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Corporate Social Responsibility. LECTURE 3: Corporate Social Responsibility MGT 610. Corporate Social Responsibility. The World Business Council for Sustainable Development definition of CSR

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Corporate Social Responsibility


Corporate Social Responsibility

MGT 610


Corporate Social Responsibility

    • The World Business Council for Sustainable Development definition of CSR
      • The continuing commitment of business to behave ethically and contribute to economic development while improving the quality of life of their workforce and their families as well as the local community and society at large
  • President of WBCSD said
  • “there is no universal definition of CSR because the concept is always being redefined it is up to the companies to find their magnetic north’
  • The values and principals are the companies internal compass that help the company to stay on the ethical path.



Corporate Social Responsibility

  • Milton Friedman said
  • “there is one and only one social responsibility of business – to use resources and engage in activities designed to create profit so long as it stays within the rule of the game which is to say engage in open and free competition without deception and fraud’
  • Shortcomings
  • Lack of morals among the practitioners of business
  • Well ordered civil society in which business operate
  • Less importance to production and distribution as compared to exchange and free economy concept is violated which says free entry and free exit and equal sharing of information



Corporate Social Responsibility

  • Economic perspective
  • Greatest social satisfaction is when individuals pursue self interest
  • Government alone cannot alone bear responsibility
    • Resulted in looking beyond economic gains
    • Development of duty / responsibility perspective
    • Aspect cannot be ignored by businesses
  • Common good
  • Keith Davis: The consideration of social needs wants and desire by the organization decision makers can be considered as CSR
  • Hopkins: CSR is concerned with treating stakeholders ethically or in a socially responsible manner



Corporate Social Responsibility

  • CSR as a continuum
  • Simon Zadek Development if CSR in terms of three genenrations
    • First generation: CSR does not interfere with commercial success
    • Second generation: integral part of long term strategy
    • Third geneation: significant contributions towards isue as poverty, environment degradation education etc
  • Archie B. Carrol: CSR is a four stage continuum
    • Economic goals
    • Legal goials
    • Ethical goals
    • Discretionary goals
  • Fitch said that CSR is an attempt to resolve social problems caused by businesses
  • Bowie says it is the interest of the busines to adopt a view of CSR that includes a duty to help solve social problem and not as a duty that will benefit the business



Corporate Social Responsibility

CSR now is not only the maximization of share holders value but also of stakeholders value. It is about the management of a company’s impact on stakeholders, the environment and the community in which it operates. It is about the integrity with which the company governs itself , how it fulfills its mission, the values it has, what it wants to stand for, and how it engages with transparency. Hence the organization have to move from the financial bottom line to social and environment bottom line



Corporate Social Responsibility

  • Understanding CSR
  • Goes beyond philanthropy
  • Four aspect of CSR
    • Responsibility
    • Accountability
    • Sustainability
    • Social contract
  • Responsibility
    • Distinction between, corporate social performance, corporate social responsibility and corporate social responsiveness
    • CRP is management of corporate relationships with its stake holders
    • Corporate social responsiveness is capacity of a corporation to respond to social pressures



Corporate Social Responsibility

  • Creativity view of history
  • Creativity and innovation to deal with the challenges
  • Liberation view of history
  • Learn lesson of empowerment and fall of the fittest (need for improvement and better understanding of change
  • Ethically accepted corporate activity and profit making are not mutually exclusive
  • Relationship between victor and victor (domination, exploitation and oppression)
    • Corporations Vs Society
    • This way or profit making not sustainable. Results in degradation and social upheaval
  • Accountability
    • Inner circle: clear cut responsibilities for the efficient execution of the economic function
    • Intermediate circle: responsibility to exercise the economic function with sensitive awareness of changing social values and priorities
    • Outer circle: emerging responsibilities in actively improving the social environment



Corporate Social Responsibility

  • Sustainability
    • CSR requires revolution in the way that companies think and act
    • The design, communication and implementation within the organization and society should be geared for support and motivation of all stakeholder.
  • Social contract
    • CSR just theory and not practical
    • Survey a decade ago summarized that 81% executives say that wealth maximization and social involvement can go hand in hand
    • Businesses have responded by short term program but no long term commitment
    • Balance between CSR and profits