CORPORATE SOCIAL

RESPONSIBILITY
2016-2017
 SESSION THEME
SOCIAL RESPONSIBILITIES OF BUSINESS
SESSION 4 AND 5

2
 SESSIONS’ SUB-THEMES

• ORIGINS AND GROWTH OF SOCIAL RESPONSIBILITIES OF BUSINESS

• STAKEHOLDERS OF BUSINESS
• CONCEPTUAL CLARITY OF CSR
• PARADIGM SHIFT IN CSR AT THE GLOBAL LEVEL: NEW APPROACHES TO CSR
• TRIPLE BOTTOM-LINE APPROACH
• SECTION 135

3
WHAT IS THE LINK BETWEEN BUSINESS
AND SOCIETY?

4
BUSINESS AND SOCIETY : THE LINK
General Systems
Theory( 1940) :
• When applied to management
theory, the systems concepts
implies that business firms ( social
organisms) are embedded in a
broader social structure ( external
environment) with which they
constantly interact.
• Business and society taken 5

together form an interactive

WHAT IS THE ROLE OF
BUSINESS IN SOCIETY?

6
ROLE OF BUSINESS IN SOCIETY
Operate profitably

Efficient and sustainable use

of resources

Innovation

Provide and deliver 7

products /services
 FORCES THAT SHAPE BUSINESS AND
SOCIETY RESPONSIBILITY

Economic competition
Strategic and social
challenges

Business Ethical perceptions and public

values
and its Changing role of government
Stakehold and public policy

ers Ecology and natural resources

concern
8
Technology and new
technology
SURVEY RESULTS OF 10 COUNTRIES

9
HOW CAN COMPANIES TAKE CARE OF
THIS RESPONSIBILITY TOWARDS
SOCIETY?

10
 MANAGING
STAKEHOLDERS
WHO IS A STAKEHOLDER OR WHAT IS A
STAKEHOLDER?
 STAKEHOLDERS
• ANY GROUP OR INDIVIDUAL WHO
CAN AFFECT OR BE AFFECTED BY
THE ACHIEVEMENT OF YOUR
PURPOSE”
• SOMETIMES IT’S USEFUL TO THINK
BROADLY, NGOS, GOVERNMENTS,
MEDIA, ETC.
• SOMETIMES IT’S USEFUL TO THINK
MORE NARROWLY, JUST THINK
ABOUT CUSTOMERS, SUPPLIERS,
EMPLOYEES, FINANCIERS AND 13

COMMUNITIES (OR SOCIETY).

 TYPOLOGY OF STAKEHOLDERS
SECONDARY OR NON-
PRIMARY OR MARKET
MARKET STAKEHOLDERS
STAKEHOLDERS
THOSE WHO ENGAGE IN THOSE WHO DO NOT ENGAGE
ECONOMIC TRANSACTION WITH IN DIRECT ECONOMIC
THE COMPANY AS IT CARRIES EXCHANGE WITH THE FIRM BUT
OUT ITS PRIMARY PURPOSE OF ARE AFFECTED BY OR CAN
PROVIDING SOCIETY WITH AFFECT THE FIRM THROUGH ITS
GOODS AND SERVICES. ACTIONS.

14
Relations between a business firm and its
primary stakeholders

Employees
(Unions) Stockholders
Wholesalers Distribute Sell
(Retailers) products labor
Invest
Business capital

Buy firm Creditors

products Lend
(Managers) money

Customers
Sell
materials
Suppliers 15
Relations between a business firm and some of its
other (secondary) stakeholders

The Local
General Communities
Public Positive,
negative Jobs, Governments
opinion environment Central/State
Regulation, and Local
Business
Advice, Business Taxes
research
Support Firm Friendly,
Groups hostile
Image, (Managers)
publicity
Social
Social Activist
Media Groups
demands 16
WHY SHOULD A COMPANY ENGAGE
WITH ITS STAKEHOLDERS?

17
 STAKEHOLDER
ENGAGEMENT/MANAGEMENT
IS IMPORTANT BECAUSE
• THERE IS A CHANGE INITIATIVE, A PROGRAMME OR A PROJECT . ALL OF
WHICH HAVE AN IMPACT ON PEOPLE INTERNAL AND EXTERNAL TO THE
COMPANY.
HOW TO MANAGE /ENGAGE : BASED ON
THE ATTRIBUTES OF A STAKEHOLDER
Legitimacy refers to the perceived
validity of the stakeholder’s claim to a
stake
Power refers to the ability or
capacity of a stakeholder to produce
an effect
Urgency refers to the degree to which
the stakeholder’s claim demands
immediate attention 19
 STAKEHOLDER MAPPING :
TYPOLOGY BASED ON ATTRIBUTES

