What are the possible disadvantages of CSI to a business? We focus the question on (Corporate Social Investment) CSI because that is area of Corporate Social Responsibility (CSR) that usually poses the greatest threat to a business.
This is because CSI is not done with the intention of generating profits. It is like charity, or volunteer work; something that a business does for the community out of goodwill. However, these points do also apply to CSR.
What is the Negative Impact of Corporate Social Investment (CSI) on a Business?
- Small businesses struggle: CSI projects cost money to implement, which can be expensive for small to medium enterprises.
- Detailed reports: Companies need to draw up detailed reports of their projects, which can take up a lot of time.
- Hard to identify needs: It is hard to figure out exactly what the community needs. If the CSI project does not serve community needs, it ends up as a waste of the company’s funds.
- Hard to measure effectiveness: It is hard to accurately measure the effectiveness of a CSI project. Therefore, some companies might struggle to tell if they have actually helped the communities.
- Taken from profits: Social investment is funded from the business’s profits, which could have been used to grow the business or lower prices for customers.
- Less money for shareholders: Shareholders may receive less dividends when the business spends some of its profits on social investment.
- Shareholders withdraw: Some shareholders may withdraw from the company because they believe that social issues should be solved by the government, not the business.
- Providing goods is enough: Some stakeholders believe that providing goods and services that meet customer needs is socially responsible enough. They find it unnecessary for a business to do more than that.
- Managers mot trained: Most managers are not trained to handle social programmes.
- Publicity stunt: Some people might see the CSI project as a publicity stunt, used to create a good image for the business without providing a sustainable solution for the community.
Common Exam Questions for the Disadvantages of CSI to a Business
When the question only asks for the disadvantages of CSR/CSI
- Describe FOUR negative effects of Corporate Social Responsibility programmes for local businesses.
- Discuss the disadvantages of Corporate Social Investment (CSI) for businesses.
When you can name advantages or disadvantages of CSR/CSI
- Critically assess the role of CSI in the business.
- Evaluate the impact of CSR on businesses.
- Discuss the impact of Corporate Social Investment (CSI) on R-TOYZ as a business.
Let the marks guide you. Typically, each point listed, in a full, descriptive sentence, counts for TWO (2) marks. If a question is out of EIGHT (8) marks, you must list FOUR disadvantages.
Essay questions may ask you to “evaluate the impact of CSR.” If you are preparing to write an essay on CSR, be prepared to list at least FOUR advantages and FOUR disadvantages.
Other Articles Related to This
To read the other articles related to Social Responsibility and Corporate Social Investment, you can click on the following links:
- Definition of CSR, Social Responsibility and Corporate Citizenship
- Describe the Differences Between CSR and CSI
- Name 5 Components of Corporate Social Responsibility (CSR)
- Discover the Benefits of CSI to the Community
- Discuss the Disadvantages of CSR to the Community
You can download the flash cards below to help you with your exam revision. Practice answering both question cards and adding more answers if you can. You will find more on my Facebook page: Nonjabulo SA. Share them with your friends and test each other online.
1. Critically assess the role of CSI in the business.
2. Describe FOUR negative effects of Corporate Social Investment programmes for local businesses.