Corporate Social Responsibility:

Theory & Models

Chapter_2
 Triple bottom line of CSR

 Economic responsibility
 Social responsibility
 Environmental responsibility
(https://www.ge.com/about-us/ecomagination/strategy)
 Models of corporate social
responsibility
 Friedman model
 Ackerman Model
 Carroll Model
 Environmental Integrity & Community Model.
 Corporate Citizenship Model.
 Stockholders & Stakeholders Model.
 New Model of CSR.
 Friedman Model(1962-73)
“The social responsibility of business is to increase its
profits”:
………there is one and only one social responsibility of business to use its
resources and engage in activities designed to increase its profits so long
as it stays in the rules of the game, which is to say, engages in open and
free competition, without deception or fraud.

Whether corporations should engage in socially responsible

activities?
Whether directors can act in any way to increase profits?

Source: https://lucidmanager.org/essays/milton-friedman/
 Friedman Model(1962-73) CONTD’

• Friedman argued for a direct form of capitalism and

against any activity that distorts economic freedom.

• Socially responsible activities conducted by a corporation

are, according to Friedman, distorting economic freedom
because shareholders are not able to decide how their
money will be spent.

Source: https://lucidmanager.org/essays/milton-friedman/
 Friedman Model(1962-73) CONTD’

• Another principle expressed by Friedman is the need to

stay within the ‘Rules of the game’ specifically avoiding
deception and fraud. This principle is further explicated
when he writes:

…….A corporate executive … has direct responsibility to

conduct business in accordance with [shareholder] desires
… [i.e.] to make as much money as possible while
conforming to their basic rules of the society, both those
embodied in law and those embodied in ethical custom.
Source: https://lucidmanager.org/essays/milton-friedman/
 Ackerman Model (1976)
 The model has emphasized on the internal policy, goals & their
relation to the CSR.

 Four stages involved in CSR.

a. Managers of the company get to know the most common
social problem & then express a willingness to take a
particular project which will solve some social problems.
b. Intensive study of the problem by hiring experts & getting
their suggestions to make it operational.
c. Managers take up the project actively & work hard.
d. Evaluating of the project by addressing the issues.
Contd….
 Six Strategies in the adoption of CSR.
 Rejection strategy
 Adversary strategy
 Resistance strategy
 Compliance strategy
 Accommodation strategy
 Proactive strategy
Contd….
Carroll Model(1991)
Carroll Model(1991)
 Philanthropic requirements: Donation, gifts, helping the
poor. It ensure goodwill & social welfare.

Ethical responsibility: Follow moral & ethical values
 to deal with all the stakeholders.

 Economic responsibility: Maximize the shareholders

value by paying good return.

Legal responsibility: Abiding the laws of the land.

 Environmental Integrity & Community
Health Model.
 This model developed by Redman.
 Many corporate in US adopted this model.

"Corporate contribution towards environmental integrity &

human health, there will be greater expansion opportunities."

"Healthy people can work more & earn more."

 CSR is beneficial for the corporate sector.
 CSR in a particular form is welcome.
 Stockholders & Stakeholders Model
by Edward Freeman
ORIENTATION
Stockholders Stakeholder
Model Model

1 2
Self
Interest Self
Interest
Productivism Progressivism
MOTIVES

3 4
Moral
Duty Philanthropy Ethical Idealism Moral
Duty
 Contd………….
 Productvists believe that the only mission of a firm is to
maximize the profit.
 Philanthropists who entertain the stockholders. CSR is
dominated by moral obligations & not self-interest.
 Progressivists believes the corporate behaviour basically
motivated by self interest & should have ability to transform the
society for good.
 Ethical Idealism concern with sharing of corporate profits for
humanitarian activities.
 Philanthropists

Disney gave more than 400 million to nonprofit organizations helping

kids, families, and communities in need through charitable cash
giving, in-kind and product contributions, and public service
announcements.
 Ethical Idealism

Progressivists
 New Model of CSR
Ethical Rooting
Strong Poor
Financial Capability

CSR (+) CSR(-)

Strong

CSR(-) CSR(-)
Poor