CHAPTER ONE: OVERVIEW OF THE STUDY
Corporate Social Responsibility has emerged as a factor that influences the financial performance of an
organization (Folksam, 2013). The present study
aims to:
(a) Provide the
responsibility between CSR and CFP so as to
provide importance in relation to the corporate social responsibility
in Dell
toward its internal and external stakeholders and
(b) Determine
its impact on the financial performance of Dell during a given time period.
This study identifies the critical factors of CSR in case of Dell and determines the importance of
these factors in framing the relationship between Corporate Social Responsibility (CSR) and Corporate Financial Performance
(CFP).
Investors and
corporations show an increasing interest in Corporate Social Responsibility
(CSR), as it renders sustainable development (Chuang & Tai, 2014). Regardless of the
underlying uncertainty as to how CSR affects the financial performance of a
firm. As a result, many researchers have explored the causal relationship between CSR and
financial performance, although they have achieved conflicting results. There
is little evidence showing that CSR and corporate financial performance (CFP)
relate positively or directly. The causal
relationship between CSR as well as CFP is based on the strategies about the
usage of Dell in order to meet the social responsibility. The relationship
between the CSR as CFP is based on the factors on either non linear or based on
the methods used in nonexistent case. The non linear relationship is proposed
on the increment of principle of CSR as the theory is implemented in
stakeholder’s analysis. The aim of this study is
to establish a causal relationship
between the CSR and CFP as well as to measure and evaluate this relationship.
The company chosen for this study is Dell, a multinational computer technology
company based in Texas (USA). Specifically, CSR efforts taken up by the company
will be analyzed and evaluated to determine the impact on the financial
performance of the company.
Fomukong (2014)
stated that every business aims to create wealth for their owners by offering
products and services that meet the market demand. However, in recent years,
the focus has shifted from mere financial gains to social responsibilities of
the business. For this study, CSR refers to the actions taken to do some social
good, going beyond the interest of the company as required by law (Sprinkle & Maines, 2010).
As
commented by Pava and Krausz (1996), the issues related to the methods of implementation of CSR
activities is related to the eco efficiency of the Dell, the engagement in
relation to the enhancement of the performance of the shareholders in order to
improve the working condition of the employee. The focus is altered from the financial gains to the methods
implemented in social gains in order to earn a high level of profit related to
Dell. The environment is to be managed in such a way that the information
technology related company earns a substantial level of profit in business
structure. The working condition of the employee who are working in the
organization associated with Dell must be improved in order to enhance the
level of productivity which will result in competitive advantage over other
markets. When the concepts in relation to CSR is practiced the operational
increase in sales as well as the profit is noticed along with increase in
quality and efficiency.
As
stated by (Peloza & Shang, 2011), the CSR practices as well as the
achievement based on CFP is interlinked with each other as they aim to earn a
sustainable amount of profit in the long term business scenario. The policy
which are implemented in case of CSR activities are inter related as both these
theory are achieved as a business model. On the other hand, the principle in
relation to CFP is related to the purpose of enhancement of the figures related to
sales as well as to enhancement leading to productivity. The
CSR practices vary from country to country, so multinational companies have to
acquire knowledge about the country in which it operates (Chuang & Tai, 2014). Therefore, a
multinational organization typically adopts a general CSR approach that can be
applied to the different units of the company in different countries (Johnson, 2003). As businesses develop a
complex relationship with the communities in which they operate, the direct
impact of the business varies from country to country (Jamali, 2016).
A comprehensive
and multidimensional program for CSR has three major parts: governance, social media, and the environment (Peloza & Shang, 2011). Within
each specific category, there are initiatives of CSR. This study will evaluate
these initiatives and determine their impact on the financial performance of
the company.
As
opined by Pava and Krausz (1996), this is a major threat which can be
implemented for the management of the specified Dell Company to identify,
quantify, and unlock the business value of CSR practices, thereby allowing
business to allocate its resources effectively. The business process helps to
implement the CSR approaches in relation to the performance by evaluating the
economic, environmental as well as the social factors. The profit of the dell
is to be enhanced in order to provide motivation of the employees as they are
inclined to work in a more balanced way. The profit scale has to be enhanced to
increase the level of sustainability as to implement better performance of the
business firm.
Corporate
Social Responsibility
There has been
extensive research carried out on CSR; however, the significance related to the incorporation of CSR is to enhance
the motivation of the employees who are working in Dell. Marrewijk
(2003) defined CSR as the activities of the company that are essential for the implementation of rules as well as the regulation which are
beneficial for law and demonstrate the concerns for
society and environment in their business operations and in their interactions
with stakeholders.
As
stated by (Peloza & Shang, 2011), the interlink in between the CSR as well
as law which are used in case of Development law which is used for
implementation in order to provide employees motivation who are working in
Dell. A similar definition was used by
McWilliams, Siegel and Wright (2006); according to them, CSR activities is an approach which is undertaken by the business
organization for contribution in case of sustainable development which is
considered to be important for the betterment of environment, society as well
as stakeholders. The sustainable development in case of CSR as well as its
activities is interlinked as both the method is related to the main purpose of
providing sustainability in case of Dell. The betterment of the environment is
based on proper implementation of CSR activities which is assessed for
innovation done in Dell. Along with Pava and
Krausz (1996) mentioned that the definitions available for the CSR are so vague
that it is not possible to differentiate between the non-socially responsible
and socially responsible companies. The
purpose used in case of CSR activities is interlinked with different types of
theories which are related to the main theory such as stakeholder’s theory.
With
globalization, many companies have become multinational and, thus, the external
pressure from the stakeholders is likely to increase, as companies must comply
with the different standards and norms of the nations to maintain a positive
image. Previous researchers have demonstrated that opinions on the CSR
engagement vary. For example, Friedman (2007) argues that CSR results from the
problems within a company or a misuse of resources that could have been used in
value-addition activities. Further, a company must fulfill the demand of all
its shareholders.
The CSR is that business approach which is
crucial for the implementation of economic values which is essential for the
implementation of CSR principles. The idea related to human rights, working condition of the
employees working in Dell as well as corporate system of governance is
incorporated in CSR activities which is related to the
shareholders in Dell as they can potentially influence the performance of the
firm and its outcomes of CSR (Freeman; 1999). Peloza & Shang (2011) used
different categories of workers on the
basis of degree held by them to distinguish CSR
activities that are business practices, product-related practices, or
philanthropic activities. The authors also held that it is not possible to
generalize all CSR activities, as a large number of activities are included in
CSR in different quantities.
Differences lie
not only in the CSR definition, but also in the understanding of "being
good" amongst companies that adopt a different approach for doing CSR
(Johnson, 2003). Johnson viewed social responsibility as a continuum, which
ranges from irresponsible or illegal activities by companies to social advocacy
wherein the company integrates CSR into its mission. The various points on
this continuum include compliant, fragmented, and strategic. Based on this
continuum, Johnson also evaluated CSR activities as to whether they are good
for the company. He concluded that the
shareholders who are involved in the long term running of the business
enterprise does not pay if the company goes to
illegal activity; in fact, the process associated with the application of CSR
principle has negative consequences. However, if the company demonstrates good
behavior, the process of CFP
does pay but only to a certain extent. Still, many companies seek more CSR
activities than what is required as a part of their social responsibility (Sprinkle and Maines, 2010).
While such activities may not be justifiable in terms of monetary gains,
motives for doing CSR activities vary among companies. The shareholders are the crucial part who works for the
organization so as to run smooth the business enterprise as the Dell is engaged
with both the CSR as well as the CFP activities.
Motives
for CSR Engagement
There is an
uncertainty as to why some companies engage in CSR activities, primarily due to
the non-availability and asymmetric information about companies. As stated by (Dechant & Altman, 1994), the non availability of
the information which is essential for the proper assessment of CSR activities
is essential for motivation required in case of CSR engagement. The CSR
activities are related to the implication of the appropriate working condition
of the Dell as the environment condition of the workers is not appropriate (McWilliams
et al. 2006). Executives may be reluctant to reveal the true motive of
their CSR activities, especially when it reflects more aspects than the bottom
line (McWilliams et al 2006). The paucity of information on CSR makes it
difficult to determine the real motives of CSR activities. However, there are
several theories that propose the different motivations for CSR activities.
As
stated by (Dechant & Altman, 1994), the right thing is to be done at the
right time as well as by the right employees who is working in case of CSR
activities is helpful in providing motivation to the stakeholders as well. In
order to enhance the working condition of the employees who are working in Dell
the market share is to be assessed in a proper way so as to increase the sales
motive. The issues which are related to the usage of CSR activities is
difficult but it analysis is provided in an significant manager.
As
commented by (McWilliams et al. 2006), that the
CSR motives can be seen as the "right thing to do" by the companies,
making themselves a part of the global citizenry. Moreover, by doing CSR,
companies tend to gain “window dressings” that attract appreciation and support
from different shareholders. Thus, companies engage in CSR when they feel it is
essential to avoid negative publicity. The potential power of stakeholders,
like the employees and the customers, are important for the company’s CSR
activities (Dechant & Altman, 1994). Most shareholder concerns pertain to
the environmental performance of the company and they expect companies to be
socially responsible toward society as well.
As
opined by (Dechant & Altman, 1994),
the willingness of the employees to work in a particular company is also
associated with environmental performance and how it fits the profile of values
that strengthen the willingness of companies to engage in CSR. The competitive advantage related to the usage of CSR is used for
the enhancement of financial terms and policies. The financial accounts are to
be implemented in such a way so that it can leads to the improvement in
software development of the Dell in relation to increase in CSR values.
