Corporate Social Responsibility
World Business Council for Sustainable Development defines Corporate Social Responsibility (CSR) as “The continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.”
Simple definition: Seriously considering the impact of the company’s actions on society.
PERSPECTIVE ON CSR
TRADITIONAL VIEW SOCIOECONOMIC VIEW
TRADITIONAL VIEW :
The classical view states that business is an economic institution directed towards profit whose only responsibility to Society is to provide goods and services and to return maximum benefits to shareholders.
SOCIOECONOMIC VIEW :
Theorists such as R. Edward Freeman (1984) supporting such view believe that business owes something back to the society that supports it, and that this debt is greater than the debt of the individual members of society.
Foundation principle of Corporate Social Responsibility
In 1899, Andrew Carnegie, founder of the conglomerate U.S. Steel Corporation, published a book called “THE GOSPEL OF WEALTH”, which state for the classical statement of corporate social responsibility.
Carnegie’s view was based on two principle 1) Charity Principle 2) Stewardship Principle.
The Charity Principal required more fortunate members of the society to assist its less fortunate members, including the unemployed, the handicapped, the sick & the elderly. These unfortunates can be helped by either directly or indirectly, through such institutes as churches, settlement houses, and the Community Chest movement. Well-to-do people & communities themselves decided to contribute. Carnegie himself donated millions of dollars for charitable and civic purpose.
The Stewardship principle, derived from the Bible, required businessman and wealthy individuals to view themselves as stewards, or caretakers, of their property. Carnegie’s idea was that the rich hold their money “in trust” of the rest of the society and can use it for any purpose that society deems legitimate; however, he also saw it as the role of business to multiply society’s wealth by increasing its own through prudent investments of the resources under its stewardship.
PYRAMID OF CSR
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 with companies that maximize profits?
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
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
Social Responsibilities / philanthropic responsibilities
An organization’s obligation to maximize its positive impact on stakeholders and to minimize its negative impact •
Includes legal, ethical, economic, and philanthropic (discretionary) dimensions
Examples of Organization
A nonprofit trust - the Indian Oil Foundation - with a mandate to protect, preserve and promote the world heritage sites. These sites are listed in the World Heritage Sites under UNESCO •
The Indian Oil Scholarship Scheme is spreading the light of education in the lives of hundreds of students of economically and socially challenged sections of society. •
Providing drinking water medical care and helping the...
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