CSR -- Corporate Social Responsibility

INTRODUCTION

Corporate Social Responsibility (CSR) is an evolving concept which is yet to command a standard definition or a fully recognized set of criterion. With the given understanding that businesses have a key role of job and wealth creation in society, CSR is generally understood to be the way an organization achieves a balance between economic, environmental, and social imperatives while they address the expectations of the shareholders and the stakeholders. While businesses try to comply with laws and regulations on social, environmental and economic objectives set by the legislations and legal institutions, CSR is often understood as involving the private sector commitments and activities that extend beyond the of compliance with laws. In fact, a key feature of the concept is the way businesses engage or involve the shareholders, employees, customers, suppliers, governments, non-governmental organizations, international organizations, and others in the organization.

         

         CSR is generally seen as the business contribution to sustainable development which has been defined as “development that meets the present needs without compromising the ability of future generations to meet their own needs”, and is generally understood as focusing on how to achieve the integration of economic, environmental, and social imperatives. CSR also overlaps and often is synonymous with many features of other related concepts such as corporate sustainability, corporate accountability, corporate , responsibility, corporate citizenship, corporate stewardship, etc.

         

           Today it is generally accepted that business firms have social responsibilities that extend well beyond what in the past was commonly referred to simply as the ‘business economic function’. In earlier times managers in most cases had only to concern themselves with the economic results of their decisions. Today, managers must also consider and weigh the legal ethical, moral and social impact and repercussions of each of their decisions.

CSR AND HISTORICAL DEVELOPMENTS

Corporate Social responsibility has its roots in the thinking of the twentieth century where the theologians and the religious thinkers suggested the application of religious principles to business activities. First was the principle of philanthropy in which the wealthy and generous individuals contributed to the resources for aiding the unfortunate. The next was the stewardship principle, a biblical doctrine, which requires business and Wealthy individuals to see themselves as stewards or caretakers not just of shareholders but also of society’s resources for the benefit of the society as a whole. Similarly different authors see corporate social responsibility from different angles.

            

             Although the topic rose to prominence in 1975 ( Caroll, 1979; Wratick and Cochran, ' 1985), the first publication specifically in the field dates back to 1953, with Bowen’s ‘social reSponsibilities of the businessman. In this work, Bowen argues that industry has an obligation to pursue those policies and to make those decisions, or to follow  those lines of actions Which are desirable in terms of the objectives and values of society’ (Bowen, 1953), which means; 

• That businesses exist at the pleasure of society and that their behaviour and methods of operation must fall within the guidelines set by society. 
• Businesses act as moral agents within society.

Wood (1991) expanded these ideas encapsulating them into three driving principles of social responsibility, which are: 

•  Business is a social institution and thus obliged to use its power responsibly;
• Businesses are responsible for the outcomes relating to their areas of involvement with society; and
• Individual managers are moral agents who are obliged to exercise discretion in their decision-making.

A growing number of scholars take the View that firms can no longer be seen purely as private institutions but as social institutions instead. The benefits flowing from firms need to be shared collectively. This thesis is similar to the stakeholders model and claims that a firm is not responsible only to its shareholders but to all stakeholders whose contribution is necessary for a firm’s success.

         

           However, Friedman differed from these and felt that the corporation is an economic institution and thus should specialize in the economic sphere alone and the socially responsible behaviour will be rectified by the market through profits.

 

             Opinions differ in terms of the basis or scepe of CSR and even the very definition of the term. As a consequence different aspects of a firm’s operations can be seen to fulfillment of social contractual obligations, achievement of a social equilibrium, etc. . depending on the stance taken. World Business Council for Sustainable Development in its publication “Making Good Business Sense” by Lord Holme and Richard Watts defines CSR as, “Corporate Social Responsibility Is the continuing commitment by business to behave ethically and contribute to economic development while Improving the quality of life of the workforce and their families as well as of the local community and society at large".

History

The view that a business can have obligations that extend beyond economic role Is not new in many respects. Throughout recorded history the roles of organizations producing goods and serices for the marketplace were frequently linked with and include political, social and/or military roles For example, throughout the early evolutionary stages of company development In England (where organizations such as the Hudson Bay Company and the East India Company received broad mandates), there was a public policy understanding that corporations were to help achieve , societal objectives such as the exploration of colonial territory, setting up settlements, providing transportation services developing bank and financial services etc.

      During the nineteenth century, the corporation as a business form of organiorganiz evoled rapidly in the US. It took on a commercial form that spelled out  responsibilities of the board of directors and management to shareholders.(.i.e.g fiduciary duty). In this later evolutionary form, public policy frequently addressed Specific social domains such as health and safety for workers, consumer protection,labour practices, environmental protection, etc. Thus, corporations responded to social responsibilities because they were obligated to be In compliance with the law and public policy. They also responded voluntarily to market demands that reflected consumer morals and social tastes. By the midpoint of the twentieth century, corporate social responsibility was being discussed in the US-by business , management experts such as Peter Drucker and in business literatures CSR emerged and continues to be a key business management, marketing, and accounting concern in the US, Europe, Canada, and other nations. 

            

           Traditionally in the United States, CSR has been defined much more in terms of a philanthropic model. Companies there made profits unhindered except by fulfilling their duty to pay taxes. Then they donated ,a certain share of the profits to charitable causes. It is seen as tainting the act for the company to receive any benefit from the giving. The first generation of CSR this way showed how companies can be responsible in ways that do not detract from and may contribute to commercial success. Corporate philanthropy is the practice of companies of all sizes and sectors making charitable-contributions to address a variety of social, economic and other issues as part of an overall corporate citizenship strategy.

      

           The second generation of CSR is now developing where companies and whole industries see CSR as an integral part of the long term business strategy. Now a days lot of companies are taking it seriously for good of business. From a progressive business perspective, CSR usually involves focusing on new opportunities as a way to respond to inter-related economic, societal and environmental demands in the marketplace. Many firms believe that this focus provides a clear competitive advantage and stimulates corporate innovation in.

          the last decade. CSR and related concepts such as corporate citizenship and corporate sustainability have expanded. This has perhaps occurred in response to new challenges such as those emanating from increased globalization on the agenda of business manager as well as for related stakeholder communities. It Is now more a part of both the vocabulary and agenda of academics, professionals, non-governmental organizations, consumer groups, employees, suppliers, shareholders, and investors.

       A third generation of CSR is needed in order to make a significant contribution to addressing poverty and environmental degradation. This Will go beyond voluntary approaches by individual, companies and will involve leadership companies and organizations influencing the market in which they operate and how it is regulated to re-mould whole markets towards sustainability.