Introduction
The issue of corporate social responsibility (CSR), manifested as a firm’s caring endeavours for its workers, stakeholders and the environment, is of momentous value for academics and contemporary business practitioners (Delios, 2010).
Prevalent external observations that a firm continually engages in socially irresponsible practices often bring undesirable ramifications for the firm in question, since external literature demonstrates that an entity’s success – indeed its survival in the harshly competitive business environment – largely depends on satisfying normative demands and expectations arising from the environment (Lange & Washburn, 2012).
When organisational action on social and environmental domains seems ethically untenable to the standards set by stakeholders and other constituents, the firm not only risks losing key members of staff and potential employees, but also its outside endorsement, reputation and support, as well as its customers and investors (Raman, 2007). T
hrough highlighting Coca Cola’s CSR initiatives, the present paper purposes to demonstrate that social responsibility, rather than economic conquest, provides the needed impetus for modern-day organisations to reach the pinnacle of business success.
Coca Cola: Precursors to its Social Responsibility Initiatives
With a huge and sustained presence in thousands of communities across more than 200 countries worldwide, Coca Cola, headquartered in Atlanta, is undoubtedly the world’s largest multinational corporation interested in the soft drinks and beverage industry (Madhavan, 2012).
In 2010, the corporation was ranked in the 70th position by Fortune 500, with sales revenue of $35,119 million and profits of $11,809 million (CNNMoney, 2012). The company has a labour force of 71,000 employees, with 83 percent of them working in other countries outside the United States (Dorfman et al., 2012).
Despite Coca Cola’s huge presence and attractive profits, it can be argued with near certainty that the journey to financial independence and world dominance has not been rosy, especially prior to the corporation’s realization of the importance of incorporating social responsibility initiatives into its business processes.
Extant literature demonstrate that the global soft drinks giant has come under attack in various countries including the United States, Columbia, Guatemala, Zimbabwe and the Philippines for engaging in socially irresponsible actions, such as discriminating against black employees, poor working conditions for migrant workers, as well as the assassinations of trade union officials and union-affiliated employees (Raman, 2007).
In India, for instance, Coca Cola’s operations were halted in the 1980’s after it became apparent that the company was engaged in thoughtless ecological degradation that laid the land to waste, not mentioning that the poisonous content of the soft drinks received sustained condemnation from villagers, non-governmental organisations and trade activists (Madhavan, 2012).
The corporation was only able to resume operations in the country in 1991 after it demonstrated a sustained imperative to care for society. Recently, Coca Cola has been on the spotlight because its sugary beverages and soft drinks have been implicated in the global obesity crisis (Dorfman et al., 2012).
Coca Cola: Strengths of Corporate Social Responsibility
Coca Cola has been able to rise above the challenges presented above through the employment of elaborate, expensive, multinational CSR initiatives (Dorfman et al., 2012). Extant literature demonstrates that CSR “…ensures that a company does business in an ethical manner and is accountable for the social and environmental impacts that the business creates for the society” (Madhavan, 2012, p. 94).
Through CSR initiatives such as “Live Positively”, Coca Cola now sees its sustainability initiatives first and foremost as the right thing to do in a world where populations are growing rapidly, natural resources are stressed beyond limits, societies are increasingly forced to do more with less, and consumer demands and expectations are expanding beyond the reach of most companies (Dorfman et al., 2012).
If these assertions are analyzed using the cost-benefit lens, it becomes obvious that sustainability efforts, rather than the pursuit of financial success, is core to the business continuity of Coca Cola since business and financial success can only be sustainable if the people and communities interacting with the corporation are sustainable and enriched along the way.
Coca Cola’s past mistakes in countries such as India and the Philippines, as well as the resulting consequences in diminished revenues and tarnished reputation (Raman, 2007), amicably demonstrate that organisations that act in a socially irresponsible manner not only find it challenging to attract key staff, customers and investors, but also risk arming competitors with deadly arsenal that could be used against them in competition (Lange & Washburn, 2012).
The corporation’s counter-normative overtures in India, for instance, led to undesirable consequences in the form of “…lawsuits, financial losses through settlements and sales declines, increases in the cost of capital, market share deterioration, network partner loss, and other costs associated with negative reputation” (Large & Washburn, 2012, p. 300).
All these consequences bear a financial underpinning because an organisation cannot purport to be profitable if it loses its key members of staff and customers, or if its market share become obsolete as was the case of Coca Cola in India during the decade of the 1980s. It therefore follows that CSR initiatives, rather than profit concerns, should be the cornerstone for business success and prosperity.
Today, more than ever, it is common knowledge that CSR initiatives “…can boost a firm’s bottom line both directly through sales and indirectly by moderating the risk for regulation and improving the overall business climate” (Dorfman et al., 2012, p. 2).
This assertion, more than anything else, attempts to demonstrate that CSR initiatives can indeed be used to trigger organisational performance and competitiveness, with the view to accumulate more profits for the firm as well as its shareholders.
However, a firm’s financial success cannot be used as a measuring stick for engaging in CSR activities. A case in point is the Coca Cola’s “Live Positively” CSR campaign, which is embedded in the firm’s commitment to trigger a positive difference in the world through focusing in critical spheres of Marketplace, Workplace, Society, and Environment (Banerjee, 2010).
The “Live Positively” campaign has not only provided tips for the corporation’s consumers to live active lifestyles and protect the environment, but continues to support charitable projects in underserved communities, with the view to encourage healthy living (Dorfman et al., 2012).
It is needless to say that this campaign has shielded the company from accusations of causing or fuelling obesity among the youth. However, the implication for practice is premised on the fact that the campaign has enabled Coca Cola to drive its profits and market share, and not vice versa.
Another important point, which is intrinsically related to the previous one, is that CSR initiatives help organisations to direct the responsibility for any undesirable consequences from the corporations onto its direct as well as indirect consumers (Large & Washburn, 2012).
Critics may counter this argument by saying that it is ethically inappropriate to do that, but the bottom-line is always premised on image and reputation protection. As postulated by Raman (2007), no organisation can afford to remain profitable when its reputation is at stake, and thus all attempts must be made to ensure that the image and reputation are shielded.
In the Coca Cola’s case, academics and mainstream commentators have argued that the “Live Positively” campaign is only a mere tactic that is used by the soft drinks giant to redirect the responsibility for health outcomes from the firm onto its customers, “…and externalize the negative effects of increased obesity to the public” (Dorfman et al., 2012, p. 3).
This argument may be true depending on the context of analysis; however, the bottom-line as per the requirements of this essay is that Coca Cola has been successful in using the CSR campaign to demonstrate that consumer’s bad lifestyle habits, rather than the firm’s sugary soft drinks, are to blame for the increased cases of obesity.
This way, the company is able to maintain its market share and, by extension, drive profitability and competitiveness.
Conclusion
The arguments used in this paper have demonstrated that CSR initiatives, rather than economic or financial conquest, provide the needed impetus for contemporary firms to reach the pinnacle of business success. The major implication is that firms must always have in place comprehensive CSR policies and strategies if they expect to spur economic and financial success.
Of course profitability and performance are important constructs for shareholders since a firm’s existence can only be justified if it is able to provide financial returns to its owners (Gilbert et al., 2011), but the present paper provides useful insights on how firms can go about strengthening their profit margins by first reinforcing CSR initiatives.
Coca Cola has been able to maintain a huge global presence and an attractive revenue base by following this orientation.
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