1 Module 1 – Social Responsibility Framework

2 Module 1 – Social Responsibility Framework

INTRODUCTION
The first realization was that one should never assume that most business executives already
understand the term “Corporate Governance”, Second, that is is difficult to explain what the term
”Corporate Governance” means in just one or two sentences. “Corporate Governance” (and Corporate
Social Responsibility”) were, and still are, broad and very complex ideas. This comprehensive
understanding of Corporate Governance and Corporate Social Responsibility give sufficient
frameworks, labels, and handles to make these concepts and concerns essential aspects of their
business.

The concepts of corporate social responsibility and corporate governance and how these can be
useful as mechanisms to safeguard the interests of the various stakeholders of society, and more
importantly, to effect change on certain processes and behaviours that can improve governance
practices.

In the past, social responsibility and good governance both in the academic and professional
arena had changed with the advent and growth of social media, corporate citizenship, and social
activism. Issues that affect ordinary individuals were no longer ignored not swept aside. Society
became increasingly indignant with corporate stories of greed and moral corruption.

The direction being pursued by organizations determine the nature of the job and the personnel
they hire. Having established their organizational goals, they will be able to determine the strength of
their personnel and from there determine whether they need additional ones to fulfil their goals.

This module covers the lesson on Social Responsibility Framework.

MODULE LEARNING OUTCOMES

In this module, you should be able to:

1. define corporation;
2. explain the importance of social responsibility and good governance; and
3. identify the drivers and barriers in the corporate world.

Lesson 1:
Social Responsibility Framework

SPECIFIC LEARNING OUTCOMES

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In this lesson you should be able to:

1. identify and elaborate the importance of social responsibility and good governance;
2. differentiate the so-called three P’s in the accounting framework of an organization;
3. discuss the key role of leadership in influencing CSR; and
4. define the purpose of measurement in a Corporate Social Responsibility.

PRE-ASSESSMENT
INSTRUCTION. On the space provided, supply the word/group of words/phrase being describe or
defined.
1. ______________ Refers to a legal entity created by an individual or group of shareholders
who have ownership of the corporation through shares of stocks issued by the corporation.
2. ____________ An expectation of profit is natural when shareholders form corporations.
3. CSR was officially introduced in the early _________ through American economist and
educator Howard Bowen’s seminal work on social responsibility.
4. ____________ It provide a framework that companies must comply with in relation to legal
dimension.
5. ____________ Allows a shareholder to sell his shares of stocks in the stock market freely
should he/she decide to let go a part or all of his shares unless explicitly stated in the
corporate bylaws.
6. According to the _______________ there is no minimum number of incorporators (directors)
but shall not have more than 20, and each of the incorporators (directors) must own at one
share of stock.
7. ________________ It is a manifestation of good corporate governance.
8. _______________ It refers to the mixture of beliefs, norms, symbols, and the heritage that a
particular country or geographic area share and practices.
9. _______________ It is considered as one of the barriers in CSR that no matter how good the
intentions are in promoting CSR in organizations.
10. _______________ It has a key role in influencing Corporation Social Responsibility with
integrity and inspiration to others. E-
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LESSON MAP

Corporation Defined

The Philippine Measuring CSR

Corporation

Social Responsibility
Framework
Future of
Philippine
CSR
Importance of Social
Responsibility and Good
Governance

Leadership

Corporate Social
Responsibility

Figure 1 shows the major aspects to be considered in social responsibility framework

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CORE CONTENTS

ENGAGE: MINI CASE STUDY

“Starting right—where and how do I give back to society?”

Mrs. Caroline Caballes-Suntay, CEO of Storage Solutions Philippines, started her business a
decade ago. She entered into this business after gaining valuable experience from her professional
retail work here and abroad. Her business steadily grew and one day she came to the realization: What
is next? She spoke to her former superior/mentor and asked how she can give back to society. She
thought of: (1) improving further the lives of her employees with emphasis on empowering women; (2)
providing more support and commitment to local manufacturers that she uses in producing her
merchandise; and (3) contributing to the care of the environment given the nature of her business
(storage items, such as travel kits, wallets organizers, and the like, made of plastic, fabric, leatherette
and other natural and synthetic materials.)

She is aware of the concept of CSR, and has a general idea of how it works but needs guidance on
how to start on her CSR journey in a meaningful and sustainable manner. Mrs. Suntay also specifically
want to strategically approach her engagement as she wants her company to continue to grow and help
in national economic development.“

Activity 1: Base on the readings above, answers the following questions:

1. What do you think the reasons Mrs. Suntay is interested in participating in CSR? Relate Carroll’s
framework and/or leadership in your response.

