FILAMER CHRISTIAN UNIVERSITY

GRADUATe ScHOOl
AUTONOMOUS STATUS -CHED
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Tel. No. (036) 6212-317 Fax No. (036) 6213-075

MBA 401 SOCIAL RESPONSIBILITY & GOOD GOVERNANCE

Reporter: Mark L. Limjuco

Perspective in Corporate Social Responsibility

People’s attitude, values and management culture differ. Consequently, each has a social
responsibility in society since every individual, body or institution makes up a society. Businesses have
different viewpoints on social responsibility as well.

Classical View Managerial View Public View Christian View

 The primary  Does not  Includes the  Excess wealth

responsibility emphasize needs and should be
of business is profit interest of the given to the
profit maximization whole society less fortunate.
maximization. and interests of in contrast Wealthy
 Obligation of stock holders. with the individuals
management is  To balance the classical and have a
to satisfy stock interests of managerial responsibility
holders for employees, views. to share their
their customers,  Establishes blessings with
investments. Suppliers and harmony with the poor.
 Supported by Local both business  A successful
Milton community is operations and corporation
Friedman, one the role of public interest. should perform
of the most managers of its social
effective big businesses. responsibility
advocates of more by
economic returning a fair
freedom and portion of its
free enterprise. profits to the
people in the
form of social
services.
 Based on the
teachings of
Jesus Christ as
taught in the
Bible.

Four Views on Corporate Social Responsibility

 ASSESSMENT ON THE PRACTICE OF CORPORATE SOCIAL
RESPONSIBILITY

1. Arguments in Support of Corporate Social Responsibility

1.1 Long- run self- interest – in the long run, business enterprises will benefit from their
own investment by using their resources in reducing or eliminating social problems.
A good social and economic condition will offer an encouraging environment for
businesses.
1.2 Business Resources - Businesses could use their huge resources in the improvement
of societal and environmental conditions. Some of these business resources are
manpower, funds, materials, management skills and technology.
1.3 Viability of Business – as embodied in the deed of a corporation, businesses are
granted power and privileges by the government due to their contributions to the
economy and valuable services to society. The government can also revoke the
charter of a business once it fails to meet social expectations. For this reason,
businesses have to perform their social responsibilities.
1.4 Public Image – charitable, civic and socio economic projects are some of the
activities where businesses take part. As they become active with such projects, their
public image is also enhanced. They leave to the society a very good impression of
their corporate image that attracts more competent recruits and a greater number of
customers.
1.5 Profit from Social Problems- businesses can turn problems into profits by being
creative and resourceful. An example is recycling of waste materials into other
valuable goods.

2. Arguments against the Practices of Corporate Social Responsibility.

2.1 Profit Maximization- Corporate executives and managers are primarily responsible
to Investors and stockholders. It is their duty to maximize the profit of their businesses,
not the concerns of the society.

2.2 Lack of Social Skills- Businessmen lack the appropriate skills in solving social
concerns. Social problems should be the concern of the government, not the
businessmen’s who are honed with the disciplines involved in business.

2.3 Lack of Social Accountability- The social needs and problems should not depend on
businessmen. Businesses cannot be expected to solve social problems. This must be left
to the government.

2.4 Higher Product Cost- Businesses active participation in social, charitable or civic
project leads to additional expenses and wastes many hours of the company. In order to
recover from such losses, businesses increase the cost of their products that may also
cause them disadvantage from the costs of the products of their competitors.
 THE FOUR CORPORATE RESPONSIBILITIES

Taking it from The Pyramid of Social Responsibility, a four-part model developed by

Archie B. Carroll and published in the July-August 1991 issue of the Business Horrizons, the
corporate social responsibilities of a business can be classified into four as can be seen from the
following figure.

1. Philanthropic Responsibilities- DESIRED of business by society. This also 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, and clean water and education programs
in underdeveloped countries.
2. Ethical Responsibilities – EXPECTED of business by society. The primary focus on
ethics is to provide fair labor practices for businesses employees as well as the employees
of their suppliers. Fair business practices for employees include equal pay for equal work
and living wage compensation initiatives Ethical labor practices for suppliers include the
use of products that have been certified as meeting fair trade standards.
3. Legal Responsibilities- REQUIRED of business by society. Legal responsibilities are
not only liable to the individuals in the society but also to the businesses in the society.
These rules and regulations are set for maintaining balance and the greater good of the
society. A law- abiding enterprise is a socially responsible enterprise as well.
4. Economic Responsibilities- REQUIRED of business by society. Focuses on practices
that facilitate the long term growth of the business, while also meeting the standards set
for ethical, environmental and philanthropic practices. By balancing economic decisions
with their overall effects on society, businesses can improve their operations while also
engaging in sustainable practices. An example of economic responsibility is when a
company modifies its manufacturing processes to include recycled products, which could
benefit the company by potentially lowering the cost of materials and also benefit society
by consuming fewer resources.