McWilliams et
al (2006) proposed a resource-based view for the engagement of CSR
activities. According to this theory, the resources and capabilities of a firm
can lead to a competitive advantage, provided they are valuable, inimitable,
non-substitutable, and rare. Thus, from the perspective of this theory, CSR is
a source of competitive advantage. McWilliams and Siegel (2001) also proposed
that a cost/benefit analysis could help to assess the required level of CSR
engagement demanded, as well as the cost of satisfying this demand by the shareholders. The theory of firm which is related to shareholders
also holds that CSR should be a strategic investment. The stakeholder’s theory is related to the main portion of business
ethics which are related to reduce the principle in relation to Dell. The
theory of shareholder is related to provide description on the usage of CSF. If
CSR cannot be a part of the central part of the business, it can serve to
enhance the reputation of the business and enhance the company’s image.
Moreover, companies that conduct business internationally must comply with the
social and ethical standards of each nation. The CSR along with its activities can be included in producing of
raw materials, different department of marketing as well as manufacturing.
As commented by Greening and Turban (2000),
the CSR value is evident in various areas of strategic importance (Barnett, 2007). In most companies, CSR
is incorporated into the product and becomes a strategic choice when doing
vertical differentiation. The vertical
integration signifies the evaluation of CSR activities requires the implication
of the combination of more than one business enterprise. This
type of integration as evaluated in the process the differentiation can add
value to the reputation of the company to fulfill stakeholder demands. However,
Bhattacharya and Sen (2004) pointed out that customers may not always be
rational and can demand CSR engagement without showing any change in their
buying behavior. They also noted that companies must focus on the internal
outcomes of the CSR activities, like consumer's attitudes, preferences,
awareness, attributions, etc., which can eventually lead to beneficial
outcomes.
Benefits
of CSR Engagement
CSR may be
considered as a strategic investment; it becomes so when it renders
considerable benefits that are related to the business by supporting the
central operations of the company and helps the company to achieve its mission
(Burke & Logsdon, 1996). Burke and Logsdon identified five core dimensions
of corporate strategy that are essential for the success of the company:
specificity, proactivity, voluntarism, visibility, and centrality. These are
useful for the assessment of CSR activities regarding how they add value to the
firm. According to the author Mishra and
Suar (2010), the various dimensions lead to different
benefits for the firm like employee benefits, employee motivation, philanthropy
contributions, and environmental engagement that results in value addition as
it creates customer loyalty, gains in productivity, and the development of new
products and markets.
Greening and
Turban (2000) claimed that prospective job applicants for a company are
influenced by the social performance of the company, as well and how well the
engagement related to the activities of
CSR values fits the purpose which are considered to be socially
responsible profile. They also argue that employees hold a higher self-image
when they work for more socially responsible companies than their less
CSR-focused competitors. Weber (2008) has given five distinct benefits of CSR;
it can; (1) enhance a company’s image and reputation, (2) increase employee
motivation, recruitment, and retention, (3) promote cost savings, (4) increase
market shares and (5) generate revenue from higher sales and reduced risk.
He also propounded
that CSR activities not only entail monetary benefits, but also non-monetary
benefits. However, the monetary benefits are the primary value drivers and the
indirect factors which lead to the decline
in case of employee’s motivation, employees contribution towards the Dell which
is beneficial for the long term running of the business organisation.
As
commented by (El Ghoul, Guedhami, Kwok & Mishra, 2011),
the purpose of CSR
are considered to be of secondary value that is generated over a longer period.
However, the non-monetary benefits can also be converted into monetary by for
example competitiveness of the company, which helps to attain a license to
operate, along with goodwill from the stakeholders and the government.
As
opined by Weber (2008), the result based on the importance of CSR
is very important when the company enter new markets in different nations.
Monetary benefits are easy to assess and a discounted cash flow method can be
used to find out the profitability of the CSR investment.
Barnett (2007)
suggested the benefits proposed by Weber
(2008) depend on the stakeholder’s crowd which was used in order to enhance the
level of employee’s communication in between the higher as well as the lower
authority who are working in Dell. The investment in
CSR demands a high stakeholder relationship orientation. Barnett introduced the
concept of Stakeholder Influence Capacity (SIC), which is the ability of a
company to identify, act, and profit from the opportunities for improving the
relationships with stakeholders through CSR. The path-dependent nature of the
stakeholders is one of the primary reasons for the companies opting for CSR
engagement, which have both direct and indirect effects on the financial
performance of the company (Yu et al. 2013).
Another benefit of
CSR relates to the valuation and risk of the company (El Ghoul, Guedhami, Kwok,
& Mishra, 2011). According to the authors, companies with higher CSR
engagement should have lower equity costs as compared to the companies with low
CSR engagement. The CSR also lead to a reduction in the cost of capital and
that in turn decreases the financing cost for companies and increases their
value. Companies that are poor in CSR activities have a reduced base of
investors and are perceived risk is higher. Two reasons for this are:
(1) The asymmetry
of information and
(2) Preferences of
investors who demand disclosure of CSR actions, so that the image of the
company is enhanced. Yu et al. (2013) has defined standalone CSR reports
as that that encompass the entire social and environmental information related
to the company. As stated by Mishra and
Suar (2010), in order to improve the performance of the Dell, the basis of
investor is to be improved in order to enhance the level of profitability in
the long term running of the business organisation.
Stakeholder
Model of CSR and Company Performance
This model was
developed by Mishra and Suar (2010) and entails the monetary and non-monetary
benefits. According to Suliman et al.
(2016), following the recession, corporations
have become more vigilant of their CSR efforts and derive both monetary and
non-monetary benefits from such activities. The interrelation in between the CSR activities as well as the
Dell performance is related to the both financial as well as non financial
performance. The non financial performance is linked with the customers as well
as the supplier which are related to aggregates of environment values. The
customer and the supplier are also related in case of non financial performance
as they are based on the factors which take into consideration both the
community as well as the environmental CSR.
As
commented by Nofsinger & Varma, (2014),
the literature reveals that companies that are more socially responsible
outperform others Borgers and Pownall, (2014) argued that consumers have become
aware of green and organic products. The risks that are faced by the business
is also affected by the several dimensions of the CSR activities suggested by
Bouslah, Kryzanowski, & M’Zali, 2013); also the quality of the financial
reporting is also found to be dependent on the CSR attitude of the business
argued by Grougiou et al. (2014), information disclosed to stakeholders
related to the social conduct of the business was suggested by Dhaliwal, Li,
Tsang, & Yang, (2014); and Mustafa et al. (2012) treated it as the
perception of the several stakeholders related to the social conduct of the
business. Linthicum et al. (2010); Maden, Arikan, Telci, & Kantur,
(2012) treated it as corporate reputation. While Borgers & Pownall, (2014);
Nofsinger & Varma, (2014) considered it as a socially responsible
investment and donations to charities. For Baird, Geylani, & Roberts,
(2012); Choi, Kwak, & Choe, (2010) and Soana, (2011) the CSR has been an independent and multidimensional ethical rating
for any company. The policy of financial performance is based on the employees
CSR activities as well as the community which is related on environment CSR as
well.
More and more
companies are interested in Corporate Social Responsibility (CSR) than ever;
however, their underlying motives vary.CSR engagement has occurred largely due
to pressure from stakeholders who want their companies to be socially
responsible (McWilliams et al.2006). The government, non-governmental
agencies, community groups, employees, and suppliers also pressure companies to
be social responsible. McWilliams et al. (2006) also noted the
challenges of quantifying the impact of CSR activities, as well as investments
made for CSR. Nevertheless, CSR has gained attention and is now a widely
popular business strategy for creating value for a company. The inherent
difficulties of measuring and evaluating CSR activities result from the vague
definitions of this concept, despite the vast amount of research done on this
topic. There are both opponents and proponents of CSR engagement by the
companies. According to one school of thought, the CSR activities are a waste
of company's resources and these resources should be used for value-adding
activities, but only for the shareholders of the company (McWilliams et al. 2006),
others believe that companies have to fulfill their social responsibility and
bear obligations to a wider community of stakeholders.
From the beginning
of 18th century to the 19th century and near the starting
of the 21st century there has been a paucity of interest among the
business in social responsibility and sustainability, according to Adeleke,
(2014). In order to improve stakeholder
reputation and restore the confidence of the stakeholders, In order to bring
improvement in the theory of stakeholder the quality of financial report is to
be analyzed in an appropriate manner. In order to
provide appropriate many companies seek CSR activities in response to challenging
and turbulent business times (Servaes & Tamayo, 2013), leading companies to
invest in CSR and utilize other company resources (Sun & Cui, 2014).
The motives behind
CSR, apart from stakeholder pressure, are the benefits derived by the
companies, like competitive advantage by virtue of increased market shares and
employee motivation (Servaes & Tamayo, 2013). Several researchers point out
that CSR can be harmful to companies as they also entail costs, which include
both one-time investments and continuous costs that increase the risk of CSR
engagement failure. This outcome may lead to mistrust amongst the company's
stakeholders and can cause harm to the image of the company (McWilliams et
al. 2001; McWilliams et al. 2006; Weber, 2008).
The casual
relationship between CSR and CFP is studied in the company Dell. Its CSR
efforts focus on the environment, community, and people (Servaes & Tamayo,
2013), Dell is committed to working for the environment, engaging their people
in an inclusive and diverse workforce and to strengthening the communities
where they operate (Ghelli, 2013). Dell has three aspirations that describe their CSR
mission and include:
1. The
Environment-The Company aims to reduce the impact of its operations on the
environment and to enable its customers to help in the reduction of the adverse
effect of IT infrastructure on the environment. The environment is crucial as dell helps to maintain the level of
sustainability. The company Dell helps to maintain the level of organization
mission as well as the vision which is crucial to implementation of long term
profitability in case of strengthening the communities.
2. Communities-The
team members in the company are engaged globally to passionately support
communities and use technological support for improving the lives of young
people. The communities is essential
for the enhancement of CSR as the employees need to provide motivation as well
as encourage is required to be provided which is essential in order to minimize
the factor associated with risk.
