Corporate Social Responsibility (CSR)

Because “CSR” is a term that is always changing, there isn’t a single agreed upon definition or set of criteria that all companies must follow. As a term that is still fairly new to management thought, “CSR” is often used a lot but not fully understood.

People often use the phrase “corporate social responsibility” to mean “only making money,” “going beyond making money,” “voluntary activities,” “care for the larger social system,” and “social responsiveness.” There isn’t a single agreed upon definition of CSR, but most people see it as a way for businesses to balance the needs of society, the economy, and the environment in their operations.

This idea is old, but the word for it is new. As an idea, corporate social responsibility has only recently become popular in India. However, Indians have been practising it as a way of life for a very long time to improve social welfare and well-being.

In ancient India, these moral concerns were still important, and they still affect how businesses run today. Businesses today need to adopt these kinds of attitudes and virtues in order to fit in with people’s social lives and meet its social obligations.

Holme and Watts say that CSR is “a company’s ongoing promise to act in an honest way, help the economy grow, and raise the standard of living for workers and their families, as well as for the community and society as a whole.”

Keith Davis, writing in 1960, said that a businessman’s “social responsibilities” are his choices and actions that are done for reasons that aren’t directly related to the company’s technical or economic interests. To put it simply, corporate social responsibility is when a business cares about the social cause at the time.

According to Carroll and Buchholtz, “Corporate social responsibility encompasses the economic, legal, ethical, and philanthropic expectations placed on organisations by society at a given point in time.”

Joining the community

It includes a lot of different things that businesses do to get the most out of the money, time, products, and services they offer for the good of everyone.

Rights of People

The way the business operates can have a huge impact on the rights and dignity of workers and communities. The main goal is to create a workplace that is free of discrimination, where learning and creativity can thrive, where there are good rules for professional behaviour, and where a good balance can be found.

Safety at Work

It means ending all forms of forced and compulsory labour, including child labour, and discrimination in employment and occupation. It also means freedom of association and the effective recognition of the right to collective bargaining.

Protecting the environment

Environmental problems affect people all over the world, so the business world also tries to find long-term solutions for natural resources and ways for companies to have less of an effect on the environment. Over the past few years, being environmentally responsible has grown to include a lot more than just following all government rules or even just a few projects like recycling or saving energy.

A lot of people, environmental groups, and leadership companies say that being environmentally responsible means taking a big picture look at a business’s operations, products, and facilities. This means looking at the business, its products, its processes, and how it balances work and other parts of life.

Business Standard: It talks about a lot of different issues related to corporate activism, such as ethics, making money, and protecting the environment.

Education and Building Leadership

If you want to see sustainable development and growth that helps the poor, you need to make sure that everyone has access to good education. Businesses, along with the government and civil society, can help make this happen by working with these groups to raise standards in corporate education and leadership development.

Why corporate social responsibility is important

There is no doubt that the idea that fulfilling corporate social responsibility costs money and, as a result, cuts profits has been proven to be false. Instead, doing the right thing by society strengthens the company’s ability to make money, both in the short and long term. In the business world, there are a lot of stories like this.

Johnson & Johnson is a classic example of a company that puts the good of the public ahead of its own profit, even when the company is the one who is being helped. On September 28, 1982, the extra strength Tylenol made by Johnson & Johnson poisoned many people with cyanide and killed them.

As a sign of its deep concern for social welfare, Johnson & Johnson not only helped with the investigation, but also offered a reward of one million dollars for information leading to the arrest of the person responsible.

Johnson & Johnson lost a lot of money because of the Tylenol crisis. They had to take 31 million bottles off the market, which was worth more than $100 million. Losing the public’s trust could have been the most damaging cost. After taking all Tylenol capsules off the market for six weeks, the company put them back on the market in tamper-proof packages, which are used for all pharmaceutical products today.

It’s amazing that Johnson & Johnson got back 95% of the market share it had before the Tylenol crisis (Waldholz 1982). This short storey from Johnson & Johnson shows how caring about social welfare strengthens an organization’s base, or “organisational character,” and, in turn, its ability to make money. Character is the key to success in everything. Also said by Swami Vivekananda: “First build character. The rest will take care of itself.”

Maruti Udyog Limited (MUL) is another company that put the well-being of others ahead of its own goals. Between January and April 1997, this responsible company took back from the market about 50,000 of their most popular car, the Maruti 800 passenger car, because they thought the steel used in them wasn’t good enough. It was the biggest recall of cars from the Indian market ever, so it made the front page of every newspaper.

This good relationship seems to be based on the idea that a business’s involvement in society gives it many benefits that more than balance out the costs. Some of these benefits would be a better image with customers, a more dedicated and motivated workforce, high public trust, social acceptance, and even less government interference.

