability, and constant legislative change, a board of directors must be able to anticipate events. It should be able to identify trends, recognize potential threats, and respond to them in a timely manner. Companies that take the long view consistently outperform their industry peers. Therefore, one of the main tasks of boards of directors at the present stage is participation in the formation of the company’s long-term business strategy, which considers the existing trends and future market dynamics (McDonald & Westphal, 2010; Marquis & Lee, 2015). At the same time, the strategy should not be rigid, as it requires regular updates in an ever-changing world.


The involvement of board members in the life of companies, as well as their direct participation in decision-making with top management, will help achieve a deeper understanding of the company’s business processes. By doing so, it will be possible to obtain the information necessary to make management decisions. The ability of CEOs to inspire, achieve goals, and adapt to change are the skills needed to successfully implement CSR projects into the company’s strategy.

Given the current situation, socially responsible corporate policies and practices are rapidly becoming mandatory elements of entrepreneurship. Leading companies are turning the concept of social responsibility into the most modern means of providing their competitive advantage. Using the principles of corporate social responsibility in their strategic development plans increases a company’s adaptability in the market. In addition, it improves the quality of its management system and legitimizes the activities of business structures in the eyes of the public. Thus, the reputation and image of the corporation is strengthened, its investment attractiveness is increased, and in the long run the economic efficiency is improved. It is the performance of the CEO and the board of directors that determines how strongly the company will adhere to the principles of corporate social responsibility.

Attitudes toward CSR over Time

For companies, corporate social responsibility is becoming an essential part of the agenda related to business sustainability and non-financial risk management. A successful business requires loyal employees, a favorable social environment around production facilities, an untainted reputation, and good relations with the authorities. Corporate social responsibility, in part, helps to solve these problems. That is why when the crisis strikes, companies do not abandon philanthropy, although they may revise their approaches and budgets.

The history of the development of the concept of corporate social responsibility as known is long and ambiguous. There have been regular changes in attitudes toward this institution. Theoretical aspects of socially responsible interaction between business and society were shaped throughout the last century. Milton Friedman opposed the concept, arguing that it undermines the foundations of a liberal society and distracts business from its main economic goal of generating profits (1970). The social responsibility of business, according to Milton Friedman (1970), is to make as much money for its shareholders as possible. His theory later became known as the theory of self-interest.

The fundamental thing is that at the turn of the XX-XXI centuries corporate governance was finally transformed into the management of the company as an open system, constantly exposed to external influence. Previously, shareholders, boards of directors and management in the external business environment were mainly interested only in the state of sales and capital markets, as well as government and legislative regulation. In today’s world, with its growing demand for social responsibility of business, all sides of corporate governance, especially boards of directors and management, have to consider the interests of all internal and external stakeholders (Garriga & Melé, 2004). This is especially evident in the sociopolitical, environmental and scientific and technical fields. In addition, they are required to be able to find adequate responses to their wishes and demands.

CSR Projects as Employee Motivation

As noted above, companies around the world are increasingly adhering to the principles of corporate social responsibility in their operations. Issues of generating profits at any cost are becoming secondary. Behind all successful companies in this direction are equally successful and effective teams of professionals — boards of directors and general directors of companies. CSR is an important factor of employee motivation, as well as the attraction and retention of highly qualified workers. It helps build an active work life inside the company. Through CSR projects, executives at companies motivate employees to work more efficiently. For example, knowing that the CEO and board of directors support charity, employees will be more loyal to the firm. In this regard, it is fair to say that a CSR strategy helps to promote innovation, creativity and intellectual capital. It is the responsibility of top management to ensure that a system of employee motivation is created (Yoshikawa & Hu, 2017). Corporate social responsibility as the guiding principle of the company may well serve as such a source of motivation.

Implementation of CSR Initiatives by the Board of Directors

The board of directors is an important element of the corporate social responsibility management system. Integrating the system of corporate social responsibility management into the system of corporate governance becomes an important task with the growing interest in CSR on the part of corporations (Luoma & Goodstein, 1999). The board of directors determines the company’s priorities and convenes annual and extraordinary general meetings of shareholders (Shen, 2003). In addition, this body is responsible for resolving corporate conflicts and effectively controlling the company’s activities. It is the board of directors that mainly approves the implementation of initiatives related to CSR and the sustainable development of the company.

CSR and Board Diversity

It should be mentioned that the diversity of the professional composition of the board of directors has a positive impact on the corporation’s performance. This is due to the ability of a diversified board of directors to provide more effective risk management in an ownership split on the one hand and control on the other. In addition, by bringing other perspectives, a more diverse board contributes to the corporation’s growing involvement in social responsibility programs (Luoma & Goodstein, 1999). In practice CSR plays a very important role in both diversified and non-diversified boards of directors. Often the head of the board of directors of the holding is the head of the supervisory board of the charity organization, which is created by the holding to implement social programs. At the same time, the supervisory board of such a charity may include a more varied audience, from informal leaders and local politicians to athletes and journalists.

Corporate Governance System and CSR

Bulding an effective corporate social responsibility management system should be based on the full implementation of the CSR into the corporate governance system. Moreover, it is necessary to implement the CSR management system at all levels of corporate governance (Lockett et al., 2006). Only with full integration of the corporate social responsibility into the corporate governance system is it possible to fully understand and incorporate responsible practices in the activities of corporations (McWilliams & Siegel 2001). The social significance of corporate management practices is manifested in the exceptional ability of corporations to achieve a balance of relationships between the main social groups involved in market interaction (L’Etang, 1995). Besides, by following such a strategy, it is possible to promote the development of their constructive relations. The principles of corporate social responsibility make it possible to ensure a compromise between the interests of different groups is reached (Mitchell et al., 1997). In particular, it helps to find a balance between the requirements of shareholders, managers, employees and consumers, profit and environmental protection, profitability and social justice.

CSR Strategy Management by the Board of Directors

The board of directors generally has the following competencies and performs the following functions in the field of CSR. First, it approves the company’s strategy, including goals, priorities, indicators and major corporate social responsibility activities. The board oversees the activities of the management in the field of CSR, as well as approves the format and the standard of social reporting used. In the most developed companies, in this area the Corporate Responsibility Committee is created, which is headed by one of the executives or an independent director of the company. The chairman of the board of directors regularly participates in prestigious national and international events on CSR and sustainable development. This, in turn, helps promote the company’s image and business reputation not only as a reliable business partner, but as a responsible corporate agent.

The Identity of the Director and the CSR Initiatives

It should be noted that who exactly is a director determines how a company’s participation in socially responsible initiatives will be organized. For example, if a company has a high proportion of women as independent directors, this organization will have more internal CSR development (Jin et al., 2021). External CSR will be particularly evident if independent directors are associated with politics (Jin et al., 2021). In addition, companies with former politicians as directors are marked by better financial indicators (Hillman, 2005). As already noted, the identity of the CEO largely determines how and what projects related to corporate responsibility will be implemented.


The head of a company today, in theory, must take into account the interests of all stakeholders when making decisions. It is impossible to ignore the demands of society, employees, public needs in environmental protection. At the same time, in practice, if competitors make more profit, the CEOs, distracted by the socially responsible opinion of stakeholders, may miss out on benefits and, as a consequence, lose their positions. It is known that the paradigm of modern management even with the social responsibility of companies is justified to a greater extent by the profit motive. In this regard, new approaches in economics and management are needed, justifying other objectives, where profit is not the goal but a by-product. Therefore, the question remains open and requires further discussion to find a consensus.


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