3. People-Leaders
are committed to helping their team members in rendering best services to the
customers. For encouraging the team members, a culture is promoted which
enables team members to take risks and feel valued and supported. The company
endeavors to make itself a compelling destination for the team members for
thriving and achieving greater heights in their career. Team members are
promoted to influence leadership and give direction to the company.
The company has 21
social and environmentally responsible goals to attain by the end of 2020.
These goals are developed, keeping in mind the cultural and social differences
between the countries where the company has its operations. Dell’s goals aim to
reduce the impact of its operations on the environment in the countries where
it operates, to reduce its environmental footprint, and focus on enhancing the
collective good for its customers. However, these goals are subject to a number
of variables that are difficult to measure; these goals are further complicated
by the cultures of the different countries where dell operates. However, the
company maintains its focus on building new ways of protecting the environment,
doing socially responsible activities, and pioneering new ways to conduct
business, which helps towards gaining a restorative economy. The main aim or objective of Dell is to analyze the proper
implementation of the strategies in order to minimize the issues which are
related to environment. The company Dell follows the different methods which
are essential for building the culture which are essential for providing
promotion to the employees who are working in the Dell. The objectives as well
as the aim will be resolved by the year 2020 as it can be estimated as the
company incorporates different types of culture which is beneficial for each
and every company.
Problem
Statement
The measurement
and evaluation of the causal relationship between CFP and CSR change
constantly; therefore, it is necessary to conduct an up-to-date study that
underlines the current phenomenon. According to Brammer et al (2012), previous
scholars of this topic have achieved varying results. Hence, the problem is
that the current causal relationship that exists between the CSR and CFP is
unknown, as is the impact of CSR practices on the CFP of the company in five
years. The interrelation in between
the CSR as well as the CFP is vague study as the different implication of the
methods is not properly evaluated. The three aspiration in relation to the
performance of CSR vision is not properly evaluated as the team leaders did not
follows the rules and regulation appropriately.
Purpose
of the Study
In this study, I
propose to measure and evaluate the causal relationship between CSR programs
and CFP. Moreover, I seek to determine if the implementation of CSR programs
causes an increase in long-term sales and gross margins. Financial performance
has been defined in the context of traditional accounting and measures, which
are primarily market-based measures. Some intervening variables, such as the
size, growth, risk, preceding year performance, and management preference have
been controlled statistically in this report. As commented by(Ghelli, 2013), the size, growth related to the
methods which were used in case of CSR activities as they are involved in
improvement related to the environment structure. The process of CSR involved
different types of finance which is essential for the maintenance of valuable
information on the investors.
This research will
investigate the potential impact of Corporate Social Responsibility on the
corporate financial performance of the company. A full picture of the subject
will be created by taking from the previous theoretical research and examining
results from previous studies. Previous researchers have reached inconclusive
results regarding the relationship between CSR and financial performance
(Ghelli, 2013). There is little evidence that CSR and financial performance
are related directly. However, companies devote their resources, money, and
efforts toward CSR activities, implying that there are certain financial
benefits for the companies to gain.
Thus, the purpose
of this research is to fill the gap in existing research and to render both the
investors and the companies a better understanding of the CSR efforts.
Additionally, this study will show how CSR efforts add value to the financial
performance of the company. The results
which are obtained is useful as well as valuable for investors, the company,
and stakeholders as they are involved derive benefit from the CSR activities of
the company. In order to enhance the profitability in case of CSR activities,
the gap of the existing research is to be minimized in order to maintain long
run profitability in case of the business organization.
This study has
three research questions:
1. Do CSR
activities affect a company’s financial performance?
2. Do
stakeholders benefit from CSR activities of the company?
3. Why do
companies devote time and resources to engaging in CSR work?
4. What
are the components of CSR activities that have the significant impact on CFP?
5. To
what extent the different component of CSR activities predict the financial
performance?
6. What
is the impact of CSR program on the CFP?
The
component of CSR is based on the impact on CFP which is required in analyzing
both the positive as well as the negative impact on Dell. In order to enhance
the level of sales as well as the productivity, the company Dell has to analyze
the gross profit as well as to maintain the CSR activities. The impact of the
CSR on the method implemented in CFP is positive as it tend to enhance the
level of communication in between the employees who are working in the
organization. The positive result also enhances the sales as the productivity
of the company which is essential for maintaining the long term profitability.
The financial performance of the company is to be enhanced as the variables are
interlinked with each other.
To address these
questions, CSR activities will be identified and analyzed, and their effect on
the CFP will be determined. The impact of CSR on CFP is measured by focusing
the analysis on the increase in sales and gross profit margin of the company in
the long-term. Studies have indicated that the impact of CSR activities is not
realized in the short run; however; it takes some time for these efforts to
show their results on the financial performance of the company. Hence, the
results are analyzed for a considerable period and, for this study, a period of
five years will be used to analyze the relationship between the CSR activities
and CFP of the company.
Methodology
The methodology
adopted for this study is a mixed-methods research design. The company’s
initiatives during the period of five years will be analyzed qualitatively,
while the financial performance shall be analyzed quantitatively by measuring
the various financial ratios and then determining the increase in sales and
gross profit margin over a period of five years. The financial performance of the company is to be analyzed in an
appropriate manner in order to improve the financial sustainability in case of cash
flow statement. The methodology aims to provide significance on the matter
implemented on enhancement used in process of CSR.
In the area of
business and management, the relationship between CSR and CFP is of great
importance; it is also highly important to investors (Weber, 2008). Many
previous researchers have investigated this topic and established varying
outcomes of the relationship in the past. That is, a correlation between them
has been studied repeatedly, but there has been an underlying conflict in these
two terms over the last forty years (Bird et al. 2007). As implemented in the previous study, the concept in relation to
the practices of CSR as well as the CFP is important as it helps to provide
benefit to the suppliers as well as to the consumer as a whole. The gross
margin in case of CSR is well defined as the correlation in between the two
terms is maintained in an appropriate manner.
As commented by
(Freeman, 1984), for a business, the primary concern is profit; however, at the
same time, they can contribute to the social and ecological environment. Social
responsibility is an important strategic investment within the central corporate
strategy, business, and management instrument (Folksam, 2013). However,
socially responsible activities will not necessarily lead to an increase in the
wealth of shareholders. Nonetheless, research indicates that it can give
insurance protection and hence maintains value for the business. In order to increase the profit, the rules as the as the
regulation be stringent which are used in regression theory.
The
main methodology of the research project is based on secondary research. Both
the quantitative and qualitative data is collected from the secondary research.
The qualitative data collected from the books and journals only gave a brief
idea about the CSR and CFP and their potential interlinking. However the
quantitative data obtained from the study of the last five years report of Dell
gave an overview of the CSR index and its direct proportionality with the CFP
such as profit and revenue. In addition the quantitative data was analyzed by
regression to establish the direct relation.
The qualitative study which had been evaluated based on the
previous study is based on the relationship between CFP as well as CSR which
allows a firm to earn a substantial amount of finance. The financial
performance of the firm indicates true as well as the fair value which results
in high earning level of the business organization. The previous scholars have
used the theory based on regression or the theory which is based on event study
in case of quantitative and qualitative method which does not provide
appropriate conclusive study (Weber, 2008).
McWilliams and Siegel (2000) discovered a neutral relationship
between profitability and socially responsible activities. The neutral relation
between the methods implemented in case of CSR as well as CFP result in
increment done in case of sustainability. On the other hand, as found by Vance
(1975) and Hassel, Nilsson, and Nyquist (2011) that there lies a negative
correlation in between CSR and CFP which results in using different kind of
variables. As opined by McWilliams & Siegel (2000), the difference which
exists in between the different types of variables which are being used in
socially responsible activities undertaken by the industries as used by the
previous scholars. The previous scholars did not provide emphasis on the
competitive advantages of the business organization rather they had undertaken
to provide emphasis of financial performance. The previous scholar did not
provide emphasis on the environment as well as the profitability of the firm
which is based on the stakeholder theory. The business structure is not
maintained properly in order to improve the financial as well as the economic
performance of the company which is missed by the previous scholars. The
importance of maintaining the appropriate relationship in between the internal
as well as the external stakeholders is not evaluated in an appropriate way by
the previous scholars. The previous scholars missed the portion related to the
evaluation of gross profit which is based on the economic value of the firm.
The sales figure which helps to increase the profitability of the company is
not evaluated by the previous scholar in a proper way. The previous scholars
failed to analysis the improvement done in case of globalization with resulted
in improvement in the overall structure of the business enterprise.
The business environment which was based on the strategies which
has resulted in enhancement of globalization as well as increase in the process
of competition within the business organization in turn helps to increase
productivity. As commented by Servaes and Tamayo (2013), the business
environment has become challenging in today’s era which is beneficial in order
to improve the benefit related to the stakeholders. The reputation of the
business organisation can also be enhanced by adopting social responsible
activities. As stated by Adeleke (2014), the firm presents their financial
principle on the basis of CSR activities in their annual report which has been
presented in case of raw materials.
As
commented by McWilliams & Siegel (2000), the stakeholder theory which is
based on stakeholders is crucial as it helps to maintain the business structure
within the firm as the theory is based on harmonization with the stakeholders.
The stakeholder theory is important as it helps to maintain the effect of key
variables which affects the financial performance of the company. The theory
used six different method of qualitative method which is used to analyse the
profitability of the firm.
As
opined by Bona (2012), the appropriate relationship between the different
employees of the firm which results in improvement in productivity. The other
methods are products which are readily available in the market, the community
which is based on diversity of the employees. The methods used in governance
are used for utilization of environment to be implemented in an appropriate
way. The advantages of the stakeholders theory is that it takes into account
the gross profit margin as well as the total sales which are used for
maintenance of economic performance of the company (Orlitzky, 2013).
