Social Responsibility of Business in Russia: Priorities and Prospects

Student: Dzliev Islam

Educational Programme: Bachelor

Year of Graduation: 2014

In today’s world, with ever increasing impact of corporations on the overall state of society, the concept of social responsibility becomes more and more important. There is no secret in that economic sphere is the basic one if the structure of society is considered. It is the economy that forms the basis for all other spheres of society and, thus, plays a paramount role in the whole course of society’s development.However, it should not be forgotten that economic sphere is closely correlated with the other spheres of society: political, social and cultural. Thus, the interrelations and interdependencies between them should be taken into account.In recent years, more and more studies and research is devoted to examining the issue of the impact which companies and corporations have on society and communities. Different studies investigate different aspects of social responsibility: its relation with companies’ value, relation between social responsibility and performance measurement systems and so on.In recent years many corporations were analyzing how effective their branding was and how they were viewed by their customers and local communities. All other things being equal, companies which take an active role in promoting their corporate social responsibility programs are generally perceived more favorably than those which do not have highly visible programs.This phenomenon may be explained by the fact that having goals and a vision for a company which go beyond products and profits definitely provides a better image of the business.According to some researchers and practitioners, one of the reasons why corporations should have visible corporate social responsibility campaigns is due to the importance of social media.Companies which would like to protect their brand realize that social media is an important part of public perception. When a company is engaged in fundraising or setting up employee giving programs, using social media to promote these actions helps to create a positive branding environment.In should not be forgotten that public relations is a necessary tool for shaping consumer perception and building a company’s image. Companies which actively promote their social responsibility activities often tend to make these efforts more visible through the media. Speaking about corporate donations, employee volunteer programs etc is a powerful tool that can build publicity for a company in both online and print media.Then it should be noted that corporations which emphasize corporate social responsibility typically have less troubles when dealing with politicians and government regulators. In contrast, businesses which are nor engaged into social responsibility activities tend to come across different bureaucratic problems related to requests for some information or services. The more positive the public perception is, the more eager governmental authorities are when asked for a kind of support or information.Finally, according to some researchers, one of the most significant benefits of promoting social responsibility in the workplace is the positive environment created for employees. When employees and management feel they are working for a company which has a true conscience, they will likely be more enthusiastic and engaged in their jobs. Thus, demonstrating involvement into corporate social responsibility activities may inspire employees and increase their motivation. This, in turn, may create a sense of teamwork which brings everyone together and leads to more productive work.It is important to understand the legislative, policy and institutional frameworks which govern contemporary corporate social responsibility practices and programmes. What is more, it is important to understand how main concepts of corporate social responsibility may benefit the organization and the environment in which the company conducts its business.In previous times, the terms corporate social responsibility and corporate social investment were used interchangeably. Subsequently, these terms have been defined separately, with the latter being a sub-component of corporate social responsibility.Corporate social responsibility refers to an organization’s total responsibility towards the business environment in which it operates. The term ‘Corporate social responsibility’ came about in the late 1960′s and early 1970′s after many multinational corporations used it to describe organizational activities which had an impact on their responsibility towards the greater environment. Currently corporate social responsibility supports projects external to the normal business activities of a company which are not directed towards making a profit. Typically, such projects have a strong developmental approach and utilize company’s resources to benefit non-for-profit organizations and communities. Corporate social responsibility expenditures must not be confused with marketing expenditures, with the latter used to promote the profile of the company brand.However, many organizations continue to overlook corporate social responsibility. For example, by importing and retailing timber that has been illegally harvested companies ignore corporate social responsibility principles. While the government may impose embargos and penalties on these companies, the organizations themselves may make a commitment to sustainability by being more careful and responsible in their choice of suppliers.A key challenge which business faces is the need for more reliable indicators of progress in the field of corporate social responsibility. What is more, dissemination of corporate social responsibility strategies is also required. Transparency and dialogue may help to make a business appear more trustworthy.In other words, the issue of social responsibility is of both theoretical and practical importance, on the whole. Speaking about Russia, in particular, too little research has been carried out to explore this topic. At the same time business activity in Russia is constantly developing, leading to larger and larger impact of Russian companies on society.If we turn back to the history of social responsibility in Russia, we will see that the first early signs of social responsibility involving business appeared at the end of the 1990s, with the most public examples being  some actions taken by the notorious oil company Yukos, which was deeply involved in modernising the social infrastructure of the region where it had operations.But private civil initiatives did not really begin to flourish until the 2000s, when responsible business people began to move into legitimate businesses and “thought about their souls”. Having looked around, they saw the pitiful state of the social sector, which had not been taken care of after the USSR disintegration. Thus, patronage returned to Russia: private and corporate donors renovated churches and museums, supported orphanages, and gave grants to theatres, sport and music schools. At the same time the first charity funds were launched, to address various social problems.Now, a decade later, there is a considerable number of respected funds trusted by the public, though many are still wary of charitable organizations. The honest funds build their reputation little by little by demonstrating real outcomes of their work, keeping detailed publically-available reports, winning citizens’ trust and motivating people to participate in resolving social problems.This process would have eventually allowed for transition from quantity to quality for charitable organizations, but a nationwide scandal prevented that from happening. A non-profit organization called The Federation Fund implemented a scheme that attracted enormous resources, not available to other private funds (free indoor advertising, benefits, etc.), invited Western stars to participate, and collected a lot of money