Module-5: Corporate Social Responsibility- Definitions

 

Howard Bowen in 1953 argued that since social institutions shaped economic outcomes it was to be expected that business firms as an economic outcome of societal interests should consider the social impact of business activity.

According to Bowen, “CSR refers to the obligations of businessmen to pursue those policies to make those decisions or to follow those lines of relations which are desirable in terms of the objectives and values of our society.”

 William C Frederick wrote that ‘Social responsibility in the final analysis implies a public posture toward society’s economic and human resources and a willingness to see that those resources are used for broad social ends and not simply for the narrowly circumscribed interests of private persons and firms’

Frederick 1960 stated ‘Social responsibility means that businessmen should oversee the operation of an economic system that fulfills the expectations of the people.

And this means in turn that the economy’s means of production should be employed in such a way that production and distribution should enhance total socio-economic welfare’ (Fredrick, 1960).

Thus, the definitions of CSR in 1960’s were an attempt to link society and businesses, defining society in broadest terms.

Canadian Government:

 

“CSR is generally understood to be the way a company achieves a balance or integration of economic, environmental and social imperatives while at the same time addressing shareholder and stakeholder expectations.”

 

UK Government:

            “The Government sees CSR as the business contribution to our sustainable development goals. Essentially it is about how business takes account of its economic, social and environmental impacts in the way it operates – maximising the benefits and minimising the downsides.”

 

World Business Council for Sustainable Development:

We define CSR as business' commitment to contribute to sustainable economic development, working with employees, their families, the local community, and society at large to improve their quality of life.”

 

The Kennedy School of Government (Harvard University), CSR Initiative:

“The term [CSR] is often used interchangeably with others, including corporate responsibility, corporate citizenship, social enterprise, sustainability, sustainable development, triple-bottom line, corporate ethics, and in some cases corporate governance. Though these terms are different, they all point in the same direction: throughout the industrialized world and in many developing countries there has been a sharp escalation in the social roles corporations are expected to play.”

 

According to Carroll(1999), “CSR encompasses the economic, legal,ethical and discretionary (philanthropic) expectations that society has of organizations at a given point in time.”

European Commission described CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”.

 Commission of the European Communities 2001 stated that being socially responsible means not only fulfilling legal expectations, but also going beyond compliance and investing ‘more’ into human capital, the environment and the relation with stakeholders(Bajpai, 2001).

Over the time four different models have emerged all of which can be found in India regarding corporate responsibility (Kumar et al., 2001).

European Union:

        “[CSR is] a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.”

According to European Union , “The voluntary integration of companies’ social and ecological concerns into their business activities and their relationships with their stakeholders. Being socially responsible means not only fully satisfying the applicable legal obligations but also going beyond and investing ‘more’ in human capital, the environment, and stakeholder relations.”

According to ISO 26000:2010,” The responsibility of an organization for the impacts of its decisions and activities on society and the environment, resulting in ethical behavior and transparency which contributes to sustainable development, including the health and well-being of society; takes into account the expectations of stakeholders; complies with current laws and is consistent with international standards of behavior; and is integrated throughout the organization and implemented in its relations” for all type of organisations, regardless of size and locations

CSR implies some sort of commitment, through corporate policies and action.

This operational view of CSR is reflected in a firm’s social performance, which can be assessed by how a firm manages its societal relationships, its social impact and the outcomes of its CSR policies and actions (Wood, 1991).

Social reporting and social audits are examples of how firms can assess their social performance.

According to Infosys founder, Narayan Murthy,  ‘social responsibility is to create maximum shareholders value working under the circumstances, where it is fair to all its stakeholders, workers, consumers, the community, government and the environment’.

The term corporate social performance was first coined by Sethi (1975), expanded by Carroll (1979), and then refined by Wartick and Cochran (1985).

In Sethi’s 1975 three-level model, the concept of corporate social performance was discussed, and distinctions made between various corporate behaviors.  Sethi’s three tiers were

l  ‘Social obligation (a response to legal and market constraints);

l  Social responsibility (congruent with societal norms); and

l  Social responsiveness (adaptive, anticipatory and preventive) (Cochran, 2007).