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Social responsibility is an ethical or ideological theory that an entity whether
it is a government, corporation, organization or individual has a responsibility
While primarily associated with business and governmental practices, activist
groups and local communities can also be associated with social responsibility,
not only business or governmental entities.
Corporate social responsibility (CSR, also called corporate responsibility,
corporate citizenship, and responsible business) is a concept whereby
organizations consider the interests of society by taking responsibility for the
impact of their activities on customers, suppliers, employees, shareholders,
communities and other stakeholders, as well as the environment.
This obligation is seen to extend beyond the statutory obligation to comply
with legislation and sees organizations voluntarily taking further steps to
improve the quality of life for employees and their families as well as for the
local community and society at large.
Social responsibility is voluntary; it is about going above and beyond what
is called for by the law (legal responsibility).
Social responsibility means eliminating corrupt, irresponsible or unethical
behavior that might bring harm to the community, its people, or the
environment before the behavior happens.
The shareholders, suppliers of resources, the consumers, the local
community and society at large are affected by the way an enterprise
functions. Thus a business enterprise should be able to strike a balance
between these divergent groups.
There has been greater consensus around the fact that the business
enterprise which makes use of the resources of society and depends on
society for its functioning, should discharge its duties by enhancing the
overall welfare of society.
The nature of social responsibility can be classified into:
Manner in which a business carries out its own activity.
Welfare activity that it takes upon itself as an additional function.
Businesses can use ethical decision making to
strengthen their businesses in three main ways
To use their ethical decision making to increase
productivity. This can be done through programs that
employees feel directly enhance their benefits given
by the corporation, like better health care or a better
pension program. One thing that all companies must
keep in mind is that employees are stakeholders in
the business. They have a vested interest in what the
company does and how it is run. When the company
is perceived to feel that their employees are a
valuable asset and the employees feel they are being
treated and such, productivity increases.
• The classical view is best expressed in terms of the work of the economist
Milton Friedman who believed it was wrong for corporate officials to
extend their social responsibilities beyond serving the interests of their
• Friedman said:
“There is one and only one social responsibility of business – to use its
resources and to engage in activities designed to increase its profit so long
as it stays within the rule of the game, which is to say, engages in open and
free competition without deception and fraud.”
• Business is an ecological one according to which business is an integral
part of a society to serve social purposes.
• Business is a social institution performing social mission
• It have a broad influence on the way people behave and work
According to Steiner and Steiner
• Each business must take into account the situation which it finds
itself in meeting stakeholder expectations.
• Business is an economic entity and cannot jeopardize its
profitability meeting social needs.
• Business should recognize that social good benefit to all.
• Directly related to social power to influence outcomes.
• Related to size of company and to thee industry
• Should tackle only social problems in which it has competence.
• Business must assume its share of the social burden and be willing to
absorb reasonable social costs.
SOCIAL RESPONSIBILITY MODLES
• There are mainly three models which describe evolution and extent
of social orientation of companies.
• Carroll’s model
• Halal’s model
• Ackerman’s model
• Corporate social responsibility is the entire range of obligations
business has to society
• A firm has the following four categories of obligations of corporate
William E Halal’s model
• A firm can only attempt to unite the diverse interest of various social
groups to form a workable coalition engaged in creating value for
distribution among members of the coalition. Beyond a certain level
of economic activity ,the social issues at stake may become
• There are three phases in development of the social responsiveness
of a company
• First phase: top management recognizes the existence of a social
problem which deserves the company’s attention and acknowledges
the company’s policy towards it by making an oral or written
• Second phase: company appointing staff specialists or external
consultants to study the problem and suggest way of dealing with it
• Third phase: Implementation of social responsibility programmes
EXTENT OF SOCIAL ORIENTATION AND
• Extent of social orientation and involvement of companies is classified
into following categories
• Socially oriented
• Committed and very active
FACTORS AFFECTING SOCIAL ORIENTATION
1.Promoters and Top Management
2.Board of Directors
3.Stake Holders and Internal Power
5.Industry and Trade Association
6.Government and Laws
1.promoters and Top Management:
• The value and vision of Top management and promoters is one of the
very important factors that influence the corporate social responsibility
2.Board of directors:
• Board of directors decides major policies and resource allocation of a
3.Stakeholders and internal power relationship:
• A firm can only attempt to unite the diverse interest of various social
groups to form a workable coalition
• It is influenced by a certain characteristics of the society and general
attitude and expectation of the society regarding social responsibility of
5. Industry and trade associations:
• It influence the behaviour of the firm by establishing professional and
ethical codes and norms education and collective decisions
6.Government and laws:
• Laws are society’s codification of right and wrong .business shall play the
rules of the game .
