Corporate Social Responsibility (CSR) has progressively become known as a germane issue in the corporate world for the past decade. Making the world a better place, socially and environmentally, is a global accepted phenomenon. According to Porter & Kramer, 2006, “corporate social responsibility has emerged as an inescapable priority for business leaders in every country.” The objective of this review is to discuss benefits of CSR on the hotel industry.
What is CSR?
Corporate social responsibility involves the ethical and non-commercial responsibilities of businesses as they relate to society in general.
It is based, on a triple bottom-line approach for companies — people (society), planet (environment) and economic (profit) (Gard McGehee, Wattanakamolchai, Perdue, Onat Calvert, 2009; Kuriakose, 2007; Clark, 2006). Smith posited that CSR implies the need for businesses to contribute to the communities and markets that have made them successful (cited in Gard McGehee et al, 2009, p.417); consequently, companies must consider the wellbeing of society in addition to their concerns for owners, investors and any shareholders.
According to Holcomb, Upchurch and Okumus (2007), the value of CSR is in achieving corporate sustainability in order to create long-term shareholder value. This involves exploiting the market’s potential for sustainable product and services, while successfully reducing and avoiding associated cost and risk.
The Gap – The Negative Impact of Not Engaging in CSR Porter & Kramer (2006) posit that, “Frequently, though, CSR efforts are counterproductive, for two reasons. First, they pit business against society, when in reality the two are interdependent. Second, they pressure companies to think of corporate social responsibility in generic ways instead of in the way most appropriate to their individual strategies.” This leads to a three-fold impact on companies not engaging in CSR– bad reputation, lower profits and customer cynicism.
Examples of CSR in Hotels
The idea of CSR has gained traction within the hospitality industry. Consequently, many hospitality businesses, including Sandals and Starwood Hotels, are developing CSR programs and strategies in an attempt to boost customer loyalty, conserve environments, reduce social problems and contribute to the development of communities. Several initiatives include the adoption of linen exchange programs, the use of environmentally friendly cleaning agents and energy conservation through the installation of energy saving devices (White, 2006). An example is the new eco-friendly Element Starwood Hotels and Resorts that contributes to sustainability through the implementation of the 3Rs practice of reduce, reuse and recycle.
The Benefits of CSR to Hotels
Companies that practice CSR achieve better reputation, improved brand image, increases in sales, more visible to investors, and increases in customer loyalty. It can also lead to enhanced public relations and benefits. For example, due to LaRosa’s Pizzeria’s contribution to community growth and development, two hundred volunteers, who had benefited from LaRosa’s generosity over the years, came to the aid of LaRosa’s Pizzeria after a fire. The volunteers made up for the short fall that resulted from inadequate insurance, with work and loans and saved the pizzeria from bankruptcy (Detwiler cited in Lynn, 2009 p. 2). Thus, companies deemed good corporate citizen are attractive to new customers and workers, and assist in raising staff morale, and have lower operating expenses.
A recent study by a University of Chicago professor published in Management Accounting revealed that companies that are perceived by the public to demonstrate more socially responsible business practices and ethics are likely to perform financially better than those who do not. In 1995, a study conducted by Vanderbilt University found that eight of ten cases of low-polluting companies financially outperformed their dirtier competitors (Brands that do good, 2003; Act responsibly, 2004; Clark, 2006). As such, consumers prefer to do business with companies that have good CSR reputations
Recommendation for CSR in Hotels
In making decisions, management, should consider environmental outcomes, which limit and/or reduce the impact of operations on the natural environment. Hotel’s management need to implement responsible measures because of high cost associated with electricity consumption for heating/cooling, lighting, cooking, etc., which levies pressure on local resource and increase costs. Thus, the impact on the total cost consumption of a hotel from energy conservation measures is strong and more direct (Kasim, 2006). Consumers are progressively more concerned with how companies make their money and are expecting businesses to engage in responsible activities that will limit, as well as lessen their social, ethical, and environmental impacts on society and the community.
White, (2006) cautions that, “that travel-savvy consumers are more environmentally aware and that having environmental and social programmes in place are a consideration in selecting accommodation.” Furthermore, any CSR program must involve the employees in order to achieve success. White (2006) also points out that, “It’s not enough for senior management to devise new ways to engage customers, to make these programs work; they must involve employees at all levels. This means ensuring that everyone in the company is informed about CSR policies and practices and are involved in implementing them.”
Corporate social responsibility means different things to different people. The underlying themes regarding CRS are that it is good and necessary, activities within which businesses participate should not be viewed or undertaken lightly, but rather, serious consideration must be given to how best CSR should be implemented. To be effective and deemed as true corporate citizens, businesses should not only demonstrate CSR during times of economic well being and its practices, during such periods as the current recession, based on measures of adherence. According to Porter & Kramer (2006), if corporations were to analyze their opportunities for social responsibility using the same frameworks that guide their core business choices, they would discover that CSR can be much more than a cost, a constraint, or a charitable deed–it can be a potent source of innovation and competitive advantage.” If hospitality organizations adopt and integrate CSR into their organizational strategies, they can facilitate innovativeness, increase and/or improve their organizational competitiveness, while at the same time contributing to solving problems in society that may arise.
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