Corporate Social Responsibility - 2 Concept of Csr

8/8/2019 Corporate Social Responsibility - 2 Concept of Csr

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Definitions of CSRDefinitions of CSR

Buchhloz (1991) identified 5 key elements found inBuchhloz (1991) identified 5 key elements found inmost, if not all definitions.most, if not all definitions.

1.1. Corporations have responsibilities that go beyondCorporations have responsibilities that go beyondthe production of goods and services at a profit.the production of goods and services at a profit.

2.2. These responsibilities involve helping to solveThese responsibilities involve helping to solve

important social problems, especially those theyimportant social problems, especially those theyhave helped to create.have helped to create.

3.3. Corporations have a broader constituency thanCorporations have a broader constituency thanstockholders alone.stockholders alone.

4.4. Corporations have impacts that go beyond simpleCorporations have impacts that go beyond simple

market place transactions.market place transactions.5.5. Corporations serve a wider range of human valuesCorporations serve a wider range of human values

than can be captured by a sole focus on economicthan can be captured by a sole focus on economicvalues.values.


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According to Wood (1991), the basicAccording to Wood (1991), the basicidea of CSR is that business and societyidea of CSR is that business and societyare interwoven rather than distinctare interwoven rather than distinctentities.entities.

Expectations are placed on business due toExpectations are placed on business due toits three roles: as an institution in society,its three roles: as an institution in society,as a particular corporation or organisationas a particular corporation or organisationin society, and as individual managersin society, and as individual managers

who are moral actors within thewho are moral actors within thecorporation. These roles result in threecorporation. These roles result in threelevels of analysis institutional,levels of analysis institutional,organisational and individual; expressed inorganisational and individual; expressed interms of 3 principles of CSR: Legitimacy,terms of 3 principles of CSR: Legitimacy,

Public responsibility and managerialPublic responsibility and managerialdiscretion.discretion.


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Bowen (1953): Industry has an obligationBowen (1953): Industry has an obligationto pursue those policies, to make thoseto pursue those policies, to make thosedecisions, or to follow those lines ofdecisions, or to follow those lines of

actions which are desirable in terms of theactions which are desirable in terms of theobjectives and values of the society.objectives and values of the society.

CSR emphasises: a) Businesses exist at theCSR emphasises: a) Businesses exist at thepleasure of society and that theirpleasure of society and that their

behaviour and methods of operation mustbehaviour and methods of operation mustfall within the guidelines set by thefall within the guidelines set by thesociety, andsociety, and

b) Business act as moral agents within theb) Business act as moral agents within thesociety.society.


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The Social Responsibility DebateThe Social Responsibility Debate Arguments FOR CSRArguments FOR CSR

1.1. Business should operate in such a way as to fulfillBusiness should operate in such a way as to fulfillthe public needs/ expectations. Acceptance ofthe public needs/ expectations. Acceptance ofsociety is a MUST).society is a MUST).

2.2. A social responsibility role should be undertaken inA social responsibility role should be undertaken in

order to prevent some public criticism andorder to prevent some public criticism anddiscourage further govt involvement/ regulation.discourage further govt involvement/ regulation.

3.3. Business must realise that the society also is aBusiness must realise that the society also is asystem of which corporations are a part, and thatsystem of which corporations are a part, and thatthe system is inter dependent.( Need to mutualthe system is inter dependent.( Need to mutual

involvements among individuals, groups, andinvolvements among individuals, groups, andorganisations in society, or among sub sectors oforganisations in society, or among sub sectors ofsociety. Business is vulnerable to the actions orsociety. Business is vulnerable to the actions orevents that occur in other sub sections ).events that occur in other sub sections ).


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The Social Responsibility DebateThe Social Responsibility Debate

4. Social responsibility is in stockholders interest,4. Social responsibility is in stockholders interest,as it brings profitability especially in long term.as it brings profitability especially in long term.

5. A poor social responsibility role on the part of a5. A poor social responsibility role on the part of acorporation means poor management to somecorporation means poor management to someinvestors. They view failure in field of CSR muchinvestors. They view failure in field of CSR much

the same as failure in financial matters.the same as failure in financial matters.6.Business must realise that social problems can6.Business must realise that social problems can

become opportunities, or can lead to profits.become opportunities, or can lead to profits.Effluent treatment may lead to recovery ofEffluent treatment may lead to recovery ofgainful material from , otherwise waste.gainful material from , otherwise waste.

7. With regard to CSR, a business must take long7. With regard to CSR, a business must take longterm view against the short term view.term view against the short term view.


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The Social Responsibility DebateThe Social Responsibility Debate8. Business must be concerned with public8. Business must be concerned with public

image and the resultant goodwill resultingimage and the resultant goodwill resultingout of CSR.out of CSR.9. Every business should seek an opportunity9. Every business should seek an opportunity

to solve some social problems. As Govtto solve some social problems. As Govtremedial actions in social responsibilityremedial actions in social responsibility

areas take inordinately long time, sameareas take inordinately long time, samework by a business is done at faster time,work by a business is done at faster time,at a cheaper rate, and more often than not,at a cheaper rate, and more often than not,Govt offers subsidies/ benefits.Govt offers subsidies/ benefits.

10. Preventing a social disorder is better than10. Preventing a social disorder is better thancure, and hence, a proactive action bycure, and hence, a proactive action bybusiness is better policy.business is better policy.

11. An owner of business is also an icon for11. An owner of business is also an icon forthe society, whom people look for guidance.the society, whom people look for guidance.

