LECTURE NOTES ON CORPORATE

SOCIAL RESPONSIBILITY
Many people have a vague idea of what CSR is all about, a big corporation giving some
money to the environment or a community initiative. Often CSR is thought to be nothing more
than a cynical public relations opportunity, a way for Mega Corporations to gloss over its
dumping of chemicals into a nature reserve by spending a few dollars on a youth center.
(Ameinfo, 2005).
Bowen (1953) as cited by Carroll (2006) set forth an initial definition of social
responsibilities of businessmen: It refers to the obligation of businessman to pursue those
policies, to make those decisions, or to follow those lines of action which are desirable in terms
of the objectives and values of the society.
According to Carroll (2006) in the early writings of CSR, it was referred more often as
social responsibility (SR) than CSR, because during those days the modern corporations
prominence and dominance in the business sector had not yet occurred.

However, the

publication of Bowens book Social Responsibilities of the Businessman is argued to be the

mark of the modern period of literature on this subject. Because of Bowens early and influential
work, Carroll submits that Howard Bowen should be called the Father of Corporate Social
Responsibility. Bowen argued in his book that corporate social responsibility is no panacea,
but it contains an important truth that must guide business in the future.
Davis (1960) argued that social responsibility is a nebulous idea but should be seen in a
managerial context.

Furthermore, he asserted that some socially responsible business

decisions can be justified by a long, complicated process of reasoning as having a good chance
of bringing long-run economic gain to the firm, thus paying it back for its socially responsible
outlook.
Frederick (1960) was also an influential contributor to the early definitions of social
responsibility, according to him, social responsibility mean that businessman should oversee the
operation of an economic system that fulfils the expectation of the public. And this means in turn

that the economys means of production should be employed in such a way that production and
distribution should enhance total socio-economic welfare.
McGuire (1963) was another major contributor to the definition of social responsibility. He
stated, The idea of social responsibility supposes that the corporation has not only economic
and legal obligations but also certain responsibilities to society which extend beyond these
obligations. He elaborated by saying that the corporation must take an interest in politic, in the
welfare of the community, in education, in the happiness of its employees and in the whole
social world about it.
Davis and Blomstrom (1966) defined social responsibility as persons obligation to
consider the effects of his decisions and actions on the whole social system. Businessmen
apply social responsibility when they consider the needs and interest of others who may be
affected by the business actions. In so doing, they look beyond their firms narrows technical
interest.
Davis (1967) revisited the revisited the concept of CSR, he asserted Social responsibility
moves large one step further by emphasizing institutional actions and their effect on the whole
social system. He broadens the meaning from a persons view to the total systems view.
Walton (1967) in his book, he presented a number of different models of social
responsibility. His fundamental definition of social responsibility recognizes the intimacy of the
relationships between the corporation and the society and realizes that such relationships
between the corporation and society and realizes that such relationships must be kept in mind
by top managers as the corporation and the related groups pursue their respective goals.
Johnson (1971) presented a definition of CSR as the pursuit of socioeconomic goals
through the elaboration of social norms in prescribed business roles; or, to put it more simply,
business takes place within a socio-cultural system that outlines through norms and business
roles particular ways of responding to particular situations and sets out in some detail the
prescribe ways of conducting business affairs.
Manne & Wallich (1972) defined CSR by arguing that any working definition requires three
elements: To qualify as socially responsible corporate action; first, a business expenditure or
activity must be one for which the marginal returns to the corporation are less than the returns
available from some alternative expenditure; second, must be purely voluntarily; and third, must
be an actual corporate expenditure rather than a conduit for individual generosity.

