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OPPORTUNITIES AND THREATS OF CORPORATE SOCIAL RESPONSIBILITY IN RUSSIA




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In conditions of economic instability increases the role of business in solving social problems, an increase in the level of social responsibility of business organizations, strengthening of business attention to the positioning of its social responsibility.

For commercial organizations, the implementation of corporate social responsibility principles is attractive from the standpoint of the acquired capabilities and competitive advantages. Meanwhile, this process is accompanied by a number of potential threats. As a rule, the most likely areas of obtaining the benefits of a socially responsible company considers human resource management, marketing and sales, finance, investor relations and public authorities. The West has held hundreds of different studies to assess the impact of socially responsible programs of the economic performance of their activities.

The first studies of foreign experts were conducted in order to validate the effectiveness of implementation of the principles of social responsibility (hereinafter – CSR) and bring to the managers of the existence of a weighty financial benefits of investing in the social and ecological-oriented projects and directions. However, in the domestic practice of this kind of research are rare.

Among the foreign studies confirming the existence of a positive correlation of the implementation of CSR principles can be distinguished research think tank «Towers Perrin». In 1999, the company announced the results of research conducted on the basis of two samples, according to which a group of the most socially responsible companies were “Coca-Cola”, “Jonson & Jonson”, “Procter & Gamble”, “General Electric” and others, and irresponsible companies. The study was based on both the inner and outer information about organizations. For example used data published annually by the US magazine «Fortune» (top 500 biggest companies in the US), and the data of the «Standards & Poor’s rating». According to these data, companies that implement the concept of social responsibility, in the last 15 years the increase in shareholders’ income was observed in more than 2 times (43% and 19%, respectively) [5].

Among recent works in this area should be noted global study at Harvard Business School, during which a detailed analysis was financial statements, policies and projects of 675 companies for the period 1993 – 2010. The results show proactive companies are actively practicing the principles of corporate social responsibility, socially responsible at least competitors on all significant indicators.

The study of Russian scientists M. Orlickiy, F. Schmidt and C. Rhines based on 52 studies (consisting of 33,878 samples of observations, collected over 30 years) also confirmed the presence of a positive impact on the economic performance of socially responsible companies.

In the Russian practice of socially responsible policies today have done a step towards the revitalization of the entrepreneurs to fulfill their social obligations to its citizens. As pointed out the head of the Ministry of Foreign Affairs of the Russian Federation Sergey Lavrov, “the theme of corporate social responsibility has for a long time is one of the priorities of international economic structures. Problems in the Russian economy remain. Performance of duties to the citizens is the top priority”[4].

Indeed, the state of the national budget is that the government is unable to invest large funds into the economy. At present there is a widespread process of optimization of costs: there is savings in all-inclusive and social costs. This situation leads to the need to achieve a balanced budget. Therefore, emphasizing the importance of the position of the business community in the context of the current economic situation, the Russian business community plans to actively participate in the implementation of the CSR concept until 2030.

In recent years, growth in the number of companies is observed in Russia who seek to build their social policies on the principles of social responsibility. However, in the international arena, our country occupies a modest position. The study «KPMG», one of the largest networks in the world, providing consulting services, our country ranks only 22th place among the countries that provide reporting on social performance.

Currently, the only way to measure the impacts of CSR in Russia are social ratings and financial reports. One resource available to the public, providing information on reporting responsibility of business structures is the National Register of Corporate Non-Financial Reports of the Russian Union of Industrialists and Entrepreneurs. At the beginning of 2016 the real register recorded 160 companies, registered reports – 635 since 2000. In particular: the environmental report (ER) – 52, social (SR) – 269, in the area of ​​sustainability reports (ASR) – 204 integrated reporting – 87 and industry – 23 [2].

Awareness of the importance of social policy and show the latest research conducted by the Association of Managers of Russia: namely the results of the forum “PEOPLE INVESTOR 2015”. The innovation of the project was the presentation of the first rating of “Top 25 Managers of corporate social responsibility”. Almost one-third of the projects submitted in the competition were submitted based organizations in the regions and the competition they were 6 finalist projects from 23, aimed at development of the regions. Organizations that fall into this list, maintain their own community development programs taking into account its direct business interests, which favorably affects the quality of life of entire regions. The winners were 6 companies in 6 categories: in particular, in the category “Mobile Tele Systems” in the category “Health personnel” – “Nokian Tires”, the winner in the category “Building relationships with customers and partners” – “The LG Electronics” and others [1].