It is not appropriate for such leaders ofIt is not appropriate for such leaders ofsociety to ignore social matters.society to ignore social matters.


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The Social Responsibility DebateThe Social Responsibility Debate A

rgumentsAGAINST CSR

Arguments

AGAINST CSR

1.1. Friedman (1970) said that theFriedman (1970) said that thecorporations are economic institutions,corporations are economic institutions,and the successful functioning of theand the successful functioning of thesociety depends on the rolesociety depends on the role

specialisation of its institutions ( orspecialisation of its institutions ( orsystems). He sees only one responsibilitysystems). He sees only one responsibilityof a business enterprise; and that isof a business enterprise; and that ismaking profit for the stock holders.making profit for the stock holders.

2.2. Profit maximisation is the prime purposeProfit maximisation is the prime purpose

of the business. A socially activeof the business. A socially activecompany , making losses , will notcompany , making losses , will notsurvive at all.survive at all.

3.3. Corporations are responsible to the shareCorporations are responsible to the share

holders and in fact have no authority toholders and in fact have no authority tooperate in the social areas.operate in the social areas.


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4. Social policy is the jurisdiction of the4. Social policy is the jurisdiction of thegovernment and not the business.government and not the business.

5. Business lacks training in social issues and5. Business lacks training in social issues andlacks social skills to carry out sociallacks social skills to carry out social

programmes.programmes.6. CSR is seen by many, as an excuse to6. CSR is seen by many, as an excuse toincrease its power. Business already hasincrease its power. Business already hassufficient power and by allotting CSR, it maysufficient power and by allotting CSR, it maygive undue power to them.give undue power to them.

7. Business involvement in CSR not only adds7. Business involvement in CSR not only addscosts to the organisation, but also maycosts to the organisation, but also mayincrease social costs.increase social costs.

8. There is yet no acknowledged source of8. There is yet no acknowledged source ofreliable guidance or policy for business inreliable guidance or policy for business in


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9. As institutions in society, business9. As institutions in society, businesscorporations cannot be heldcorporations cannot be heldresponsible for their actions in a wayresponsible for their actions in a waysufficient to satisfy demands forsufficient to satisfy demands for

social involvement. It should be leftsocial involvement. It should be leftto NGOs and the Govt machinery.to NGOs and the Govt machinery.

10.There is a divided support in the10.There is a divided support in thebusiness community for socialbusiness community for socialinvolvement, and as a result there isinvolvement, and as a result there isunlikely to be a very satisfactoryunlikely to be a very satisfactorytreatment of social issues bytreatment of social issues by

business.business.


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AlternateAlternateview ofview of

the Corp.the Corp.

TheoryTheory DescriptionDescription

AMORALAMORAL FundamentaliFundamentalismsm

The corporation has no orThe corporation has no orvery little CSR.very little CSR.

LegalLegalRecognitionRecognition

The corpn. Is anThe corpn. Is anautonomous entity and notautonomous entity and nota society creation.a society creation.

FunctionalismFunctionalism Groups in society should notGroups in society should not

encroach upon each otherencroach upon each otherprovinces of behaviour.provinces of behaviour.

IndividualIndividualAgreementAgreement

Corpns. Can be sociallyCorpns. Can be sociallyresponsible but only withinresponsible but only withinthe limits of a priorthe limits of a priorcontractual agreement withcontractual agreement with


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AlternateAlternateview ofview of

the Corp.the Corp.


AMORALAMORAL TraditionalTraditionalstock holdersstock holdersmodelmodel

Beyond individualBeyond individualagreements, corpns. Are notagreements, corpns. Are notethically required to beethically required to besocially responsible but tosocially responsible but to

make profit.make profit.Role BasedRole BasedApproachApproach

The role of corporationThe role of corporationdetermines itsdetermines itsresponsibilities.responsibilities.

PERSONALPERSONAL Moral Person/Moral Person/Moral AgentsMoral Agents

Corpns. Are collectives thatCorpns. Are collectives thatact as individuals; theyact as individuals; theyexist as legal persons andexist as legal persons andcan be held responsible.can be held responsible.

SOCIALSOCIAL SocialSocialContractContract

An implicit social agreementAn implicit social agreementdoes exist between societydoes exist between society


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AlternateAlternateview of theview of the

Corp.Corp.


IDEOLOGICAL/IDEOLOGICAL/

HISTORICALHISTORICALSociety evolves and history givesSociety evolves and history givesrise to new social needs, socialrise to new social needs, socialdemands, and changes in socialdemands, and changes in socialvalues to which business isvalues to which business isexpected to contribute.expected to contribute.

StakeholderStakeholder There is a social responsibilityThere is a social responsibilityfunction of the interrelationshipsfunction of the interrelationshipsdeveloped by the corporationdeveloped by the corporationwith groups that have a stake.with groups that have a stake.(Constituency Theory).(Constituency Theory).

Legal CreatorLegal Creator A Corpn. Is a creature of law,A Corpn. Is a creature of law,existing in contemplation of law,existing in contemplation of law,and is thus made by society forand is thus made by society forthe common good of society..the common good of society..

SocialSocial

PermissionPermission

Society can legitimately demandSociety can legitimately demand

the Corpn. To do certain kind ofthe Corpn. To do certain kind of


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Alternate viewAlternate viewof the Corp.of the Corp.


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Corporate Social Responsibility - 2 Concept of Csr