Organizations usually operate within a given set of conditions that control and direct their activities. Most theories that explain how the management can perform optimally within these circumstances should determine the most appropriate strategy. Organizations are sometimes forced to determine whether their moral obligations are connected to their financial responsibilities. As such, in addition to being socially responsible, multinational corporations also need to be triple bottom line companies in order to meet their ethical obligations.
Difference between Corporate Social Responsibility and Triple Bottom Line Companies
CSR is derived from the notion of sustainable development addressing the behavior of corporations, and environmental management strategies could be used to grow a firm’s public image and their profits (Dixon, 2014). Conversely, the triple bottom line confirms that success in a business can only be measured by three perspectives (the 3P): people, planet, and profits. Therefore, their performance in different categories would represent their obligation and devotion to the natural environment, stakeholders, and economic profits of the company (Dixon, 2014). The triple bottom line theory proposes that the categories need to achieve a trade-off so as to maximize the potential benefit from each category. CSR is usually considered philanthropic, as opposed to the TBL, which is referred to as obligatory. In fact, firms are not even required to abide by these standards in their operations (D’Amato, Henderson & Florence, 2009). The TBL demonstrates that social and environmental responsibilities are significant and should be reflected in the financial statement. Thus, their inclusion would still be beneficial for the [“Write my essay for me?” Get help here.]company. However, it is evident that the TPL is only used when corporations are unwilling to fully commit to investing in CSR
.Why Multinationals Need to Invest in Both CSR and TBL
An important reason as to why companies need to combine TBL with the social responsibilities of a business could be attributed to the financial requirements of a company. In many cases, companies tend to forget that the primary goal of any given organization is to create revenue or gain profits for a company (Norman & MacDonald, 2004). Corporate social responsibility is usually philanthropic in nature. Thus, it does not focus on the financial aspect of the company or the stockholders for that matter, despite improving the public image of the enterprise. However, combining it with the triple bottom line leads to a balance in different aspects, since the natural environment, the stakeholders, and the profits of the company are all maximized (Norman & MacDonald, 2004). CSR will thus do a lot better to assure the business of its long-term sustainability if combined with the canons of the triple bottom line.
Additionally, the triple bottom line could be argued to provide CSR with a framework for performance analysis. Palmer, Cockton, and Cooper (2007) state that the TBL commonly evaluates performance from three aspects: an economic/financial aspect of the company, environmental aspect, and its social equity aspect. As a result, TBL simultaneously analyses the business from the perspectives of shareholder value, profitability, cash flow, ROI, sustainability of the materials, balance in resources, health safety, well-being, and sustainability of costs for its various stakeholders. These measures are also calculated, audited, and reported quantitatively, consequently making it easier to determine areas that need to be improved. In consequence, the application of the two theories will ensure that the performance analysis considers all the relevant dimensions of the company without ignoring anything.
Also, the triple bottom line accounts for challenges encountered, especially in distributive justice and the current wealth distribution resulting from CSR. The TBL does not only consider the bottom line of maximizing incomes, but rather, it also looks forward to achieving progress in environmental equality, economic development, and social justice (Horrigan, 2010). The social aspect of the TBL is the least developed in practice and corporate strategy, hence the inability of CSR to achieve a fair distribution of wealth. However, the use of the two theories in a company works towards achieving a balance and shifting from the expansion of capital to its just distribution (Horrigan, 2010). Thus, the company would be willing to achieve its ethical obligations as they try to maximize their returns sustainably through the two.[Click Essay Writer to order your essay]
From the discussion, it is true that multinational corporations need to be socially responsible and also be a triple bottom line company to achieve different obligations (ethical and legal). Social responsibility tries to create corporate behaviors that enhance certain ethical standards while the triple bottom line develops the same concept at three levels: people, planet, and profits. Using the two theories to achieve a balance will be more beneficial compared to implementing one of them since they will complement each other.[Need an essay writing service? Find help here.]
D’Amato, A., Henderson, S., & Florence, S. (2009). Corporate social responsibility and sustainable business: A guide to leadership tasks and functions. Greensboro, NC: CCL Press.
Dixon, T. (2014). Corporate social responsibility, the triple bottom line, standardization and brand management in Houston, Texas (Master’s Thesis). Uppsala University, Uppsala, Sweden.
Horrigan, B. (2010). Corporate social responsibility in the 21st century: Debates, models and practices across government, law and business. Cheltenham, United Kingdom: Edward Elgar.
Norman, W., & MacDonald, C. (2004). Getting to the bottom of “triple bottom line”. Business Ethics Quarterly, 14(2), 243-262.
Palmer, R., Cockton, J., & Cooper, G. (2007). Managing marketing. Amsterdam, Netherlands: Butterworth-Heinemann.