Corporate Social Responsibility

Corporate social responsibility or CSR has been defined by Lord Holme and Richard Watts in
The world Business council for sustainable Development’s publication ‘Making good business
Sense as “…the continuing commitment but business to behave ethically and contribute to
economic development while improving the quality of life of the workforce and their families as
well as the local community and society at large”. CSR is the most recent management strategies
where companies try to make a positive influence on society while doing business. As there is no
such definition of what CSR constructed. Different company has different CSR motives though
the main motive is the same. All companies have two point programs- to improve the
management of people and processes and the impact on society. The second is as important as
the first and stakeholders of every company are increasingly taking an interest in the activities of
the company and how these are impacting the environment and society.

Corporate social responsibility is a form of corporate self-regulation integrated into a business

model. CSR policy functions as a built-in, self-regulating mechanism whereby business monitors
and ensures its active compliance with the spirit of the law, ethical standards, and international
norms. THE goal of CSR is to embrace responsibility for the company’s actions and encourage a
positive impact through its activities on the environment, consumers, employees, communities,
stakeholder and all other members of the public sphere.

The term “corporate social responsibility” comes into common use in the late 1960s and early
1970s after many multinational corporations built the term stakeholder, meaning those on who
influence on an organization’s. It was used to describe corporate owners beyond shareholders as
a result of an influential book by R. Edward Freeman, Strategic management: stakeholder
approach in 1984. Individuals argue that corporation makes more social responsibility in a
voluntary effort on the part of business to take different steps to gratify the expectation of the
different interest groups. As we have already learned the interest groups maybe owners,
investors, employees, consumers, government and society or community.
According to John Elkington, 2,500 businesses worldwide are now certified as B Corps. All are
configured around the TBL — dedicated to be not just “best in the world,” but “best for the
world.”

Arguments for CSR:

The supplement of corporate social responsibility has put onward arguments supporting the
concept of CSR. Some of the reasons cited in favor of CSR are shortened as follows:

i. Business involved in social issues:

Managers are the important citizens, as the individuals are. And they have the same
responsibility as individual citizens do to improve the society exhaustedly.

In addition to, a business operates with social resources and it is the management’s responsibility
to use these resources with the best possible way. The businesses would be benefitted by being
concerned about such societal concerns as unemployment, inflation, economic growth and so on.
These are the concern of a business which they do for the society.

ii. CSR programs create a public image:

The people do respect for that kind of businesses whom are displaying socially responsible
behaviors. A company who is conscious about the society would win the goodwill of the
community. It would create better relationship for business- customer and for worker-
management relations, which is good for organizations.

iii. The society expects the businesses to be socially sensitive and responsive:
The public opinion runs intense in expecting the productivity goals to co-existence with the
quality of life social goals.

Survival and growth: Every business is a part of the society, so for its survival and growth
support from the society is very essential. Business utilizes the available resources like power,
water, land, roads, etc. of the society. So it should be the responsibility of every business to spend
a part of its profit for the welfare.
iv. Employee satisfaction: Besides getting good salary and working in a healthy atmosphere,
employees also expect other facilities like proper accommodation, transportation, education and
training, employers should try to fulfill all the expectation of the employees because employee
satisfaction is directly related to productivity and it is also required for the long term prosperity
of the organization. For example, if business spends money on training of the employees, it will
have more efficient people to work and thus, earn more profit.

v. To be loyal to everyone: A business should no work for the profit of the owners/ shareholders
alone. The participation of the employees, the consumers, the suppliers and the government in
the activities of a business is more than the participation of the owners. The business, therefore,
has primary duty to serve these different groups apart from satisfying the owners.

vi. Businesses have the resources for CSR activity:

The modern businesses have abundant wealth, huge wealth generating capacity, a huge stock of
technical, financial and managerial resources and a conjunction of skill that can solve many
societal problems and provide leadership to society.

vii. Avoidance of excessive government regulations and interference:

Laws cannot be passed for all kind of situations and hence businesses must contribute
responsibility to maintain an orderly society. According to waves of anti-trust, equal employment
opportunity, air and water pollution control legislation, truth in advertising and other similar
legislation being enforced in America, it is apparent that government will force the businesses to
do for social benefit what it has failed to do voluntarily. As a result, government provides less
regulations or restriction for those whom are more socially responsible the businesses.

