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Posted on April 21st, 2014, by

1 The rise of the social responsibility of corporations

One of the major causes of the growth of self-regulation is the rise of social responsibility of corporations[1]. The social responsibility of corporations refers to their human resource management, company-customer relationships, and company-community interaction[2]. The social responsibility of corporations in regard to their employees is the result of the increased significance of human resources in the contemporary business environment[3]. Human resources play an important part as the major drivers of the business development and growth of corporations because innovations cannot always be introduced frequently to keep the growth of corporations fast[4]. When corporations lack material resources to boost their business development, they use the potential of human resources. The more qualified human resources are the more efficient they may perform, while the high efficiency of employees’ performance contributes to the better marketing performance and, therefore, to the business growth of corporations[5]. Hence, corporations grow interested in the employment of well-qualified professionals and their retention. At the same time, the social responsibility of corporations in relation to their employees stimulates the implementation of self-regulation because self-regulation is an efficient tool that helps corporations to monitor the performance of employees, to identify problems they may have and to help employees to tackle those problems. In addition, self-regulation helps to enhance employees’ performance, since they are aware of the permanent supervision and monitoring conducted in terms of self-regulatory policies[6]. Moreover, self-regulation helps to prevent crimes being committed by top executives because, if self-regulation is efficient, top executives cannot misuse their power and position but, instead, they are also liable to inspections and monitoring[7]. In this regard, internal self-regulation is more efficient than government or external regulation because internal inspectors know corporations better and can find challenging issues easier and faster than external inspectors or auditors.

Company-customer relationships also increase social responsibility of corporations as well as their environment responsibility because customers’ loyalty and satisfaction define, to a significant extent, the marketing position of corporations[8]. The social and environment responsibility stimulate corporations to introduce self-regulation because the latter helps them to monitor their internal business processes that may affect the customer relationships management or environment negatively[9]. If any problems in company-customer relationships or environmental policies of corporations are identified with the help of self-regulation, they may eliminated as those social and environmental policies return to the framework set by self-regulation of corporations[10]. For instance, if a corporation identifies the negative impact of its product on the environment, the corporation identifies the cause of this negative impact and eliminates it because its self-regulatory rules ban the negative impact of the corporation on the environment.

Finally, the company-community interaction also stimulates self-regulation because through self-regulation corporations demonstrate their transparency and concerns with the quality and safety of their products and services and respect to human rights and community well-being[11]. Corporations attempt to develop positive interaction with local communities to avoid conflicts which may have a negative impact on their brand and public image[12]. In this regard, self-regulation helps corporations to develop public relations and prevent conflicts with local communities before they arise because compliance groups and inspectors monitor the situation within the community and the corporation to find any areas of tension and eliminate causes of such tension, if there are any.

[1] Jenkins, R. (2001). “Corporate Codes of Conduct: Self-Regulation in a global economy,” Technology, Business and Society Programme, 2, 24

[2] Ibid.

[3] Gerber, J. (1990). “Enforced Self-Regulation in the Infant Formula Industry: A Radical extension of an ”˜impractical’ proposal,” Social Injustice, 17(1(39)), 98

[4] Peltzman, S. (1976). “Toward a More General Theory of Regulation,” Journal of Law and Economics, 19, 216

[5] Ibid.

[6] Braithwaite, J. (1982). “Enforced Self-Regulation: A New strategy for corporate crime control,” Michigan Law Review, 80(7), 1467

[7] Ibid.

[8] Ibid

[9] Holmes, T. J. (1998). “The Effect of State Policies on the Location of Manufacturing: Evidence from State Borders,” Journal of Political Economy, 106, 670

[10] Ibid.

[11] Ibid.

[12] Jenkins, R. (2001). “Corporate Codes of Conduct: Self-Regulation in a global economy,” Technology, Business and Society Programme, 2, 31

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