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Corporate Social Responsibility
“Need of the Hour”
Sudhir Kr. Pandey
Sushil Bandict Lakra
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• After 1960 word CSR has been wide used.
• In the eighteenth century Adam Smith expressed the
traditional or classical economic model of business. His
model suggest that the needs and desires of society could
best be met by the unfettered interaction of individuals
and organizations in the marketplace.
• However, even Smith recognized that the free market did
not always perform perfectly and he stated that
marketplace participants must act honestly and justly
toward each other if the ideals of the free market are to be
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• In the late nineteenth century many tycoons practiced a
philosophy that came to be called “Social Darwinism”
and became greatest philanthropists.
• In twentieth century a backlash against the large
corporations began to gain momentum. Big business was
criticized as being too powerful and for practicing
antisocial and anticompetitive practices.
• Labour movement;
• Civil rights movement;
• Consumerism; and
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• The World Business Council for Sustainable Development (WBCSD)
defines CSR as "The continuing commitment by business to behave
ethically and contribute to economic development while improving the
quality of life of the work force and their families as well as of the local
community and society at large”.
• Mallin (2007)* defines CSR as voluntary actions that a company may take
in relation to the management of social, environmental and ethical issues.
Mallin (2007) quoting Carroll (1979)# expounds on CSR by explaining
that the business has a responsibility to produce goods that it sells at a
profit, to abide by legal requirements, to do what is right and fair and to do
what might be desired of companies in terms of supporting the local
community and making charitable donations.
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Ethics in business has been an issue for academics,
practitioners, and governmental regulators for
decades, some believe that unethical, immoral, and/or
illegal behaviour is widespread in the business world.
Numerous scandals in the late 1990s and early 2000s
seemed to add credence to the criticism of business ethics.
Eg:-WorldCom, Enron, ImClone, Arthur Andersen, etc.
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• Due to Scandals firm face the following
– public humiliation,
– huge financial losses,
– bankruptcy or dissolution.
– prison to some corporate officials,
– many employees losing their jobs,
– thousands of stockholders losing some or all of
their savings invested in the firms.
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Hence to improvement in perception of
the company among:
Firms started to use CSR activities.
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Firm’s Motivational factor for CSR
A/C to KPMG's International Survey of Corporate (Social) Responsibility
Reporting 2005, which surveyed more than 1,600 companies worldwide and
documented the top ten motivators driving corporations to engage in CSR
for competitive reasons, the following emerged:
• Economic considerations
• Ethical considerations
• Innovation and learning
• Employee motivation
• Risk management or risk reduction
• Access to capital or increased shareholder value
• Reputation or brand
• Market position or share
• Strengthened supplier relationships
• Cost savings
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Justification of CSR
• The rise of the modern corporation created and
continues to creates many social problems.
Therefore the corporate world should assume
responsibility for addressing the problems.
• In the long run it is incorporation’s best interest to
assume social responsibilities. It will the increase
the chances that they will have a future and reduce
the chances of increased governmental regulation.
• Large corporation have huge reserves of human
and financial capital. They should devote at least
some of there resources to addressing social
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Corporate Governance Vs CSR
Robert Reich (2008) is of the opinion that …’’
investors are interested in better corporate
governance. But better governance makes a firm
more responsive to its investors -- not to its
employees, communities, or society as a whole.’’
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Contemporary Social Issues & CSR
• Environmental Issues;
• Global Issues; and
• Technology Issues.
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• * Corporate Governance (second Edition) Christine A.Mallin
• # Caroll,A.B (1979) ‘’ A Three –dimensional Conceptual Model of corporate
Social Performance ‘’Academy of Management Review ,No.4