2. CSR
• Classical concept of the corporation
presents the corporation as existing primarily
to serve the shareholders. According to this
view, the interests of the shareholders are
paramount and come first over all other
interests.
•
A corporation has the same ethical
obligations to its
shareholders, employees, customers, s
uppliers, and the community and the
same responsibilities with respect to
3. Social Responsibility
◦ Is the obligation a business assumes
toward society.
◦ Is designed to maximize the positive
influence & minimize the negative.
◦ Includes economic, legal, ethical, and
humanitarian dimensions.
4. CSR Definition
◦ The idea of social responsibilities (SR)
suppose that the corporation has not only
economic & legal obligations but also
certain responsibilities to society which
extend beyond these obligations.
Joseph McGuire (1993)
5. CSR Definition
◦ SR refers to the objectives or motives that
should be given weight by business in
addition to those dealing with economic
performances.
Jules Backman
(1975)
6. CSR
◦ CSR describes an organization‟s duties to
its internal and external stakeholder
groups, which it may or may not willingly
accept.
◦ In other words, it is the way an
organization behaves towards its
shareholders, customers, employees,
suppliers and society in general.
◦ Then socially responsible implies that the
organization operates as a good
corporate citizen, both locally and globally.
7. CSR
◦ CSR is an umbrella term under which the
ethical rights and duties existing between
companies and society are examined.
◦ In both cases the business attempts to
maximize its positive impacts on
stakeholders and society and minimize its
negative impacts.
8. Ethics & CSR
• Ethics are the concerns of individual
managers and employees.
•
CSR is a concern of the entire
organization.
9. CSR Principle
◦ Business that practice CSR principles
support their employees and consumers
by
◦ Providing a safe and healthy work
environment
◦ Adopting fair labor polices
◦ Protecting the environment
◦ Being truthful in advertising
◦ Avoiding price discrimination
◦ Donating to charity
10. CSR Principle – Twofold
◦ Stewardship principle – Bible, Wealthy
people should act as caretakers of their
property Business should multiply
society‟s wealth.
◦ Charity principle – More fortunate should
assist less fortunate.
11. Triple bottom line (holistic
approach)
◦ Society depend on economy and
economy depend on global environmental
ecosystem
◦ Economic – express revenue & income
growth
◦ Environmental – protect environment
(waste, pollution, management)
◦ Social – public health, confirm to
regulations, philanthropic activities
12. Six fundamental precepts of
CSR
◦ Power holds responsibility
◦ Taking responsibility voluntary is better
than Govt. intervention
◦ Voluntary social responsibility requires
business leaders to accept needs of the
other groups in the society.
◦ CSR require respect for law
◦ Business firm take a long run view of
profit.
◦ Greater economic, social and political
stability.
13. Arguments for & against CSR
◦ For
As business create problems (to resources)
and should help to solve them
Corporations are citizens of the society and
have obligations as citizens
Business have resources to solve the problems
Business is a partner of the society
14. Arguments for & against CSR
◦ Against
Potential for conflicit of interest – (cigarette /
cancer hospital)
Business lack the expertise to handle social
problems
Activities in social programmes give them more
power
Milton Fredman – going out of basic mission of
earn profit for owners
15. CSR Consideration – Model
◦ One of the first approaches encompasses
the spectrum of economic and noneconomic concerns in defining SR was
the “Three Concentric Circle” (Committee
for Economic Development – 1971)It
includes
◦ Inner circle,
◦ Intermediate circle and
◦ Outer circle.
16. CSR Consideration
◦ Inner circle: clear – cut basis
responsibilities for the efficient execution
of economic function – product, job and
economic growth
◦ Intermediate circle: encompasses
responsibility to exercise this economic
function with a sensitive awareness of
changing social values & priorities. Ex.
With respect to environment
conservation, hiring, and relations with
employees.
17. CSR Consideration
◦ Outer circle: outlines newly emerging &
still amorphous responsibilities that
business should assume to become more
broadly involved in actively improving the
social environment.
◦ The outer circle would refer to business
helping with major social problems in
society such as poverty, and urban blight.
