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Impact of Corporate Social Responsibility on Decision-Making Strategies

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 1915 words Published: 26th Oct 2020

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The clothing of fast fashion has become the target of mainstream consumers in recent years. According to research by Erbschloe (2019) shows that fast fashion is generally believed to produce the fashion trends displayed in the fashion week in the shortest time. The clothes produced by this method are made quickly and cheaply, enabling mainstream consumers to buy fashionable clothes at a very low price. Therefore, this idea applies to big retailers, such as H&M, Zara and GAP. For improving the interests of the fast fashion companies, these companies use the Corporate Social Responsibility (CSR) as a main decision-making strategy. CSR is defined by Tariq Khan et al. (2012) as the enterprise not only creates values for the shareholders, but also it should assume responsibility for society, economy and environment. And Jones(2000) suggested that enterprises can utilise CSR to improve the revenue, influence and cohesion of fast fashion companies This means that CSR can help enterprises to establish a responsible brand image, enhance the reputation and competitiveness of enterprises, increase the financial stability of the enterprise.This essay will analyse what sociological evidence there is for the approaches in which CSR can influence the decision-making strategies of fast fashion firms, such as sustainable of environment and will then go on to analyze the reasons for its occurrence. The final part of the essay will answer the most available ways of incorporating CSR into decision making strategies in the sector.

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Companies’ excessive undertake of CSR might be seen as bringing financial issues in the short term. Whether as Mishra and Modi (2012) illustrate that taking corporate social responsibility and maximizing the interests of corporate shareholders could contrary to each other. This means that these theorists believed that CSR may not be included in corporate decision-making strategies, because CSR's expenditure on social welfare can affect the primary goal of maximizing corporate interests, especially on the charity and employee welfare. Thispresents that some small and medium-sized enterprises may risk being dragged down by CSR. Therefore, compared with fast fashion companies without CSR, this may take more fiscal expenditure. As Kang et al. (2010) demonstrate that Corporate social responsibility might an abuse of corporate resources. In addition, CSR might make some managers to advance their personal career and life experiences, but it could does not bring strategic benefits to shareholders. This means that CSR is seen as the selfish behaviour of executives, which may weaken the wealth of shareholders, but might not bring income to shareholders. Hence, CSR may put financial pressure on companies. However, even though CSR may spend enterprises more financial pressure in the short term, it might result in financial profits in the long run. According to a study by Wang (2014) argues that entrepreneurs use enterprise resources or assets to do various social charity activities just for their reputation, even though the practice of philanthropy may cost shareholders a large amount of profits, it can help companies reap the trust of business associate and improve their social image in the long-term. This shows that the CSR is seen with charitable activities can establish a good image and obtain a good reputation, which will be supported by the government, the society and the community as well as the recognition of consumers, and generate credit economy society, broaden the share in the market in the long-term. As a consequence, companies' use of CSR to increase fiscal revenue is not conducive to shareholders' wealth in the short term, which may lead to some small and medium-sized enterprises unable to make ends meet or go bankrupt due to large social welfare expenditure. To some extent, CSR could be financially stressful in the short-term, but there are still some positive effects in the long run.

Although the company's socially responsible behaviour could hurt its short-term performance, it may bring long-term financial profits to the fast fashion companies in the long run. This can be seen in the effects of CSR on the company’s image and its perception in society. In fact, many scholars, such as McWilliams et al. (2006, p. 4) have conducted a number of empirical analysis and research, which is the positive corporate culture can enhance corporate cohesion and establish the value of common development view to maximize enterprise value. This is because that corporate investscharitable activities, which is one of the factor consumers are most satisfied with CSR, and philanthropy can blend values with corporate values to obtain the trust of purchasers, which could gain the better reputation, enhances the purchase rate.Hence, this is the reason why CSR can help companies make more profits in the long run, instead of it in the short-term, because charity events may the best way for fast fashion companies to promote the image in consumers. In addition, Park et al. (2014) claim that CSR can cultivate consumers' loyalty and faith to the brand in charity events, which may strength the enterprise reputation and enhance the social image. From the point of view of economics, this may cost companies some fiscal expenditure, but a good corporate reputation could lead to competitive advantage, this is because it can contribute to the social welfare and might be recognized by consumers. Therefore, this kind of investment could be supported by the government, the society and the community as well as the recognition of consumers, ultimately, enhance the social image of corporations and brand reputation to promote the financial profits in the long run.

Although to increase the profitability of the enterprise social responsibility and business performance measurement is difficult, there are still some strategies to deal with this situation. One strategy is to address environmental protection issue can help enhance the image of corporate within fast fashion industry. Shen (2014) shows that due to the increasing awareness of environmental protection, consumers are more willing to buy eco-fashionable clothes, which made from recyclable environmental materials. It can be seen that the concept of recycling is promoted in the field of fast fashion, which may reinforce consumers' interest in buying and loyalty to the brand. Thus, fast fashion companies utilize environmental protection as a strategic decision of CSR, which might make it easier for purchasers to accept and buy their clothes. In addition, redesign and remanufacture can help businesses reduce the source waste, which can promote the sustainability of companies. According to a paper by Moorhouse and Moorhouse (2017), fast fashion companies need to come up with unique clothing that attracts attention. For instance, Stradivarius, which is a fast fashion brand, its swimwear design proves that there could be commercial benefits, because it has well received by consumers for designing sustainable clothing using 100% recycled nylon and recycled fishing nets collected. Besides, in terms of design, designers could get inspiration from the natural world, which may increase the story of products and endowing clothes with additional significance rather than only aesthetic value. This also could be seen that in the production of swimwear, marine renewable materials are used to associate products with environmental issues, and this might be a good marketing method. In brief, designing sustainable products may a way to fulfill CSR, which could gain the consumers' identification and then promote brand image, this might be a good business decision.

Another strategy is that the improvement of employees' welfare may conducive to attracting excellent talents and enhancing employees' enthusiasm for production. To some extent, the increase of employees' welfare might bring financial pressure to the company, but the increase of employee income can strength employees' high degree of motivation for work. Thus, they can complete their work more efficiently. As Dickson (1999)shows that an employee in Bangladesh fainted due to be given a nutrient-poor lunch during the garment making process. By this means that if a company have poor employee welfare, it may decrease the productivity of its employees, staff shortage, and affect the image of the company. Hence, firms with fair labor may lead to more efficient production and might help boost their image. In addition, according to Child Labor Deterrence Act (1997) suggests that Child labor would be effectively banned by restricting the purchase of products produced by child labor. This finding indicates that enterprises should ban child labor in developing and underdeveloped countries to give them more time to study and benefit their physical health. Therefore, a company with good employee benefits could be a better corporate image, which may increase its revenue.

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As a result, the economic bill brought by enterprises' CSR expenditure might be seen as leading to the consequences of not making ends meet in the short term. However, even though CSR could bring the financial pressure, this is conducive to the development of enterprises in the long run. Such as promoting corporate social responsibility image, enhance the social welfare, these can help companies to obtain the consumer's trust, and increase brand reputation and corporate cohesion, thereby, maximizing brand value and creating more wealth. It is worth mentioning that there are several ways to improve corporate image, including: environmental sustainability, improving employee welfare, ultimately CSR can contribute to the sustainable development of the enterprise, this may not only produce financial value, but also conducive to the sustainable development of human society.

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  • Husted, B.W. and Allen, D.B., 2007. Strategic corporate social responsibility and value creation among large firms: lessons from the Spanish experience. Long range planning40(6), pp.594-610.
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