Last few data and structure of corporate indicates the concept of social responsibility of corporate and its exponential growth. Large industries face huge issues of social responsibility as a key problem. In the 21st century larger firms face a large number of changes and challenges including the corporate social responsibility as being one of the key problems. It is suggested to understand the importance of corporate social responsibility that could affect the financial performance of the company.
This report emphasises the impact of corporate social responsibility to the Australian companies. Five companies are undertaken in a report on the Australian stock exchange. Australia is a country which is developing and requires increasing in the literacy rate as well as in employment rate. Welfare role made by the government is not clearly revealed therefore organisations are emphasising increasing the role of welfare. It is done for increasing the reputation of an organisation and business growth.
The report aims at researching the relationship between the issues of society, a responsibility of corporate towards such issues and its impact on the financial performance of the company (Yawar & Seuring, 2017). According to Lord Holmes, the corporate social responsibility is a continuation of a business with a commitment by the company to contribute welfare to society. The organisation commits to change the lifestyle of society and brings economic development. The organisation is required to follow the triple bottom line related to economic, social and ecological factors for providing welfare to society. The three factors identify the need for triple bottom line structure for gaining profit and increase the ratio of sustainability (Tevel, Katz & Brock 2015).
It intends to bring improvement in a workforce of society, in a community as well as within family by creating employment. The organisation that contributes to society and the internal structure of a company, it enhances and motivates the surrounding and employees to work efficiently. Providing a healthy and friendly environment to employees motivate the existing employee to give their best to business. It also attracts new employees due to the characteristics of an environment within an organisation.
The financial performance of an organization could be calculated in monetary terms and by reviewing the past and present performance result of a company. It could be measured by analysing total assets, total liabilities and net profit. The social responsibility of the organisation toward society could be calculated by performing a regression calculation.
A subjective and qualitative method is used to measure the usage of assets from a primary source of a company to provide welfare to society and brings development. Therefore changes or utilisation of company assets affect company’s financial performance. It is observed that financial performance and social responsibility is correlated. The statistics data and regression calculation would help in identifying the responsibility of the organisation and their contribution towards society. The above diagram mentioned how the calculation and analysis of corporate social responsibility could be recognised to determine the performance of an organisation and its contribution to the welfare of social, economic and ecological factors. It determines the impact of a stated component on performance and procedure of organisation by the management.
The concept of development in corporate social responsibility to attain better financial performance
In terms of responsibility by a company to society influence the notion of sustainability achieved by mankind (Qian, Hörisch & Schaltegger, 2018). The making or sustainability towards accounting and social practices works as a yardstick. As per the knowledge it is seen that the financial statement helps only in making a financial decision. In the case of Australian based company's, social responsibility to improve financial performance are analysed by retrieving the net profit, total assets, total liabilities and return on equity. The involvement of CSR has an ability to improve or develop the societal issues and business as well. The interest of corporate social responsibility is rising day to day due to changes in the global performance of an organisation. Corporate social responsibility identifies the reputation and performance of an organisation by creating good images among the member of society. Member is then forced to think good of the organisation as the company is rendering better welfare service to society. Good image of organisation creates value and increase sale which in return provides profitability to the company. Creation of bad image due to poor welfare performance brings down the reputation of an organisation and decrease sale.
Rivera, J. M., Muñoz, M. J., & Moneva, J. M. (2017). Revisiting the relationship between corporate stakeholder commitment and social and financial performance. Sustainable Development, 25(6), 482-494. https://onlinelibrary.wiley.com/doi/abs/10.1002/sd.1664 (Concept)
Borghini, S., Carù, A., & Cova, B. (2014). Representing BtoB reality in case study research: Challenges and new opportunities. Industrial Marketing Management, 39(1), 16-24. https://www.sciencedirect.com/science/article/abs/pii/S0019850109001527
Yawar, S. A., & Seuring, S. (2017). Management of social issues in supply chains: a literature review exploring social issues, actions and performance outcomes. Journal of Business Ethics, 141(3), 621-643. https://link.springer.com/article/10.1007/s10551-015-2719-9 Literature review
Qian, W., Hörisch, J., & Schaltegger, S. (2018). Environmental management accounting and its effects on carbon management and disclosure quality. Journal of Cleaner Production, 174, 1608-1619. Retrieved on 30th July 2018 from https://www.sciencedirect.com/science/article/pii/S0959652617327580
Tevel, E., Katz, H., & Brock, D. M. (2015). Nonprofit financial vulnerability: Testing competing models, recommended improvements, and implications. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 26(6), 2500-2516. Retrieved on 30th July 2018 from https://link.springer.com/article/10.1007/s11266-014-9523-5
Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The impact of corporate sustainability on organizational processes and performance. Management Science, 60(11), 2835-2857. Retrieved on 30th July 2018 from https://pubsonline.informs.org/doi/abs/10.1287/mnsc.2014.1984
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