Further, Professor Wallich (Manne & Wallich, 1972) wrote that the exercise of CSR
involves three basic elements: (1) the setting of objectives, (2) the decision whether to pursue
given objectives, and (3) the financing of this objectives. He identified circumstances in which
CSR might be defensible, but he favored stockholder instructions to the corporation to make
corporations properly responsible to stockholders interest.
Eilbert & Parket (1973) for the purposes of their research they defined CSR as
commitment of the business to an active role in the solution of broad social problems, such as
racial discrimination, pollution, transportation, or urban decay. The result of their research was
they found out that the type of CSR activities which firms engaged had affected organizational
structure and budget, the activities believed to be more important than other organizational
issues.
Ealls & Walton (1974) took a broader perspective on what CSR means and how it evolved.
In its broadest sense, CSR represents a concern with the needs and goals of society which
goes beyond the merely economic. Insofar as the business system presently exist, it can only
survive in an effectively functioning free society if the CSR movement represents a broad
concern with businesss role in supporting and improving the social order.
Backman (1975) defined social responsibility as the objectives or motives that should be
given weight by business in addition to those dealing with economic performance such as;
employment of minority groups, reduction in pollution, greater participation in programs to
improve the community, improve medical care, improve industrial health and safety these and
other programs designed to improve the quality of life are covered by the broad umbrella of
social responsibility.
Sethi (1975) discussed about the dimension of corporate social performance, the
process to distinguish between corporate behaviors and might be called social obligation,
social responsibility and social responsiveness.

He stated that social obligation is

proscriptive in nature while social responsibility is prescriptive. Social responsibility by contrast

goes beyond social obligation. Thus, social responsibility implies bringing corporate behavior
up to the level where it is congruent with the prevailing social norms, values, and expectation of
performance.
Preston and Post (1975) discussed social responsibility as public responsibility, which
intended to define the function of organizational management within the specific context of

public life. They also stated that in the principle of public responsibility, the scope of managerial
responsibility is not unlimited, as the popular conception of social responsibility might suggest,
but specifically defined in terms of primary and secondary involvement areas.
Fitch (1976) defined CSR in terms of solving social problems. He stated, Corporate
social responsibility is defined as the serious attempt to solve social problems caused wholly or
in part by the corporation. His problem and solving perspective on CSR was that firms, to be
socially responsible, must identify and define a social problem and then, from an array of social
problems, decide which one to attack first. Included in this process is making a distinction
between social and non social problems and then identifying methods for attacking social
problems.
Carroll (1979) proposed a four-part definition of CSR that was embedded in a conceptual
model of corporate social performance (CSP). The businesses should fulfill economic, legal,
ethical and discretionary responsibility. His basic argument was that for mangers of firms to
engage in CSP they needed to have (a) a basic definition of CSR, (b) an understanding of the
issues for which a social responsibility existed, and (c) a specification of the philosophy of
responsiveness to the issues. He offered then the following definitions:
(1) The economic responsibility represents the expectations that society has of
organizations at a given point of time. He contended that before anything else, the business
institution is the basic economic unit of the society. As such it has a responsibility to produce
goods and services that society wants and to sell them at a profit. All other business roles are
predicated on this fundamental assumption.
(2) The legal responsibility, just as society expects business to make profit as an incentive
and reward for its efficiency and effectiveness, society also expect business to obey the law.
The law represents the basic rule of the game by which business is expected to function.
Society expects business to fulfill its economic mission within the framework of legal
requirements set forth by the societys legal system.
(3) The ethical responsibility represents the kinds of behaviors and ethical norms that
society expects business to follow. These extend to behaviors and practices that are beyond
what is required by the law. Although they seem to be always expanding, they nevertheless
exist as expectations over and beyond legal requirements.

(4) The discretionary responsibility represents voluntary roles that business assumes but
for which society does not provide as clear-cut an expectation as it does in the ethical
responsibility. These are left to individual managers and corporations judgment and choice;
however, the expectation that business perform these still exists. This expectation is driven by
social norms. The specific activities are guided by businesses desire to engage in social roles
not mandated or required by law and not expected of businesses in an ethical sense, but are
increasingly strategic.
Jones (1980) entered the CSR discussion with an interesting perspective; he defined CSR
as the notion that corporations have an obligation to constituent groups in society other than
stockholders and beyond the prescribed by the law and union contract. Two facets of this
definition are critical. First, the obligation must be voluntarily adopted; behavior influenced by
the coercive forces of law or union contract is not voluntary. Second, the obligation is broad
one, extending beyond the traditional duty to shareholders to other social groups such as
customers, employees, suppliers, and neighboring communities.
Tuzzolino and Armandi (1981) sought to develop a better mechanism for assessing CSR
by proposing a need-hierarchy framework patterned after Maslows hierarchy of needs. They
accepted Carrolls (1979) definition as appropriate for their purpose, and then proceeded to say
that it would be helpful to have an analytical framework to facilitate the operationalization of
CSR. Their organizational need hierarchy did not redefine CSR; however, it sought to suggest
that organizations, like individuals, had criteria that needed to be fulfilled or met, just as people
do, as depicted in the Maslow hierarchy.