that never reached the needy. Moreover, in its advertising campaign the fund acted far beyond the limits of ethics; for example, its ads featured a picture of a sick child who had died two years earlier. When the story became public, the fund made improvements (some money reached those for whom it was intended) but trust in the notion of charity in general, that had been so carefully built over such a long time, was ruined again among the general public.Another aspect of charity has generated debate. For example, the actress Chulpan Khamatova – co-founder of the charity fund Gift of Life (a highly respected fund in Russia that helps children suffering from cancer and other life-threatening diseases) – is often criticized because her fund deals with issues that should have been tackled by the state; the argument is that charity funds like Gift of Life grant to state authorities a sort of “amnesty” from addressing social issues in the future.Thus, there is much room for further development of social responsibility by Russian companies. Taking into account the specifics of the Russian business, for example, its relatively young age, several distinct predominant industries (oil and gas, mining etc) and absence of proliferated system of business regulations, it can be stated that the issue of social responsibility is even more important for Russian companies. Coupled with little research on this topic for Russian business, the issue discussed in current thesis is of high importance, both in theoretical and practical terms.The subject of this study is the importance of social responsibility for Russian companies. Thus, the goal of current research is to analyze how important social responsibility for Russian companies. In order to reach the goal stated above, the following tasks have been set:·         To explore the concept of social responsibility and related terms·         To investigate recent developments in social sphere·         To analyze the impact of being social responsible on financial results of companies·         To provide recommendations, both practical and for further researchThe structure of current thesis is split into three parts which gradually develop the issue in accordance with the goal and tasks stated above.The first part of the thesis is devoted to analysis of theoretical background of the issue under investigation. This stage of the research is of high importance since it states which terms will be applied in further stages and, thus, on what the whole research will be based.In current study a comprehensive overview of relevant theoretical sources has been carried out. In this part of the thesis, first, the definitions of prevailing terms are set.First of all, the concept of social responsibility is explored. Today in the academic world there is no unique definition and understanding of social responsibility born by companies. As almost every concept, the term social responsibility has a number of approaches to definition. In current thesis a summary is provided regarding those definitions. What is more, the choice of the prevailing concept which will be employed further in the thesis is justified.Second, related concepts which will be used in further stages of the research are also considered. For example, the concepts of tax concessions and social activities are examined and justified.It should be noted that literature review which is carried out in the scope of current thesis is based on recent publications devoted to the issue of corporate social responsibility. The articles which are covered in this stage of the research are published in leading journals and magazines in years 2010-2013.The literature review covers both international and Russian information sources. However, due to the fact that the issue of social responsibility is much more explored abroad, the number of Russian information sources is considerably limited.At the end of the first part of current thesis the conclusion is made with respect to the following issues:·         Main approaches to understanding of prevailing concepts used in the thesis·         Main trend in the development of the issue under investigation in international and Russian research·         Definition and understanding of prevailing concepts which are adopted for the purposes of current studyThe second part of the thesis is aimed at exploration of statistical data referred to the issue of corporate social responsibility in Russia. The main objective of this stage of the study is to examine the external environment, the background for the issue under investigation.The main method applied in this stage is analysis of statistical data, induction and deduction. The information to analyse is predominantly statistical which describes recent trends and main results which were achieved in social sphere.It should be noted that at this stage external analytical reports are analyzed as well. These include reports produced by the Association of Management, as well as reports on social investments made.At the end of this stage the conclusion is made in respect to the following:·         Current trends in social investments in Russia·         Recent results in social responsibility development in Russia·         The extent to which the idea of corporate social responsibility is spread in RussiaThe third part of the thesis is wholly devoted to empirical research of the impact which social responsibility has on companies’ performance. Important steps which are made at this stage are the following:·        Setting the method for statistical research·        Defining sample of companies based on which the study will be carried out with justification of the sample size, industries, data which is going to be extracted for the companies defined·        Stating hypotheses for the research·        Conducting statistical analysis of gathered data·        Interpreting results and justifying/denying the hypothesesThe statistical study which is going to be used in this stage employs regressions as the main tool. These are constructed with the help of SPSS software.The sample justified for the research encompasses a range of companies which are related to social responsibility. The exact data which is going to be gathered is specified.The hypotheses are then stated so that at the end of the empirical research they may be either proved or denied.The idea of this stage of the research is to obtain statistically significant data on the impact which investments in social responsibility have for selected companies. Thus, the investments made in social responsibility activities are examined against their results in order to see whether these investments bring benefits to the companies or not.Finally, the conclusion of the overall work is made. The conclusion is structured according to the composition of the whole work. First, brief summary of the theoretical background of the issue is made, approaches to the understanding of the main concepts are justified and the choice of the definitions is proved.Then the summary of the overall state of the corporate social responsibility in Russia is provided. This includes not only statistical data for Russian companies but also analytical reports on related issues.After that the results of the empirical part of the research is provided with hypotheses either proved or denied. The interpretation of the results is also provided.Finally, practical implementation and recommendations are provided in conclusion with directions for future research.To summarize, current thesis is of high theoretical and practical importance due to the fact that corporate social responsibility becomes a broadly investigated issue, on the one hand, and has a wide implementation in Russia, on the other hand. The structure of the thesis is made in the way to reach the goal and objectives stated at the beginning of the research. The conclusions are made at the end of the thesis on accomplishment of the goal.

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