20
 WHAT STRATEGIES DO COMPANIES ADOPT
TO MANAGE STAKEHOLDERS OF A PROJECT?
MODELS ADOPTED BY BUSINESS TO TAKE
CARE OF RESPONSIBILITY TOWARDS
STAKEHOLDERS

Corporat
Shared
e
CSR Value
Philanthr
Creation
opy

22
 CORPORATE PHILANTHROPY
• CORPORATE PHILANTHROPY MAY BE DEFINED AS THE
DIRECT CONTRIBUTION BY A CORPORATION TO A
CHARITY OR CAUSE, MOST OFTEN IN THE FORM OF
CASH GRANTS, DONATIONS AND /OR IN-KIND
SERVICES ( KOTLER AND LEE, 2005)

23
 CORPORATE PHILANTHROPY :
CURRENT SCENARIO
Corporate contribution : $ 19.9 billion in cash
and product giving according to Corporate
Giving Standard Survey.

Top 5 foundations by Total Giving

• Bill & Melinda Gates Foundation : every person deserves
the chance to live a healthy and productive life.
• AbbVie Patient assistance Foundation : helping
uninsured access medicines.
• Pfizer Patient Assistance Foundation, Inc.: prescription
assistance
• Glaxo SmithKline Patient Access Programs Foundation :
prescription assistance
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• Genentech Access to Care Foundation : prescription
assistance
Source : http;//foundationcentre.org/findfunders/fundingsources/fdo.html
CORPORATE PHILANTHROPY :
CURRENT INDIAN SCENARIO

Gates Foundation: National Azim Premji Foundation :

polio eradication enabling elementary
programme education in India.

GMRV Foundation :
HCL Foundation : education , livelihood,
education & art health care & community
development.

Swades Foundation
( Ronnie Screwwala) :
community mobilization,
water and sanitation, 25

agriculture and livelihood,

health and nutrition in
26
ORIGINS OF CSR

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 DEFINING CORPORATE SOCIAL
RESPONSIBILITY (CSR)
• CSR CONSIDERS THE IMPACT OF THE COMPANY’S ACTIONS ON SOCIETY ( BAUER)

• CSR REQUIRES DECISION MAKERS TO TAKE ACTIONS THAT PROTECT AND IMPROVE
THE WELFARE OF SOCIETY AS A WHOLE ALONG WITH THEIR OWN INTERESTS ( DAVIS
AND BLOMSTROM)

• CSR MANDATES THAT CORPORATION HAS NOT ONLY ECONOMIC AND LEGAL
OBLIGATION , BUT ALSO CERTAIN RESPONSIBILITIES TO SOCIETY THAT EXTEND
BEYOND THESE OBLIGATIONS (MCGUIRE)

• CSR RELATES PRIMARILY TO ACHIEVING OUTCOMES FROM ORGANIZATIONAL

DECISIONS CONCERNING SPECIFIC ISSUES OR PROBLEMS, WHICH BY SOME
NORMATIVE STANDARD HAVE BENEFICIAL RATHER THAN ADVERSE EFFECTS UPON
PERTINENT CORPORATE STAKEHOLDERS. THE NORMATIVE CORRECTNESS OF THE
PROBLEMS OF CORPORATE ACTION HAVE BEEN THE MAIN FOCUS OF CSR ( EPSTEIN) 28
 CSR : AS DEFINED TODAY
• KOTLER AND LEE (2005) “ A COMMITMENT TO
IMPROVE COMMUNITY WELL BEING THROUGH
DISCRETIONARY BUSINESS PRACTICES AND
CONTRIBUTIONS OF CORPORATE RESOURCES”.

• MALLEN BAKER REFER TO CSR AS “A WAY

COMPANIES MANAGE THE BUSINESS PROCESSES TO
PRODUCE AN OVERALL POSITIVE IMPACT ON SOCIETY”.

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 RESPONSIBILITIES OF
BUSINESS
Be a good Contribute resources to
corporate citizen Philanthropic the
Responsibilities Community; improve
quality of life

Operate ethically Ethical Obligation of doing what is

right, just and fair. Avoid harm
Responsibili
ties
Law is society’s codification
Obey the law Legal of right or wrong. Play
by the rules of the game
Responsibilities
Without sustainable
Be Profitable Economic viability all other
Responsibilities
actions are not possible
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The Pyramid of Corporate Social responsibility

Source : Caroll, 1991
 WHAT IS CSR?

• WHILE THERE MAY BE NO SINGLE UNIVERSALLY ACCEPTED DEFINITION OF

CSR, EACH DEFINITION THAT CURRENTLY EXISTS UNDERPINS THE IMPACT
THAT BUSINESSES HAVE ON SOCIETY AT LARGE AND THE SOCIETAL
EXPECTATIONS OF THEM
 PARADIGM SHIFTS: STAGES IN EVOLUTION
OF CSR
The only social responsibility of businesses is to make
money for owners and stockholders and obey the law.

