Academic journal article Management Accounting Quarterly

Corporate Social Responsibility: An Examination of Practices in the Retail Industry

Academic journal article Management Accounting Quarterly

Corporate Social Responsibility: An Examination of Practices in the Retail Industry

Article excerpt

Walmart donates millions of pounds of food to the needy. Lowe's employees participate in volunteer projects across the country. Best Buy recycles old electronics.

Many corporations now routinely engage in socially responsible behavior as a part of their business operations. A generation or two ago, this was virtually unheard of in the United States. In fact, Americans were more likely to hear of what "Big Business" was doing to spoil the environment rather than repair it.

The Exxon Valdez disaster and General Electric discharging PCPs into the Hudson River are two incidents that come to mind.

Many companies now go the extra mile to take positive actions toward the environment, social causes, and their communities. Examples include reducing their use of energy, supporting local schools, and working with national organizations such as the American Red Cross and Habitat for Humanity. Affordable housing and education are important issues in many communities, as are hunger, cancer, natural disaster preparedness, and childhood diseases. All of these offer opportunities for companies to get involved.

It is easy to see why so many firms have been quick to get on board. Corporate social responsibility promotes a positive image, bolsters employee morale, and saves money--a win-win scenario for both the companies and their beneficiaries. This article looks at the socially responsible behavior of giants in the retail industry to gain further insights into their level of commitment, determine the areas where they place the most interest, and identify any trends based on the practices of these organizations. To focus the discussion, we will look at some of the specific actions self-reported by the 25 largest retail organizations in the United States based on total revenues.

KEY GOALS OF THE STUDY

Developing a successful program to address socially responsible concerns has become part of the overall business strategy for many large organizations. To establish how deep the levels of commitment across companies run, this article will address three questions:

* Are there any trends present in the socially responsible actions of companies in the retail industry?

* Do some retail companies perform more socially responsible actions than other companies?

* Do some retailers emphasize certain specific aspects of corporate social responsibility more than others?

It is important to seek answers to these questions because the topic of corporate social responsibility relates very closely to the views of society in general. Many individuals are concerned about the environment, the quality of education, and diseases, such as breast cancer. By practicing social responsibility, businesses of various sizes in different industries play an important role in helping to improve society.

A REVIEW OF THE LITERATURE

Altruism aside, one of the primary reasons companies engage in socially responsible behavior relates to the possible financial gains that exist in many activities. Recent studies show that socially responsible firms tend to report long-term financial gains and increases in the value of the firm. The returns are not immediate, however: Most companies show a financial loss or only a small positive difference in the first three years after launching new socially responsible initiatives. (1) For example, companies that implement a recycling program, reduce waste, or switch to more renewable forms of energy spend money at the beginning of the project to purchase and install new equipment and to train employees. The upfront financial costs to the organization are offset by the long-term financial gains from the investment because of decreased energy costs, lower waste disposal expenses, a stronger business reputation, or more efficient use of materials.

The reputation of an organization is an especially strong motivation to engage in socially responsible behavior. …

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