As commented by Weber (2008), the stakeholders theory is beneficial
as the relationship in between the social as well as the environmental
performance of the company is maintained which depicts an inverse shaped
curved. The theory is chosen in the study as it helps in providing analysis in
maintaining the relationship in between the activities based on the CSR
activities as well as success in terms of economic value.
As opined by Orlitzky (2013), the stakeholder theory is chosen as
it was assumed the performance of the employees in terms of economic values
which is considered to be a dependent variable. This theory is based on the
importance of stakeholder which is beneficial as it helps to produce such goods
as well as the services which are environmental friendly in nature as well as
which is demanded by the customer. The theory also takes into consideration the
nature of the technology which is being used in the acquisition of raw
materials which results in enhancement of the scale of profitability within the
firm. The stakeholder’s theory is chosen as it helps in evaluation of intensity
within the firm in order to increase the level of sustainability. The theory is
used in this study as it helps to maintain the pressure from the stakeholders
in order to manage the rules as well as the regulation of the firm. The rules
and the regulation are to be based in such a way that it helps to maintain the
environmental friendly behavior.
As opined by Orlitzky (2013), the theory is chosen in this study as
it consisted of both the internal as well as the external stakeholders. The
internal stakeholders comprises of employees, the owners as well as the manager
who are linked directly to the company and are solely responsible for
maintaining the image of the company in its long term. The external
stakeholders in case of stakeholder theory are the suppliers, the government
rules and the regulation on which the company activities are dependent and the
creditors.
As opined by Soana (2011), the customers and the shareholders are
responsible for maintaining the profit scale of the company. The stakeholder’s
theory is important as it helps to maintain the relationship in between the
business enterprise as well as its internal and external shareholders.
Thus,
the stakeholder’s theory is undertaken in the study as it helps to provide
strategy in maintaining the relation of the company along with its stakeholders
in an effective and efficient manner.
Significance
of the Study
This study has
many implications for executives, key decision-makers, and owners of the
business and the beneficiaries of CSR activities (e.g., consumers, community,
environment, stakeholders, and employees). This study builds a foundation for
future research. According to Bona (2012), there has been an increase in the
expenditures for CSR for which the chief executive must decide how many
resources will be allocated to make it beneficial. Hence, this study is
significant for such decision making, as it provides information about the
impact of the CSR activities on the financial performance. The Dell Company may
use the results of this study’s implications regarding contributions to its
socially and environmentally-responsible goals.
Assumptions
It is assumed that
the CSR practices being followed by the company are comparable to industry
standards and are easily available
to all the stakeholders. The next assumption is that all components of the CSR
initiative pertain to the CFP measures taken for the study. The most important
assumption is that the socially- and environmentally-responsible activities are
commensurate with the cultural practices of the country in which the company
operates, as the company has offices around the world.
Limitations
of the Study
Several factors
limit the outcomes of the study. First, this study focuses on one computer
manufacturing company; hence, the results are unique to the company and are not
generalizable for the whole industry. The second limitation is that only a few
variables will be considered to determine the causal relationship between the
CSR and CFP. The omitted variables may affect the accuracy of the results. The limitation of the research is that although the research is
based on Dell assumptions have already been taken that the CSR and CFP
interrelationship are more relevant in case of IT companies. However the
results obtained in the research may not be applicable to other sector or to
other IT companies. This is because the research is solely focused on factors affecting
Dell not all IT companies in case of CFP and CSR. In addition it can also be
seen that not all the factors applied in case of Dell is applicable for the
ethical and CSR index of other companies. The
third limitation is that the data for quantitative analysis is collected for
only five years; however, the company practices CSR activities and has done so
since its inception. In addition
regression analysis of the impact of the variables of CSR such as the
greenhouse emission and the renewable energy use and the energy consumption
with that of the CFP is also analyzed. This is done based on the last five
years report of CFP. The compounding effect of
the CSR activities was not taken into account, as it is seen from previous
studies that CSR activities do not generate results immediately. The fourth
limitation is that the data used in the study is secondary data and they have
been generated for a different purpose from which the implications for the
study have been derived. The secondary
research has been used to establish the views of previous researches regarding
relationship between CSR and CFP and link it to the existing regression
analysis data of Dell. The secondary research although will gave brief overview
and will help to establish the quantitative research. However the data from the
previous research papers may suffer from lack of reliability and validity. The
fifth limitation is that accuracy and credibility of the secondary data cannot
be guaranteed.
The study is
limited to the company itself, and only two dimensions of the CFP are
considered. The agenda of this research is to examine and analyze the causal
relationship between CSR and CFP in the chosen company, Dell. The CSR variable
is a multidimensional, ethical rating at the individual component level. One
way to measure CSR is the use of multidimensional and ethical ratings. However,
an alternative way was generated by the researcher for the measurement of the
CSR, which focuses on the perceptions of the stakeholders. The primary data was
collected by means questionnaires from the stakeholders or by conducting an
in-depth interview or as an information disclosure that was related to the
social conduct or was given as a uni-dimensional social measure like, the
reputation of the company, environmental footprint, expenditure done on
charitable purposes or investment made for socially responsible activities. The delimitation of the study is that the study clearly establishes
the relation of CFP with CSR and does not establish any relation with the
operation and production value of the company. It is not generalized and is
very much inclined for IT companies especially Dell. The study is confined only
to the analysis of the relationship between CSR and CFP and not in establishing
the relation with other factors such as the employee relation and employee
turnover or the leadership practices. These factors although may affect the CSR
and CFP but are not considered in eth study.
Key
Terms
· External
stakeholders: according to Orlitzky,( 2013) these are the groups of
organizations or people that are impacted by the firm or have an impact on the
firm like government, suppliers, customers, community, and trade unions.
· Internal
stakeholders: according to Orlitzky, (2013) Management
discretion/preference: Soana (2011) stated that these are decisions related to
spending by firms, which are entirely discretionary in nature.
· Corporate
governance: the means by which any company is operated, controlled and managed
to keep in focus the benefits of the stakeholders, as defined by OECD (2008).
· Environmental
conduct: the behavior of the business entity and how it treats the environment
is an important resource in a way that is sustainable and causes minimum or
least harm as was proposed by Idemudia, (2011).
As
opined by Orlitzky, (2013), the environmental conduct helps to maintain the behavior with
respect to the enhancement of the business organization which results in
increasing the sustainability. The enhancement in sustainability helps to
achieve the required treatment which was provided in case of environment.
As
commented by Carol (1979), the main aim or objective of the business unit is
concerned to the business structure is to use the resources of the environment
in such way that it can be recycled and reused. The structure of the
environment is to be properly evaluated to maintain the sustainability so that
the resources which are non renewable in nature are saved for the usage of
future.
· Environment
footprint: Idemudia, (2011) the harmful or adverse effects on society and the
environment by the operations of the business for which the corporations have
social and environmental obligations to reduce it to a level which is safe for
the entire community.
· Ethical
conduct: As stated by Carol (1979), the
ethical consideration of the business organization is used when the
stakeholders undertakes the true as well as the fair value in case of
preparation of financial terms. The financial terms are to be prepared in
accordance with the rules as well as the regulation which is used in
enhancement of the profitability of the organization. The main purpose of
ethical consideration in case of business enterprise is to maintain the
confidentiality while the recording of data. The internal control is also
maintained within the organization in order to possess smooth functioning in
case of ethical consideration.
· Financial
reporting: Bona (2012) proposed that these are the rules that govern the
maintenance of the company’s records used in the preparation of the financial
statements to be used by the stakeholders of the company.
· Greenwashing:
As commented by Sun & Cui (2014),
the term ‘green washing’ is usually a
practice which is based on claiming the environmental benefits which is based
on the products as well as the final goods and services. This process as used
by the company helps to be more reliable in case of maintaining the products
which is based on environmental friendly.
As
opined by Bona (2012), the methods undertaken by company on the basis of green
washing uses the cost reduction method by making the competitor more
environmental friendly. The process of green manufacturing in case of changing
the packaging system of finished goods as well as on the method used in
recycling process is beneficial.
· Ozone
layer: a layer in the atmosphere of the earth; ozone depletion causes adverse
effects on the plants and animals. As
commented by Jo & Harjoto (2011), the ozone layer contains high amount of ozone (O3) which is found
generally in the lower part of the stratosphere from about 20 to 30 kilometer
above Earth.
· Risk
management: the practice of identifying business risks, analyzing these risks
for comprehending them, assessing them to give them priority, and addressing
them by taking appropriate strategic actions. Risk management also implies
monitoring them for ensuring that remain within the limits of tolerance and
control, as given by Jo & Harjoto, (2011).
· Social
conduct: Carol (1979) suggested that it is the concern of the business firms
for the working conditions of its workers and the living conditions of all its
stakeholders.
· Social
responsibility: Carol (1979) defined it as the role of the business firm in
supporting and improving society while simultaneously pursuing the legitimate
purposes of the business, profit and shareholders’ wealth maximization.
· Stakeholders:
Freeman (1984) defined them as those parties who are impacted by the operations
of the firms and those who can potentially influence the behavior of the firm.
· Stakeholder
theory: according to Freeman (1984), this theory states that in the long-term,
it is advantageous for firms to keep their stakeholders happy with the
operations of the firm.
As
opined by Sprinkle
and Maines (2010), the stakeholder theory is based on improving the performance on the
basis of both the internal as well as the external stakeholders.
· Sustainability:
As commented by Jo & Harjoto (2011),
the term ‘sustainability’ signifies the
usage of the resources in such a way the needs of the present generation is met
without compromising the proper usage in case of the future generation. The
practice which is based on the economic values as well as the method
implemented in social responsibility is used in case of protection done on the
basis of environmental factors.
