II.

Management and Society

2. Ethics and Social Responsibility

2.B Social Responsibility Concepts

There seem to be a lot of definition of CSR and the key point to note that CSR is an evolving concepts
that does not have a universally accepted definition currently. The definitions associated with other
terms and ideas of CSR, including corporate sustainability, corporate citizenship, corporate
accountability, corporate ethics and the triple bottom line.

World Business Council for sustainable Development defines CSR as the Continuing commitment by
business to behave ethically and contributed to economic development while improving the quality of
life the workforce and their families as well as of the local communities and society at large.

Commissions of Europeans Communities defines CSR as a concept whereby companies integrate social
and environmental concerns in their business operations and in their interaction with their stakeholders
on a voluntary basis

Working group on social responsibility of ISO 26000 gave the working definition of CSR as a
responsibility of an organization for the impacts of its decisions and activities on society and the
environment through transparent and ethical behaviour that is consistent with sustainable development
and the welfare society: takes into account the expectations of stakeholders: is in compliance with
applicable laws and consistent with international norms of behaviour: and in integrated through the
organization.

Types of Corporate Social Responsibility

Carroll (1979) developed the four-part framework of corporate responsibility which focuses on the types
of social responsibilities. This four-part framework categorized four types of responsibilities under total
social responsibilities of a corporation that society assumes the business have. The social responsibility
of business encompasses the (1) economics, (2) legal, (3)ethical and (4) discretionary expectations that
society has of organization at a given point in time.

1. Economic Responsibility comes from the principal role of a business organization to produce
goods and services that meet consumers. Its main function is to earn profits. To earn profits
means to understand the needs and demands of consumers whether it be regarding the quality of
the product or its price.
2. Legal Responsibilities are not only liable to the individuals in the society but also to the businesses
in the society. As business is an entity itself, it must also follow laws and rules. Every business has a
 responsibility to operate within the boundaries set by the various commissions and agencies at
every level of the government. These rules and regulations are set for maintaining balance and the
greater good of the society
3. Ethical responsibilities include the behavior of the firm that is expected by the society but not
codified in law. The factors of ethical responsibility include that the business must be
environmentally friendly. The business should always be aware of its activities and how do they
affect the environment. It is the moral and ethical responsibility of every human and every
business. Ethical responsibility shows the concern for what consumers, employees, shareholders
and communities regard fair
4. Discretionary Responsibility / philanthropic responsibility shows the obligations for a business
organization to be a good corporate citizen assuming all activities to promote human welfare or
goodwill. Philanthropic initiatives include the donation of time, money or resources to
charities and organizations at local, national or international levels. These donations can be
directed to a variety of worthy causes including human rights, national disaster relief, clean
water and education programs in underdeveloped countries. For example, Microsoft co-
founder Bill Gates has donated billions of dollars to the Bill and Melinda Gates Foundation,
which supports numerous causes including education, the eradication of malaria and
agricultural development. In 2014, Bill Gates was the single largest giver in the world,
donating $1.5 billion in Microsoft stock to the Bill and Melinda Gates Foundation .

Organization Stakeholders
Understanding and applying CSR is that managers must confront the question “Responsibility to
whom?”

From a social responsibility perspective, enlightened organization view the internal and external
environment as a variety of stakeholder.

A stakeholder is any individual or group that is directly or indirectly affected by an organization’s

decisions. Managers of successful organizations typically have many different stakeholders to consider:
stockholders, or owners of the organization; suppliers; lenders; government agencies; employees and
unions; consumers; competitors; and local communities as well as society at large. Each stakeholder has
a different criterion of responsiveness because it has a different interest in the organization.
 Categories of Stakeholder Groups
 
Primary Stakeholders Shareholders (Owners)
  Employees
  Customers
  Business Partners
  Communities
  Future Generations
  The Natural Environment
Secondary Stakeholders Local, State, and Federal Government
  Regulatory Bodies
  Civic Institutions and Groups
  Special Interest Groups
  Trade and Industry Groups
  Media
Competitors
 

Stakeholders of a typical modern organization and examples of social obligation managers owe to
them

Stakeholder Social Obligations Owed

Stockholders/owners To increase the value of the organization
Suppliers To deal with them fairly
Banks and other lender To repay debts
Government Agencies To abide by laws
Employees and Union To provide safe working environment and to
negotiate fairly with union representative
Consumers To provide safe products
Competitors To compete fairly and to refrain from restraints
of trade
Local communities and society at large To avoid business practices that harm the
environment