ICTM518 EHO - Ch9: CSR

Corporate Social Responsibility

CSR refers to the actions of an organisation that are targeted toward achieving a social benefit over and above maximising profits for its stakeholders and meeting its legal obligations.(Ghillyer, 2008, p.78)

CSR means that a corporation should act in a way that enhances society and its inhabitants and be held accountable for any of its actions that affect people, their communities, and their environment.(Lawrence and Weber, 2010, p.50)

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THREE TYPES OF CSR:

1. Ethical CSR represents the purest or most legitimate type of CSR in which organisations pursue a clearly defined sense of social conscience in managing their financial responsibilities to shareholders, their legal responsibilities to their community and society as a whole, and their ethical responsibility to do the right things for all their stakeholders.
2. Altruistic CSR takes a philanthropic approach by underwriting specific initiative to give back to the company's local community or to designated national or international programs.
3. Strategic CSR runs the greatest risk of being perceived as self-serving behavior on part of the organisation. This type of activity targets programs that will generate the most publicity or goodwill for the organisation.

ARGUMENTS FOR CSR:

• balances corporate power with responsibility
• discourages government regulations
• promotes long-term profits for business
• improves business value and reputation
• corrects social problems caused by business

ARGUMENTS AGAINST CSR:

• lowers economic efficiency and profit
• imposes unequal costs among competition
• imposes hidden cost passed onto stakeholders
• business may lack required skills (i.e. 'do businesses really know about inner-city issue or world poverty?')
• places responsibility on business rather than individuals

THE DRIVING FORCES BEHIND CSR:

• TRANSPARENCY - companies can no longer sweep things under the rug... whatever they do, will be known (good or bad).
• KNOWLEDGE - the transition to an information-based economy means that consumers and investors have more information at their disposal than at any time in history.
• SUSTAINABILITY - the earth;s natural systems are in serious and accelerating decline, while global population is rising.
• GLOBALISATION - this represents a new stage of capitalist development, this time without public institutions [in place] to protect society by balancing private corporate interests against broader public interests.
• THE FAILURE OF THE PUBLIC SECTOR - in most countries, citizens arguably expect less of government than they used to, having lost confidence in the public sector as the best or most appropriate venue for addressing a growing list of social problems.

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IS THERE A SOCIAL RESPONSIBILITY OF BUSINESS? 

> If so, responsibility to whom?

A responsibility is based on an aspect of some relationship and is empty of content until that relationship is described and specified.

Firms exists in relationships with many stakeholders and these relationships can create a variety of responsibilities:

• it may not be possible to satisfy the needs of each and every stakeholder in a situation.
• social responsibility would, sometime, require decisions to prioritise firms' stakeholder to be responsible.

> If so, what is the extent of the responsibility?
Laws & regulations involve many duties and restrictions that firms must be responsible

• those responsibilities are things which we ought/should do, even if we would rather not and responsibilities bond, compel, or require us to act in certain ways.

But  CSR overlooks those duties or restrictions that bind us to act in one way rather than another

• CSR is to be concerned with society's interests that restrict or bind business behaviour
• CSR is what a business should or ought to do for the sake of society

Businesses have several different types of social responsibility:

• businesses have the social responsibility to obey the law
• beyond the law, businesses have responsibilities:

              > to try not to cause harm to others;
              >  to prevent harm even in those cases where one is not the cause
              > to do good.

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BALANCING ECONOMIC, LEGAL AND SOCIAL RESPONSIBILITIES
Social responsibility is embraced by some organisations and treated at arms' length by others.
     > social responsibility is not a business organisation's sole responsibility

As a member of a civil society, organisations have legal obligations, as well as economic and ethical responsibilities, to their owners and other stakeholders affected by the financial well-being of the firm.

The belief that the business of business is solely to attend to stockholder's return on investment and to make a profit is no longer widely held.

A business must manage its economic responsibilities to its stockholders, its legal requirements to societal laws and regulations, and its social responsibilities to various stakeholders.
     > although these obligations may conflict at times, a successful firm is one whose management find ways to meet each of its critical responsibilities and develop strategies to enable these obligations to reinforce each other. 


Business executives' view of the role of business in society:
Percentage of business executives who believe that business organisations should...

> Balance their responsibility to their investors with their responsibilities to other business stakeholders... 84%

> Primarily focus on maximizing their investors' returns while staying within the law of society... 16%

STOCKHOLDER INTERESTS vs. OTHER STAKEHOLDER INTERESTS
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THE ROLE OF REPUTATION AS A MOTIVATION FOR CSR

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DOES GOOD ETHICS MEAN GOOD BUSINESS?