• Pressure exerted by special interest groups in society and media to
control business practices .eg, Ngo’s like environmentalist, consumer
interest groups etc…
• Social orientation of companies influence by the competitive forces .
some companies do good to the society and some are encourage to do
• Social involvement of companies is also effected by the financial
position and the other resources of the company.
• Another factor influencing the social orientation is ethical decision
making and self-regulation of business conduct.
RESPONSIBILITY TO SHARE HOLDERS
I. SHARE HOLDERS ARE THE REAL OWNERS OF THE COMPANY
II. PROFIT MAXIMIZATION AND WEALTH MAXIMIZATION
III. MAKING PROFIT AND DISTRIBUTE DIVIDENTS TO SHARE HOLDERS
IV. FINANCIAL INDIPENDANCE
V. INCREASING THE VALUE OF SHARES BY IMOROOVING IMAGE AND MARKET OF TH ECOMPANY
RESPONSIBILITIES TO EMPLOYEES
I. PAYMENT OF FAIR WAGES
II. OFFERING BEST POSSIBLE WORKING ENVIORNMENT
III. ESTABLISHMENT OF WORKING STANDARDS AND NORMS
IV. PROVIDE SUFFICIENT LABOUR WELFARE AND RECREATIONAL PROVISIONS
V. PROPER TRAINING AND EDUCATION TO THE WORKERS
VI. OPPORTUNITIES FOR ACCOMPLISHMENT AND PROMOTIONS
VII. BENEFITS IN TERMS OF MONEY AND OTHERS
VIII. EFFICIENT GRIEVANCE HANDLING SYSTEM
IX. OPPORTUNITIES IN MANAGERIAL DECISION MAKING AS DESIRABLE
RESPONSIBILITY TO CONSUMERS
CONSUMER SATISFACTION IS THE KEY TO SATISFYING ORGANIZATIONAL GOALS
I. PROVIDE IMPROVED QUALITY GOOSDS AND SERVICES,ENSURE EASLY AVAILABILITY AT REASONABLE
II. PROVIDE ENOUGH SALES AND AFTER SALES SERVICE CENTERS
III. ELIMINATE BLACK MARKETING, PROFITEERING BY MIDDLEMEN AND ANTI-SOCIAL ELEMENTS
IV. PROVIDE SUFFICIENT INFORMATIONS AND PRECUATIONS ABOUT THE PRODUCTS AND ADVERSE THE USE
V. AVOIDE MISLEADING THROUGH ADVERTISEMENTS AND OTHER WAYS
VI. UNDERSTAND THE NEEDS AND WANTS OF THE CUSTOMERS AND MEET THEIR NEEDS
RESPONSIBILITY TO COMMUNITY
I. PREVENT ENVIORNMENTAL POLLUTION AND PRESERVE THE RESOURCES
II. REHABILATING THE PEOPLE DISPLACES BY THE OPERATON OF THE BUSINESS
III. ASSSISTING THE OVERALL DEVELOPMENT OF THE LOCALITY
IV. ENSURE CONSERVATION OF SCARCE RESOURCES
V. CONTRIBUTING TO RESEARCH AND DEVELOPMENT
VI. PROMOTION OF ANCILLARISATION AND SMALL SCALE INDUSTRIES
VII. MAKING POSSIBLE CONTRIBUTION TO THE SOCIETY
VIII. DEVELOPMENT OF BACKWARD AREA
IX. CONTRIBUTING TO THE NATONAL PRODUCTION
CSR is not a new concept in India. Ever since their inception,
corporates like the Tata Group, the Aditya Birla Group,and Indian Oil
Corporation, to name a few, have been involved in serving the
community. Through donations and charity events, many other
organizations have been doing their part for the society. The basic
objective of CSR in these days is to maximize the company's overall
impact on the society and stakeholders. CSR policies, practices and
programs are being comprehensively integrated by an increasing
number of companies throughout their business operations and
processes. A growing number of corporates feel that CSR is not just
another form of indirect expense but is important for protecting the
goodwill and reputation, defending attacks and increasing business
Companies have specialised CSR teams that formulate policies,
strategies and goals for their CSR programs and set aside
budgets to fund them. These programs are often determined by
social philosophy which have clear objectives and are well defined
and are aligned with the mainstream business. The programs are
put into practice by the employees who are crucial to this process.
