Traditionally, government was only responsible of socio-
economic development and environment protection.
Overall liberalization has strengthened the private sector.
Steady increase in foreign direct investment flows in
Corporations open their branches in countries with weak
regulatory institutions and thereby impacting in wide
range on socio-economic and environmental factors.
These brings forth the fundamental questions regarding
the obligations and responsibilities of the private sector:
Apart from contributing in economic progress by
generating profit and employment, what else to private
Should the society expect the private sector to care and
contribute to a larger common good?
Are such expectations reasonable and can they be
Do they impose too heavy a burden on the private sector?
Do they shift too much authority from the government?
According to CSR, Business is accountable to all it’s
Those stakeholder’s being:
Employees and their families
Community in which organization exists
Following questions arise when we take about CRS and
Who are the stakeholders and who defines them?
Is it a company or political authority or is it self-selecting?
What degrees of interest does a stakeholder hold?
How close the stakeholder should be to company, for
his/her opinion to matter?
What role does the media play?
What extent should the stakeholder effect the decisionmaking process of a company?
What kind of process is need to let them participate in
CSR should go beyond above mentioned minimal
Globalization has extended the concept of stakeholders:
Does the social contract that the company utilizes in one
country must be extended to other countries? how many
social must a company enter into if it operation beyond its
Should same standard be used or must different standards
be adopted for different countries?
Does consumer in one country define company’s behavior
in other countries?
CSR, therefore, involves the establishment of a dialogue
between a company and its stakeholders
Respect and comply with concerns of the stakeholders
Minimal Elements of CSR:
1. Comply with laws and regulation
2. Undertake philanthropic activities
3. Develop public relations strategy
CSR is mostly laid down in the form of code of conduct
Code of Conduct: written policy or statement of principles
intended to serve basis for a commitment to socially
They are generally initiatives taken by company, voluntarily
Government also plays a role in supporting above code of
conduct along with non-governmental organization and
Much broader view is
Who is the corporation
responsible and accountable
Employees and customers
tend be equal partners with
Goal of business is only to
“Business has responsibility” means what?
Corporation is artificial person, hence it has artificial
Manager’s primary responsibility is to operate the business
in best interest of stockholders because their biggest
concern is financial return.
If money is spent on social cause, it’s stockholder’s money
that is spent.
It is morally correct to increase profit in ethically.
In a free enterprise, a manager is employee of the owner of
the business and hence responsible to his/her employer.
Hence he must increase profit but abiding both laws and
Freidman’s view is quite radical
But by utilizing CSR , a company can increase its profit
In this information stage , where business practices have become
transparent, CSR has become a requirement rather than luxury.
Focus on product and services, brands and logos, revenue and
margins is no longer enough
Companies will also be judged on basis of environmental
stewardship, employee relations, diversity, community relations
and human rights.
Above terms must be met for company to become reputed and
for it to prosper. Consumers want to deal with companies they
can trust and believe in.
Business can’t sustain at the cost of their employees and
environment in which they exist.
CSR is a business strategy designed for economy where, socioeconomic and environmental goals are interwoven.
A 1999 Cone Roper Study found that 68% of customers would
have no problem paying for a product that is linked to a good
A 1999 study, cited in Business Society Review, showed that 300
large corporations found that companies that made a public
commitment to rely on their ethics code out performed
companies that do not do so by 2 or 3 times, as measured by
market value added.
In 1997, Coca-Cola experienced a 490% increase in the sales of its
product at 450 Wal-Mart stores during six-week camping
with mothers against Drunk Driving.
A Wirth Worldwide survey found 2 to 3 Americans refusing
to buy a product suspicious of harming environment, even
if suspicions are not confirmed.