1. CORPORATE SOCIAL RESPONSIBILITY
Introduction
The debate about corporate social responsibility (CSR) began in the early 20th century, as
concerns about large corporations and their power came to the fore. Two broad
principles—charity and stewardship—have help to shape thinking about CSR.
The arguments for CSR tend to focus on the relationship between power and
responsibility, the need for good stakeholder relations, and business’ desire to forestall
government regulation. (The notion of “enlightened self-interest” also fits in here.)
The arguments against CSR tend to focus on the economic function of business (to make
products, not to solve social problems that are the responsibility of individuals, society,
and the government), the imposition of unequal costs on some companies and
stakeholders, and lower economic efficiency.
Businesses need to balance economic, legal, and social responsibilities in order to achieve
long-run success. More generally, there is often a relationship between good social and
good financial performance. Further, firms that are seen as acting illegitimately are likely
to face difficult relations with employees, governments, communities, and consumers—
which all have direct impacts on the top and bottom lines. One defense of the shareholder
view of CSR is that shareholders take on a unique set of risks, but other stakeholders are
protected by contractual relations with organizations. But Enron1 and other companies
illustrate that most stakeholders take on risk—sometimes without knowing it. One result
of increasing globalization is that there are many different voices around the world with
differing views on corporate social responsibility. What is seen as “ethical” in one
country may not be in another (like Genetically Modified Foods).
Definition of CSR
There are number of ways to define Corporate Social Responsibility. It is the
commitment of business to contribute to sustainable economic development, working
with employees, their families, the local community and society at large to improve their
quality of life. It can also be defined as a concept that relates to organizations taking on
their social and environmental responsibilities and includes factors such as provisions for
employees, participation in local community, green working practices, ethical trading and
good corporate governance. On the other hand,Corporate Social Responsibility (CSR) is
a concept that organizations, especially (but not only) corporations, have an obligation to
consider the interests of customers, employees, shareholders, communities, and
ecological considerations in all aspects of their operations.
It characterizes the need for organisations to consider the good of the wider communities,
local and global, within which they exist in terms of the economic, legal, ethical and
philanthropic impact of their way of conducting business and the activities they
undertake.
1
See a case study 2 on the creative accounting lecture notes

2. Generally it is is the commitment of business to contribute to sustainable economic
development, working with employees, their families, the local community and society at
large to improve their quality of life
CSR for an organization means achieving long term growth and profitability while
reducing their environmental footprint and meeting the needs of employees and the
communities in which the organization operate. This can be depicted in a diagram below
The Triple Bottom Line
Economic
Prosperity
Opportunity??
Environmental
An
Integrated,
Balanced
Strategic Economic
Approach Social
Social Environmental
Responsibility Stewardship
It can be clearly be summarized by a triangular relationship below:
Ethical Responsibilities
Social Responsibilities
Legal Responsibilities
Economic Responsibilities

3. Need for CSR
There are number of arguments on the reasons for CSR whereas there are state laws and
regulations guiding business practices. On the other hand to counter the argument the law
is very slow to much with high pace of innovation impacting upon the business today.
Furthermore the law is slow and reactive rather than being proactive.
CSR models
There are various models to describe the CSR complexity. These can be divided in
accordance to time as follows
• Premodern
o Minimalist
o Self Interested
• Modern
o The social contract
• Postmodern
o Stakeholder (management and stewardship)
The dual responsibility and goal for each of the model position are shown hereunder;
Position Responsible to Therefore…
Minimalist Stockholders/ Maximizing profit
owners
Self interested Stockholders/ owners/ cost Do good when furthers quest for
“controllers” growth and profit
Social contract Those with social and legal Goes beyond law to spirit of
contract commitment
Stakeholder Those who influence direction Develop responsive strategies
Management and fortunes
Stakeholder Society as whole / future Solutions for social problems
stewardship
Minimalist Model
The major participants in this model are investors/stockholders and owners/managers.
Their focus for change issues is hyper-competition and globalization. Their level of trust
grows when performance meet expectation and there is distrust when fails to meet
expectation
Self Interest Model
Participants are