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________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________

2. Where should the CEO focus her CSR efforts? How should she prioritize her desired
engagements?
________________________________________________________________________________
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________________________________________________________________________________
________________________________________________________________________________
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EXPLORE: READING CONCEPTS

CORPORATION DEFINED
A corporation is a legal entity created by an individual or group of shareholders who have
ownership of the corporation (through shares of stocks issued by the corporation) to engage in business
activities. Monks and Minow (2011) defines a corporation as a structures established by law to allow
different parties to contribute to capital, expertise, and labor or the maximum benefit of all of them. Their
ownership of the corporation is generally represented by their holding of common stock (one share =
one vote).Certain types of shares can have more voting rights or dividend priority, as expressed in the
company bylaws. Not all corporations though are formed with the objective of profit-making such as
charitable institutions, nonprofits, or nongovernmental organizations (NGOs). But the majority of
corporations are formed to provide a return for their shareholders.
Corporations are legal entities and are sometimes defined as “legal persons.” Corporations are
allowed to perform foundations that humans make, such as buying and selling properties owning
copyrights, patents, trademarks, and engaging in any other business activities. Corporations have an
indefinite life span that can survive from generation to generation.

THE PHILIPPINE CORPORATION

According to the 2019 Revised Corporation Code (RCC), there is no minimum number of
incorporators (directors) but shall not have more than 20, and each of the incorporators (directors) must
own at least one share of stock. Today, a corporation is granted a perpetual corporate term (in lieu of
the previous 50-year term). There is also the removal of the required subscribed/paid-up capital, and
residency of incorporators was made to keep up with goal standards. The most significant change done
was the introduction of the One Person Corporation (OPC).
The RCC focuses on four areas of reforms: enhancement of ease of doing business in the
Philippines; fortified stockholder protection and institutionalized corporate governance provisions;
emphasis on corporate social responsibility; and improve policies and regulatory corporate framework.

IMPORTANCE OF SOCIAL RESPONSIBILITY AND GOOD GOVERNANCE

The way a corporation conducts its business has profound effects on individuals in the societies
they operate. Corporations have continued to grow and can sometimes influence government policy
through political lobbying. Imagine a society where drinking water becomes a problem when its water
resources are being polluted by companies dumping their waste into lakes, rivers, and oceans or when
you wake up one day to find out that the bank where you have put all your savings into collapsed
overnight. Who should be accountable? How do you as an individual member of society, contribute to
good governance?

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) is a manifestation of good corporate governance. CSR
is the responsibility of companies to act and behave ethically to satisfy their various stakeholders’ needs.
7 Module 1 – Social Responsibility Framework

It is an ongoing commitment of organizations to ensure accountability to the stakeholders their existence

impacts. The foremost authority on this subject, professor Archie Carroll, views CSR from four
different perspectives.
Economic – An expectation of profit is natural when shareholders form corporation. The lower
layer of the pyramid suggests that companies must first be profitable after they have paid their
obligations to employees and suppliers, and conform to consumers’ needs and demands. This is the
very foundation and required of all corporations.
Legal – A corporation is created through law and, as such, must abide by the rules and
regulations imposed for fairness and justice. Much like economic responsibilities, it is required for
companies to the legally compliant as well.
Ethical – Doing what is right for stakeholder is what ethical companies should aim for. Society
expects companies to take on this responsibility beyond what is required of them legally.
Philanthropic – To fulfill this responsibility, companies need to truly embrace philanthropy,
meaning, issues that pertain to the improvement of human lives must be addressed without compromise.
This responsibility, however, is not required nor expected but rather desired by companies.

A BRIEF HISTORY OF CSR

CSR can be traced back to the industrial revolution when there was a growing concern for the
well-being of workers and its effect on their productivity. The industrial revolution was responsible for the
economic growth of nations. Still, the downside of industrialization that contributed to social problems
(such as increased poverty and unfair labor practices, among others) became advocacy for reformers.
CSR started as a philanthropic endeavor of successful businessmen who wanted to do good through
their donations to help the underprivileged. A rise of nations’ wealth brought about an increase in
philanthropists.
CSR was officially introduced in the early 1950s through American economist and educator
Howard Bowen’s (1953) seminal work on social responsibility. The last 40 years, beginning in the
1970s, saw marked developments in CSR as companies started to be more aware of their social
responsibility.
In the Philippines, CSR started as donations from various businesses in the 1960s. Activities
from this decade were unorganized and sporadic. The 1970s saw more coordinated efforts between
companies and intermediaries. The end of the Marcos regime in the 1980s and its adverse effects on
the economy led to a closer collaboration between donors and donees. CSR flourished in the 1990s as
companies acknowledge their role as social catalysts. And from the 2000s onward, CSR has become an
essential part of a company’s identity (Roman, 2007). Top companies started to approach CSR as an
integrative strategic management tool. CSR now is a universally accepted norm of good corporate
governance.

