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Corporate Social Responsibility

Corporate social responsibility is the expectation that a firm maintain a balance
between making a profit and contributing to society.
Socially responsible entities are conscious of the trade-off between economic
development and the welfare of society and the environment. They therefore refrain
from socially harmful practices and contribute to activities that are socially
beneficial.
Companies can demonstrate social responsibility in a variety of ways, such as
donating funds to education, arts, culture, and underprivileged children.

Is CSR the same as business ethics?

There is clearly an overlap between CSR and business ethics


Both concepts concern values, objectives and decision based on something
than the pursuit of profits

And socially responsible firms must act ethically

The difference is that ethics concern individual actions which can be assessed as
right or wrong by reference to moral principles.
CSR is about the organisation’s obligations to all stakeholders – and not
just shareholders.
There are four dimensions of corporate responsibility

Economic - responsibility to earn profit for owners


Legal - responsibility to comply with the law (society’s codification of right
and wrong)

Ethical - not acting just for profit but doing what is right, just and fair

Voluntary and philanthropic - promoting human welfare and goodwill


Being a good corporate citizen contributing to the community and the quality
of life.

Responsibility towards owners

The responsibilities of business towards its employees include: a. ii. They contribute capital and bear the business risks. financial institutions. Banks. Timely repayment of principal amount. b. The primary responsibilities of business towards its owners are to: a. Timely and regular payment of wages and salaries. The responsibilities of business towards its investors are : a. So it is the prime responsibility of every business to take care of the interest of their employees. c. d. Run the business efficiently. Growth and appreciation of capital. Responsibility towards employees Business needs employees or workers to work for it. Opportunity for better career prospects. Proper utilisation of capital and other resources. then the only business can be successful. bonds. Responsibility towards investors Investors are those who provide finance by way of investment in debentures. These employees put their best effort for the benefit of the business. b. Regular payment of interest. group . and investing public are all included in this category. Job security as well as social security like facilities of provident fund. Proper working conditions and welfare amenities. d. deposits etc. Regular and fair return on capital invested. b. c. e. iii.Owners are the persons who own the business. If the employees are satisfied and efficient. Ensuring safety of their investment.

if any. canteen. g. Responsibility towards customers No business can survive without the support of customers. Dealing on fair terms and conditions. b. All the advantages and disadvantages of the product as well as procedure to use the products must be informed do the customers. Products and services must be able to take care of the needs of the customers. Products and services must be qualitative c. g. The responsibilities of business towards these suppliers are: a. iv. Availing reasonable credit period. c. crèches etc. Better living conditions like housing. As a part of the responsibility of business towards them the business should provide the following facilities: a. e. called distributors. d.insurance. . Grievances of the consumers. pension. etc. Giving regular orders for purchase of goods. f. Price of the goods and services should be reasonable and affordable. Timely payment of dues. transport. v. There must be regularity in supply of goods and services d. b. retirement benefits. supply finished products to the consumers. Responsibility towards suppliers Suppliers are businessmen who supply raw materials and other items required by manufacturers and traders. must be settled quickly. There must be proper after-sales service. Certain suppliers. f. Timely training and development.

adulteration. iii. organizations. Responsibility towards society A society consists of individuals. which . They interact with each other and are also dependent on each other in almost all activities. duties and taxes regularly as well as honestly. not to offer to customers heavy discounts and /or free products in every sale. The various responsibilities of business towards government are: a. must be avoided. Unfair means like under weighing the product. vi. Conforming to pollution control norms set up by government. d. Existence of competition helps the business in becoming more dynamic and innovative so as to make itself better than its competitors. Payment of fees. They all are the members of the society. Not to indulge in corruption through bribing and other unlawful activities. h. not to offer exceptionally high sales commission to distributers. vii. viii. Responsibility towards government Business activities are governed by the rules and regulations framed by the government. It also sometimes encourages the business to indulge in negative activities like resorting to unfair trade practices. etc. groups. c. ii. Not to indulge in monopolistic and restrictive trade practices. Responsibility towards competitors Competitors are the other businessmen or organizations involved in a similar type of business. Setting up units as per guidelines of government b. families etc. agents etc.h. There exists a relationship among them. not to defame competitors through false or ambiguous advertisements. The responsibilities of business towards its competitors are i.

to generate employment d. Again. which may ultimately force the firm to close down its business. to help the weaker and backward sections of the society b. For example. to protect the environment e. Instead. People prefer to buy products of a company that engages itself in various social welfare programmes. to promote sports and culture g. roads. good public image also attracts honest and competent employees to work with such employers. if any business firm pollutes the environment it will naturally come under strict government regulation. ii. Thus. So for its survival and growth. which may be as follows: a. Business. etc. it has certain responsibilities towards society. to preserve and promote social and cultural values c. support from the society is very much essential. So it should be . Business utilizes the available resources like power. technology etc.may be direct or indirect. Government Regulation . Public Image . iii. to provide assistance in the field of developmental research on education. being a part of the society. land. medical science. Arguments for Business involvement in social actions: i. of the society. Survival and Growth -Every business is a part of the society. the business firm should engage itself in maintaining a pollution free environment. water. to conserve natural resources and wildlife f.The activities of business towards the welfare of the society earn goodwill and reputation for the business.To avoid government regulations businessmen should discharge their duties voluntarily. The earnings of business also depend upon the public image of its activities. also maintains its relationship with all other members of the society.

the responsibility of every business to spend a part of its profit for the welfare of the society.Now-a-days consumers have become very conscious about their rights. Employee satisfaction . Consumer Awareness . This has made it obligatory for the business to protect the interest of the consumers by providing quality products at the most competitive price. They protest against the supply of inferior and harmful products by forming different groups. education and training. For example. The employers should try to fulfil all the expectation of the employees because employee satisfaction is directly related to productivity and it is also required for the long-term prosperity of the organisation.Besides getting good salary and working in a healthy atmosphere. employees also expect other facilities like proper accommodation. transportation. v. it will have more efficient people to work and thus. Benefits: CSR behaviour can benefit the firm in several ways • It aids the attraction and retention of staff • It attracts green and ethical investment • It attracts ethically conscious customers • It can lead to a reduction in costs through re-cycling • It differentiates the firm from its competitor and can be a source of competitive advantage • It can lead to increased profitability in the long run Arguments against Business involvement in social actions: Social involvement could reduce economic efficiency. iv. earn more profit. . if business spends money on training of the employees.

Social involvement can create a weakened international balance of payment situation.Social involvement would create excessive costs for business. Business has enough power. Businesspeople lack the social skills to deal with the problems of society. . and additional Social involvement would further increase its power and influence.