The authors illustrated how organizations have

physiological, safety, affiliate, esteem, and self-actualization needs that parallel those of humans
as depicted by Maslow. They presented the hierarchy as a conceptual tool whereby socially
responsible organizational performance could be reasonably assessed.
Strand (1983) presented a system paradigm of organizational adaptations to the social
environment that sought to illustrate how such related concepts as social responsibility, social
responsiveness, and social responses connected to an organization-environment model.
Although offered no new or unique definition of CSR, his model is notable because it
represented another in a continuing stream of efforts to associate concepts as CSR to other
similar notions and to organization-environment interface.
Carroll (1983) elaborated further his 1979 four-part definition of CSR. He viewed that CSR
involves the conduct of a business so that it is economically profitable, law abiding, ethically and

socially supportive. To be socially responsible then means that profitability and obedience to
the law are foremost conditions to discussing the firms ethics and the extent to which it
supports the society in which it exist with contributions of money, time and talent. Thus, CSR is
composed of four parts: economic, legal, ethical, and voluntary or philanthropic.
Drucker (1984) made explicit in a number of his earlier definitions and was implicit in
several others as well. His perspective was not simply the compatibility of profitability and
responsibility but the idea that business ought to convert its social responsibilities into
business opportunities.

He made this point clear: that the proper social responsibility of

business is to tame the dragon that is to turn problem into economic opportunity and economic
benefit, into productive capacity, into human competence, into well-paid jobs, and into wealth.
According to Peter Drucker (1984), management has three responsibilities: to make profit;
satisfy employees; and be socially responsible. If management fails to carry out these social
responsibilities the production of wealth in the long run will weaken society. Balancing profit
maximization and income generation on the one side and discharging social responsibilities by
stockholders and citizens in general on the other side is not an easy task.

There has to be a

very vigilant civil society that can maintain the said balance. Further, vigilant civilian actions
have sprung during these times as a result of the so called comeback of the neo-classical
economic philosophies whereby private global enterprises are actively taking over the less
efficient state-owned and state-protected enterprises through various privatization schemes like
buy-outs, joint venture, build operate and transfer (BOT), build own and operate (BOO), build
and transfer (BT), subcontracting and so on.
Wartick &Cochran (1985) presented their evolution of the corporate social performance
model, which extended the three dimensional integration of responsibility, responsiveness, and
social issues which Carroll (1979) previously introduced. One of the major contributions of
these two authors was to recast Carrolls three aspects corporate social responsibilities,
corporate social responsiveness, and social issues into a framework of principles, processes,
and policies. They argued that Carrolls definition embraced the ethical component of social
responsibility and should be thought of as principles; social responsiveness should be thought
of as processes, and social issues management should be thought of as policies.
Epstein (1987) provided a definition of CSR in his quest to relate social responsibility,
responsiveness, and business ethics. He pointed out that this three concepts dealt with closely
related, even overlapping, themes and concerns. He defined CSR as it relates primarily to

achieving outcomes from organizational decisions concerning specific issues or problems which
(by some normative standard) have beneficial rather than adverse effects on pertinent corporate
stakeholders. The normative correctness of the products of corporate action has been the main
focus of corporate social responsibility.
In addition to defining CSR, Epstein (1987) defined corporate social responsiveness and
business ethics and then brought them together into what he called the social policy process.
He added, The nub of the corporate social policy process is the institutionalization within
business organizations of the following three elementsbusiness ethics, corporate social
responsibility, and corporate social responsiveness.
Wood (1991) revisited and reformulated Carrolls (1979) three-dimensional CSR model
and Wartick and Cochram (1985) formulation. She formulated this into three principles. First,
she stated the principle of CSR that took Carrolls four domain (economic, legal, ethical, and
discretionary) and identified how they related to CSR principles of social legitimacy (institutional
level), public responsibility (organizational level), and managerial discretion (individual level).
Second, she identified the processes of corporate social responsiveness, which went beyond
Carrolls articulation of responsiveness categories (reactive, defensive, accommodative, and
proactive) that Wartick & Cochran (1985) had formulated as policies, and she highlighted such
processes as environmental assessment, stakeholder management, and issues management.
Third, she took Wartick & Cochran (1985) policies, which were their elaboration of Carrolls
social issues category, and reorganized them under a new topic of concernoutcomes of
corporate behavior. Like the two previous models, Wood placed CSR into a broader context
than just a stand-alone definition.

