You are on page 1of 19

Chapter 4

Business & Social Environment


19 August 2018
Topics Learning Outcome
1) Distinguish between instrumental and
social contract approaches to corporate

2) Summarize 2 foundation principles of

What is CSR?
“The action of an organization that are targeted
towards achieving a social benefit over and
above maximizing profits for its stakeholders
and meeting all its legal obligation”
• Also known as
• “corporate citizenship” = company’s roles
towards society or
• “corporate conscience” = having integrity
is doing right things when nobody
watching you.

CSR in Malaysia

In 2011 – increased awareness

Framework - to describe actions that go beyond
philanthropy or compliance with applicable laws

Example of CSR activities - safeguard the
environment, communities, employees,
shareholders and other affected parties’ interests

Canon Marketing Malaysia was the “Official Imaging Partner” of the annual charity
Live Active Run organized by The Spring shopping mall in Kuching on 14 June 2015.
Canon engaged 12 EOS photographers to be the official photographers for the event.
In addition, free Selphy photo prints were given out to all runners who visited the
photo booth.

4,612 runners participated in the charity run and the charity beneficiaries were
Kuching Autistic Association, Persatuan Dialisis Cahaya Kuching (Kuching Dialysis
Society) and Special Olympics Sarawak.

Participants at The Spring’s Live Active Run Event
Participants get to enjoy free prints during the event
Dumex Malaysia
CSR for consumer, community, staff and nature.

1) For Consumer:

• Nutritious and healthy products
Since 2011, our range of Growing Up Milk contain less or no sucrose as
well as an increase in dietary fibre, monounsaturated fats and
polyunsaturated fatty acids to promote a healthier diet.

• The Eat Right Plate is a practical and helpful tool to plan healthy meals
throughout the day, including lunch and dinner. The Eat Right Plate is
divided into sections to help families take food in appropriate proportions.
It is developed by the Dumex Sciences Institute and in collaboration with
International Medical University (IMU).

• The Eat Right Plate is based on the principles of the Food Pyramid –
variety, balance and moderation.

2) For community: To enhance the well-being of
children and mothers by caring for their nutritional and
health needs for community transformation

3. For staff:
• We have implemented many efforts to
support the social benefit of our staff.
Among others:
• 4 months maternity leaves
• Provide breastfeeding room in the office
• Provide fruits for all employees twice a week
• Allowance for yearly medical screening

4. For Nature:
The company has formed a Work In Safe Environment (WISE)
committee that has drawn up safety and environmental
objectives and targets.

This includes aiming for a reduction in carbon footprint by at
least 7% by (year).

Why CSR in Business?
6 reasons:
1) Business Transparency
We live in an information-driven economy where
business practices have become increasingly
transparent. Companies can no longer sweep things
under carpet –whatever they do, will be known,
almost immediately around the world.
E.g. WikiLeaks.

2) Balances between Corporate Power with
Responsibility must accompany power. Businesses
committed to social responsibility are aware that if
they misuse they have, they might lose it.
Why CSR in Business? (con’t)
3) Discourages Government Regulation
Voluntary social acts may avoid government
regulation. Some regulation may reduce freedom
for both business & society. E.g. If all bus drivers
drive responsibly, government might not regulate
the installation of black box.

4) Promotes Long-term Profits for Business
Social initiatives by business produce long-run
business profit – able to attract new customers, as
well as support from governments and NGOs.

Why CSR in Business? (con’t)
5) Improve Business Value and Reputation
Firm’s reputation is a valuable intangible asset, as
it prompts repeat purchases by loyal customers
and helps to attract and retain better employees to
enhance productivity and profitability.

6) Corrects Social Problem caused by Business
Business has responsibility to compensate society
for the harm it may sometime caused. E.g. if
consumer injured due to product defect, the
manufacturer should be responsible.

Principles of CSR
2 broad CSR principles:

1) The Charity Principle
Business should give voluntary aid to society’s needy
persons and groups
= the idea that the wealthiest members of society
should be charitable towards those less fortunate.

2) The Stewardship Principle
= corporate executives see themselves as stewards, or
trustees, who can act in the general public’s interest.
Although the companies are privately owned & try to
make profits for the shareholders, they are expected to
act with a special degree of responsibility in making
business decision.

3 types of CSR
1) Ethical CSR
When organizations pursue a clearly defined sense
of social responsibility in managing their financial
responsibilities to shareholders, their legal
responsibilities to their local community and society
as a whole, and their ethical responsibilities to do
the right thing for all stakeholders. Org. in this
category typically incorporated their belief into their
core operating philosophy.

E.g. Body Shop mission statement states “We will
operate our business with strong commitment to
the well being of our fellow humans and the
preservation of the planet”.

3 types of CSR (con’t)
2) Altruistic CSR
When org. engages into specific initiatives to give back to
company’s local community.

E.g. Shell Oil Corp. responded to 2004 tsunami disaster
with donations of fuel for transportation rescue and water
tank for relief aid, on top of several million dollars of
financial contribution.

3) Strategic CSR
Organization targets programs that will generate the most
positive publicity or goodwill for the organization.

i.e. good publicity brings more sales.

CSR vs Corporate Citizenship
CSR Corporate Citizenship

Origin 1920s 1990s
Basis Principles of Charity and Building collaborative
stewardship partnerships with stakeholder
Focus Moral obligation to society at Discovering business
large opportunities through
Action 1) Philanthropy (someone who Managing corporate social and
donates his or her time, money, financial performance
and/or reputation to charitable
2) trustee of the public’s
CSR is one of the sustainable development
program for an organizations to growth.

Based on the above statement, debate the
factors of why we need CSR in sustaining our