Relation between Social Responsibility and Enterprise Long-term Competitiveness

Yongkui Zhang

doi:10.3991/ijet.v8i5.2994

Abstract

The theory of corporate social responsibility holds that a company must not only fulfill its economic responsibility of making profits for its shareholders, but also undertake broad legal, ethical and philanthropic responsibilities. The notion of corporate social responsibility is most vulnerable to the argument that fulfillment of social responsibility will affect the companyâ??s financial performance and competitiveness, which will in turn undermine the efficiency of the economy at large. To find an answer to this question, this paper draws upon the logical core of the stakeholder theory to design a framework for analyzing social responsibility and enterprise long-term competitiveness. This framework is then used to examine the Mengniu case, and the results show that fulfillment of social responsibility is a fountain of enterprise long-term competitiveness, fulfillment of social responsibility may reduce short-term financial performance somehow, but it will greatly increase long-term financial performance and enterprise long-term competitiveness.

Highlights

Niu Gensheng, Chairman of the Board of Directors of Mengniu Dairy, often claimed that his personal motto was that “minor wins come from wisdom while major victories result from high standards of ethical conduct”
The concept of corporate social responsibility was born in the United States in the early 20th century; it holds that a company must fulfill its economic responsibility of making profits for its shareholders, and undertake broad legal, ethical and philanthropic responsibilities [3]
The notion of corporate social responsibility is most vulnerable to the argument that fulfillment of social responsibility will affect the company’s financial performance and competitiveness, which will in turn undermine the efficiency of the economy at large

Summary

INTRODUCTION

Niu Gensheng, Chairman of the Board of Directors of Mengniu Dairy, often claimed that his personal motto was that “minor wins come from wisdom while major victories result from high standards of ethical conduct”. In the late 1990s, corporate social responsibility began absorbing the emerging stakeholder theory as its basis, gaining a semblance of a theoretical foundation [2, 10] Is it true that a company cannot survive if it tries to fulfill its social responsibility, or does social responsibility inevitably leads to a decline in financial performance and economic efficiency? To find an answer to this question, this paper draws upon the logical core of the stakeholder theory to design a framework for analyzing financial performance, social responsibility and enterprise sustainable development This framework is used to examine the Mengniu case, and the results show social responsibility and financial performance are not mutually exclusive, and that, in the long run, fulfillment of social responsibility will not affect a company’s financial performance or competitiveness, but enhance its value and sustainable development

STORY OF MENGNIU’S BREAKNECK EXPANSION

Average annual total revenues per dairy farmer

Fulfillment of Social Responsibility Should Be Hierarchical

Findings

CONCLUSION