This chapter concludes the introduction of the
research by providing an overview of the study. The research work analyses the
35 years of previous research done on this topic and explores the commercial
benefits of conducting socially and environmentally responsible business.
Specifically, this chapter provided the necessary context for the link between
the corporate social responsibility (CSR) and corporate financial performance
(CFP) in the selected company, Dell. Previous researchers have studied the firms
that do not practice any form of CSR. However, the researchers also found that,
following the great economic downturn, CSR activities have helped companies to
gain a competitive advantage over other firms. CSR efforts of companies do
appear to relate to their financial performance during the last five years;
however, they were examined using different theoretical frameworks. Thus, it
can be concluded that in order to maintain the commercial benefit which is
essential in case of improving the relation in between the CSR and CFP. The processes
which are used by the business have to be sustainable in nature.
The current chapter on literature review takes into account
the theoretical basis of the Corporate Social Responsibility (CSR) and the
critical analysis of the factors affecting it. It also takes into consideration
the evaluation of the theories in regards to CFP and the critical analysis of
the factors affecting it. It takes into consideration the critical evaluation
of the impact of CSR on the company's financial statement as well as the
benefit of the stakeholders of using CSR. Apart from that, it evaluates the
impacts of CFP on the employees as well as the stakeholders. The dissertation
assesses the relationship between CSR and CFP on the basis of critical
evaluation. Lastly, it provides the strategies to implement a good CSR practice
as well as the gap in the present literature review.
As commented by Wang et al. (2015), the Carroll's CSR pyramid
signifies the strategies of the organization to meet the social responsibility
as it can be accomplished by using four stages. The four stages can be the
economic, legal, ethical as well as philanthropic which can be followed by the
business enterprise to ensure that the business complies with rules and
regulation or not. On the contrary Tang et al. (2015), rejected this and
commented that the four stages are not required for ensuring a well establish
business structure, among that the two stages legal and ethical are vital to
comply rules and regulation. The legal structure takes into account the
different types of rules as well as a regulation which are essential for the
maintenance of long-term business. The ethical structure comprises of the rules
as well as regulation based on which a business acts ethically and the
financial statement in regards to CSR are prepared with following the true and
fair view of GAAP (Korschun, Bhattacharya & Swain, 2014).
As stated by Shaukat, Qiu&Trojanowski (2016), the CSR is
based on the evaluation of economic values in accomplishing the organization
goals as well as objectives. The economic values are based on the assessment of
the profit motive of the business as profit is the ultimate source for the
achievement of the long-term objectives. The profitability is the only one way
to achieve the long-term benefit which applies to both the small scale as well
as the large scale industries. However, Saeidi et al. (2015) argued and
commented that philanthropic stages in Carroll's CSR pyramid are essential for
the evaluation of the long-term business objectives apart from the ethical as
well as legal values. The responsibility of the philanthropic stages is to
provide a proper result to the society at the end of an accounting period. The
donation, grants received by the project is vital for the evaluation of the
long-term aims as well as to maintain the upward rising of the profit scale. It
takes into consideration the luxurious things as they focus on strategies on
the improvement of quality life of the employees to provide motivation.
(Source- Flammer, 2015)
As commented by Pérez & Bosque (2015), the theory of
strategic leadership signifies that the Chief Executive Officer (CEO) has the
direct impact on the evaluation of CSR as are involved in the implication of
strategic CSR rather in case of average companies. On the contrary Orlitzky et
al. (2017), argued that there is no direct relation between the strategic
leadership as well as the evaluation of the company’s growth. The business
enterprise growth can be enhanced by following both the ethical as well as economic
responsibility in Carroll's model of CSR.
As
opined by Öberseder et al. (2014), the key features related to the implication
of Carroll's model of CSR are the evaluation of the profit scale which is the
vital factor for the foundation of any type of business enterprise. The
enterprise both short-term as well as long-term is based on the factors of
earning a profit in its long-term business prospective. On the other hand
Obeidat, Tarhini & Aqqad (2016), opposed this and commented that the
business enterprise must comply with rules and regulation as per the strategic
leadership theory. The organization can earn a profit when the rules, as well
as the regulation, are compiled and the business enterprise follows the ethical
practices in Carroll's theory which is based on CSR.
As stated by Saeidi et al. (2015), Carroll's theory is
simple to use and understand as it helps to establish and emphasis on the
importance of the profit scale. The process associated with CSR is more
adjustable as the business related to the stakeholder model helps to evaluate the
ethical values. On the contrary Shaukat, Qiu & Trojanowski (2016), rejected
and commented that the Carroll's CSR model is complex in nature as the profit
scale and the evaluation of the ethics is not easily determined. The
interaction of the responsibility, as well as the social issues, is not
determined which is crucial for maintenance of profit scale in case of business
enterprise. The responsibility is based on an evaluation of both the long-term
as well as the short-term objectives in the evaluation of the profit scale in
case of business enterprise (El Ghoul, Guedhami & Kim, 2017).
Although there is opposition, but the four stages in case of
Carroll's CSR model is crucial for the determination of long-term profit scale
and by compliance with ethical values in business enterprise.
As commented by Kim, Song & Lee (2016), the futures of
management theory provides the implication of the future orientation in regards
to the achievement of the long-term goals as well as objectives. It takes into
consideration the different types of theories as it can be applied in case of
variables as well as the management philosophy. On the other hand, Shaukat, Qiu
& Trojanowski (2016), argued and commented that to achieve the high level
of profit scale in case of a business enterprise, the short terms objectives
are also vital apart from the long-term aims as well as the objectives.
As opined by Bańos-Caballero,
García-Teruel & Martínez-Solano (2014), the business management of the
present business trend is notably adapting the theories of CFP for making the
business more sustainable. The management theory of CFP is helping the business
to grow in different technical ways. This management theory of CSR is
remarkably transforming the trends of the business as it is using the digital
platforms for managing the finance. The management theory is helping in
expanding the ways for business development. Various new development features
are adding up to the management theory of CFP. As for example, artificial
intelligence and robotics mechanisms were added up for a betterment of the CFP
in the business management.
On the contrary Brammer, He & Mellahi
(2015), argued that the implementation of an algorithm in the finance has made
the finance management stronger than before. Besides that, the gig economy is
also helping in the development of the business that is providing to be
beneficial for the companies. The CFP also includes the environmental
orientation that is helping it to enhance the acceptability in the business
market. CFP is always upgraded to implement various new features in it thus
this is helping the business to achieve the competitive advantages in the
market. The innovative new feature that includes into CFP is helping the
business to create new ideas for making the finance of the business stronger.
As opined by Cheng, Ioannou & Serafeim
(2014), CFP is expanding the social innovations for the business that is
helping the society to become more developed. The changing techniques for CFP
always support the up-gradation of the business and make the company unique in
context to the other business companies. CFP always adopt new methods that are
providing the companies opportunity to grab more new features into the
business. These enhanced features of CFP theories are helping CFP to evolve the
changing patterns of business. This new feature providing theories are
engraving remarkable milestones to flourish the business.
On the contrary, Dhaliwal (2014) argued that
the circumstantial prudence for the business development and orientation is
fully dependent on the methods that have been adopted by the companies. The
traditional theories of CFP are helping the business to evolve in a certain way
that is providing the business a feature of creating a bridge between new and
old methods. The evolution of theories will help the business to create
profound knowledge in the finance management. Due to this enhanced feature
providing methods the adaptation of CFP is making the performance of the
business better. The new theories of CFP are also helpful in business growth
assessment that helps the business in taking decisions regarding the business
growth.
As commented by Ditlev-Simonsen (2015), the
forecasting feature of the CFP is helpful in decision making that helps the
business to adapt the changing pattern according to the need of the business.
The occasional updates will help the business to mitigate the wrong decisions
taken previously for creating the better business environment. Though the
features provided by the CFP is creating positive impacts for enhancing the
financial performance of the business but there have certain risks for this
quick decision-making techniques of CFP. Since the decisions are always taken
in short time span thus, they may become error-prone for the business. As for
example, the forecasting of business growth may give wrong results due to the
short period assessment. The management theories that have been incorporated
into the CFP may damage the business orientation as they are not well verified
for their suitability on the business.
On the contrary El Ghoul, Guedhami & Kim
(2017) argued that there are wide ranges of strategies in CFP for the business
development that will help in reducing the business risks for the company.
Beside that as per the traditional management theories, CFP also contains
topical management theories that provide the business liberty of finding flaws
in the business. The periodic up gradation of the new theories helps the
company to become alert for the upcoming challenges. The theories that have
been constructed on the basis of the business circumstances are providing wider
views regarding the upcoming risks of the business. Thus this will help the
companies to assess correctly the risk level of the challenge and they will
become able to take precaution to stand up to the challenge.
As stated by Rao & Tilt
(2016), the companies in the financial sectors give more priority to the social
measures and the environmental measures than the commercial sectors. The
production companies need to give more priority to the environmental
measurement than the other companies. Besides that, the companies need to give
the same priority to the social measures. The people and the companies engaged
with the real estate enterprises do not value the social measure and this is a
vital factor that is affecting the society. The transport companies are doing
the same thing that the real estate companies are doing. On the other hand, as
per the comment of Öberseder et al. (2014), it has been observed that
the academic sectors are less interested in giving priority to the
environmental measurement. The public works department of the society and the
health and private sectors are also losing their interest in giving priority to
the measurement of the environment. However, it is a remarkable fact that the
public enterprises, the private organizations and the health and academic
organizations are taking more interest in social measurement. These sectors are
taking a deeper interest in the social measurement.
On the contrary Brammer, He & Mellahi
(2015) argued that many factors are affecting CSR but the first factor that is
affecting CSR is the company size. The size of the company is affecting the
social and the environmental measure in a very positive manner. As per the
research of Orlitzky et al. (2014), it can be observed that the more the number
of employees in a company, the better will be the effect on the CSR and thus
the companies need to recruit a more number of employees that will make the CSR
stronger. Companies those are lagging behind for the less number of employees
cannot take an important part in the social and environmental initiative.
