Stakeholders play an important role in corporate social responsibility by using their influence and voting power to shape company goals and policies. Stakeholders have a social responsibility to act in the best interests of the entire company, its market and employees. This includes considering social impacts, pushing for ethical practices and transparency, and ensuring employee welfare. For a company to truly serve its stakeholders, it must integrate social and environmental responsibilities into its business model through practices of corporate social responsibility.

1.  Describe role of stakeholders in social
responsibility.
By: Muhammad Hanif Khan
Corporate Social Responsibility
Hanifka9@gmail.com

2. corporate social responsibility
Definition: A company‟s sense of
responsibility towards the community and
environment (both ecological and social)
in which it operates. Companies express
this citizenship (1) through their waste and
pollution reduction processes, (2) by
contributing educational and social
programs, and (3) by earning adequate
returns on the employed resources.
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3. Example
Wateen offers summer internship programmes as part of its corporate citizenship.
Students intern at Wateen to enrich their curriculum learning with corporate exposure and
experience.
We have partnered with The Universal Service Fund, established by the Government of
Pakistan, to develop the telecommunications infrastructure and establish high speed
internet providers and promote computer literacy with a special focus on underserved
areas by offering subsidized Internet and Telephony services. Our collaboration and
subsidized services are provided in Faisalabad Telecom Region, Hazara Telecom Region,
Gujranwala Telecom Region and Central Telecom Region. Support and value addition is
also provided with planned Education and Community Broadband Centers. Wateen mobile
units and vans operate in these areas to educate and increase Internet and computer
literacy. In recent months Pakistan was hit with one of the worst natural disasters to date.
In this crisis, Wateen‟s employees donated their salary (on personal discretion ranging
from 1 day salary and going up to 7 days) and carried out an aggressive drive to collect
relief goods and personal donations. Some were directly affected by the floods and Wateen
responded with priority attention to the respective employees. Even through its
communication, Wateen reflected its obligations as a responsible corporate entity and
initiated a „Go Green with Wateen‟ campaign aimed at helping people to adopt „greener‟
lifestyles.
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7. Social Responsibility of
Stakeholders
Company stakeholders are not merely
investors in a company -- stakeholders
typically have voting power that can
influence the social and financial impact of a
company. With this voting power comes a
social responsibility to the employees and
customers. Stakeholders must consider more
than just the company's bottom line when
using their influence to shape company
goals.
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8. 1. Company Interests
Company stakeholders have a social responsibility to act for
the good of the entire company, not just their own self-
interests. The policies for which stakeholders push must not
be based purely on financial gain. For example, stakeholders
may have the opportunity to increase their own wealth if
they push to merge the company's subsidiaries into the
parent company. This merger, however, could limit the
company's ability to serve multiple markets, hinder its
product diversification or create other problems.
Stakeholders must push for a strategy that focuses on long-
term gain and growth for their company.
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9. 2. Market Interests
Stakeholders must consider the interests of their market when
implementing company policy or new business strategies. The needs and
desires of stakeholders may not align with those of the consumers for
which the company produces products. For example, a company that
produces high-optioned vehicles for low prices might be able to squeeze
more profit out of customers by charging for the options, but it would
alienate its customers. Stakeholders must consider the social impact of
their segmentation, targeting and positioning (STP) in the marketplace.
The company's STP is the type of customer to which it sells products
(segment), the advertising method it uses to reach that customer
(targeting) and the current marketing advantage it has among
competitors in the industry (positioning).
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10. 3. Company Monitoring
Monitoring and auditing is critical to ensure that a company
is socially responsible. Stakeholders must push for tight
regulations and ethical practices within the company to
avoid financial and legal problems. For instance, a company
can significantly limit its tax burden by storing profits in off-
shore bank accounts. However, this practice might put the
company in a legal gray area that could shake the confidence
of potential investors. Stakeholders have to insist on
company transparency and adherence to industry norms to
avoid breaking their "social contract" to consumers.
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11. 4. Employee Relations
The fate of employee pay, safety, health quality and
job security might sometimes rest in the hands of
stakeholders. It is the social responsibility of the
stakeholder to ensure that the employees of the
company work under the best possible conditions.
A company could potentially increase its profits by
working employees harder for less pay, but the
effects on the employees would be negative.
Stakeholders must push for profits and employee
satisfaction, simultaneously.
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12. Stakeholders and Corporate
Social Responsibility
• Let‟s begin this topic with quotation of Robert W. Lane, the
Chairman and CEO of Deere & Company, “If you don‟t have
honesty and integrity, you won‟t be able to develop effective
relationships with any of your stakeholders.”
• These stakeholder groups form the basis of success and failure of the
business. Stakeholders are individuals or groups that have interests,
rights, or ownership in an organization and its activities. Customers,
suppliers, employees, and shareholders are example of primary
stakeholder groups. Each has interest in how an organization
performs or interacts with them. These stakeholder groups can
benefit from a company‟s success and can be harmed by its mistakes.
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13. Cont.
• Secondary stakeholders are also important because they
can take action that can damage or assist the organization.
Secondary stakeholders include governments (especially
through regulatory agencies), unions, nongovernmental
organizations (NGOs), activities, political action groups,
and the media.
• In orders to serve their stakeholders in an ethical and
social manner, more and more organizations are adapting
the model of corporate social responsibility. The term
Corporate Social Responsibility goes by many other
terms such as corporate citizenship, responsible business
or simply corporate responsibility. 13

