Historical Evolution of CSR

Corporate Social Responsibility (CSR) has had a long and wide-ranging history. There have been formal
writings on social responsibility mostly from the twentieth century, especially from the past 50 years or so.
Though it is possible to see evidence ofCSR throughout the world, mostly in the developed countries, most
early writings have been most obvious in the United States where a sizable body of literature has
accumulated (Cavrou, 1999). In the past decade, however, Europe has become captivated with CSR and there
is considerable evidence that scholars and practitioners in Europe are taking seriously this social concern,
often manifested in the form of formal writings, research, conferences, and consultancies. More recently,
countries in Asia, including Nepal have begun increasing their attention to CSR policies and practices. At the
same time, it must be acknowledged that CSR and related notions have been developed in practice and
thought in a number of other countries and at different times. With this background in mind, this essay of the
historical evolution of CSR will focus primarily on developments in the world and also in Nepal.

CSR Evolution in the World

Though formal literature regarding CSR started to take form in the 1950s, we can begin with some of the
activities and practices originating in the Industrial Revolution as a useful starting point. For instance, in the
mid-to-late 1800s, emerging businesses were especially concerned with employees and how to make them
more productive workers. Then, and now, it is sometimes difficult to differentiate what organizations are doing
for business reasons, i.e. making the workers more productive, what the organizations are doing for social
reasons, i.e. helping to fulfill their needs and make them better and more contributing members of society.

For example, an early practice illustrated how business people were thinking about social causes which could
be an example of corporate social responsibility. Morrell Heald illustrated how company expenditures on
community causes were quite evident in the late 1800s. He cites the case of the R. H. Macy Company of New
York City that might have reflected a social sensitivity on the part of its management. The firm’s records show
that there were enough cases of company assistance given to social agencies to build a sense of relationship to
the community that extended beyond the walls of the company. In 1875, Macy’s contributed funds to an
orphan asylum. In 1887, company gifts to charities were listed under Miscellaneous Expenses in the
company’s accounts. Examples such as these prove that corporate social responsibility has been existing for a
long time, though it has become a lot popular in the past fifty years. However, it is difficult to know how CSR
was evolving before the past fifty periods.

One can also classify the evolution of CSR into specific ‘eras’. Patrick Murphy argued that the period up to the
1950s was the ‘philanthropic’ era in which companies donated to charities more than anything else. This
period saw companies that passively donated to charities when they thought it was required. The period 1953–
67 was classified as the ‘awareness’ era, in which there became more recognition of the overall responsibility
of business and its involvement in community affairs. In this period, strategic giving was linked to business
interests and this included cause-related marketing. The period 1968–73 was termed the ‘issue’ era in which
companies began focusing on specific issues such as urbandecay, racial discrimination, and pollution
problems. Here, companies were focusing on investments and strategic partnerships with the community.
Finally, in the ‘responsiveness’era, 1974–8, and, continuing beyond, companies began taking serious
management and organizational actions to address CSR issues. These actions would include altering boards of
directors, examining corporate ethics, and using social performance disclosures.

Two broad principles had emerged in society about CSR. They were the charity principle and the stewardship
principle. The first principle argued that the wealthy members of the society should be charitable to the less
fortunate ones. It is synonymous to a private aid given by wealthy people to poor people. On the other hand,
the stewardship principle argues that business people have an obligation to see that everyone benefits from
their firm’s actions. This principle basically says that organizations have a responsibility to use their resources
in ways that are good not just for the stakeholders alone, but also for society in general.

Presently, for the previous 20 years, but especially in the 2000s, the CSR movement has been a global
phenomenon. The interest and growth of CSR can be seen in the European Community. According to a report
prepared by the Organization for Economic Co-operation and Development (OECD, 2001), voluntary
initiatives in corporate social responsibility have been a major trend in international business in recent years.
The OECD project on private initiatives for corporate responsibility revealed a number of key findings about
CSR. Some of the important findings are worth noting. One noteworthy finding is that CSR is definitely a
global phenomenon, though there are important intra-regional variations in practice. Some initiatives are more
voluntary than others as some companies have been under legal and regulatory pressure to adopt them. There
appear to be divergences of commitment and management practice even in narrow areas of application such as
labor standards, environment, human rights, and fighting bribery. First steps have been taken towards the
development of consensus on social norms of business conduct, though the conversation is ongoing (OECD,
2001).

It is clear from CSR trends and practices that social responsibility has both an ethical or moral component as
well as a business component. In today’s world of intense global competition, it is clear that CSR can be
sustainable only so long as it continues to add value to corporate success. It must be observed, however, that it
is society, or the public, that plays an increasing role in what constitutes business success, not just business
executives alone, and for that reason, CSR has an important part in the global business arena. The pressures of
global competition will continue to intensify, however, and this will dictate that the ‘business case’ for CSR
will always be at the center of attention.