Besides that, it is also a fact that the small enterprises do not take an
interest in the social and the environmental measures due to their lack of
financing capability in the business. Pérez & Bosque (2015) commented that
the industries with huge turnover always take an interest in the social,
environmental measures due to their huge cash flows in the business. Though the
industries with huge revenue take an interest in the social measures to make
the business more profitable and sustainable but they never show interest in
the environmental measures.
As opined by Cheng, Ioannou & Serafeim
(2014), the main reason behind the social measurement of the huge industries is
that they are getting benefits for the measurement. On the other hand, the
environmental measurement is not providing such a huge benefit for the
companies. Thus they are not showing any interest in this part of CSR. The
companies are not bounded by any barrier to take the environmental or the
social measure. Due to this reason, the companies are not having any legal
issues regarding the measurements. Beside that, the social and the
environmental measure do not have any effect on the market penetration of the
companies. This is another fact that is affecting the CSR and thus the
companies need to take a step for the betterment of the environmental
measurement. As opined by Obeidat, Tarhini & Aqqad (2016), though most of
the companies do not bother about the effects on CSR but few companies do this
for the society and for customer satisfaction. In order to maintain the
prospect of the company, all the companies need to think about the impacts on CSR.
On the contrary, Dhaliwal et al. (2014) argued that the cash
flow in the business has a significant effect on the CSR as it provides the
company's ability to make decisions. The cash flow in the business provides the
ability to the companies to take decisions independently. Higher the flow of
the cash inside the business, higher will be the sustainability of the
business. In this way, the company will make better revenue and thus they can
take rigid steps for the betterment of the CSR. Thus the cash flow is another
factor that is affecting the CSR. Supported this as viewed by Lu et al. (2014),
the activities of the companies are also playing a vital role in the
development of CSR. In order to make more prospects the companies need to
implement specific rules and regulations for the well being of the company. On
the other hand, increasing membership in the companies gives the companies
opportunity of getting various opinions. This helps the companies in taking
decision for the well being of the company as well as for the wellbeing of the
CSR.
(Source: Malik, 2015)
As commented by Ditlev-Simonsen (2015), companies need to form
different bodies that can mitigate the problems regarding the effects on CSR.
In order to form these groups companies need to engage people of different
race. The companies need to promote the CSR in a serious manner to mitigate the
problems. The companies need huge fundings for promoting CSR and due to this reason;
they have to think about the wellbeing of CSR. The financial sectors first needs
to take action for this as they are the source of funding into the society.
As commented by Krüger (2015), this key role
of the financial companies can make the situation better for the CSR. The
management of the companies never focuses on the internal factors that are
affecting CSR. The wrong policies taken by the company is making the business
more profitable is also affecting the CSR growth. Thus companies need to make
stricter and more innovative policies and statements regarding the CSR. Besides
that, the internal roles of the employees of a company are also playing a vital
role in CSR.
On the contrary El Ghoul, Guedhami & Kim
(2017), argued that the perceptions regarding the CSR are also a fact that is
internally affecting the CSR. The human resource management needs to take
decisions for making the CSR better. The governing body is not making rigid
steps for the CSR and due to this reason companies are not bothering about the
proper execution of CSR. Due to this, the companies are not giving proper
knowledge to their employees regarding the CSR which is greatly affecting the
CSR. Thus it is the duty of the companies as well its employees to maintain
proper CSR through effective understanding collaboration between each-other.
As commented by Flammer (2015), CSR has a
great contribution to the business as it provides many facilities and
advantages to the companies. CSR has no bindings of providing the features
regarding the size of the company. CSR increases the brand value of the
products of the company as it promotes the products inside the society. Beside
that CSR also helps in distinguishing the products and the qualities of the
products distinctly. Company reputation is a vital thing for the companies.
Thus the companies need to create a good reputation in the market. As stated by
Ditlev-Simonsen (2015) in order to improve the reputation of the company CSR
plays an important role. The corporate investments, as well as the investments
for the society, make the business company’s image better to the mass of the
society. Thus CSR can give the companies a competitive advantage and to achieve
the competitive advantage in the business companies need to make small favors
to their clients and the suppliers.
On the contrary Kang et al. (2015) argued
that to make the reputation of the company better inside the market the
companies need to behave well with the clients and the suppliers. This will
help the companies in achieving better position inside the market thus they
will be able to drag the business in the global corridor.
As opined by Kim, Song & Lee (2016), the adaptation of
CSR is helpful for the company shareholders as it enhances the growth of the
company. The value of shareholders accelerates with the implementation of CSR
in the company and due to this reason; the shareholders of the companies grab
more benefits from the companies. The performance of the companies also
upsurges with the implementation of CSR in the companies thus the stakeholders
grab a greater percentage of benefits due to growth in the revenue. Besides
that, the CSR is a cost saving method and due to this, the company benefits
increases. This increment in the company revenue is added up to the
shareholder's benefit.
On the contrary, Korschun, Bhattacharya & Swain (2014)
argued that CSR increases the sale of the company thus the share value of the
company accordingly boosted up. This increment in the share value helps the
shareholders to increase their reputation. Beside that CSR helps in improving
the organizational growth thus the growth of the company helps the shareholders
to get more profit from the company. The most important benefit of implementing
the CSR inside the business is that helps in accessing the company capital.
Thus, this enhanced accessibility helps the shareholders to take decisions
liberally for the financial growth of the company.
As commented by Flammer (2015), CSR helps the company
employees in personal skill development. The dedication of the organization can
be increased by implementing CSR in the business. In this way, the relationship
among the company employees can be enhanced that makes the performance of the
employees better. The CSR helps the company to find out the efficiency of the
employee and due to this feature, the employees get motivated in doing more
work for the wellbeing of the company. Besides that CSR is helpful in
developing the cooperative behaviors among the employees that make the
performance of the business better.
On the contrary, Jenter & Kanaan (2015) argued that CSR
helps in enhancing the recognition of the staffs of the company. The social
responsibilities of the staffs can be enrooted within the staffs using CSR.
This helps the employees to become the socially responsible person and thus both
the organization and the employees get benefitted. Besides that CSR helps in
enhancement of employee retention that makes them more valuable employees for
the company. This enhanced commitment of the employees helps them to become
trustworthy for the company. Implementation of CSR is also beneficial for the
employees in making their prospects for the company. Thus it can be seen that
the employees work culture evolves due to the implementation and as a result,
the skills of the employees enhances.
As viewed by Kang et al. (2015), the incorporation of the CSR
in the company helps the company to attain more skilled management as CSR helps
in making skilled employees for the company. The betterment of the employee
performance will be helpful in expanding the business thus the management
leadership will be appreciated. Lu et al. (2014), supported this viewed
that CSR also helps the company to expand the innovative ideas regarding the
business growth thus it will help the management of the company to implement
new ideas for the wellbeing of the company. The enhancement in the employee
retention will help the management to get more trustworthy employees for the
company thus the performance of the business will increase rapidly.
(Source: Luo et al. 2015)
On the contrary, Kim, Song & Lee (2016) argued that the
leadership quality of the management can be enhanced using CSR in the business
as it provides proper training and knowledge regarding the business growth. Due
to this reason, the leaders will become able to lead their subordinates in the
right manner. The work culture of the company can be improved using the CSR and
due to this reason, the commitment of the management for achieving global
competitiveness will also increase accordingly. This will help the management
in taking decisions liberally for the company growth.
As opined by Korschun, Bhattacharya & Swain (2014), CSR
has a wider impact on the environment as it helps the business to develop moral
values for the society. The implementation of CSR helps in scaling down
catastrophes that are harming the environment. CSR provides knowledge to the
company about the management of waste that helps to progress the cleanliness of
the society. Besides that, the waste management is also helpful in recycling
the wastes that help the companies in energy management.
On the contrary, Krüger (2015) argued that CSR reduces the
emissions of greenhouse gases the companies that are beneficial for reducing
the environmental pollution. The knowledge of building eco-friendly offices
helps the companies to become socially responsible. The business risks can also
be mitigated using the environmental CSR and in this way, business reputation
can be improved.
As opined by Lins, Servaes & Tamayo (2017), the CFP is
eminently dependent on the financial management. The enrichment of earning is
directly depending on the capability of earning a company. In order to make
better financial future the company needs to adopt different strategies that
will benefit the financial performance. The nature of spending the money is
another vital factor that is affecting the CFP as less expense will make the
business opportunities narrow and spending too much can ruin the business.
On the contrary Luo et al. (2015)
argued that the investment in the business is also affecting the CFP as more
investment will help the company to take the decisions conveniently. Business
bodies need to store at least 10%-15% money for the security purpose that will
be acting as the backbone of the business. Besides that business administration
needs to eliminate the unnecessary purchase of things for the company. This
unnecessary costing makes the CFP weak and as a result, the performance of
corporate funding scales down.
(Source: Post & Byron 2015)
As opined by Aguilera-Caracuel,
Guerrero-Villegas & Morales-Raya (2015), systematic tax payment makes a
business stronger. Thus companies need to pay taxes periodically according to
their earning. This lawfulness in tax payment makes business more secure thus
the sustainability of the CFP escalates. In order to make the CFP progressive
the investments need to be allocated to various products of the company. This
diversification in investment is a factor that offers the CFP feasibility.
Continual cash flow is a vital factor in making the CFP viable and due to this
reason companies need to make the cash flow steady inside the business.
On the contrary Friede, Busch &Bassen (2015)
argued that the business returns are playing a vital role in making CFP stable.
