As corporate citizens, companies have a responsibility towards society. They are expected to conduct their operations in ethical and moral ways.
Corporate Social Responsibility (CSR) is the framework that is used to measure and enforce this. To achieve social responsibility, corporations take measures like improving workplace conditions and initiating community development projects, through their Corporate Social Investment (CSI). Such projects promise many positive changes for society.
Unfortunately, in real life, they do not always turn out as wonderful as they look on paper. Which is why, in this lesson, we look at 10 disadvantages of CSR to the community.
What Are the Disadvantages of CSR to the Community?
- Discrimination: When distributing scarce resources, recipients need to be identified according to set criteria. This can lead to discrimination from distributors or feelings of discrimination from those who do not receive anything.
- Hand–outs: CSI programmes that hand out goods like food and clothing, may discourage community members from making their own efforts to get things, as they get used to receiving them freely.
- Not sustainable: Some CSI projects are not sustainable. Once the business pulls out of the project, the community is not able to continue on its own.
- Higher prices: In order to afford CSR projects, businesses need to raise the prices of their goods, which has a negative effect on the economy.
- Only for marketing: Some businesses only use CSR as a marketing scheme, they do not actually intend to help communities.
- Businesses benefit more: Businesses can benefit more from CSR initiatives than the communities that they claim to be uplifting.
- Benefits not reaching people: The benefits of CSR programmes do not always reach the people they are intended for. Sometimes, the money is spent by other individuals before it reaches the community.
- Buying support: Communities do not always trust that companies do CSR with pure intentions. They may believe that they are only doing it to buy their support.
- Long term needs: It is difficult for businesses to meet the long term needs of communities, especially when they are running hand-out programmes.
- Less money for crises: As businesses regularly spend their resources on CSR, they have less money available to help communities in times of crises, e.g., during floods and pandemics.
Exam Questions for the Disadvantages of CSR/CSI to Communities
When you should only discuss the disadvantages of CSR/CSI
- Discuss the negative effects of Corporate Social Responsibility (CSR) for local communities.
- Analyse the potential disadvantages that CSI may have on communities.
When you can name advantages or disadvantages of CSR/CSI
- Critically assess the role of CSR on communities.
- Explain the impact of CSR on local communities.
- Discuss the impact of Corporate Social Investment (CSI) on South African communities.
Let the marks guide you. Typically, each disadvantage 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 corporate social responsibility, you can click on the following links:
- Definition of CSR, Social Responsibility and Corporate Citizenship
- Definition of Corporate Social Investment: CSI vs CSR
- Discover the Benefits of CSI to the Community
- Benefits of CSR (or CSI) to the Business – Positive Impact
- 10 Disadvantages of CSI to the Business – Negative Impact
You can download the flash cards below to help you with your Grade 12, Business Studies, exam revision. You will find more on my Facebook page: Nonjabulo SA. Share them with your friends and test each other online.
1. Explain the impact of CSR on local communities.