An important emphasis on her was on outcomes or

performance. Although outcomes or performance were implicit in the earlier models, Wood
made this point more explicit, and this was a meaningful contribution.
Carroll (1991) revisited his previous four-part CSR definition.

By this time, He was

referring to the discretionary component as philanthropic and suggesting that it embraced

corporate citizenship. He stated, for CSR to be accepted by the conscientious business
person, it should be framed in such a way that the entire range of business responsibilities is
embraced. It is suggested here that four kinds of social responsibilities constitute total CSR:
economic, legal, ethical and philanthropic. Furthermore, these four categories or components of
CSR might be depicted as pyramid. To be sure, all of these kinds of responsibilities have
always existed to some extent, but it has only been in recent years that ethical and philanthropic

functions have taken a significant place. In summary, The CSR firm should strive to make a
profit, obey the law, be ethical, and be good corporate citizen.
Brummer (1991) explained the theories of corporate social responsibility.

First, the

classical theory, the primary goal of organization is to secure the shareholders financial goals.
Second, the stakeholders theory, corporate executives are responsible to shareholders and
other groups. Third, the social demandingness theory, the goal of corporation is to promote and
protect certain interests of the general public.

Lastly, the social activist theory, there exist

universal standards to determine responsible corporate conduct that is independent of the

interests of the stockholder.
In addition, business organizations have become global and realize the importance of
long-term existence. They realize the inadequacy of the classical philosophy that the goal of
corporations is merely financial. They now recognize the value of their share in promoting the
interest of the society of which they are a part of and the need to comply with standards to
protect the environment where they operate.
Iigo (1995) cited that social responsibility is the moral and ethical content of managerial
and corporate decisions over and above the pragmatic requirements imposed by legal principle
and the market economy.
Pauli (1995) explained the

main corporate social responsibility (CSR) theories and

related approaches in four groups: (1) instrumental theories, in which the corporation is seen as
only an instrument for wealth creation, and its social activities are only a means to achieve
economic results; (2) political theories, which concern themselves with the power of
corporations in society and a responsible use of his power in the political arena;(3) integrative
theories, in which the corporation is focused on the satisfaction of social demands; and (4)
ethical theories, based on ethical responsibilities of corporations to society. In practice, each
CSR theory presents four dimensions related to profits, political performance, social demands
and ethical values.
Wheelen

(1998)

commented

the

difference

between

ethical

and

discretionary

responsibilities is that few people expect an organization to fulfill discretionary responsibilities,

whereas many expect an organization to fulfill ethical ones.
Bateman et. al. (1999) discussed about the traditional view of social responsibility, it has
always been the contention that the business of business is business.

This means that

businesses are in existence for the profit motives of its shareholders.

Theorist like Friedman

believes that the responsibility of business is to produce goods and services that are not
contrary to public policy and to conduct business in an open and competitive manner that is free
from fraud. However, the traditional view would appear appropriate during the 1960s to 1970s,
even much earlier. Population growth was at manageable levels and pollution was tolerated in
the name of progress and convenience. In view of the changing times however, this outlook
may be considered obsolete. Despite this, there are still quite a number of businessmen
today, as evidenced by the continuous debates on the scope of social responsibility, who believe
that any cost attributed to corporate social responsiveness is contrary to sound business
practice.
Furthermore, the modern theorist view social responsibility cost as investment rather
than expenses. Bateman believed that investing in social responsive acts is actually for the
best interest of the corporation. Additional cost incurred to contribute to society may result in
higher prices and perhaps lower sales volume in the short term; but this may be later on
compensated by the additional business they are able to generate from discerning and
committed customers.
In addition, socially oriented programs may improve employee productivity that will
eventually improve a corporations profitability.