14. Cont.
Stakeholders of Organization
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15. Cont.
When an organization builds ethical and social
elements in its operating philosophy and
integrate them in its business model, it is said to
have possessed a self-regulating mechanism that
guides, monitor and ensure its adherence to law,
ethics, and norms in carrying out business activities
that ensures the serving the interest of all external
and internal stakeholders. In other words, the
objective of being socially responsible business is
achieved when its activities meet or exceed the
expectations of all its stakeholders. 15

16. Cont.
• Here is a model for evaluating an
organization‟s social performance. The
model indicates that total corporate social
responsibility can be subdivided into four
criteria-economic, legal, ethical and
discretionary responsibilities.
• These responsibilities are ordered from
bottom to top in the following illustration.
Let‟s discuss each one them briefly 16

17. Cont.
Total Corporate Social Responsibility
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18. 1. Economic responsibilities
• The first criterion of social responsibility is economic responsibility.
The business institution is, above all, the basic economic unit of
society. Its responsibility is to produce goods and services that a
society wants and to maximize profit for its owners and shareholders.
Economic responsibilities, carried to the extreme, is called profit-
maximizing view; it was advocated by Nobel economist Milton
Friedman. This view argued that a company should be operated on a
profit-oriented basis, with its sole mission to increase its profits so
long as is stays within the rule of the game.
• The purely profit-maximizing view is no longer considered an
adequate criterion of performance in the world in general. Treating
economic gain in the social as the only social responsibility can lead
companies into trouble.
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19. 2. Legal responsibilities
All modern societies lay down ground rules, laws and
regulations that businesses are expected to follow. Legal
responsibility defines what society deems as important with
respect to appropriate corporate behavior. Businesses are
expected to fulfill their economic goals within the legal
framework. Legal requirements are imposed by local
councils, state and federal governments and their regulating
agencies. Organizations that knowingly break the law are
poor performers in this category. Intentionally
manufacturing defective goods or billing a client for work
not done is illegal. Legal sanctions may include
embarrassing public apologies or corporate „confessions‟.
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20. 3. Ethical responsibilities
Ethical responsibility include behavior that is not
necessarily codified into law and may not serve the
organization‟s direct economic interests. To be
ethical, organization‟s decision makers should act
with equity, fairness and impartiality, respect the
rights of individuals, and provide different
treatments of individual only when differences
between them are relevant to the organization‟s
goals and tasks. Unethical behavior occurs when
decisions enable an individual or organization to
gain expense of society. 20

21. Discretionary responsibilities
Discretionary responsibility is purely voluntary
and guided by an organization‟s desire to make
social contributions not mandated by economics,
laws or ethics. Discretionary activities include
generous philanthropic contributions that offer no
payback to the organization and are not expected.
Discretionary responsibility is the highest criterion
of social responsibility, because it goes beyond
societal expectations to contribute to the
community‟s welfare.
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