Published on March 6, 2014
Presented By: Maya Khansul Monica Jain
Traditionally, government was only responsible of socio- economic development and environment protection. Overall liberalization has strengthened the private sector. Steady increase in foreign direct investment flows in recent years. Corporations open their branches in countries with weak regulatory institutions and thereby impacting in wide range on socio-economic and environmental factors.
These brings forth the fundamental questions regarding the obligations and responsibilities of the private sector: Apart from contributing in economic progress by generating profit and employment, what else to private sector do? Should the society expect the private sector to care and contribute to a larger common good? Are such expectations reasonable and can they be achieved? Do they impose too heavy a burden on the private sector? Do they shift too much authority from the government?
According to CSR, Business is accountable to all it’s relevant stakeholders Those stakeholder’s being: Shareholders Suppliers/Partners Investors Customers Employees and their families Community in which organization exists
Following questions arise when we take about CRS and company: Who are the stakeholders and who defines them? Is it a company or political authority or is it self-selecting? What degrees of interest does a stakeholder hold? How close the stakeholder should be to company, for his/her opinion to matter? What role does the media play? What extent should the stakeholder effect the decisionmaking process of a company? What kind of process is need to let them participate in decision-making?
CSR should go beyond above mentioned minimal elements Globalization has extended the concept of stakeholders: Does the social contract that the company utilizes in one country must be extended to other countries? how many social must a company enter into if it operation beyond its parent company? Should same standard be used or must different standards be adopted for different countries? Does consumer in one country define company’s behavior in other countries?
CSR, therefore, involves the establishment of a dialogue between a company and its stakeholders Corporate Citizenship Respect and comply with concerns of the stakeholders Social Contract Minimal Elements of CSR: 1. Comply with laws and regulation 2. Undertake philanthropic activities 3. Develop public relations strategy
CSR is mostly laid down in the form of code of conduct Code of Conduct: written policy or statement of principles intended to serve basis for a commitment to socially responsible behavior. They are generally initiatives taken by company, voluntarily Government also plays a role in supporting above code of conduct along with non-governmental organization and other stakeholders.
Much broader view is adapted Who is the corporation responsible and accountable to Employees and customers tend be equal partners with investors Goal of business is only to increase profits
“Business has responsibility” means what? Corporation is artificial person, hence it has artificial responsibility Manager’s primary responsibility is to operate the business in best interest of stockholders because their biggest concern is financial return. If money is spent on social cause, it’s stockholder’s money that is spent.
It is morally correct to increase profit in ethically. In a free enterprise, a manager is employee of the owner of the business and hence responsible to his/her employer. Hence he must increase profit but abiding both laws and ethical customs. Freidman’s view is quite radical But by utilizing CSR , a company can increase its profit
In this information stage , where business practices have become transparent, CSR has become a requirement rather than luxury. Focus on product and services, brands and logos, revenue and margins is no longer enough Companies will also be judged on basis of environmental stewardship, employee relations, diversity, community relations and human rights. Above terms must be met for company to become reputed and for it to prosper. Consumers want to deal with companies they can trust and believe in. Business can’t sustain at the cost of their employees and environment in which they exist. CSR is a business strategy designed for economy where, socioeconomic and environmental goals are interwoven.
A 1999 Cone Roper Study found that 68% of customers would have no problem paying for a product that is linked to a good cause A 1999 study, cited in Business Society Review, showed that 300 large corporations found that companies that made a public commitment to rely on their ethics code out performed companies that do not do so by 2 or 3 times, as measured by market value added. In 1997, Coca-Cola experienced a 490% increase in the sales of its product at 450 Wal-Mart stores during six-week camping with mothers against Drunk Driving. A Wirth Worldwide survey found 2 to 3 Americans refusing to buy a product suspicious of harming environment, even if suspicions are not confirmed.
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