Systematizing the practice of social policy of Russian and foreign companies, we can highlight the following essential aspects of the positive impact of CSR on the growth of business efficiency. The most significant effect of the introduction of CSR has on the formation of an attractive image of the company. At all stages of its development, organizations are looking for ways to reduce the risk of loss of reputation. In turn, the CSR has the properties that are able to prevent the onset or reduce the negative effects of the crisis. Social responsibility in this case helps to create a positive environment around them, due to the understanding and support of a wide range of stakeholders.

There are cases where socially irresponsible behavior worsened the image of a company after the publication of violations of CSR principles. A priori, the effect of strengthening the image and reputation to improve the economic performance is through the conduct of those most concerned, as the company customers who are consumers of its products, the investors who make investments, partners who trust the organization, employees and their loyalty to the leadership, and so on.

From here we select the aspect of the positive correlation of CSR on business performance, as increased motivation and loyalty of staff. According to a survey of leading domestic companies in the field of CSR, conducted by the Russian Managers Association in the period 2012 – 2013, the number of priorities among stakeholders, companies was nominated for the first staff [3].

On the one hand, attractive working conditions, the effective corporate culture, high-tech business processes, motivational scheme of remuneration and the opportunity for career and professional growth, more and more companies have to more opportunities to attract and retain qualified and talented professionals. On the other, motivated staff contributes to the improvement of productivity and quality of work. In addition, the CSR principles for employees is primarily a social protection, decent financial reward and as a consequence — confidence in the future. According to the above mentioned study at Harvard Business School in 2010, the productivity of the workforce of socially responsible companies higher than those of the less socially active competitors at 37,9 % [5].

Recent overseas studies show that potential employees are more likely to prefer employment socially active organizations, ceteris paribus. And the most tangible results bring not only the loyalty of the staff in relation to the organization itself, but also in relation to the product, contributing to its promotion on the market.

An indicator of influence of socially responsible actions on the performance of the company is the efficiency of marketing and sales. Despite the fact that the main factors when buying a product is the price and quality, a growing number of consumers around the world prefer to produce socially responsible organizations.

Implementation of company socially responsible practices also affects its investment attractiveness. The yields on the organization of foreign stock markets are accompanied by an assessment of all the risks investors’ spectrum, and there are more attractive to the company’s profitability position with sustainable social policies.

Thus, determining the needs of stakeholders, business becomes a kind of provider for positive change and innovation in its flagship activity, at the same time, through the support of research, development of socially significant goods and services and the development of the vacant market increases its productivity and competitiveness.

In turn, the introduction of technologies with better performance and resource efficiency creates additional opportunities to save resources and to reduce the volume of waste. In this case, benefit from the implementation of CSR and the state receives by reducing costs for environmental sphere.

We select as one of the priorities of the company’s capabilities – improving relations with the authorities. Socially oriented companies are investing in the development of the regions and society in general, to the environment. Such organizations are much easier to negotiate with the authorities on obtaining permits, licenses, and in many countries, these companies use a variety of tax benefits.

According to a survey conducted by the international organization «Grant Thornton» in 2011, to identify the main disincentives following CSR policies by domestic companies, the main motives were: to attract and retain key personnel, cost management and reduction of pressure on business.

According to the survey of 2011, conducted by the international organization “Grant Thornton”, to identify the main disincentives following CSR policies by domestic companies, the main motives were: to attract and retain key personnel, cost management and reduction of pressure on business.

Any business structure is a part of society, which has positioned itself as a positive member of social relations. In this sense, companies implementing social programs that take advantage of the formation of a positive image in the eyes of consumers. For the Russian reality it is certainly very promising. However, the majority of Russian companies prefer to operate within their personal interests and needs. A company ready to use CSR practices considering the costs of its implementation rather as a charity, not as an investment.

Among the main threats to the implementation of social responsibility in the Russian realities of the majority of experts highlighted the high cost of social inclusion and the violation of the principle of profit maximization. As you know, the main purpose of a business is reduced to profit, so it is quite understandable reluctance of owners to reduce its business by investing in the development of society. It should be noted that the funds allocated for social needs, are already for the company costs, which are included in the price of the final product. Hence the increase in prices for goods that have a negative impact on consumer demand, and therefore on competitiveness and business efficiency.

In the context of monopolization and oligopolization markets in Russia there is a rather low level of competition in connection with this circumstance CSR principles are used by companies as a means of competition, as is the case in developed countries.

