Corporate Social Responsibility

Corporate Social Responsibility (CSR)

The managerial obligation to take action that

protects & improves both the welfare of society as a

whole & the interests of the organization

The key questions for corporations include:

Does business have a social responsibility? If so, what is the extent and type of the responsibility?

Evolution of social responsibility of business

Phase 1- profit maximizing management

Entrepreneurs produce what people want only when they can earn a profit by doing so

Phase II- trusteeship management

Managers were expected not only to maximize profits, but also to

serve as trustees of stakeholders

Phase III- quality of life management

what is good for society is good for our company recognizes government as a partner in a joint effort to solve societys problems

Advantages of CSR
Improved financial performance Enhanced brand image & reputation

Increased sales & customer loyalty

Increased ability to attract & retain employees

Reduced regulatory oversight

Innovation & learning

Social responsiveness

Degree to which an organisation

meets its social responsibilites

What should be measured when measuring social responsiveness?

Financial contributions to charitable

projects Fund raising for a social cause Volunteerism: involvement of employees in civic activities Recycling to conserve the environment

What should be measured when measuring social responsiveness?

Valuing diversity Direct corporate investments to provide facilities

for a locality/ community

Quality of worklife

Providing quality & safe products to customers

Pollution control measures

Models of Corporate Social Responsibility (CSR)

Carrolls Model A firm has four categories of obligations of corporate performance:

Economic Legal Ethical Discretionary

Responsibility

Societal Expectation Required

Examples

Economic

Be profitable. Maximize sales, minimize costs, etc. Obey laws and regulations. Do what is right, fair and just. Be a good corporate citizen.

Legal Ethical

Required Expected

Discretionary Desired/ (Philanthropic) Expected

Pyramid of CSR

Models of Corporate Social Responsibility (CSR)

Halals Return On Resources Model Of Corporate Performance
A firm can only attempt to unite the diverse interests

of various social groups for form a workable coalition.

Beyond a certain level of economic activity. The

social issues at stake can become conflicting

Models of Corporate Social Responsibility (CSR)

Ackermans Model 3 phases in the development of social responsiveness of a firm Phase 1:

top management recognises the existence of a social problem that need companys attention Acknowledges the company's policy by making an oral or written statement

Phase 2: Appointment of staff specialists/ external consultants to study the problem & find solutions Phase 3: implementation of social responsibility programs

Models of Corporate Social Responsibility (CSR)

Keith Davis Model

Describe why & how business should adhere to CSR Proposition I:

social responsibility arises from social power.

business shall operate as a two way open system with open receipt of inputs from society & open disclosure of its operations to the public. The social costs & benefits of an activity, product/ service shall be thoroughly calculated & considered in deciding whether to proceed with it.

Proposition II:

Proposition III:

Models of Corporate Social Responsibility (CSR)

Keith Davis Model

Proposition IV:

The social costs related to each activity shall be passed on to the customer business institutions, as citizens, have the responsibility to become involved in certain social problems that are outside their normal area of operations.

Proposition V:

Arguments favoring CSR

Business survives using resources of the society

Integral part of social systems, hence has to care for

the needs of the society

Business is resourceful
Social involvement would foster a harmonious &

healthy relationship between the society & business

to the mutual benefit of both

Arguments favoring CSR- cont

Social responsibilities like recycling the waste may

have favorable financial effects

Discourage government regulation & intervention

Create a better public image

Arguments against CSR

Business should confine to its own business Can adversely affect the economic health of a

business
Can affect competitiveness if it causes an increase in

the price of the product

Can lead to an increase in the dominance of business

over the society

Responsibilities Of Business To Different Sections Of The Society

Responsibility to shareholders
To safeguard the capital of the shareholders To provide a reasonable dividend

By:
Strengthening & consolidating its position thru

innovation & growth

Responsibility to employees
The payment of fair wages The provision of the best possible working conditions

The establishment of fair work standards & norms

Provision of labor welfare facilities to the extent

possible & desirable

Arrangements for proper training & education of the

workers

Responsibility to employees- cont

Reasonable chances & proper system for

accomplishment & promotion.

Proper recognition, appreciation & encouragement

of special skill & capabilities of the workers

The installation of an efficient grievance handling

system
Opportunity to participate in managerial decision to

the extent possible

Responsibility to consumers
To improve the efficiency of the functioning of the business so as to

Increase productivity & reduce prices Improve quality Smoothen the distribution system to make goods easily available.

To do research & development, to improve quality & introduce better &

new products
To take appropriate steps to remove the imperfections in the

distribution system, including black marketing or profiteering by middle men or anti social elements
To supply goods at reasonable prices

Responsibility to consumers- cont

To provide the required after sales service. To ensure that the product supplied has no adverse effect on the

consumer
To provide sufficient information about the products, including their

adverse effects, risks, & care to be taken while using the products
To avoid misleading the customers by improper advertisements or

otherwise
To provide an opportunity for being heard & to redress genuine

grievances
To understand customer needs & to take necessary measures to satisfy

these needs.

Responsibility to the community

Taking appropriate steps to prevent environmental

pollution & to preserve the ecological balance

Rehabilitating the population displaced by the

operation of the business, if any

Assisting the overall development of the locality Taking steps to conserve the scarce resources &

developing alternatives , wherever possible

Responsibility to the community- cont

Improving the efficiency of the business operation Contributing to R&D Development of backward areas Promotion of small scale industries Making possible contribution to furthering social causes

like the promotion of education & population control

Contributing to the national effort to build up a better

society.

Responsibility to the dealers

Fairness & truthness of all the activities including

pricing, licensing to sell & rights to sell.

Ensure business activities are free from litigation
Develop long term stability in dealer relationship

Ensure that there is equity in relationship with all

dealers.

Responsibility to the government

To behave like a law abiding citizen To pay its dues & taxes to the state fully & honestly

Impartiality towards political affairs, i.e., to abstain

from direct political involvement, & not to support political parties

To follow honest trade practices & avoid activities

leading to restraint of trade

Responsibility to the government- cont

Not to corrupt public servants for selfish ends To sell commodities & services without adulteration

Use scarce national resources properly

Environmental protection & reduce pollution

Respect to the community & citizens of the country

Contribute to social development.

Corporate Citizenship
Corporate citizenship embraces all the facets of corporate social responsibility, responsiveness and

performance