The Impact of Social Responsibility on Business Performance
The challenges of 21-st century that many businesses face are dynamic and heterogeneous. As times goes on business models are not focused only in maximizing profit but to create value for the society. It is a long process when you have to consider potential stakeholders. Issues of social responsibility are very sensible for the public opinion and can affect company’s image. The main purpose of this paper is to analyze the impact of social responsibility in firm’s growth and image. The company which will be analyzed demonstrates that there is no big difference regarding profit between social businesses and private enterprises.
THE BIG ISSUE is the pure example of how social responsibility can lead to a very profitable business. “The Big Issue is a business solution to a social problem, demonstrating that an organization can succeed whilst being simultaneously driven by commercial aims and social objectives. ” Discussion The Big Issue is a magazine founded in 1991 with the main aim to help rough sleepers on the streets of London. The main articles of this magazine are related with social issues such as unemployed people, quality of food & drink, environment protection, charity, lifestyle etc.
The distribution channels are managed by homeless people (vendors) who work separately from the magazine. The vendors go through a process of recruitment and training before they begin selling. Vendors buy the magazine for one Euro and they sell it for two Euros but are not considered as Big Issue employees. No money is reimbursed for the unsold magazines but they are trained in advance how to manage the work and take responsibility. From this activity the Big Issue earns money which allows promoting and expanding its issue all over the world.
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Nowadays they operate in Australia, Japan, Kenya, Korea, Malawi, Namibia, Ireland, South Africa and Taiwan. The expansion of this business idea shows the flexibility and sensibility of public opinion toward social responsibility all over the world. Research question Can social responsibility increase company’s profit? What about image? Can we extend social responsibility concept in many sectors of economy? It began with a social issue and now is making considerable profits. They built the concept considering the triangle: Society, Big Issue and people in need.
They focus in social issues and help people in need to change their life. Public opinion is very sensitive to social problems, pays attention and gives credibility to the initiator. As long as the Big Issue will focus in social responsibility and find new issues to develop its concept it can be an important profit centre. On the other side image is an asset which differentiate and add value to the company. The perceived value of a firm is build through a transparent, long lasting and loyal agreement. To have a business is something but to have a vision and follow it is very special.
To create money in a short term may satisfy the desire of your boss but will not offer the so wanted positive image and steady company’s growth. The Big Issue began two decades ago, now is spread in many continents and has a steady growth. Network has become a crucial factor in our life and an effective tool of communication between people. Current business models which are driven by social activities can be spread in every field of economy. Tom shoes activity is another concept very close to Big Issue which works successfully. They sell shoes and for each pair you buy, another one will be given for free in poor countries.
Research topic Examples of small and large firms which pay attention to environmental issues, mission statement, integrity, poverty reduction or charity are innumerable. As an economist I would analyze the relation between social responsibility and company’s image or profit. It is interesting to observe how these independent variables (actions related with CSR) influence the company’s growth. Skeptical voices argue that is hard to measure these relations and for more the objective’s firm is to increase its profit within the rules & laws of a country.
There is a big difference between Non Profit Organization (NPO) or public organizations and private owned enterprises. If you choose to be a private enterprise the aim is to increase the profit and not involve in charity activities. The customer sensibility toward social businesses and perception of their products determine the existence of these businesses. Is not a surprise that in developed countries these business concepts are widely spread compared to developing countries. The level of education, development and culture are higher in England rather than southeastern countries.
To apply the Big Issue model in developing countries will not lead to immediate success due to social and cultural differences but future progress is very likely to happen. Problem definition Concept may be brilliant but how to promote and make it known especially in the 21-th century. This concept was thrown into market in the early 90’s and it was very early to attract public attention but the founder had a vision which was based on American example. Creating a company which helps homeless people change their life, have a shelter and vision seemed impossible.
The symbiotic cooperation between social activity and Business Company worked perfectly and expanded year after year. The value added to the society is key toward success of this business concept. To the homeless or hopeless people is given a chance to change their life, live and work properly as before. Nowadays it is very easy to spread the word and introduce new concepts through the web. The challenge is to find something new which will have immediate attention of the public opinion. Conclusion Corporate Social Responsibility is a crucial factor which determines the success, image and profit of a company.
The challenges of 21-st century and especially the second decade impose attention on behalf of the companies to the CSR issue. The differences between countries in culture, education or level of development determine the attention and perception to CSR. The dynamic changes in developed countries show that public opinion is sensible and conscious of social issues. In developing countries, social responsibility concept is some step backwards compared to developed ones. Anyway, as the economic or development progress does not go with the same pace all over the world, the social responsibility will follow the same steps.
The case of Big Issue may be a practical example that may be copied in developing countries. The first one to introduce it as a new concept will have a comparative advantage toward others. As the concept will get known, the company will grow and attract other companies to enter the market with same principle. That is the way it will be spread around the world, following examples of other countries and adopts it in different cultures.
References
http://www. bigissue. com/History_34. php, accessed on March 20-th CSR workshop held in MSM
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