1. One way to understand why corporate social responsibility is important is to look at the ancient teaching of Propkaram Paramam Dharma, which says that the most sacred duty is to help others, which sociologists call altruism. “Dharma” means duty, and “Dharma” means truth.
2. Truth always wins in all of its forms and for a long time. The events of the past show that in all areas of life, satyamev jayate, or truth alone, wins in the end. Cooperate social responsibility is the “dharma” of a business that helps it stay in business and grow.
3. A lie or unethical business doesn’t last long either, just like any other lie. A lot of companies, like Arthur Anderson, Enron, Union Carbide, the Harshad Mehta Stock Business, and others, have shown that a business can’t exist and stay in business without the support and approval of the people it works with. Without social approval, a business will fail and go out of business.
4. The following are some more reasons why companies should take on social responsibility. A lot of these (Mintzerg 1983) are explained in terms of “enlightened self-interest,” which means that the company takes on social duties only if doing so helps its own bottom line.
5. People may reward companies that they think are socially responsible with more and/or happier customers. On the other hand, people may reject or boycott companies that they think are not responsible. This kind of boycott happened with Pepsi and Coca-Cola in India in 2007.
6. According to research, workers are drawn to and even more committed to companies that act in a socially responsible way (Greening and Turban 2000).
7. Companies that voluntarily take part in social programmes and actions may also be able to stop laws from being passed and gain more freedom from the government.
8. Being socially responsible and doing good things for society could be seen as an investment that pays off in the long run by making the world a better place to do business.
9. Along with the business reasons given above for corporate social responsibility (CSR), here are some important moral reasons for CSR as well:
10. Corporations have a moral obligation to fix the problems they cause and work to stop similar problems from happening in the future. Some of the problems they cause are pollution, dirtiness, and so on.
11. As social actors, corporations use scarce social resources. So, for the good of society, they should use these resources in a responsible way.
12. Different kinds of business activities, like selling goods and services and giving people jobs, all have effects on society, which can be good, bad, or neutral. Because of this, corporations need to take responsibility for these effects.

In reality, companies depend on the help of many people, not just their shareholders. These people are called “stakeholders” in society, and they include customers, suppliers, local communities, and so on. For this reason, companies need to think about the needs and wants of shareholders and other important people.

Because there are so many reasons to support CSR, there has been no doubt about the need for and importance of corporations acting in a socially responsible way.

Different Types of Corporate Social Responsibility (CSR)

Many organisational researchers have tried to name and explain the different types of CSR over the years. The “Four-Part Model of Corporate Social Responsibility,” which was created by Archie Carroll and later improved by Carroll and Buchholtz, is likely the most well-known and accepted model of CSR that does this. The following picture, Figure 1, shows this model. Carroll’s four-part model for social responsibility in business. Carroll says that CSR is a multi-layered idea made up of four interconnected types of responsibilities: economic, legal, ethical, and charitable. He describes these different duties as levels that build on top of each other in a pyramid.

He says this to explain what CSR is: “Corporate social responsibility includes the economic, legal, moral, and charitable expectations that society places on organisations at a given time.”

A business needs to take care of its economic duties, like giving investors a good return, paying workers fairly, selling goods at fair prices, and so on. Meeting economic responsibility is the first level of responsibility, and it sets the stage for the other levels of responsibility. As things stand, all businesses must now take economic responsibility if they want to stay in business.

Being legally responsible

Businesses have to follow the law and play by the rules because they are legally responsible for doing so. Laws write down what people should and shouldn’t do in society.

Any business that wants to be socially responsible must follow the law. There are many examples in the history of corporations of breaking the law so badly that they could no longer operate. Examples of companies that people don’t like or trust include Enron, Union Carbide, Global Trust Bank, and others.

Duty to Act Morally

These responsibilities are things that corporations should do because they are right, fair, and just. Following the law, procedures, and rules and regulations does not always make business behaviour moral or good. Companies that do things that are above and beyond the law and help people are said to be ethical.

Because of this, businesses have a moral duty to do what is good for society, even if it goes against the law or a rule or regulation. That is, ethical responsibilities are the things that people generally expect from businesses, on top of what the law and the economy require.

Being Responsible for Giving Back

“Philanthropy” comes from the Greek word for “love of fellow humans.” When this idea is used in business, it can mean doing things that the company chooses to do to improve the lives of its employees, the communities where it operates, and ultimately, society as a whole.

Corporations have philanthropic duties, such as giving money to charities, building recreation centres for employees and their families, supporting schools, funding art and support activities, and so on. It is important to remember that corporations want to do charitable things; society does not expect them to.

Different parts of CSR

One part of corporate social responsibility is the duty a company has to the people who have an interest in it. These people are called “stakeholders.” People who have an interest in a business include shareholders or owners, customers, employees, the government, society, and so on.