Unit 3

Corporate Social Responsibility

Why Social Responsibility of Business?
Different perspectives of CSR
According to Dr. Manmohan Singh, CSR is no philanthropy. It is no
charity. It is an investment in our collective future.

Mahatma Gandhi said, Wealth created from society has to be ploughed
back into society


Thus,
1. It is an attempt made by companies to be voluntarily responsible to
ethical & social consideration

2. It is a set of obligations to pursue those policies, to make those decisions
or to follow those lines of action which are desirable in terms of the
objectives & values of our society

3. It is the overall relationship of the corporate with all its stakeholders.
These include customers, employees, communities, owners, suppliers &
competitors

4. It covers the economic, legal, ethical & environmental expectations
society has placed on organizations at a given point of time
The Classical Economic Model
Adam Smith, father of the classical economic model, believed that an
invisible hand promoted the public welfare

Smith believed that the public interest was best served by individuals
pursuing their own self-interests


The Socio economic model
Business is seen as one sub-system

Recognizes that companies have stakeholders other than their
stockholders

Business has an obligation to respond to the needs of all stakeholders
while pursuing profit
Todays CSR
Today CSR is to ensure the betterment of the society in which its
functions

It includes:
1. Configuration of principles of social responsibility

2. Process of social responsiveness

3. Policies, programmes & outcomes as they relate to the firms societal
relationships

Models of Corporate Responsibility
Ethical model:
In the ethical model, there is a voluntary commitment to public welfare

In India, it has its roots in the Gandhian philosophy trusteeship

E.g; Tatas, Birlas, Infosys, Reliance Industries- who have provided cash for
the social welfare projects, community investment trusts & schools

Many companies, particularly family-run business, continue to engage in
philanthropic activities based on this model

Corporate Philanthropy
It means doing good to others.

It refers to charity which promotes general welfare

It is thus the love for mankind, expressed in terms of charity for promoting
the welfare & progress of society as a whole


Forms of Corporate Philanthropy
Concern for the welfare of the immediate members of the corporate body:
the staff & the employees

Innovative contribution by visionary business leaders in quest of personal
satisfaction

The desire to establish a strategic relationship with the State or society led
some corporate bodies to invest in the establishment of institutions that
fulfill the specific requirements of the community
Features of Corporate Philanthropy
It involves offering companys resources for the general good of the
society
It is voluntary act involving no legal binding

The purpose may be charitable, social, human or selfless service

Reasons for Corporate Philanthropy
Economic Motives

Non-Economic Motives
Benefits
It enhances the public image & reputation of the corporation

It strengthens the employees commitment

It sustains health & welfare of the local community where the companys
productive facilities are located
CSR VS. Corporate Philanthropy
CSR Philanthropy
It is wider perspective. It focuses on
profits, people & planet
It has a narrow perspective. It focuses on
charitable activities of the company
It deals with business basics & ethics It deals with humanitarian cause
It focus on long-run sustainability of the
company
It focus on short- term viability of the
company