The changing view on corporate social

responsibility can also be attributed to the changing view of business. Previously, businesses
were working under the concept of a closed system but later on, managers realized that
businesses work within an open system. This means, business decisions of corporations have
impact on various stakeholders and consequently cannot be isolated from economic and social
consequences.

Today, many firms practice social responsibility in various ways. Practicing

social responsibility costs money. But failing to emphasize social responsibility also has its
costs, whether in fines, increased regulations, negative publicity, public disfavor, or loss of
customers. Customers, special interest groups, and the general public are aware of the impact
of business on society and expect firms to do more than try to make profits. Most managers
today regard the cost incurred in practicing social responsibility as a necessary part of doing
business.

Moreover, Bateman et. al. (1999) suggested that businesses should consider the

social implications of their decisions. Corporate social responsibility is seriously considering the
impact of the companys action on society. Social responsiveness is the ability of a corporation
to relate its operations and policies to the social environment in ways that are mutually
beneficial to the company and to society.

The Dow Jones Sustainability Index (2005) web site as cited by Holcomb et al (2007)
defines corporate sustainability as follows:
Corporate sustainability is a business approach that creates long-term shareholder
value by embracing opportunities and managing risks deriving from economic,
environmental and social developments. Corporate sustainability leaders achieve
long-term shareholder value by gearing their strategies and management to harness
the markets potential for sustainability products and services while at the same time
successfully reducing and avoiding sustainability costs and risks.
Schrader (2005) mentioned that traditional sharing of tasks between the public and the
private sector has evolved and new forms of cooperation have emerged. There are three main
trends that are responsible for this shift of paradigms: Firstly, the importance of governments is
diminishing in various sectors as, with reduced budgets, governments are less and less able to
guarantee adequate education, health or insurance against poverty.

Increasing the public

income through raising taxes is usually very difficult. As a result, countries lose a significant part
of their capability to shape the social agenda.
In higher education, according to Schrader (2005), it is well known that increasingly the
needed money needs to come from nongovernmental sources, more and more universities
have their own fundraising teams in place. In parallel, the importance of companies is rising, as
with increased profits they have the financial backbone to assume responsibility in a globalized
world. This leads to an increased capability to shape and influence national agendas.
Caroll (2006) pointed out that there are four parts of social responsibility of business
encompasses the economic, legal, ethical, and discretionary (philanthropic) expectations that
society has of organization at a given point in time.

First, economic aspect,

the basic

responsibility of business is to produce goods and services of value to society so that the firm
may repay its creditors and shareholders. Second, the legal aspect refers to compliance with
local, national and whenever applicable, international laws. Third, the ethical responsibility of an
organizations management is to follow the generally held beliefs about behavior in society. The
final aspect which is discretionary refers to any act or deed beyond that is required by law or
society. These responsibilities are purely voluntary obligations a corporation assumes.
Caroll (2006) listed the four responsibilities in order of priority. A business firm must first
make a profit to satisfy its economic responsibilities. To continue in existence, the firm must
follow the laws thus fulfilling its legal responsibilities.

However, those business managers

have responsibilities beyond the economic and legal ones.

Having satisfied the two basic

responsibilities, the firm should look to fulfilling its social responsibilities. The discretionary
responsibilities of today may become the ethical responsibilities of tomorrow.

Social

responsibility, therefore, includes both ethical and discretionary, but not economic and legal
responsibilities. A firm can fulfill its ethical responsibilities by taking actions that society tends to
value but has not yet put into law. When ethical responsibilities are satisfied, a firm can focus
on discretionary responsibilities purely voluntary actions.
Branco and Rodrigues (2007) describe the stakeholder perspective of CSR as the
inclusion of all groups or constituents (rather than just shareholders) in managerial decision
making related to the organizations portfolio of socially responsible activities. This normative
model implies that the CSR collaborations are positively accepted when they are in the interests
of stakeholders and may have no effect or be detrimental to the organization if they are not
directly related to stakeholder interests. The stakeholder perspective suffers from a wheel and
spoke network metaphor that does not acknowledge the complexity of network interactions that
can occur in cross sector partnerships.