DRIVERS AND BARRIERS OF CSR

How can one strengthen the propagation of CSR? And what are se of the barriers it needs to
contend with for companies to embrace it fully?
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Below is an illustration of the opposing forces of CSR:

DRIVERS BARRIERS
Regulation C Limited financial
resources
Market
behaviour
s Profit
maximization
Social activism

Culture
R Availability of
human
resources
Strategy

Drivers:

Regulation – Regulation and law provide a framework that companies must comply with. This is
in relation to the legal dimension of Carroll’s CSR framework.
Market behavior – Benchmarks have been established because of companies’ best practices
that use CSR as a builder of reputation; how the market behaves and influences; and bow
companies engage in their respective CSR initiatives and have become a source of competitive
advantage.
Social activism – How stakeholders in society reach and voce out their concerns to corporations
publicly through various menus (such as social media, demonstrations, lawsuit’s, and the like)
have impacted how organizations behave.
Culture – Culture is a mixture of beliefs, norms, symbols, and the heritage that a particular
country or geographic area shares and practices.
Strategy – Perhaps the most significant driver of CSR is strategy. Integrating CSR in its planning
from the different functional areas of a company fortifies the relationship and becomes a creator
of value that benefits the corporation in the long term.
Barriers:
Limited financial resources – As with Carroll’s economic perspective of CSR, a
company needs to be profitable and take care of its own needs before it has the ability
and resources to engage effectively in social responsibility.
Profit maximization - A company that single-mindedly focuses on operational efficiency
is usually driven by profit maximization. According to Kolstand (2007), most executives
support the Friedmanian view of maximizing returns to shareholders despite the growing
literature on CSR’s positive effects on corporate financial performance, persistence, and
acceptance of maximizing profits at as barriers to CSR.
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Availability of human resources – No matter how good the intentions are in promoting
CSR in organizations, it will need efficient mobilization through employee involvement
and engage net in its programs. Without the support of human resources in its
implementation CSR activities will be lackluster.

MEASURING CSR
The purpose of measurement is to understand what is being measured better and lay the
groundwork for improvement. CSR is a management concept that is not easy to measure
Unlike other functional areas where tangible measurements have been developed for quite
some time, market share, customer satisfaction, attrition rate, turnaround time, financial ratios,
goodwill, loyalty, and social/environmental impact are just some CSR concepts that cannot be
accurately measured. But all these intangibles can be translated into measurable variables that
can provide indications of relationships and outcomes. Measuring CSR provides several
benefits, such as helping organizations make better decisions on allocating resources with the
greatest impact, improving processes that will make initiatives more efficient, and providing
more support for the business case.
Kaplan and Norton’s (1996) Balanced Scorecard is an example of an integrated strategic
measurement system.
Triple Bottom Line (also commonly called the three Ps: (people, planet, and profit) is an
accounting framework that describes three evaluation perspectives that contribute to creating
greater value for the organization. The increasing pressure from the government and society to
manage and assess the results of their operations gave way to scrutinizing companies from
their economic (profit), social (people), and environmental (planet) impact

PEOPLE
Social

PLANET PROFIT

Environmental Financial
10 Module 1 – Social Responsibility Framework

In recent years, with the growing emphasis on employee happiness and good corporate
governance, ideal results such as employees’ well-being, ethical behavior, and other factors have been
considered as art of a company’s “bottom line”, and these contribute to multiple bottom-line reporting.
As human development continues to prosper in the future, the traditional look at the bottom line (profit) is
already a thing of the past.

LEADERSHIP
 Leadership has a key role in influencing CSR.
 Both CS and leadership are founded on concepts of service, integrity, and inspiration to
others.
 The relationship between them is mutually empowering and transforming (Guarheri & Kao,
2008).
 Employees and managers as members of organizations are naturally concerned about,
contribute, and react to their organization’s social consciousness (Rodrigo & Arenas, 2008)
particularly to their leaders’ commitment to CSR.
 Leader perceptions provide evidence regarding their CSR attitude and acts of the leaders can
trickle down to affect employees’ subsequent attitude, behavior, and actual engagement
through volunteerism.
 Leader must also be able to communicate their CSR stories internally and externally
effectively.

FUTURE OF PHILIPPINE CSR

“Corporate Social Responsibility has become integral for most companies as it becomes an
opportunity to wholly and directly engage stakeholders, creating share value for both the organization
and communities it serves. It goes beyond profit. It becomes about serving the Filipino, and is a clear
reflection of the values that your company stands for.

EXPLAIN: DISCUSSING CONCEPTS Deep

INSTRUCTIONS: Answer the following questions below.