Significant impacts on the use of its CSR activities by domestic companies have negative shifts that followed as a result of the economic events of the second half of 2014. As you know, in a worsening crisis and increasing competition resistance organizations are increasingly linked to its tangible assets. The introduction of international sanctions negatively affected the involvement of so necessary domestic business cheap western funds. Before the introduction of sanctions, Russian companies have tried to “look at” in the field of social responsibility, since this factor is taken into account by western financial institutions in the allocation of loans to Russia. Now, such a motivation faded into the background.

Significant influence on the formation and content of CSR in developed countries has a state. However, the level of motivation and stimulation of the Russian state as a CSR has been, and remains extremely low. Therefore, one of the most important problems in the development of CSR, we believe, speaks uncertainty in domestic public policy in this area. The state’s role is traditionally high in the formation of CSR in the activities of different business structures. Currently, however, there is no federal program to encourage enterprises involved in socially responsible activities are not covered by tax breaks, government grants and subsidies. Supports for socially responsible entrepreneurship exist in some regions of Russia, but they do not have a systemic nature. Business leaders are faced with the lack of support from local authorities. Many entrepreneurs claim that their social projects often do not find support from the regional authorities and government agencies.

Along with the major challenges exist, and a number of other equally important issues, which should be mentioned. This lack of a stable institutional environment and a low level of trust in society and the lack of influence on the part of the media, well-defined instruments implementing CSR, close cooperation of the commercial organizations with non-profit organizations.

Today seems very urgent problem of measuring social policy organizations. CSR is a multidimensional process involving multiple actors and therefore difficult to formalized assessment. In Russia, though it has produced a large number of CSR and sustainability reports, consistently engaged in this work all the same about 50 leading companies.

In summary, it can be argued, a positive correlation between the degree of CSR practices implementation and financial well-being company. But getting benefits is only possible by overcoming encountered on the way of its implementation barriers. And in our opinion, the most effective tool will be an active state participation in the development of CSR.

That state social policy is designed to determine lines of business in the field of corporate social responsibility. In order to improve the implementation process of CSR in the activities of domestic companies should:

— improvement of the existing legislation;

— formation of special governance structures;

— economic preferences, including tax, state guarantee for lending, subsidies;

— the introduction of mandatory social (non-financial) statements for organizations;

— the development of a unified national standard defining quality criteria and the periodicity of disclosures governing the monitoring by regulatory authorities;

— the development of public-private partnerships as a promising form of cooperation between the state and business in the implementation of social projects;

— improving the incentive system: the creation of reputation and non-material incentives for companies and their managers;

— to stimulate public dialogue on CSR with the authority of political leaders.

An effective tool for influencing the socially responsible activities can also be the introduction of CSR into the work of local government institutions in the exercise of government functions. Thus the Russian government by example will demonstrate the importance of these processes for the country. Today, CSR has a long-term trend of social development, adherence to which will allow reaching a new level of competitiveness and significantly strengthening the position of Russian companies on the world markets.

References

  1. Philanthropist: electronic Journal. People Investor 2015: How to improve the lives of people in the regions [electronic resource]. – URL: http://philanthropy.ru/news/2015/11/20/31088/#.VtczP_mLTIV
  2. National Register and corporate non-financial reports from the Library February 11, 2016 [electronic resource]. – URL: http://rspp.ru/simplepage/157
  3. Nikitina L. M. Corporate Social Responsibility. Rostov-on-Don: Fenix, 2015. – 445 pp.
  4. REGRUM. Information Agency. Sergey Lavrov: Problems in the Russian economy are saved [electronic resource]. – URL: http://regnum.ru/news/economy/2056554.html
  5. Report on Social Investments in Russia – 2014: to create value for business and society / edited by J. E. Blagov. Saint Petersburg: The author’s creative workshop (ATM Book), 2014. – P. 45.
    OPPORTUNITIES AND THREATS OF CORPORATE SOCIAL RESPONSIBILITY IN RUSSIA
    In this article the practice of the principles of social responsibility of Russian and foreign companies in their activities, defined the essential aspects of the positive impact of corporate social responsibility (CSR) on the growth of business performance, the basic directions of activity of the state to improve the social responsibility of business.
    Written by: P´yanov Alexander Ivanovich
    Published by: БАСАРАНОВИЧ ЕКАТЕРИНА
    Date Published: 12/23/2016
    Edition: euroasian-science.ru_25-26.03.2016_3(24)
    Available in: Ebook