Impact of corporate social responsibility on firm’s financial performance Essay sample

Write my Economics essayAs economic entities, all corporations function in a particular social and cultural environment. The primary aim of businesses is to generate profit, but corporations cannot ignore the world around them. Corporate social responsibility describes the measures a company takes to address environmental and social well-being. CSR does not bring profit right away. It is rather an obligation of businesses to compensate for the damage they do to the environment and a motivation to create a positive social image for their brand.
The simplest way to implement corporate social responsibility is to give money to charity. Some companies face ethical problems, like child labor or gender discrimination; resolving these issues can improve the corporate image in society. Many businesses invest in local communities building infrastructure so that their activity is visible. High level of CSR brings recognition and loyalty of the customers, which definitely helps companies thrive in the competitive environment. That is why corporate responsibility is an investment rather than an excessive charity.
Recent studies on CSR examined the impact of social investment on 15 companies listed on Karachi Stock Exchange, Pakistan. The government plays little role in restoring the welfare in the country, and businesses have plenty of opportunities to gain a positive reputation while investing in society. The studies confirmed that there is a positive impact of corporate social responsibility on the performance of companies in question. CSR generated a greater net profit for the companies as social well-being determines how many products customers can afford. In the developing countries like Pakistan, the impact of CSR on profit is especially visible because there are almost no governmental mechanisms to regulate money supply.