18. Three Dimensional Conceptual
model of CSR
◦ A basic Definition of SR ( a firm SR be
assessed)
◦ An enumeration of the issues for which
SR exists (identify social issues)
◦ A specification of the philosophy of
response (a response philosophy be
chosen)
◦ These three distinct aspects of Corporate
Social Performance must be articulated
and interrelated.
20. 3C-SR Model
◦ Ethical and Social Commitment represent
the values element of social resources.
◦ They comprise the ethical standards &
social objectives the organization
subscribes to and are manifested in its
mission, strategic objectives, strategy
program. Organizational policies and
corporate culture.
◦ These commitments should encompass
legal, economic & ethical dimensions.
21. CSR deficit
◦ They comprise the ethical standards &
social objectives the organization
subscribes to and are manifested in its
mission, strategic objective, strategy
program. Organizational policies and
corporate culture.
◦ These commitments should encompass
legal, economic & ethical dimensions.
◦ Due to consistent focus on short term
profits across the value network, CSR
deficit will occur.
22. Stakeholder deficit
◦ This value results from;
◦ Value creating system within which
different economic actors
(suppliers, business
partners, allies, customers) work together
to co-produce value.
◦ Failure to work towards dissemination of
social values within a wider value network
a stakeholder deficit will exist.
23. CSR deficit
◦ Consistency refers to the behavioral
element of social resources over time and
across all facets of an organizations
operation.
◦ Thus development of social resources
requires consistent adherence to
externally recognized and accredited
standards.
◦ Failure to consistently behave will result in
corporate social performance deficit.
24. CSR Four- Part framework
Total
SR=A+B+C+D
◦ The Proportions simply
suggest the relative
magnitude of each
responsibility
Discretionary
Responsibilities(D)
Ethical
Responsibilities(C)
Legal
Responsibilities(B)
Economic
Responsibilities(A)
25. CSR Consideration
◦ These Four are not mutually exclusive,
nor are they intended to portray a
continuum with economic concerns on
one end and social concerns on the other.
That is they are neither cumulative nor
additive.
26. Economic Responsibility
◦ The first and prime SR of business is
economic in nature.
◦ Since business institution is the basic
economic unit in our society it has a
responsibility to produce goods & services
for the society and sell at a profit.
◦ All other business roles are predicated on
this assumption.
27. Economic…
How resources for the production of goods and
services are distributed within the social system
Do you think consumers favor socially
responsible companies or are they most
enamored/ care with companies that maximize
profits?
28. Legal Responsibility
◦ Through the society has allowed the
economic system, it has laid down the
laws and regulations under which the
business units expect to operate.
◦ Society expects business to fulfill its
economic mission within the framework of
legal requirements.
29. Legal….
◦ Refers to obeying governmental laws and
regulations
◦ Civil Law : rights & duties of individuals
and organizations
◦ Criminal Law: prohibits specific actions
and imposes fines and /or imprisonment
as punishment for breaking the law.
30. Legal Issue and CSR
All organizations will need to comply with the
legal requirements in day to day operations, but
CSR means going beyond these legal and
accepting that the sole function of a business is
not just making profit for its shareholders.
31. Ethical Responsibility
◦ Although economic & legal responsibilities
represent ethical norms there are
additional behaviors that are not
necessarily codified into law but expected
by the society from the business.
◦ Ethical Responsibilities are ill defined and
consequently are among the most difficult
for business to deal with.
32. Ethical…
◦ Behaviors and activities that are expected
or prohibited by organizational members,
the community, and society (not codified
into law)
◦ Standards, norms, or expectations that
reflect the concern of major stakeholders.
33. Discretionary Responsibility
◦ Are the responsibilities about which
society has no clear-cut message for
business.
◦ They are left to individual judgment and
choice.
◦ They are voluntary not mandated or
required by law.
34. Sehti model of CSR
◦ Adaption of corporate behavior to social
need
Social obligation – behavior according to
market response or legal constrains
Social responsibility – bringing up the behavior
up to prevailing social norms, values &
expectations
Social responsiveness – more than responding
to social pressure, their long role in a dynamic
social system
35. Importance of Being with CSR
◦ Business Image
It improves the Image of the business and its
goods and services and can provide it with
competitive advantage.
◦ Attracts New Customers & Customer
Loyalty
It attracts new customers and can create
customer loyalty and repeat purchase behavior.