CSR Evolution in Nepal

Like the rest of the world, Nepal has also seen the boom of CSR. Though the term CSR has recently arrived,
the concept of social responsibility has been around for centuries. Through religion and culture, people are
generally indoctrinated with the concept of social responsibility as a child. The belief transcend from the
religious belief of the potential punishment the person will have after his death, if he exploits too much and the
reward he will enjoy after his death, if he makes some social or religious contribution (Legal, 2006).

In the past 100 years of history of Nepal, few business communities have contributed their wealth to build
educational institutions, temples and large Dharmasalas (inns built for religious purposes) for general public
and pilgrims. Landlords who were the businessmen of ancient Nepal were involved in building such things for
public use. When the country faces natural calamities such as flood, famine and earthquake, the businessmen
are always there at the front to donate food, cloth and other amenities. Even in the recent flood, corporate
houses have donated a lot of money to the victims. These historical evidences of the participation of business
community are more philanthropic in nature. However, now businesses in Nepal are moving towards a
different approach. Social entrepreneurs are giving training of various kinds to people from rural Nepal. Their
main belief is ‘Give a man a fish and he will eat for a day. But teach a man how to fish, and he will eat for a
lifetime.’

In the article ‘Corporate social responsibility domains and related activities in Nepalese companies’, Adhikari
writes that it is difficult to initiate discussion on CSR dimensions in the context of Nepal as it is still
considered as an underdeveloped country. The small number of business houses mostly family owned and their
profit-making attitudes are the key factors that affect CSR in the Nepalese environment.

For instance, as part of their CSR initiatives, MAW enterprises has been engaging students and community
members in their safe-driving programs. They organize such programs at the community level and teach the
people on practicing safety rules and regulations as well as to follow discipline when driving. These programs
have been thought to widely decrease the number of road accidents as well as traffic jams. They are also
conducting programs to teach motorcycle driving for people who want to get a driver’s license.

Buddha Air, like other corporations in Nepal, started its ‘so called’ CSR with minor initiatives of promoting
staff welfare activities, and writing charity checks, donating in bits and pieces to NGOs for sports and social
activities. It can be claimed that Buddha Air’s CSR then was more of a rhetorical façade than reality. However,
things changed as Buddha Air started becoming economically more affluent and started initiating agriculture
projects through its CSR. Moreover, in this regard, Birendra B Basnet, Managing Director of Buddha Air,
acknowledges that, irrespective of what Buddha Air was doing earlier, it started its CSR primarily from 2006
and was further restructured in 2012, with the formation of Nepal Krishi Company (NKC) and channelizing
the CSR activities through it and 31 cooperatives in four districts—namely Morang, Sunsari, Jhapa and
Saptari, with more than 6,400 households as beneficiaries.

In the article, ‘Corporate Social Responsibility: Evidence from Nepalese Financial Service and Manufacturing
Sectors’, Chapagain examines the Nepalese financial service and manufacturing sector managers’ strategic and
moral views on CSR. This study found that the trend of CSR thinking has moved from philanthropy to better
stakeholder relations and competitive/strategic advantage of organizations and even nations. In his own words,
‘CSR is stronger than strategic view on CSR. Likewise, the actual CSR efforts are not as greener as the views
are. Responsibility towards government seems to be highest and the responsibility towards society is the
lowest in both the sectors. Analysis also reveals that overall CSR performance of companies is much more
correlated to themoral view on CSR than to the strategic view on CSR. In this context, the government,
pressure groups and other stakeholders are also required to further encourage socially responsible corporate
behaviour for more equitable and just society.’

This article along with many other literatures has come to a conclusion that CSR has been thriving in the recent
years. Companies have been knowingly or unknowingly been contributing to the growth and development of
CSR. The future will see a lot more CSR from companies, given the competition in the Nepali market as well
as the global market.

Benefits of Corporate Citizenship

The benefits of good corporate citizenship to stakeholders are fairly apparent. But
what are the benefits of good corporate citizenship to business itself? The benefits
to companies of corporate citizenship, defined broadly, appear to be the
following:53
• Improved employee relations (e.g., improves employee recruitment, retention,
morale, loyalty, motivation, and productivity)

Improved customer relationships (e.g., increases customer loyalty, acts as a

tiebreaker for consumer purchasing, enhances brand image)
• Improved business performance (e.g., positively impacts bottom-line returns,
increases competitive advantage, encourages cross-functional integration)
• Enhanced company’s marketing efforts (e.g., helps create a positive company
image, helps a company manage its reputation, supports higher prestige
pricing, and enhances government affairs activities)