CSR programs ranges from community development to
development in education, environment and healthcare etc.
A more comprehensive method of development is adopted by
some corporations such as Bharat Petroleum Corporation
Limited, Maruti Suzuki India Limited. Provision of improved
medical and sanitation facilities, building schools and houses, and
empowering the villagers and in process making them more self-
reliant by providingvocational training and a knowledge of
business operations are the facilities that these corporations focus
on. Many of the companies are helping other peoples by providing
them good standard of living.
Also, corporates increasingly join hands with non-governmental
organizations (NGOs) and use their expertise in devising
programs which address wider social problems.
CSR has gone through many phases in India. The ability
to make a significant difference in the society and improve
the overall quality of life has clearly been proven by the
corporates. Not one but all corporates should try and bring
about a change in the current social situation in India in
order to have an effective and lasting solution to the social
woes . Partnerships between companies, NGOs and the
government should be facilitated so that a combination of
their skills such as expertise, strategic thinking, manpower
and money to initiate extensive social change will put the
socio-economic development of India on a fast track.
ARGUMENT FOR SOCIAL RESPONSIBILITY
•Public Image: Social responsible firm gain more
customers and employees are motivated
•HANDLING GOVERMENT REGULATION:
Government seeks to regulate business in public
•PREVENTION IS BETTER THAN CURE: problems with
labour union should be handled tactfully
•Stock holders interest: social responsibility will improve
the price of business’s stock in the long run the stock market
will view the socially responsible company as less risky and
open to public attack there for it will award it’s stock a higher
price earning ratio
•Possession of resources : business has the financial
resources, technical experts and managerial talent to provide
support to public and charitable project that need assistance
•Better environment: involvement by business can solve
difficult social problems those creating better quality of life
and more desirable community in which to attract a and hold
ARGUMENTS AGAINST SOCIAL
•Profit maximization is the ultimate goal: since business
operates in a world of poverty and hunger, the economic
efficiency of business in the sole priority
•Lack of social skills: business people do not possess social
skills to solve social problems
•Social over head cost: costs on social responsibility will not
immediately benefits the business
• Lack of board support
COST: many socially responsible activities
do not pay their own way. Some one has
to pay this cost . Business must absorb
this cost or pass the on to consumer in
Too much power: business already one of
the most power full institution in our
society . If it pursued social goals, it would
have even more power. Society has given
business enough power
• Social audit is a tool for evaluating how satisfactorily a company has
discharged its social responsibilities.
• Social audit enables the public as well as the company to evaluate the
social performance of the company.
• It is similar to that of financial auditing
Steps involved in social auditing
• Identification of the firms activities.
• Assessment and evaluation.
• Measurement of the social costs and benefits.
Objectives and benefits of social auditing
• to evaluate the social dimension
of the performance of the
• Take measures to improve the
social performance of the
company on the basis of audit.
• Social audit increases the public
visibility of the organisation.
• It will help to boost the public
image of the company.
Methods of social audit
• Social process audit whether objectives met
• Financial statement format audit
• Micro macro social indicator audit
• Constituency group audit attitude
• Partial social audit
• Comprehensive audit total
• Corporate rating approach
Obstacles to social audit
• being a new concept, social audit is yet to gain wide appreciation and acceptance.
• A clear and generally well accepted methodology for conducting the social audits
is not available.
• There is no agreement as to the items to be included for social audit.
• There may be resistance within the company to social audit because of difficulty
involved in the task.
• There may be resistance because of the fear of unsatisfactory picture that may be
presented by the social audit.
Social auditing in India
• Idea of social audit originated in USA centuries ago.
• But received attention recently.
• First comprehensive social audit was conducted by TISCO in 1980.
• It was done by board of directors of the company to examine the
extent to which the company has fulfilled its objectives.