Corporate Social Responsibility

The idea of social responsibilities (SR) suppose that the corporation has not only economic & legal obligations but also certain responsibilities to society which extend beyond these obligations.
Joseph McGuire (1993)

Social Responsibility

SR refers to the objectives or motives that should be given weight by business in addition to those dealing with economic performances.
Jules Backman (1975)

One of the first approaches encompasses the spectrum of economic and noneconomic concerns in defining SR was the Three Concentric Circle (Committee for Economic Development -1971). It includes inner circle, intermediate circle and outer circle.

Inner circle: clearcut basic responsibilities for the efficient execution of economic function product, job and economic growth Intermediate circle: encompases responsibility to exercise this economic function with a sensitive awareness of changing social values & priorities. Ex. With respect to environment conservation, hiring, and relations with employees Outer circle: outlines newly emerging & still amorphous responsibilities that business should assume to become more broadly involved in actively improving the social environment.

 The outer circle would refer to business helping with major social problems in society such as poverty, and urban blight In recent years several writers have suggested that focus on the social responsibility of business indicates undue effort to pinpoint accountability or obligation and therefore, is too narrow and too static to fully describe the social efforts or performance of business.

Robert Ackermean and Raymond bauer (1976), for example, criticize the expression social responsibility , holding that the connation of responsibility is that of the process of assuming an obligation. It places an emphasis on motivation rather than performance. They elaborate responding to social demands is much more than deciding what to do. There remains the management task of doing what one has decided to do, and the task is far from trivial. They go on to argue that social responsiveness is a preferable orientation.

S. Prakash Sethi (1975) takes a slightly different, but related, path in getting from social responsibility to social responsiveness. He sets forth a three state schemef or classifying the Adaptation of corporate behavior to social needs Social obligation Social responsibility Social responsiveness

Social obligation- involves corporate behavior in response to market forces or legal constraints. Social responsibility- bringing corporate behavior up to a level for congruence with the prevailing social norms, values & expectations. Social responsiveness- what is important is not how corporations should respond to social pressures but their long-run role in a dynamic social system. Business , therefore, must be anticipatory and preventive.

Three aspects of Corporate Social Performance

1. A basic definition of SR a firms SR be assessed) 2. An enumeration of the issues for which SR exists (Identify social issues) 3. A specification of the philosophy of response (a response philosophy be chosen) These three distinct aspects of Corporate Social Performance must be articulated and interrelated.

THE SOCIAL PERFORMANCE MODEL

- Three Dimensional Conceptual model

Basic Definition of SR Social responsibility Categories

(Four- part framework) Total SR =A+B+C+D The proportions simply suggest the relative magnitude of each responsibility

Discretionary Responsibilities (D)

Ethical (C) Responsibilities

Legal (B) responsibilities

These four are not mutually exclusive, nor are they intended to portray a continuum with economic concerns on one end and social concerns on the other. That is they are neither cumulative nor additive.

Economic (A) responsibilities

Economic Responsibilities
The first and prime SR of business is economic in nature. Since business institution is the basic economic unit in our society it has a responsibility to produce goods & services for the society and sell at a profit. All other business roles are predicated on this assumption.

Legal Responsibilities
Though the society has allowed the economic system, it has laid down the laws and regulations under which the business units expect to operate. Society expects business to fulfill its economic mission within the framework of legal requirements.

Ethical Responsibilities
Although economic & legal responsibilities represent ethical norms there are additional behaviors that are not necessarily codified into law but expected by the society from the business. Ethical Responsibilities are ill defined and consequently are among the most difficult for business to deal with.

Discretionary Responsibilities
Are the responsibilities about which society has no clear-cut message for business. They are left to individual judgment and choice. They are voluntary not mandated or required by law.

Social Issues
Many factors come into play as a manager attempts to get a fix on what social issues should be of most interest to the organization. Social issues must be identifies as an important aspect of Corporate social performance. Prominent factors in selecting areas of social involvement by firms

Matching social need to corporate need or ability to help

Seriousness of social need Interest of top executives Public relations value of social action Government pressure However, business executives do not have a consensus on what social issues should be addressed.

Corporate Social Responsiveness

capacity of a corporation to respond to social pressures. The literal act of responding or of achieving a generally responsive posture, to society is the focus. Social responsiveness can range on a continuum from no response (do nothing) to a proactive response (do much)

PHILOSOPHY OF RESPONSIVENESS

Social Responsiveness Continuum

Do nothing (No Response)

Do much

Several writers have provided conceptual schemes that describe the responsiveness continuum . E.g: Ian Wilson (1974) Reaction Defense- Accommodation - Proactive

Reactive respond to a social issues only after it has challenged social goals. Defensive company acts to ward off a challenge Accommodative The company brings itself into line with government requirements and public opinion. Proactive The company anticipate demands that have not yet been made.

3C-SR Model CSR

3C-SR Model
a 1 2
Effective corporate citizenship Corporate social performance deficit Stakeholder deficit

Ethical and Social Commitment

Ethical and Social Commitment represents the values element of social resources. They comprise the ethical standards & social objectives the organization subscribes to and are manifested in its mission, strategic objectives, strategy program, organizational policies and corporate culture. These commitments should encompass legal, economic & ethical dimensions.

Ethical and Social Commitment b (cont.)

Due to consistent focus on short term profits across the value network, CSR deficit will occur.

Connections with partners in the value network

Value occurs not in chains but in complex constellations. This value results from;
Value creating system within which different economic actors (suppliers, business partners allies, customers) work together to co-produce value.

Consistency of behavior
Consistency refers to the behavioral element of social resources over time and across all facets of an organizations operation. Thus development of social resources requires consistent adherence to externally recognized and accredited standards. Failure to consistently behave will result in corporate social performance deficit.

Failure to work towards dissemination of social values within a wider value network a stakeholder deficit will exist.

 Ethical and Social Commitment developed across a value network comprising business partners sharing these commitments, are thus necessary but not sufficient conditions for the development of social resources.

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