It also relegates communication to a maintenance

function, similar to the exchange perspective.

In addition, social responsibility is concerned with low individuals and organizations deal
with current social issues. The general public has a rather broad and all inclusive definition of
the social responsibility of business organizations. The public seems to feel that managers and
business organization should provide leadership in rebuilding cities, wiping out poverty,
controlling crime, and cutting government red tape. Social responsibility has come to mean
participation in a multitude of issues and problems.

CSR is also about looking at the

relationship of a firms activities on society and the environment. It would not be out of line for a
firm to introduce more environmentally friendly measures as their approach to CSR. For
example, several companies have reported enhanced productivity and reduced costs from
introducing new technologies aimed at reducing pollution
Carroll (2009) defined corporate social responsibility as the obligation of decision makers
to take actions which protect and improve the welfare of society as a whole along with their own
interests.

This definition suggests two active aspects of social responsibility protecting and

improving. To protect the welfare of society implies the avoidance of negative impacts on
society. To improve the welfare of society implies the creation of positive benefits for society.

Caroll (2009) discussed an approach of corporate social responsibility is becoming more

widely accepted is community based development projects such as ; to help educate the
communitys children, as well as develop new skills for the adults, the common approach of
CSR is through the giving of aid to local organizations and impoverished communities in
developing countries. Some organizations do not like this approach as it does not help build on
the skills of the local people, whereas community based development generally leads to more
sustainable development.
Caroll (2009) explained the proactive or affirmative approach to social responsibility is
the most difficult, complex, and expensive concept for organizations to implement. It involves
accepting five categories of obligation such as: (1) broad performance criteria. Managers and
employees must consider and accept broader criteria for measuring organizations performance
and social role than those required by law and the market place; (2) ethical norms. Managers
and employees must take a definite stand on issues of public concern. They must advocate
ethical norms for the organization, the industry, and business in general; (3) operating strategy.
Managers and employees should maintain or improve the current standards of the physical and
social environment. Organizations must compensate victims of pollution and other hazards
created, even in the absence of clearly established legal grounds; (4) response to social
pressures. Manages and employees should accept responsibility for solving current problems.
They need to be willing to discuss activities with outside groups and make information freely
available to them; (5) legislative and political activities. Managers must show a willingness to
work with outside stakeholders for the enactment of environmental protection laws. They must
promote honesty and openness in government and in their own organizations lobbying and
activities.
Sibal & Atienza (2010) discussed the elements of corporate social responsibility namely;
a) corporations have responsibilities that go beyond the production of goods and services at a
profit. b) these responsibilities involve helping to solve social problems especially those they
have helped create. c) corporations have a broader constituency than stockholders alone. d)
corporations have impact that go beyond simple marketplace transactions. e) corporations
serve a wider range of human values than can be captured by a sole focus on economic values.
Moreover, they mentioned about the reasons why corporations should be socially
responsible. In general, the mass of consumers and the public have higher level of education
and are hooked with better means of communication.

Public image can make or unmake

corporations. These consumers are very much concerned with their collective welfare and they
are always pressuring the government to be more protective of their rights and welfare
especially against unscrupulous local and foreign enterprises whose usual stake in the business
operation in a foreign country is on the short term consideration.
Further, they said that citizens today are more actively organized in the civil society and
volunteer organizations. They are supported by state legislation, have forced corporations to
transform into enterprises solely concerned with profits to socially responsible and community
oriented organizations.
In addition, they said that in the modern economic system, capital and other physical
assets such as land and buildings are no longer the premium factors of production but people
with skills and knowledge. Management therefore have to equally serve the interest of all
stakeholders of the enterprise, not only the controlling stockholders but also the employees,
suppliers and subcontractors, customers, the community and the general public.
Sibal & Atienza (2010) further discussed that the corporations now a days views
themselves as an integral part of society whose role is to help that society develop which will in
return assure the corporations long-term existence.

The values, visions and strategic

objectives of the corporation should be compatible with that of society and the community.
Corporations are actually sub-systems of the community or society.

