Module-II Part 3

3. Management and
Society Concept,
External Environment,
CSR,
CSR Corporate
Governance, Ethical
Standards.

Corporate Social Responsibility

Definition:- CSR basically refers to the obligation towards
the society voluntarily assumed by the business. The
definition as per Keith Davis & Robert Blomstrom (1975)
imply that business has to be viewed more than a
money-making proposition and should provide greater
opportunity to serve the society.
Companies have been more bothered with economical
achievements like

Profit making
Reducing cost of production
Increasing profit margins

Over the last few years, corporate social responsibility has

been increasing . Prominent business houses like the
Tatas, Birlas, Ambanis, Godrej, Hindujas, Bajaj,
Mahindras, have contributed to the society as a mission
of their business. They have assisted in promoting
better health, education, drinking water facilities, rural
development, more employment opportunities etc by
forming trusts.
According to Howard Bowen(1953) businesses have to
consider the social implications of their decisions. There
is no firm agreement on CSR(Corporate Social
Responsibility), it merely considers the impact of
business actions on its society.

Corporate Social Responsibility

Different organizations have integrated CSR at different levels
in terms of intensity of contribution to other stakeholders
such as social interest groups, environmental groups, local
community groups, media, consumers and society at large.
Different CSR Dimensions

CSR
obligatio
n
towards
society

Voluntary
responsibilities
Ethical
responsibilities
Legal responsibilities
Economic
responsibilities

Corporate Social
Responsibility Dimensions
Integrating CSR in business mission ensures indirect
goodwill, improves brand image and business gains.
Economic responsibility indicates that profit
making is the basic foundation for all other activities.

Every business should fulfill basic legal

responsibilities by obeying rules and abiding by the
laws of the industry and society.

The achievement of meeting both economic and legal

responsibilities ensures that the business will meet its
ethical responsibilities by taking actions and doing
things right that are just and fair for the society .

Contributing resources by free will for the well-being

of the community and society that ensures
improvement of quality of life contributes to the
highest level which is voluntary responsibility.

Areas of CSR
1. Environment- A critical area of CSR relates to natural environment. To prevent
overuse of resources companies should research to find renewable energy
sources. Management should encourage recycling policies to avoid acid rain
and global warming caused by toxic wastes, excessive noise, chemical
pesticides, factory and automobile exhausts and other wastes.
2. Consumers- Protecting consumer interests is essential social obligation that
organizations practice to influence better pricing and performance. They take
special care to improve product line that includes product quality, safety,
design, average life, service quality, warranties, disposability or recyclability.
The marketing policy includes accuracy of advertising , adequate information
about product usage, fair pricing, credit policies and healthy selling practices.
3. Human Resources- There are many issues related to human resources. Fair
employment practices for women, minorities and disabled individuals is
important. Employee advancements relate to proper training and education
facilities, leave options for higher education, budget allocation for vocational
and special training programs. Employee health and safety is necessary for
a fit, addiction free and stress free work environment.
4. Community involvement- Contribution for community welfare include areas
of education, art, health services, recreation programs, better sanitation and
water facilities.

Advantages of
CSR

1. Business is unavoidably involved in social issues- Businesses

operate with social resources and it is the managements
responsibility to utilize these resources in the best possible way.
2. CSR programs create a favorable public image- A socially
conscious business would win the goodwill of the community.
3. The society expects the businesses to be socially sensitive and
responsive- Public opinion is deeply affected by the co-existence of
economic uplifting of the society though better business practices.
4. Businesses have the resources-Modern
businesses own huge
resourceswealth-generating capacity that involves technical, financial and
managerial resources with the right expertise to solve social
problems.
5. Avoidance of excessive government regulations and interferenceThe government cannot pass laws for every social issue, hence
businesses should deal with anti-trust, equal employment, air and
water pollution control, truth in advertising to maintain an orderly
society.

Disadvantages of
CSR
1. The management is under moral and contractual commitment to the
stockholders only- The corporate managers are primarily
responsible for maximizing returns of their investments that can
only be done by reducing expenditure for social wellbeing.
2. In a free and democratic economy, all groups are expected to take
care of their own problems and responsibilities- Companies cannot
be solely responsible for solving social issues. Prices are determined
by simple supply and demand of resources, wages are set by
workers bargaining capacity, laborer safety should be based on
individual safety measures etc.
3. The management is not properly equipped and trained in handling
social issues and activities-Management should leave social issues
for those well equipped in handling them and not interfere with
society at large.
4. Big businesses already hold enough economic power-Big businesses
already rule the countrys economy. It will not be beneficial socially if
social wellbeing is also handled by the same organizations.

Social Responsiveness
Social responsiveness is a concept similar to that of CSR which refers to
the extent to which a companys policies and programs are geared to
benefit the social environment.
It is defined as the degree of effectiveness and efficiency an organization displays
in pursuing its social responsibilities. Various managerial approaches to meet
social obligations determine an organizations level of social responsiveness.

There are 2 basic approaches that characterize business responsiveness.

They are:o Social obstruction- The method of adopting approaches to fight to
eliminate, delay or fend off social demands being made on them. The
companies do very little to solve the social issue.
o Social obligation- The approach reflects an attitude whereby an
organization meets its social obligation as a lawful mandate and are
consistent with economic objectives and profitable operations.
o Social reaction- It goes beyond the legal requirements that have
enacted to protect societal interests and accept extra legal criteria to
measure CSR.
o Social involvement- It goes beyond corporate duty which considers
an obligation to prevent any social problem from occurring and solve
them once they occur.