After all the discussion; it would be natural to accept that it is beneficial for businesses to fulfill
extended social responsibility into their activities and their philosophy. Keith Davis has summed
up his views regarding managerial social responsibility as follows:

“Society wants business as well as all other major institutions to assume significant social
responsibility. Social responsibility has become the hall mark of mature, global
civilization………. the business which vacillates or chooses not to enter the arena of social
responsibility may find that it gradually will sink into consumer and public disfavor.”
Argument against CSR:
The major anti-CRS arguments are summarized as follows:

i. The management is under moral and contractual commitment to the stock holders only:
The primary duty of the management is to work for the shareholders who expect maximum
returns on their investment. The policies of profit making and social responsibility are mutually
exclusive and hence any contributions made for social causes reduce profits. Economists like
Milton Friedman believe that such practices conflict with the basic premises underlying U.S.
capitalism.

ii. In a free and democratic economy, all groups are expected to take care of their own
problems and responsibilities:
Why should the managers be concerned with the interests of the workers and consumers? The
prices should be fixed by the economic forces of supply and demand and not by the capabilities
of the consumers to pay. The consumers must look after their own interests. Similarly, the
workers should be responsible for their own safety and well-being.

iii. The management is not properly equipped and trained in handling social issues and
activities:
It would be better to leave social interests in the hands of people more skilled in social programs
such as teachers, social workers and so on. Furthermore, management is so heavily involved in
enormously imposing tasks of managerial functions that it will not be desirable to impose an
additional task of social responsibility.

iv. Big businesses already hold enough economic power:

Businesses control the economy of the country. Giving them the social power as well would be
harmful to the general and optimal prosperity of the society. Such social power could influence
political results and hence legislative results which would destroy the true morality of
democracy. For example, contributions to a favorite charity of a legislator could point the
legislation in favor of given business which would be counter to democratic principles.
Refutation argument against CSR:
First of all, as there is an argument against CSR about responsibility for shareholder to maximize
shareholder wealth, they claim that CSR activity will minimize the profit as a result moral
commitment to shareholder couldn’t achieve. But my point is, I already mention that CSR create
public image so the sales will increase as a result profit will be maximized. Consumers want
companies to be transparent about their practices and to be considerate of all stakeholders, and
many consumers are willing to pay more for clothing and other products if it means that workers
are paid a living wage, and the environment is being respected in the production process. So by
doing CSR activity business can make profit as well as maintain their responsibility toward
society and can build a good image in the society. Without CSR a company may make short term
profit but with CSR a corporation can make long-term profit.

Secondly, as a free economy, market force fixes the price of the product and also consumers are
looking for their own benefit. But if you provide a good quality of product then consumer right
will be achieve as well as CSR activity. And it helps to gain consumer attention as a result they
will buy more when they will satisfy with your product. So company’s sales will increase

Thirdly, another claim is the workers should be responsible for their own safety and well-being.
But if a business aware the worker about any kind of risk by proper training and by HR activity ,
then worker might be more concern about their safety. So that worker can avoid any kind of
major injury and can do their job properly.

Fourthly, social worker, teacher etc. can do social work much better but if a corporation can do
anything for the society that would be extra beneficial. A corporation can help by donating
money, reduce unemployment problem, solve environmental problem and so on so forth. If
everyone works together we can make better world.

And lastly social work doesn’t mean that businesses will get social power. Gain political power
it’s not that much easy. Government is there to maintain all these sorts of thing as well as rules
and regulation are there.
The idea of “triple bottom line” founded by John Elkington describe three bottom lines which are
people, planet, profit and these idea enjoyed some success in the turn-of-the-century zeitgeist of
corporate social responsibility, climate change and fair trade. After more than a decade in which
cost-cutting had been the number-one business priority, the hidden social and environmental
costs of transferring production and services to low-cost countries such as China, India and
Brazil became increasingly apparent to western consumers. These included such things as the
indiscriminate logging of the Amazon basin, the excessive use of hydrocarbons and the
exploitation of cheap labor.

Conclusion

The Corporate social responsibility is very important for both society and business organizations.
Although there are some arguments for and against social responsibility, even more of the
organizations are interested on social responsibility. There are lot of advantages created for CSR
programmers, some of that was already discuss on previous pages. Believed that, the best interest
of business organizations is social responsibilities and CSR will benefit the corporation in the
long run , can be earn more profit, and benefit to the human and the environment’s is now
recognized that poverty reduction and sustainable development will not be achieved through
government action alone corporation also need to pay attention on these by doing CSR activities.
Influential persons are paying increasing attention to the dynamic contribution of the private
sector to such policy purpose. The concept of CSR is sometimes used as business contribution to
sustainable development. A number of core development issues are already central to the
international CRS program. They comprise labor standards, human rights, education, health,
child labor, poverty reduction, conflict and environmental impacts. CSR is often associated with
large corporation like multinational and global enterprises. CSR has some criticism for being
uncaring to local priorities and the primary livelihood needs of people in developing countries,
particularly where CSR activities may perceived as barriers to market access for some producers.
But the CSR program needs to be locally owned if CSR make a great contribution to the local
development priorities and it must be related to local enterprises, whether large or small.
References:

Wilson, J. (2009, November17). Triple Bottom Line. Retrieved from:

https://www.economist.com/news/2009/11/17/triple-bottom-line

Folger, J. (2019, February 6). Corporate Social Responsibility. Retrieved from: https://e-
csr.net/definitions/csr-definition/

Sickler, J. (2017, July 10). Powerful Corporate Social Responsibility examples. Retrieved from:
https://www.reputationmanagement.com/blog/corporate-social-responsibility-examples/