Incorporating Role of Stakeholders into Corporate CSR Strategy For Sustainable Growth: An Exploratory Study

Abstract

In today's modern day context, Corporate Social Responsibility (CSR) become the mantra for businesses as it can be seen as a strategic approach for firms to be succeed in their business endeavours. Hence, it remains the most widely used concept to refer to organizationalstakeholder relationships. An understanding about a stakeholder approach to CSR is an important means for a firm to enhance their commitment to operate in an economically, socially and environmentally sustainable manner. In support with above arguments, this article presents a theoretical proposition based on stakeholder theory for better CSR and firm performance. By drawing upon classic work in the field, the paper offers conceptual discussion and then systematically develops a means of stakeholder approach into corporate CSR strategy. The aim of this paper is to demonstrates the need for a firm to enhance further understanding about the role of stakeholders in the context of corporate CSR strategy, which is increasingly necessary in view of the fact that business entities are absolutely essential for economic development, but at the same time, their business activities pose a huge impact to society and the environment. Thus, firm's CSR disclosure is a pivotal tool to establish a relationship of working together with the stakeholders that ensures mutual benefit and continue to be a firm that is needed by society. This article contributes to the literature by providing a fundamental explanation of how a business should embrace responsibility for the impact of its activities on the stakeholders across various levels of the value chain. By doing so, firms are offered a means to take a much more proactive approach to CSR through the stakeholder approach which is precisely helpful in measuring the effectiveness of any CSR initiative on the society to foster business sustainability.

Stakeholders, stakeholder theory and Corporate Social Responsibility (CSR)

“…Drawing from Wendell Wilkie, Bowen (1953) defines CSR as organization's social obligations, which is conceptually and operationally diverse. Some others define CSR as actions partially taken beyond the economic or technical sense (Keith, 1960), casting the firm's shadow on social scenes (Eells & Walton, 1961), and paying certain responsibilities beyond the economic and legal obligations (Freeman et al, 2010;McGuire, 1963;Reed, 1998;Tanggamani et al, 2017). Like Bowen's (1953), they lean on Wendell Wilkie but the words or phrases in italics rarely show explicitly the current criticality of CSR in organizations as a competitive weapon, a mantra for business success, a continuing commitment and a long-term action in the contemporary business setting.…”

“…The stakeholder theory brings a new dominant world into CSR that defines corporate obligations and responsibilities to every stakeholder and integrates same into strategy. Scholars (Freeman, 1984;Freeman et al, 2010;Jones, 1995;Reed, 1998;Tanggamani et al, 2017) attest that such insights explain and predict the relationship between CSR and stakeholders since corporations are continuously involved in CSR activities to build or rebuild trust, support and cooperation from stakeholders. Freeman (1984) proposes that stakeholder theory explains firm's motivations with respect to CSR disclosure; emphasizing that corporate sustainability and survival predominantly lie on relationships with, and value-delivery to, stakeholders.…”

“…The emphasis on stakeholder interest may imply strategic trade-offs; hence integration and channeling of every interest in the same direction for competitive advantage qua sustainability (Donaldson & Preston, 1995;Freeman et al, 2010), given that CSR is obligatory and aims at higher responsiveness to stakeholders (Carroll, 1994;Freeman, 1984;Tanggamani et al, 2017). Scholars (Vermeulen & Writjes, 2016;Zhao, 2021) posit that corporate behaviour to stakeholders requires legitimate integration of extant theories to accommodate systems and environmental appeals, as well as multiple stakeholder groups at different levels.…”

“…Because relationships and treating stakeholders as individuals and groups that contribute to the corporation's wealth (Freeman, 1984;Ormiston & Wong, 2013) are key; then, the stakeholder approach and CSR management systems are strengthened and moderated by stakeholder theory, with the utmost goal of recognizing economic, environmental, and social aspects of corporate activities. In its criticality to CSR, corporate sustainability and crisis management, scholars (Freeman & Dmytriyev, 2017;Ormiston & Wong, 2013;Tanggamani et al, 2017) affirmed that stakeholder theory enjoys huge scholarship ahead of other theories. Analyzing corporations exclusively from their own perspective requires stakeholder theory to describe and predict corporate behaviour and outcomes in terms of stakeholders' nature, their management, values and relative influence on decisions.…”

Pengaturan CSR Dalam Rangka Percepatan Pembangunan Sosial Dan Lingkungan Di Indonesia

“…Selain itu, penerapan konsep CSR di Indonesia diatur melalui Undang-Undang Perseroan Terbatas. Untuk memberikan dampak yang signifikan terhadap masyarakat, perusahaan perlu merangkul inisiatif CSR tidak hanya sebagai kewajiban tetapi lebih sebagai alat strategis yang melayani kepentingan perusahaan dan masyarakat (Tanggamani et al, 2017) (Faisal et al, 2019). Selain itu, diperlukan investasi dalam pelatihan dan pendidikan untuk meningkatkan kesadaran akan pentingnya CSR dan penerapannya yang tepat.…”