Businesses must also be “ethical” in the ways they

make money and not engage in bribery, fraud or
corruption.

Businesses must also protect the environment and

biodiversity.

Businesses must also protect and promote human

rights, labour rights, and sustainable development.
(“triple bottom line”)

Businesses must adhere to a global standard for CSR

enforced by law.
THE DEBATE

33
 ARGUMENTS FOR & AGAINST CSR
FOR
• CORPORATIONS ARE CITIZENS IN OUR SOCIETY
• BUSINESS CREATES PROBLEMS AND SHOULD
THEREFORE HELP SOLVE THEM
• BUSINESS OFTEN HAS THE RESOURCES
NECESSARY TO SOLVE PROBLEMS
• BUSINESS IS A PARTNER IN OUR SOCIETY,
ALONG WITH THE GOVERNMENT AND THE
GENERAL POPULATION
AGAINST
• SOCIAL ISSUES ARE IN THE REALM OF PUBLIC
POLICY IE. GOVERNMENT ACTION
• RESTRICTS THE FREE MARKET GOAL OF PROFIT
MAXIMIZATION AND DILUTES THE PRIMARY AIM OF
BUSINESS
• LIMITS THE FIRM’S ABILITY TO COMPETE IN A
GLOBAL MARKETPLACE
• MANAGERS ARE NOT TRAINED TO MAKE PUBLIC
POLICY DECISIONS
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During the 1960s and 1970s, people especially in the US
began to take this idea very seriously.

Large companies began to make what is known as “the

business case for social responsibility”.

By being good citizens and paying attention to the social

effects of their businesses, business leaders could gain
important support from customers and communities, and
avoid regulation which sought to constrain them. CSR
was just good business.

By focusing on the business case, companies could

counter Friedman’s argument that CSR was a waste of
shareholder’s resources, and a usurping of their 35

prerogative.
 STRATEGIC CSR APPROACH
Strategy goes beyond best practices.

It is about choosing a unique position: doing things

differently from competitors in a way that lowers
costs or better serves a particular set of customer
needs.
• Strategic CSR moves beyond good corporate citizenship.

Strategic CSR involves both inside-out and outside-

in dimensions working in tandem: opportunities of
shared value
DIFFERENCE BETWEEN CORPORATE
PHILANTHROPY & STRATEGIC CSR
PHILANTHROPY STRATEGIC CSR
• IT MAY OR MAY NOT • COMPANIES INTEGRATE
BRING DIRECT CSR WITH THEIR LONG
RETURNS TERM BUSINESS
STRATEGY FOR
• OFTEN GIVEN BECAUSE SUSTAINABILITY.
OF SOME
PRESSURE/MOTIVES • CREATING A SOCIAL
DIMENSION TO THE
• USED AS A PR FOR VALUE PROPOSITION
BUSINESS
• IN MAINTAINING TBL
• PARTNERSHIP WITH APPROACH
CIVIL SOCIETY
ORGANIZATIONS ( AD-
HOC)
• ONLY STRATEGIC
PHILANTHROPY BRINGS
DIRECT RETURNS
CAN PHILANTHROPY AND CORPORATE
PHILANTHROPY ADDRESS ALL ISSUES?
WHAT ARE THE OTHER STAKEHOLDER ISSUES WHICH
BUSINESSES HAVE TO ADDRESS?
 The Issues
Marketplace Workplace
Impact on society of core products Workforce diversity
and services Work-life balance
Issues around buying and selling health and safety
Supply chain human rights
Vulnerable customers training and lifelong learning

Environment
Emissions to air, land and water Community
Use of natural resources Impact on local operations on
Environmental risk the community
Transport impacts Business investment in
Impact on environment of core community
products and services
TRIPLE BOTTOM LINE

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WHAT BENEFITS DOES CSR
CREATE FOR BUSINESS?

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 BENEFITS OF CSR

TANGIBLE INTANGIBLE
• REDUCED OPERATING COSTS • ENHANCED REPUTATION & BRAND
• INCREASED STAFF COMMITMENT & INVOLVEMENT VALUE
• DEVELOPMENT OF BETTER CUSTOMER
RELATIONS • LESS MEDIA HARASSMENT
• IMPROVED FINANCIAL PERFORMANCE & • GOOD RELATIONS WITH
PROFITABILITY
COMMUNITIES & GOVERNMENT
• LONG TERM SUSTAINABILITY FOR COMPANIES &
THEIR EMPLOYEES • BETTER ENVIRONMENT

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