In

addition,

globalization has increased the powers of business organizations. They have been pressured
to comply with standards to improve their competitiveness.

They have taken initiatives to

improve the quality of their products and services, improve working conditions, and strengthen
human resource development efforts as well as their relations with communities.

These

measures/initiatives are various aspects of corporate social responsibility.

Sibal & Atienza (2010) also cited that todays
business enterprises are growing bigger and global. They have been changing drastically from
their laissez faire industrial revolution origins. Corporations now realize the importance of longterm existence and investing into the future of their business operations. They now feel the
inadequacy of the traditional classical economic philosophies where their basic concern is
limited to the efficient transformation of scarce resources into goods and services and in the
process creating wealth primarily for themselves. Business enterprises are not only concerned
with profits but also with the social, human and ethical impact of their actions in the society and
the environment where they operate.

Sibal &Atienza (2010) pointed out the basic idea of CRS is that business and society are
interwoven. There are role expectations guided by the following principles:
1.

Principle of Legitimacy. Refers to societys granting of legitimacy and power to business

and the possibility of losing that power.

Society grants it power to operate as an

institution but it can also take away the power if the organization does not perform what
is expected of it.
2. Principle of Public Responsibility, business is responsible for outcomes related to its
involvement in society. The nature of responsibility will vary as their programs and
activities differ. The principle emphasizes the relationship of the firm to its specific
social, ethical, cultural and natural environment.
3. Principle of Managerial Discretion.

Managers can choose and decide on the

approaches to achieve the corporations social responsibility.

Their discretion is

dependent on available opportunities, choices and resources.

Moreover, todays corporate battle cry is to look deeper into CSR by going profit
maximization and philanthropy towards creating long lasting business solutions to social
problems.

To be able to continue doing good deeds, a business must be commercially

successful to be able to sustain contribution to the communities.

Corporate entities at present

take a broader perspective in their roles in societies and communities.

The business of business according to Juan Luz and Teodoro Montelibano (1999) is
also developing people, not only within the company but also in the community that it serves.
Further, the criteria for the success of an enterprise is not only in terms of profits but
also in terms of social political contributions to society like decreasing pollution, reducing
unemployment, improving peace and order situation and so on. Corporations not only contend
with trade unions, consumer groups, media and government regulatory agencies but also with
environmentalist, civil rights activitists, womens organizations. Tribal communities and in the
specific communities where it operates,

Some social scientist even maintain that the

corporation operates on a franchise granted by the people a franchise that can be withdrawn if
the people feel they are not benefiting from it.

Sibal & Atienza (2010) explained the practice of CSR is a must for all business entities
and organizations.

The major actors of the industrial relations system, namely, leaders of

organizations of labor civil society, management or administrators/ employers and government

officials or bureaucrats, have their respective roles to play.

To be socially responsible,

management should be efficient and competitive in order to bring the benefits of its successful
operations to all its stakeholders, customers, owners, and stockholders, employees, supplies,
government and the community.
Further, the government officials and bureaucrats should act as societys planner
enforcer and equalizer in their governance of society and communities. They should create
favorable social, political and economic environments that will create a level playing field for all
the actors of society in the pursuit of their respective goals and interests. The leaders of labor
and civil society organizations, usually supported by other actors like organizations within
academe, media, and church, should continue to put pressure on both the government officials
and corporate managers to encourage them to pursue economic development and job creation
and to prevent them from utilizing their combined economic and political power and influence in
putting at a disadvantage the workers and ordinary citizens of society.
RELATED STUDIES
Most of the researches about CSR have been centered on the positive benefits to the
community, of which there are many, and which also seems to find much agreement among
academics and business executives.

The new direction is relating CSR to profitability.

Therefore, in an effort to provide some practical examples and substance to this paper we
focused on studying the dynamics of the relationship between CSR and profitability, by
presenting related studies relating CSR to profitability of the organization.
Bowman and Haire (1975) conducted a study to ascertain the extent to which companies
were engaging in CSR. They chose to operationalize CSR by measuring the proportion of lines
of prose devoted to social responsibility in the annual reports of the companies they studied.
Although not providing a formal definition of CSR, they illustrated the kinds of topics that
represented CSR as opposed to those that were strictly business. The topics they used were
usually subheads to sections of annual report.