In addition to this, the savings for the growth of the business also needs to
be verified periodically to make the savings backbone for the future
instabilities in the business. Beside that rise in the non-performing assets of
the companies creates an endangered situation for the companies. Thus the
financial companies need to verify the customers before lending them to continue
the growth of CFP.
As stated by Haldar&Rahman (2016), there is a profound
effect of non-financial factors on the CFP. The first factor that influences
the CFP most is decision making. The companies need to organize meetings with
the assistance of administration on the laws and rules to evolve the CFP
positively. The present and the future steps creation for achieving the
sustainability of the CFP is an important factor. In addition, the
policy-making of the company for enhancement of the growth of CFP is a vital
factor for the companies.
Hasan et al. (2016) opposed this and argued that
the industry needs to maintain a good quality of the products to influence the
growth of the CFP. Thus quality management of the company is a vital factor for
making the CFP growth stable. The companies need to focus on the standard of
the products that have been fixed by the standard maintenance board. Thus
proper monitoring by the standard maintenance board is a vital factor for the
CFP growth of the company. The companies need to pay attention to the employees'
role towards the CFP sustainability achievement. Employees are the pillars of
the company thus their role is observed as an influential factor in CFP growth.
As opined by Ilhan-Nas, Koparan&Okan (2015),
employees' dedication to the work is another significant factor for proper
enhancement of the corporate performance. In addition to that employees'
understandability about the work and the work culture is a factor that helps in
improvement of the CFP. The employee retention procedure of the company is
observed as an integral factor for the CFP management. The role of the
relationship management of the company in maintaining the good relationship
between the customer and the company is also an effective factor that controls
the corporate financial performance directly. Thus the administration needs to
observe these relationship management policies very carefully.
Simionescu (2015) supported this and added that
the business-friendly atmosphere of the business locality is another vital
factor that has a direct impact on the CFP growth. As for example, the locality
needs to have proper resource for the development of the business. This will be
helpful for the CFP improvement of the company and thus the company needs to
choose right locality before investment.
As stated by Isaksson&
Woodside (2016), stakeholders are basically categorized into two groups. The
first group is categorized as internal stakeholders and the second group is
external stakeholders. CFP has a greater impact on the internal stakeholders of
the company as they are directly engaged with the company. The employees and
the management come under the internal stakeholder's group. The performance of
the corporate finance motivates or de-motivates the stakeholders according to
the progress of CFP. The financial growth enhances the purchasing power of the
company. Thus the stakeholders become more liberal to purchase raw materials
for the company. On the other hand lack, Simionescu (2015) stated that of
purchasing power occur due to a deceleration in the CFP thus the stakeholders
become dependent on the other companies purchasing capability. Hence companies
need to maintain the growth of CFP to motivate the stakeholders in seeking more
investment for the company.
On the contrary Javed, Rashid &Hussain (2016)
argued that the external stakeholders also get influenced by the corporate
financial performance of the company as they bear the key role in the business
investment. The lack of growth in the CFP prohibits the desires of investment
of the stakeholders with respect to investment in the company. In addition to
this, the stakeholders start searching for other growing corporate financial
sectors for more profit. Hence companies need to maintain stable growth in the
CFP for seeking more investment from the external stakeholders. The media
partners are the external stakeholders of the company. Due to this reason
company needs to create progressive CFP to influence the clients of the company
with the media assistance.
As viewed by Lam et al. (2016), the size of the company
employee is directly proportional to the progress of CFP. The better
progression in the CFP attracts the number of employee and vice versa. Thus CFP
needs to have superior performance for the employment generation in the company.
CFP helps in the advancement of the salary structure of the employees and hence
a larger number of people desire to get attached to the company. On the other
hand, Aguilera-Caracuel, Guerrero-Villegas & Morales-Raya (2015) stated
that financial recession makes the CFP weaker and due to this reason the size
of the company gets reduced rapidly. Hence corporate financial performance
needs to be upgraded to the changing business requirements. Besides that CFP
also helps in employee motivation as employees before engaging with the company
search for the company revenue to get a better idea of the company. Thus
employees always desire to get engaged with the profit-making employers and CFP
helps them in getting proper knowledge about the company revenue.
(Source: Rojas et al. 2017)
On the contrary Lin et al. (2017) argued that the
cash management helps the employees to release the stress. A healthy CFP
provides employees extra motivation in working more for the company well-being.
An improved CFP helps in decision making for the company and due to this reason,
the employees become efficient in understanding the vision of the company.
Hence the employees work in the appropriate and progressive manner for the
company's prosperity. In addition to this better corporate financial
performance supports the company's employee requirements to create productive
results for the company. In this way, the employees become valuable employees
for their employer.
As stated by Linke & Jentoft
(2016), CFP of the company works as an indicator of the company growth for the
consumers. CFP provides information regarding the financial performance of the
company that helps the consumers to choose the right place for investment. In
addition to this CFP is working as a financial advisor to the consumers as
unhealthy CFP indicates the deteriorating revenue of the company and thereby
consumers become aware before investment. Besides that CFP helps in
understanding the vision of the company regarding their financial growth. The
financial policies of a company for their consumers can be easily identified
with the assistance of CFP. CFP is helpful for the consumers in determining the
company honesty regarding the business and thus consumers can choose the right
place for investment.
On the contrary, Lucas & Noordewier (2016) argued that
CFP makes the companies conscious about the consumer interest. This benefits
the consumers as the companies try to rectify their errors to take more
competitive advantage of the market. On the other hand not meeting the interest
of the consumers makes the business weaker and in this way, CFP becomes weaker.
Due to this reason stability of CFP influences the consumers in a very profound
way. CFP is also advantageous for the consumers as it increases the ease of
doing social works for the society. Healthy CFP helps the companies to do
better service for the society and in this way society gets enriched with the
help of CFP.
As opined by Miroshnychenko, Barontini & Testa (2017),
CSR and the CFP are interdependent and indispensable to each other. In addition
to this, the governance of the company plays a major role in making the
relationship better between CFP and CSR. In order to understand the
relationship between CSR and CFP, the companies need to differentiate the
stakeholders' responsibility for the society and the company responsibility for
the society. The internal issues of a company must need to be distinguished
from the social issues to compose a better relationship between CFP and CSR.
On the contrary, Muhammad (2015) argued that the
administration of the company needs to be focused on the relationship
management among the stakeholders and the society. Companies and industries
manage the stakeholders' relationship with the assistance of CSR, and the
social responsibilities also judged on the basis of CSR. Haldar & Rahman
(2016) added that the policy-making of the company is determined by the CSR
whereas the CFP helps in deciding financial policies for the company. CSR is
also helpful in improving the reputation of the company and thus a lasrge
number of consumers can be attracted using CSR. On the other hand, CFP helps
the consumers to know the financial status and financial performance of the
company. Thus healthy CFP also helps in enhancing the consumer base of the
company by providing information about the company financial health.
As opined by Ortas, Álvarez & Garayar (2015),
CSR assists the companies in evaluating the responsibilities for the
environment and the CFP status of the company helps the companies to decide the
required funding for the environmental benefit. The responsibility of the
employees for the betterment of the company is reflected by the CSR whereas the
CFP helps to determine the growth of the company. Thus both the CSR and CFP
evaluate the needs of the company for company growth. Besides that, the CFP is
determining the net profit of the company that signifies the company growth and
the CSR help the company to decide the amount they can afford to contribute to
the social development.
On the contrary Park & Ghauri (2015) argued
that CSR supports the company to meet the consumer requirements and the CFP is
helpful in accomplishing the requirements for the consumers. The external
stakeholders are also influenced by CSR and CFP. CSR enhances the reputation of
the company. Thus it helps in seeking investment for the company according to
CSR rating. On the other hand, CFP reflects the financial strength of the
company and due to this better rating of CFP; it also plays a supportive role
in bringing more investment for the company.
(Source: Simionescu, 2015)
As viewed by Rojas et al. (2017), the
relationship of the CSR and the CFP is judged on the basis of two theories that
are good management and the stakeholder contract cost. The good management
theory supports the skill development of the employees and the management using
the CSR. In addition to this good management theory also provides guidance on
company strategy making. Wang et al. (2016) supported this and stated that CSR
helps the companies to measure the social responsibility as well as the
environmental responsibility. In addition, CFP helps in money allocation for
fulfilling the social and environmental responsibilities. Besides that, the
good rating in CSR indicates the positivity in the business that attracts more
investment of the company. Thus in this way, the revenue of the company becomes
higher and due to this reason, the CFP also becomes healthier for the company.
On the contrary, Wang & Berens (2015) argued that the
reputations of the companies can be enhanced using the CSR and thereby company
size can be expanded by engaging more number of employees. This expansion in
the company size will help the company to become productive and thus the
financial stability of the company can be enhanced. This will help in
developing the CFP of the company. Hasan et al. (2016) supported this
and stated that companies try to achieve a good rating in CSR to motivate their
employees as well as making good reputation inside the market. This can be
achieved by giving proper training to their employees and meeting the employee
demands. Hence the reputation improvement will offer the company more
work-friendly atmosphere. This work-friendly atmosphere, in turn, will provide
more efficient workers that will help the company to compete in the global
level. Thus the CFP will rapidly increase due to the global competitiveness of
the company.
As opined by Ilhan-Nas, Koparan & Okan
(2015), the prosperity in the CSR index of the company enables the company to
mitigate the excess expense for the company stakeholders. Thus the cost
management will help the company in enhancing the production. Due to this
reason, the CFP of the company will accordingly increase and the profit will
become higher than before. In order to achieve this goal, the companies need to
hear the stakeholders' views regarding the company welfare. Thus the
stakeholders will rely more on the company and due to this reason, CSR rating
will become much higher.
