Corporate Social responsibility (CSR) In Entrepreneurship
Corporate Social responsibility (CSR) In Entrepreneurship
Entrepreneurship and corporate social responsibility have existed for analyzing the common economic and social elements fundamental in developing a solution for the society (Karthikeyan & Sujeetha, 2018). Through CSR efforts, entrepreneurs can provide economic, social, and environmental benefits through the products and services provided to society. This report looks to discuss the integration of CSR into the development of a new company that intends to venture into the design and production of solar-powered cell phones. The report discusses the primary CSR issues that are fundamental for this entrepreneurship business, the stakeholders affected by the CSR issues, and the respective impacts incurred. The entrepreneurs must understand what is expected of them in terms of CSR, considering the mutual benefits for different stakeholders.
Background of Situation
Two environmentally conscious entrepreneurs are looking to start a company that will design solar-powered cellular phones. These cell phones are expected not to use wireless charging but rather recharged by the sun (Cragg, 2019). The mobile phones will run on the Android operating systems. These entrepreneurs have sought important insights related to integrating CSR into their operations such that the aspect becomes fundamental in different decisions that need to be made.
These primary decisions relate to the target customer group, its price and specifications, the product release cycle, the raw material suppliers, and the assembly factory. Therefore, considering an element such as the product release cycle, the entrepreneurs need to determine how that will remain technologically relevant and ahead of their competitors. Regarding the raw material suppliers, the entrepreneurs are looking to reduce the costs of affiliates with direct materials. Regarding the assembly factory, the entrepreneurs are asking about minimizing production expenses and how they could eliminate the factory’s building costs, hence looking to outsource the manufacture of their innovative cell phones. In regards to the targeted customer group, the entrepreneurs are looking to determine the appropriate target group and the right affordable price that will cater for the high-quality products
Overview Of Corporate Social Responsibility (CSR) Frameworks
Issues that May Have CSR Implications
One issue with CSR implications is the absence of adequate resources such as finances, human capital, knowledge, and expertise (Yuen & Lim, 2016). According to Lam & Lim (2016), the effective implementation of CSR frameworks requires many resources. Nevertheless, the budgets focussed on implementing CSR are commonly insufficient and outcompeted by other initiatives that warrant greater returns in the investments. Also, a shortage of qualified human capital with the relevant knowledge and experience to produce specific products adds to implementing CSR.
For these entrepreneurs, the absence of resources is already becoming a challenge since the decisions concerning the raw material suppliers and the assembly factory are already inclined to choose the cheapest options. The entrepreneurs have asserted selecting the suppliers for their direct materials considering those who submit the lowest bids. They are also looking to reduce the production expenses and do not want to build their factory. Therefore, they prefer outsourcing the production function for their innovative cell phones in China. Nevertheless, these decisions affiliated with the lack of resources are highly likely to impede CSR implementation. This is because it is not easy to outsource and have cheap suppliers and expect them to do their operations in a manner that upholds the economic, legal, ethical, and discretionary expectations that society has on entrepreneurial organizations.
The second issue that impedes the implementation of CSR by the entrepreneurs is the high regulatory industry that will make it challenging for entrepreneurs to be socially responsible (Yuen & Lim, 2016). In the development of mobile phones, there are erratic government regulations concerning licensing, permits, and business regulations that are major obstacles. The development of phones is actually under the technology industry that is highly regulated, implying that many stakeholder concerns relating to the environment, safety, and the well-being of employees have been sufficiently handled. Furthermore, the environmental and safety performances are constantly being increased through additions or amendments to the regulations, prompting the industry to deal with the incoming standards.
While adhering to the standards will provide preventive benefits, many technology companies are still working towards being fully compliant with the environmental regulations and avoiding the punitive consequences. There is still a limited number of technology companies, especially those in the production of cell phones, that have genuinely exceeded the regulatory requirements demonstrating how challenging it can be.
Another primary challenge is how complex it can be to convey the CSR or sustainability plan in conjunction with the accompanying outcomes in a concise and meaningful manner that is fundamental to the stakeholder (3BL Media, 2022). As a new entrepreneurship, the three primary forms of communication encompass marketing communication, management communication, and organizational communications. The main challenge in management communication is that not every top leader will understand their role in communicating and demonstrating CSR initiatives (3BL Media, 2022). Within marketing communication, the challenge mainly relates to the perspectives of the targeted consumers. Consumers always have concerns of trust, authenticity, and transparent communication, which will impede entrepreneurship from fully articulating their CSR initiatives,.organizational communication challenges related to building sustainable business communications will ensure streamlined stakeholder engagement. Failing to properly consider the audience, strategy, and the needed resources before launching any marketing strategy for communications to stakeholders will lead to unfocused communication that will lose its steam quickly. Suppose these entrepreneurs cannot communicate what they want in their CSR initiatives to their stakeholders. In that case, this already impedes their progress, considering that support from these stakeholders remains fundamental.
