1. CHAPTER 4:
BUSINESS & SOCIAL ENVIRONMENT
CORPORATE SOCIALCORPORATE SOCIAL
RESPONSIBILITY

3. Topics Learning Outcome
1) Distinguish between instrumental and social
contract approaches to corporate
management.
2) Summarize 2 foundation principles of CSR.2) Summarize 2 foundation principles of CSR.

4. CSR Definition
“The action of an organization that are targeted
towards achieving a social benefit over and
above maximizing profits for its stakeholders
and meeting all its legal obligation”and meeting all its legal obligation”
Also known as
“corporate citizenship” = company’s roles towards society
or
“corporate conscience” = having integrity is doing right
things when nobody watching you.

5. CSR in Malaysia
In 2011 – increased awareness
Framework - to describe actions that
go beyond philanthropy or compliance
with applicable lawswith applicable laws
Example of CSR activities - safeguard
the environment, communities,
employees, shareholders and other
affected parties’ interests

6. Example
Malaysia Airlines And MERCY Malaysia Unite To Raise Funds For
Charity - purpose - this campaign is to generate contribution from
passengers on-board Malaysia Airlines with proceeds channeled to aid
organizations and charitable trusts.
– donation boxes placed at MAS tickets office.
Funds collected through this initiative will be channeled towards the
following humanitarian aid efforts identified:
1) Cleft Lip and Palate Programme in Bangladesh and Cambodia
2) Disaster Risk Reduction Programme for schools in Malaysia
3) Rehabilitation Health Centres set up in Cambodia
4) Oral Rehydration Therapy
5) Emergency Fund – Humanitarian relief
Source from www.mercy.org.my

7. Why CSR in Business???
6 reasons:
Business Transparency
Balance between Corporate Power with Social
ResponsibilitiesResponsibilities
Discourage Government Regulation
Promotion Long-term Profits for Business
Improve Business Value and Reputation
Corrects Social Problems caused by Business

8. Reasons why CSR
1) Transparency
We live in an information-driven economy where
business practices have become increasingly
transparent. Companies can no longer sweep
things under carpet –whatever they do, will be
known, almost immediately around the world.known, almost immediately around the world.
E.g. WikiLeaks.
2) Balances between Corporate Power with
Responsibility
Responsibility must accompany power.
Businesses committed to social responsibility are
aware that if they misuse they have, they might
lose it.

9. Reasons why CSR (cont.)
3) Discourages Government Regulation
Voluntary social acts may avoid government
regulation. Some regulation may reduce freedom
for both business & society. E.g. If all bus drivers
drive responsibly, government might not regulatedrive responsibly, government might not regulate
the installation of black box.
4) Promotes Long-term Profits for Business
Social initiatives by business produce long-run
business profit – able to attract new customers,
as well as support from governments and NGOs.

10. Reasons why CSR (cont.)
5) Improve Business Value and Reputation
Firm’s reputation is a valuable intangible asset,
as it prompts repeat purchases by loyal
customers and helps to attract and retain better
employees to enhance productivity andemployees to enhance productivity and
profitability.
6) Corrects Social Problem caused by Business
Business has responsibility to compensate society
for the harm it may sometime caused. E.g. if
consumer injured due to product defect, the
manufacturer should be responsible.

11. Principles of CSR
2 Broads Principles of CSR:-
1) The Charity Principles1) The Charity Principles
2)The Stewardship Principles

12. Principles of CSR
2 broad CSR principles:
1) The Charity Principle
Business should give voluntary aid to society’s needy
persons and groups
= the idea that the wealthiest members of society should= the idea that the wealthiest members of society should
be charitable towards those less fortunate.
2) The Stewardship Principle
= corporate executives see themselves as stewards, or
trustees, who can act in the general public’s interest.
Although the companies are privately owned & try to
make profits for the shareholders, they are expected to
act with a special degree of responsibility in making
business decision.

13. 3 Types of CSR
1) Ethical CSR
When organizations pursue a clearly defined sense of
social responsibility in managing their financial
responsibilities to shareholders, their legal
responsibilities to their local community and society as a
whole, and their ethical responsibilities to do the rightwhole, and their ethical responsibilities to do the right
thing for all stakeholders. Org. in this category typically
incorporated their belief into their core operating
philosophy.
E.g. Body Shop mission statement states “We will operate
our business with strong commitment to the well being
of our fellow humans and the preservation of the
planet”.

14. 3 Types of CSR (cont.)
2) Altruistic CSR
When org. engages into specific initiatives to
give back to company’s local community.
E.g. Shell Oil Corp. responded to 2004 tsunami
disaster with donations of fuel for
transportation rescue and water tank for relief
disaster with donations of fuel for
transportation rescue and water tank for relief
aid, on top of several million dollars of financial
contribution.
3) Strategic CSR
Organization targets programs that will generate
the most positive publicity or goodwill for the
organization.
i.e. good publicity brings more sales.