Introduction Responsibility of a Business Responsibility of a Responsibility of a business in present business traditionally scenario • Providing goods To solve social and services to problems like society. poverty, •Maximizing corruption, corporate profit pollution, • Creating job educational opportunities etc problem etc.
Meaning of CSR• According to European Union, “ CSR is a concept that an enterprise isaccountable for its impact on all relevant stakeholders. It is the continuingcommitment by business to behave fairly and responsibly and contribute toeconomic development while improving the quality of life of the work force andtheir families as well as the local community and society at large.”• Social responsibility refers to the obligation of an organisation to seek actionsthat protect and improve the welfare of society along with its own interest.
Nature of Social Responsibility• Focus on Business Firms• It deals with moral issues• It moves along with the objective of profitmaximization• It is a pervasive activity• It is a continuing process
Historical Perspectives of Social Responsibility• Expectations of society from business firms in regard tocorporate social responsibility has gone through 3 phases:
Profit Maximization (Traditional Philosophy) Historically, business enterprise was mainly looked for the interest of the owners. Social responsibility of the organisation was to maximize the profit within the legal framework of the country.
Trusteeship Management (Stakeholder Philosophy) During later years, the concept of social responsibilitywidened from mere satisfaction of owners’ interests tointerest of other stakeholders like employees,consumers, creditors etc. Providing good working conditions, better qualitygoods, timely repayment of loans to creditors etc.
Quality of life management(Affirmative philosophy) A still wider concept of social responsibility developedin 1960s.It viewed business enterprises as institutions to removesocial ills and uplift the society. Business enterprises are now supposed to uplift thequality of life in the society.
Four-Part model of Corporate Social ResponsibilityType of Societal ExamplesResponsibility Expectation DESIRED of Corporate contributions. Philanthropic Programs supporting community/education, business by health, poverty etc society Creating Job Opportunities EXPECTED of Providing products as per the need of the Ethical business by society customers etc Obey all laws; Environmental laws. REQUIRED of Legal Consumer laws. business by society Laws affecting all employees. Be profitable. REQUIRED by Economic Maximise sales revenue. business Minimize costs (administrative, production, marketing, distribution). Make wise strategic decisions. Be attentive to dividend policy
Arguments in favour of social responsibility Long-run survival of Business concerns. Profitability for business concerns. Moral and Social commitment. Combination of several interests. Improvement in public image. Complementary to profit maximization Helps in avoiding Government Regulations Status of a citizen Available Surpluses
Arguments against Social Responsibility Business is an economic activity. Burdensome for business organizations. Cost-benefit analysis. Lack of skill and competence. Transfer of social costs: Increase in prices, reduction inwages, reduction in profits.
Barriers to Social Responsibility Managerial perceptions Comparison of divisional performance Overall Organisational Barriers International Barriers
Various Stakeholders and Social Responsibility Shareholders Employees Customers Creditors/Suppliers Organizations Government Society