These three issues were selected because they are fundamental in establishing the new company and the progress they will make in regards to developing their new product while adhering to the CSR principles.
Stakeholders Affected By The Three Issues And Assessment Of The Impacts
The term ‘stakeholders’ refers to the groups and persons that could affect or are affected by attaining an organization’s mission. These stakeholders act either formally or informally and individually or collectively (O’riordan & Fairbrass, 2008).). Nonetheless, they remain an important element of the organization’s external environment that could bring positive or negative effects. Their diverse nature and the range of actors intrinsically bring a challenge for entrepreneurs looking for a clear path that understands their responsibility towards each one of them.
Regarding the three fundamental issues that would impede the implementation of the CSR frameworks in the organization, several stakeholders would be affected. The first important stakeholder is the targeted customer and its entire group. The entrepreneurs have indicated that they are looking to sell their phones to the younger demographic and college students. Their objective is to provide a phone with the features these individuals will desire, such as high-quality front and back cameras, while pricing them at affordable prices below the market price. Nevertheless, producing this phone and selling it at a lower price may be challenging, especially when integrating the CSR factor into the production process. Generally, the absence of resources will limit the organization in accessing raw material suppliers that are cheaper but produce environmentally friendly items. Many suppliers that have incorporated environmentally friendly processes are expensive, yet the entrepreneurs acknowledge not having numerous funds. The outsourcing option also is impeded since while entrepreneurs are evading setting up their production plant, outsourcing to a manufacturer that can produce the exact product they want at a cheaper option will be expensive. The entrepreneurs being forced to compromise on the products they could produce due to a lack of resources such as funds and support will lead to customers receiving substandard cellular phones that are not meeting the intended objective.
Customers will also be affected by the poor communication challenge. Suppose these individuals cannot understand one’s vision regarding the kind of product one wants while still upholding the CSR principles. In that case, it is possible that they will not appreciate the product, its features, and their respective prices. The organization is required to streamline its communication process such that the top management, the employees, the customers, and even the suppliers understand their intended objective in regards to CSR. a proper understanding will prompt them to understand the product better and play their role accordingly so that the organization can advance fully.
The shareholders are also an important part of the CSR process and will be affected considerably. In this case, the two entrepreneurs will make up the organization’s shareholders as they are the initial investors for the company. Notably, with the organization having to deal with high and dynamic regulatory standards, this would mean that the possibility of obtaining higher returns on their investments while building a good reputation is limited. Generally, this entrepreneurship starts at limited resources considering they need to set up the businesses. Most financial, human capital, and time resources would be geared towards manufacturing the phone with the desired features and marketing to the targeted customer group. As they try to be compliant with different regulations, this means that their profit margins are reduced. The development of a new product brand is socially responsible and will take up more resources while bringing back returns for their investments.
Its other important stakeholders are the government and the regulatory authorities governing its operations. In conjunction with upholding the stipulated guidelines, the business relationship with the state and the local and international institutions will make the organization a responsible member of society in which it operates and the global community aspects (Zukauskas etal., 2018). Notably, the absence of resources, dynamic regulations, and even poor communication of intended objectives could affect this relationship. When the organization is deemed not to be adhering to established guidelines, that affects their reputation if it is considered not to be socially responsible. Therefore, the business must understand how it will act according to the regulations to build a better relationship with the state that comes with numerous benefits.
Suppliers are also important stakeholders even if they come forth in the rank of importance. The raw material suppliers will determine the ultimate product that is produced. Therefore, when an issue such as communication is not streamlined in terms of they do not understand the kind of product that is to be produced or they do not know that the business is working towards being socially responsible, then it is possible that they will not put efforts to ensure everything acts as power these objectives.
Despite the importance of CSR in all kinds of businesses, it is evident that the implementation process can be challenging. This is due to various challenges related to either an absence of sufficient resources, poor communication, and stringent regulations. Subsequently, these challenges impeded the interactions of the business with its stakeholders. It is advisable that the organization communicate well with its stakeholders on its objectives so they can obtain support that will help deal with other implementation challenges.
3BL Media. (2022). What are the biggest challenges to communicating CSR… Retrieved from https://www.3blmedia.com/blog/info444/what-are-biggest-challenges-communicating-csr-social-media
Cragg, O. (2019, August 5). Forget wireless charging: Future Xiaomi phones could be recharged by the sun. Retrieved from https://www.androidauthority.com/xiaomi-solar-phone-1015790/
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