Some of these subheads were corporate

responsibility, social responsibility, social action, public service, corporate citizenship, public
responsibility, and social responsiveness. A review of their topical approach indicates that they
had a good idea of what CSR are generally meant.

Holmes (1976) conducted a study in which she sought to gather executive perception of
corporate social responsibility.

She had no clear definition of CSR, rather, she chose to

present executives with set of statements about CSR, seeking to find out many of them agreed
or disagreed with the statements.

Like Bowman and Heir topics Holmess statements

addressed the issues were generally felt to be what CSR was all about during that time period.
She sought executive opinions on businesses responsibilities for making a profit, abiding by
regulations, helping to solve social problems, and short-run and long-run impacts on profits of
such activities. She further added to the body of knowledge about CSR by identifying the
outcomes that executive expected from their firms social involvement and the factors
executive used in selecting areas of social involvement.
Abbott and Monsen (1979) sought to reveal more about CSRs meaning in research
study involving a content analysis of the annual reports of Fortune 500 companies. Their article
presented a corporate social involvement disclosure (SID) scale that purported to reveal a
measurement of firms CSR. They accepted as their measure of CSR self-reported disclosures
about social involvement topics that had been derived from content analysis of annual reports of
500 companies. The condition of the data was performed by then Big 8 accounting firm of
Ernst and Ernst. Ernst and Ernst had developed an annual unpublished summary reporting
whether the annual reports of these firms indicated activities for specific social involvement
categories. Their study was not designed to clearly define CSR but rather to existing data to get
some ideas about measuring CSR. In the study they proceeded to note changes over time, the
direction and scope of social involvement and the effect of this involvement appeared to have
on profitability.
Cochran & Wood (1984) made an empirical study on CSR; it must be observed that
scholars were becoming interested in the question of whether socially responsible firms were
also profitable firms.

If it could be demonstrated that they were, this would be an added

argument in support of the CSR movement. They surveyed the various ways in with social
performance and financial performance had been operationalized in the past, and decided to
use a reputation index as their measure of CSR. The reputation index was early developed by
Milton Moskowitz, an observer of the CSR scene and a writer. Moskowitz, in the early 1970s,
had developed a reputational index in which he categorized firms as outstanding, honorable
mention, or worst. They admitted the weaknesses of this CSR measure and called for new
measures.

Aupperle, Carrol, and Hatfield (1985) also made an empirical study seeking to understand
the relation between corporate social responsibility and profitability. What was unique with this
particular research study was that it was one of the first to be used a definitional construct of
CSR from the theoretical literature as its measure of corporate social responsibility. The study
confirmed the priorities of the four components in this sequence: economic, legal, ethical, and
discretionary. In a later part of the study, they partitioned the four definitional components to
separate the economic, which the labeled as concern for economic performance (on the part
of the firm) from legal, ethical and discretionary, which they labeled concern for society (on
the part of the firm). In essence, then, they acknowledged that not everyone sees the economic
responsibility as a part of the social responsibility but rather considers it something business
firms do for themselves. Further, they stated that the social orientation of an organization can
be appropriately assessed through the importance it places on the three non-economic
components compared to the economic.
Carroll (1994) surveyed 50 academic leaders in the social issues in management field and
found some very interesting data. The findings of the study was useful, it helped to position
CSR definitional literature in the total scheme of things. The concept of CSR has had a long
and diverse history in the literature. As theory is developed and research is conducted, scholars
may revise and adapt existing definitions of CSR or new definitions may come into the literature.
In a study done by Brown and Dacin (1997) the result suggests that CSR associations
have a significant influence on consumer responses to new products. The results of all studies
demonstrate that negative CSR associations ultimately can have a detrimental effect on overall
product evaluations, whereas positive CSR associations can enhance the product evaluations.
Apostol (2003) cited the benefits of CSR in the conducted by the Ashbridge Business School in
2001 namely; (1) enhanced brand and company reputation (2) improved social and
environmental risk management (3) improved employee relations (4) better stakeholders
relations (5) improved community relations (6) proactive change management strategies (6)
improved financial performance from all of the above.

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(mallen@mallenbaker.net)