Research has shown that customers are more
likely to choose products they perceive as
being produced in a socially responsible
manner.
36. Importance of Being with CSR
Attracts likeminded employees
o It attracts likeminded employees to join the
business.
Improve Motivation of existing employees
o With increased motivation, staff turnover may
fall and productivity may increase.
Reduces possibility of Negative
Publicity.
It reduces the likelihood that
pressure groups will act against the
organizations interests.
37. Importance of Being with CSR
◦ Goodwill among stakeholder groups
It ensures goodwill among all stakeholder
groups, which may prove beneficial at times of
crisis.
E.g.: Suppliers and employees may be
prepared to wait for payment during a cash flow
crisis, because they feel a sense of loyalty to
the organization, which has treated them well.
38. CSR is Cost or benefit
◦ Like many other business
decisions, acting responsibility should be
considered as a long term benefit, that
may have short term cost.
◦ The question is whether the business is
willing to accept these short term costs
when competitors are not.
39. Famous Quotes about CSR?
◦ “Conducting your business in a socially
responsible way is good business. It
means that you can attract better
employees and that customers will know
what you stand for and like you for it”
(Anthony Burns, CEO Ryder Systems 1944)
40. Social Issues
◦ Many factors come into play as a
manager attempts to get a fix on what
social issues should be of most interest to
the organization. Social issues must be
identifies as an important aspect of
Corporate social performance.
◦ Matching social need to corporate need or
ability to help a social audit is required.
41. Choosing which social issues to
be address
◦ As any firm has limited resources, firm
should select some issues that intersect
with the business. Issues fall under
following
◦ Generic issue – important to society & no
effect to firm (dengu)
◦ Value chain social impact – impact due to
activity of the value chain.
◦ Social dimension of competitive context –
Big firms not allowing the firm to
operate/Kappam (protection money)
42. Social Auditing
◦ The purpose of a social audits it to assess
the impact of an organization‟s operations on
its stakeholders and wider society.
◦ It is a similar process to a financial audit as
the organization generates a set of a „social
accounts‟ that evaluate social performance
against non-financial criteria and
benchmarks.
◦ However, unlike financial auditing there are
no legal obligations on an organization to
carry out a social audit, although it helps the
business address potential problems that
might later lead to legal liability.
43. Social Auditing
◦ A Strong emphasis on health and safety
may mean the organization avoids
prosecution for any accidents caused by
the negligence of the organization and its
employees.
◦ Social auditing should also result in more
informed planning and better
management.
44. Who conducts social audit?
◦ Social audits are usually conducted by an
independent group that prepares a
published report assessing the
organization‟s wider external impact.
◦ This report helps clarify social objectives
and encourages the business to come up
with action plans to sort out any
deficiencies that have been identified.
45. Social Auditing –
◦ Environment
This includes pollution, waste disposal, and
resource depletion.
Energy use – business practices to improve
energy efficiency.
◦ Human Resources
HR and the treatment of employees and other
individuals in the distribution chain – this could
cover issues relating to recruitment, promotion,
health, safety and remuneration.
46. Social Auditing –
Community Programmes
The business helps organize or fund
community based initiatives in education, the
arts or the environment.
Product & Service Quality
There is an emphasis placed on the durability
and safety of the products sold and honesty
of services provided.
47. Corporate Social
Responsiveness
“capacity of a corporation to respond to social
pressures”
The literal act of responding or of achieving a
generally responsive posture, to society is the
focus.
Social responsiveness can range on a
continuum from no response (do nothing) to a
proactive response (do much).
49. Social Responsiveness
Continuum
◦ Reactive – respond to a social issue only
after it has challenged social goals.
◦ Defensive – company acts to ward off a
challenge
◦ Accommodative – The company brings
itself into line with government
requirements and public opinion.
◦ Proactive – The Company anticipate
demands that have not yet been made.
50. CSR strategic option
◦ Shareholder strategy – CSR as a overall
profit motive (Fredman)
◦ The Altruistic Strategy
(unselfish/philanthropic)-give something
back to the society (from of philanthropy)
◦ Reciprocal strategy – two fold. Benefit
society while gaining a economic benefit
to the firm (CSR is done for making profit)
◦ Citizenship strategy – all stakeholders &
others are well looked after