Opposing this fact Isaksson & Woodside (2016)
argued that, companies can take the competitive advantage by mitigating the
external and the internal challenges of the company. Companies need to handle
efficiently the problems between the company management and the employees to make
the company growth sustainable. The cost transaction related problems need to
be mitigated to create a good reputation. The companies need to be engaged with
different NGOs that will help them in improving social and moral values. These
factors will help the company to improve their CSR and thus their brand value
will increase.
Javed, Rashid & Hussain (2016) supported
this and stated that improved consumer base would help the company to make a
higher profit and hence the CFP will also get increased. The companies need
good governance and need to have a broader view regarding the social and environmental
growth. Opportunistic attitudes may damage the reputation of the company. This
damage to the company reputation will reduce the stakeholders' interest in
investment in the company. Thus the CSR will get damaged due to reputational damage
and CFP will be harmed due to the reduction in investment.
Illustration of the strategies to establish good CSR
practice
As viewed by Lam et al. (2016), in order to flourish the
business in a positive manner, the companies need to make strategies that will
help them to become socially responsible figures. Companies need to train the
employees about the social values and the way they are abided, for maintaining
the social responsibilities. The leaders of the companies need to establish by
themselves few examples regarding social responsibilities that will motivate
the subordinates to follow the leaders. Lin et al. (2017) supported this and
added that as for example the leaders of the company could organize few charity
programs for supporting the backward classes of the society. This will make a
greater impact on the employees as well as in the society regarding the good
initiatives of the company. Hence company can get a large number of consumers
and the employees will become socially responsible. Thus by making this
strategic reform inside the company both the company and the society can become
beneficial.
On the contrary, Linke & Jentoft (2016) argued that the
companies need to make themselves environmentally responsible figures.
Companies occasionally need to host programs regarding the environmental
welfare that will help the employees to turn themselves into environmentally responsible
people. This will also make the environment beneficial which in turn help the
company to become eco-friendly. Lucas & Noordewier (2016) supported this
and commented that the companies need to organize few programs that will spread
a good message to the mass of the society regarding the environmental
reformation. Companies can host reforestation programs that will help in
reducing the pollution level. Reforestation will also help the company to
reduce the greenhouse gas effect in the environment. Hence this responsible
attitude will help the company to seek positive stakeholders' investment. Thus
the CSR result of the company can be enhanced in this way.
As opined by Miroshnychenko, Barontini & Testa
(2017), companies need to enhance the size that will help them in penetrating
the market. The enhancement in the number of employees will enable the
companies to create a better quality of services for their clients. In this way
the companies can make the service improvement and thus the acceptability of
the products will also boost up. Muhammad et al. (2015) supported this and
stated that the enhancement in the employee number would help the company to
expand the business in a sustainable manner. The well-developed size of the
employees will make the company enable to become a global company by expanding
the productivity. Thus in this way the company can get the opportunity to serve
more number of people within the society. This increment in the social service
will help the company to improve the CSR level.
On the contrary Ortas, Álvarez & Garayar
(2015) argued that the improvement in the company size will help the company to
get engaged with more number of people from different communities and cultures.
Thus the mixture of different communities and adaptation of various cultures
will help the company to transform themselves according to the demand of the
society. Park & Ghauri (2015) supported this and stated that the mixture of
different community and culture would help the companies to create a greater
impact towards communal harmony and this will be beneficial for the society.
Thus the CSR of the company can be ascended and the people of the society will
rely more on the ability of the company.
(Source: Simionescu, 2015)
As opined by Aksak, Ferguson
& Duman (2016), in order to make the CSR rating better the companies need
to infuse various new products periodically. Infusion of these new products
will help the company to attract the number of customers and investors due to
their uniqueness in the market. Thus the brand value of the company will also
scale up. The new products need to be introduced in the society with good
quality maintenance. In order to infuse new products in the market companies
need to have a steady cash flow and for achieving this CFP of the company needs
to be healthy.
Opposing this fact Andreu, Casado-Díaz &
Mattila (2015) opined that, to maintain the viability of the CSR the companies
need to realize the product demand inside the company. These concerns of the
companies convey their responsible attitude towards the society and thus the
society will be benefited. The responsible attitude of the company for the
society will help them to raise the customer base. Batty, Cuskelly & Toohey
(2016) supported this and stated that In order to infuse new products into the
market companies need to maintain the environmental criteria. The new products
of the company need to be introduced into the market after checking their
environment friendliness. Thus this will help the company to reduce the
environmental criteria as well as the business can be expanded in this way.
As viewed by Chung et al. (2015), companies need
to learn the talent management procedure to attain the sustainability of the
growth of the CSR. The talent management techniques of the companies will help
them to produce skilled and talented workers inside the market. Thus accelerating
the business the enhancement of the business will grow the CSR rating
accordingly and this will make the company able to maintain the CSR growth.
Dias, Rodrigues & Craig (2017) supported this and stated that companies
have to create governing bodies to support the talent hunt initiative. The
talents need to be searched from different parts of the society and this will
help the company to convey a message regarding social responsibility. The
society will come to know about the vision and mission of the company and due
to this reason, the size of the company will be expanded. This expansion in the
company size will help the company in creating stable CSR rating.
As opined by Fernandez-Feijoo, Romero & Ruiz
(2014), companies need to promote their product. This promotion of the products
within the market will help the company to become more familiar with the people
of the society. In addition to this, the promotion will create new business
relationships between the society and the company. Thus the CSR rating of the
company can be enhanced in this way by involving the society and taking the
help.
As opined by Gardberg, Symeou & Zyglidopoulos (2015), to
establish better CFP for the company the cash flow in the business needs to be
satisfying. The favorable cash flow within the business will help the company
to enhance the purchasing power. This enhancement in the purchasing power will
lead the company to expand the production of the company. Thus the company
revenue can be made higher in this way and the growth in revenue will help the
company to generate better CFP rating. Helmig, Spraul & Ingenhoff (2016)
supported this and stated that companies need to promote the products in an
exceptional manner that will help the products to become mundane to the
consumers. Thus the sale of the company will accordingly increase and the
turnover will increase for the company.
On the contrary Hond et al. (2014) argued that
the security arrangement for the employees needs to be structured stronger to
build better CFP rating. The enhanced security arrangement for the employees
will help the company to attain the trust of their employees and due to this reason
employees will be motivated. This motivation within the employees will generate
the dedication towards the company work. Thus the production of the company can
be expanded in this way. This improvement in production will help the company
to intensify the profit of the company. Thus the profit, in turn, will help the
CFP to become more viable and the viability will attract the investors. Husted,
Montiel & Christmann (2016) supported this and commented that, companies'
enhanced security would help the company to increase the size of the company.
This expansion in the company size will help the company to create new ideas
regarding the product. Besides that, the new products can be promoted with the
help of expanded size of employees in an enriched manner. Thus the customer
base will be intensified accordingly and the profit will also get enhanced.
This enhancement in the revenue will help the CFP to become more stabilized.
As opined by Kiliç, Kuzey & Uyar (2015),
the companies need to distinguish the clients in order to form enhanced CFP.
The favorable customer base will help the company to attain enhanced revenue.
Thus the growth in the revenue will help the company to enroot the business
within the society in an exceptional manner. This unique business strategy of
the company will distinguish the company from other companies in the market in
a positive manner. Thus the CFP of the company can be enhanced by mitigating
the mischief consumers from the business. Kim (2014) supported this and stated
that the clients need to be distinguished on the basis of their purchasing
capacity. The company needs to be careful with their deal with the customers.
Besides that, the customer management relationship must be maintained in a
satisfying manner. This will strengthen the consumer base and the revenue will
also elevate accordingly. The increment in the revenue will cause increased CFP
rating for the company.
As stated by Oh & Park (2015), the
financial status of the companies needs to be monitored periodically. According
to the financial status of the company, companies need to design their project.
As for example during the shortage in the finance companies need to buy only
the essential commodities that are helpful for the growth of their business.
This well-maintained finance will help the company to achieve more profit and
thus the CFP will escalate. Pan et al. (2014) supported this and viewed that
the companies need to give proper training to their managers for appropriate
maintenance of the company finance. The cost accountants and cost consultants
need to be engaged with the company as per company objectives to make the
growth of finance more sustainable. Thus the conventional methods of
maintaining the finance will enable the company to generate more revenue and
hence CFP value can be ascended in this way.
On the other hand, Plewa et al. (2015)
argued that besides the financial management, companies need to focus on the
non-financial matters to accelerate the revenue. Companies need to host
meetings regarding the financial policies of the company to enhance the company
prosperity. In addition to this, the managers of the company need to organize
meetings with their subordinated regarding their visions about the company
policies. These meetings will enrich the company with various ideas about the
growth policies. Thus by selecting the accurate method companies can enhance
the growth and thus CFP will also get increased due to the rectified policies
of the company.
The significance of the literature is it is based on the
understanding of the relationship between the CFP and the CSR in a company.
However, during the research, many problems regarding the growth of CSR and CFP
and their solutions have been missed out. The research did not shed light on
the implementation procedure of the growth enhancement for the companies. The
literature did not cover the time-requirement for total growth implementation
process. In addition to this, the literature did not focus on the impacts of
CSR on the society deeply. The literature also missed out the effect of CFP on
the environment and the society. The acceptability of the CSR method among the
mass is not analyzed in the literature. The literature did not shed light on
the monetary requirements of the companies to adopt the CSR and CFP inside the
business.
Thus it can be concluded from the literature that the CSR and
the CFP are co-related in a company. The companies need to make themselves
aware of the growth procedures of the business. The impacts of the CSR on the
society have been discussed in the literature and the effect on the
stakeholders is also mentioned in this literature. In addition to this,
internal and the external factors that are affecting the growth of the CSR are also known. The benefits of the CSR implementation in
the business focused on this literature. The impacts on the company due to the
adaptation of the CSR have been well discussed in the literature. Various
procedures to develop the CFP to attain the sustainability in the business
growth have been focused during the research.
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APPENDIX
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