1. Describe corporation.

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

2. What, for you, are the values and mores that make up a good organization?
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
11 Module 1 – Social Responsibility Framework

3. What is corporate good governance?

________________________________________________________________________________
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________________________________________________________________________________

4. What do you think is the role of management in the survival of a company?

________________________________________________________________________________
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________________________________________________________________________________

5. Do you believe that corporations should behave ethically and be morally accountable to society
at large?

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________________________________________________________________________________

EXTEND: TAKING OPINIONS

INSTRUCTIONS: Answer the following questions below.
1. How will you describe your own experience with the governance of our government during this
pandemic and that of Typhoon Odette?
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

2. What is your take with the benefits of good governance of our government during this pandemic
and that of typhoon “Odette”?

________________________________________________________________________________
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________________________________________________________________________________

EVALUATE: DEEPENING UNDERSTANDING

INSTRUCTIONS: Answer the following questions below.
1. What is the difference between the Philippine Corporation before with the advent of the Revised
Corporation Code of 2019.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
12 Module 1 – Social Responsibility Framework

2. Describe the importance of Social Responsibility and Good Governance.

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

3. Search for an organization that uses a unit of measurement which is the Balanced Scorecard on
the functional areas where tangible measurements have been developed for quite some time, in
the market share, customer satisfaction, attrition rate, turnaround time, financial ratios, goodwill,
loyalty, an social/environmental impact.

TOPIC SUMMARY

In this lesson, you learned that:

 Corporation is an artificial being created by operation of law, having the right of succession and
the powers, attributes and properties expressly authorized by law or incident to its existence.
 Importance of Social Responsibility and Good Governance.
 Four dimensions that provide a structure or framework that characteri3s companies’
responsibilities within societies such as Economic, Legal, Ethical, and Philanthropic.
 CSR can be traced back to the industrial revolution when there was a growing concern for the
well-being of workers and its effect on their productivity.
 Drivers and Barriers of CSR were as follows: Drivers: regulation, market behavior, social
activism, culture, and strategy while the barriers are: limited financial resources, profit
maximization, and availability of human resources.
 Application of the scorecard is also dependent on the specific need or circumstance of a
company and may be adjusted accordingly.
 The triple bottom line commonly called the three Ps: People, Planet, and Profit.
13 Module 1 – Social Responsibility Framework

POST-ASSESSMENT
INSTRUCTIONS: Choose the letter of the correct answer.
1. It is a legal entity created by an individual or group of shareholder who owns a share of stocks.
a. Corporate Social Responsibility
b. Corporation
c. Leadership
d. Balance scorecard

2. It allows a shareholder to sell his/her shares of stocks in the stock market freely should he/ she
decide to let go a part or all of his/ her shares unless explicitly stated in the corporate bylaws.
a. Improves marketability
b. Reduce the vulnerability of companies
c. Transferability
d. None of the above
3. Other term of incorporators in the corporation
a. Bondholder
b. Board of directors
c. Shareholders
d. Public

4. According to the 2019 Revised Corporation Code, there is no minimum number of incorporators
but shall not have more than ___________ who must own at least one share of stock.?
a. 20 individuals
b. 15 persons
c. Perpetual existence
d. All of the above

5. It is complementary to good corporate governance.

a. Corporate Social Responsibility
b. Economic
c. Ethics
d. Legal

6. Corporate Social Responsibility was officially introduced in the early _________ through
American economist and educator Howard Bowen’s.
a. 1970s
b. Early 1980s
c. Early 1950s
d. 1990s
14 Module 1 – Social Responsibility Framework

7. The Corporate Social Responsibility started in the Philippines through a ______________.

a. program
b. project
c. giveaways
d. donations

8. Which one is /are not part of the corporate governance?

a. BOD
b. CFO
c. CEO
d. All of the above

9. It is a mixture of beliefs, norms, symbols, and the heritage that a particular country or geographic
area shares and practices.
a. Culture
b. Social activism
c. Market behavior
d. Regulation

10. Which is not among the effects of agency in governance?

a. conflict of interest
b. managerial opportunism
c. incurrence of agency cost
d. all of the above

REFERENCES

 Aune, B. (2014). Kant’s theory of morals. New Jersey, USA: Princeton University Press.
 Chandler, D (2019). Strategic corporate social responsibility: Sustainable value reason. CA,
USA: Sage Publications, Inc.
 Chaudhary, R. (2027). Corporate social responsibility and employee engagement: Can CSR
help in redressing the engagement gap? Social Responsibility Journal, 13 (2), 223-338.
 David, F.R., & David, F.R. (2016). Strategic management: Concepts and cases. Essex,
England: Pearson Education Limited.
 Davis, J., Schoorman, F.D., & Donaldson, L. (1997). Toward a stewardship theory of
management. Academy of Management Review, 22(1), 20-47.
 Delos Santos, Danilo Lorenzo S. and Ng, Leveric T. (2021). Good Governance and Social
Responsibility. Rex Book Store, First Edition.