Philanthropic
Responsibilities

Ethical Responsibilities
(Obligation to be ethical; do
What is right & avoid harm

Legal Responsibilities
(Compliance with laws and regulations)

Economic Responsibilities
(Being profitable)
Social Responsibility towards Consumers

Consumers are considered to be the most important stakeholders of the business beside
its own employees. Companies are duty- bound to fulfill and be conscientious of their social
responsibility towards the customers of their business. Not only workers experience abuses and
exploitation, cheating and abuse. These also happened to customers in as early as the beginnings
of the history of social responsibility when workers were forced to work longer hours and treated
as slaves. Although aware of the poor quality of their products, avaricious businessmen during
the early periods cheated their customers by selling the same poor quality products with very
expensive prices. Even at present, there are still a great number of cheating businessmen who
swindle, deceive and take advantage of their trusting customers. Consumer rights which are, the
right to safety, the right to be informed, the right to choose, and the right to be heard were
introduced by the famous former U.S president John F. Kennedy. These rights became
contributory to the now more intelligent and smarter consumers of our generation. As more and
more customers become aware of their rights, businesses in turn have to take care not to violate
these rights.

Social Responsibility towards the Community and the Environment

All living things are dependent on the earth’s natural resources. Therefore, man has the
moral obligation to preserve the environment and respect the natural order of things. Of all the
living things created by God, man is the only living thing given the responsibility of taking care
of all the rest of the creatures on earth. It is clear order from God as written in the bible. Only
man is given authority over all the other creatures in the same way that he is the only one given
the ability to protect the environment, not to intervene with the forces of nature.

The business industry is no doubt the primary user of the earth’s natural resources. In the
everyday course of a business, an enormous quantity of energy and raw materials are being used
in the manufacturing of products and services. Energy is both employed and discharged into the
environment. When resources and energy is used, the earth’s natural resources are depleted.
Businesses benefit so much from the environment in order to produce products, goods and
services they need for their businesses to prosper. They primarily rely on the benefits provided
by the environment. In turn, businesses have the corporate social responsibility of preserving and
maintaining the balance of nature because once natural resources are depleted, these can never be
replaced no matter how magnificent the power of man’s brain is.

Current Activities Related to Corporate Social Responsibility

The response of the business industry to the call become more socially responsible
encompasses a great deal of activities in recent years. Across the globe, teams and organizations
were created as part of making corporate social responsibility an integral part of business
operations and strategies. These teams provide information, tools, training and advisory services
that businesses use to collaborate and develop businesses performance towards higher standards
of corporate social responsibility. Some of these activities involve the following:
  Establishment of certifying bodies to develop standards, programs and to train and
certify employees, managers and businesses with quality programs, certifications and
accreditations, e.g ISO certifications; Total Quality management; 5s of good
housekeeping; self-evaluating and product teams; occupational health and safety; health
safety and environmental accreditations that will ensure continual improvement of all
aspects of the business.
 Training their employees for customer care and people skills with the application of
customer relationship management standards. Training of employees for continuous
improvement and development skills.
 Improvement of compensation and benefits packages for employees to enjoy from hiring
to retirement while a number of benefits are also rewarded to families of the employees
such as health and medical assistance, hospitalization benefits, scholarship grants, among
others.
 Establishment of programs for the protection and preservation of the environment, some
of which include tree- planting activities, recycling of waste materials, segregation of
hazardous, infectious, biodegradable and non- biodegradable waste materials, among
others.
 Active participation in socio civic and charitable activities, adopt-a- community
programs, adopt-a-school programs, books and toys donation to government agencies and
NGO’s, scholarship grants, volunteer work to communities and those affected by
calamities and the like.
 Development of customer complaint desk or hotlines, a large number of which are
impressively using state-of –the-art technology or sub-contract with call centers in order
to reach customers wherever they are across the globe 24 hours a day, seven days a week.
 Recruitment of competent and technical employees to ensure manufacturing of their
products follows the strictest standards.
 Training quality people that will handle all aspects of the business processes including
accreditation of suppliers, third-party contractors, standardization of the requirements for
raw materials, calibration of machines, handling of product complaints and aftersales
service.
 Application of good manufacturing practices and advance quality assurance standards for
sale and good quality products including handling and packaging.
 Strengthening of ties with agencies and creating organizing bodies that aim at the
promotion, monitoring and recognition of companies that adhere to their moral obligation
in order that they will have standard of corporate responsibility to follow.

Several of these commitments and activities fulfill the firms ’moral obligation to societal,
economic and environmental concerns. In general, they act in response to these key elements and
issues.
1. Stakeholder rights;
2. Supplier relations;
3. Human rights;
4. Human resource management practices;
5. Consumer rights and protection;
6. Labor protection and security;
7. Environment protection;
 8. Corporate governance;
9. Community development; and
10. Health and safety

The way businesses engage employees, shareholders, consumers, suppliers, the government and
its agencies, non- governmental organizations, international organizations and other stakeholders
form a progressive prospective of corporate social responsibility of businesses at the present
time. Many of these firms believe that it stimulates corporate innovations and provide them a
clear competitive advantage. Companies worldwide have been motivated to respond favorably
because many of them have proven that responding to the call of being responsible businesses
has given then better financial performance and profitability, improved accountability to the
assessments from the investment community, enhanced employee commitment, and decreased
vulnerability through stronger relationships with communities and improved reputation and
corporate image building.