To comply with society’s expectations, today’s businesses are expected to go beyond their self-interests and consider their social responsibilities. At the same time, the economic, ethical, legal and philanthropic performance of the firms is deeply bound (Thorne, Ferrell, & Ferrell, 2010, p. 4). For this reason, it is hard to define which of the four types of business social responsibility is the most important. In today’s environment, businesses cannot ignore any of these types of responsibilities without affecting the well-being of the entire company. That is why, according to McWilliams and Siegel (2006), “scholars and managers have devoted greater attention to the strategic implications of corporate social responsibility” (p.1). For example, a company that neglects the animal rights and uses animal experimentation is likely to face the challenge of public protests. Furthermore, regardless of the quality of the company’s products, customers can reject buying its goods due to their ethical concerns. Therefore, the definition of the most important type of business social responsibility is a tricky question which requires consideration of the mutual relationship between different types of responsibilities.
While all of the four types of social business responsibility, namely economic, ethical, legal and philanthropic, are important for today’s companies, the legal responsibility can have the strongest effects upon the company’s success. The legal responsibility deals with the violation of any of the remaining three types of norms, but in their extreme forms. Currently, the legal system does not regulate all minor violations of ethical, economic and philanthropic responsibilities. Certainly, it does not mean that businesses can neglect any of them. However, the violation of legal requirements would have the most serious consequences for the company’s performance. Importantly, the firms should go beyond the nicely written mission statements and include the adopted business social responsibility inappropriate strategic implications.
Reputation management is the mechanism through which the firms establish and save their good names, affecting the stakeholders’ opinions. The company’s image is a critical issue which requires careful attention of managerial staff.
Positive stakeholder relationships can have both long-term and short-term implications to attract or repel stakeholders (Thorne, Ferrell, & Ferrell, 2010, p. 53). There is evidence that the prior high reputation allows companies to experience higher market rewards in case of positive surprises and lower penalties in case of negative surprises in the market (Pfarrer, Pollock, & Rindova, 2010, p. 1132). Importantly, every single instance of interaction with stakeholders can be essential to building the company’s reputation. Stakeholders can exercise significant pressures upon managers because they can frequently change their views by reassessing the outcomes of the company’s performance. Therefore, careful attention to possible stakeholders’ responses should become the cornerstone in planning the firm’s operations. The main four elements of reputation management are organizational identity (how the company wants to be perceived), organizational image (how the company is actually perceived), organizational performance (the process of company-stakeholders interaction) and organizational reputation. These four elements of reputation management deserve serious consideration because each of them will have significant effects upon the stakeholders’ attitudes and corresponding company’s performance.
Reputation management, defined as the process of building and sustaining company-stakeholders relationships, plays a crucial role in the company’s performance. For this reason, today’s firms realize the significance of stakeholders’ responses to their image, mission and products or services and consider the main elements of reputation management when developing their strategies and performing operations.
Reference List
Pfarrer, M., Pollock, T., & Rindova, V. (2010). A tale of two assets: The effects of firm reputation and celebrity on earnings surprises and investors’ reactions. The Academy of Management Journal, 53(5), 1131-1152.
McWilliams, A. & Siegel, D.S. (2006). Corporate social responsibility: Strategic implications. Journal of Management Studies, 43(1), 1-18.
Thorne, D., Ferrell, O., & Ferrell, L. (2010). Business and society: A strategic approach to social responsibility and ethics. Boston, MA: Houghton Mifflin Company.