CHAPTER 1
INTRODUCTION
BACKGOUND OF THE STUDY
"The obligation of businessmen is to pursue policies, make decisions, and follow
lines of action that are desirable in terms of the objectives and values of our society"
(Howard Bowen, 50). The emergence swift development of economics emphasizes the
significance of corporate social responsibility (CSR). In recent times, corporations have
started to see sustaining the welfare of society and communities as a natural obligation. In
addition, businesses currently must fulfill socially desired roles in addition to producing
high-quality goods and services. CSR is a major factor in the advancement of sustainable
development.
The development of Corporate Social Responsibility (CSR) is a consequence of
ethical circumstances, as demonstrated by the inevitability of change throughout time, and
the stakeholders were not fully aware of the role that business plays in society. This affected
people's differing opinions regarding the detrimental relationship between CSR and
businesses. The theory "A Friedman Doctrine: The Social Responsibility of Business is to
Increase Its Profits" (Milton Friedman, 1970) proposes that an organization's only
responsibility is to its shareholders, with no obligation to the public or society. In contrast,
Archie Carroll proposed the theory "Carroll's Pyramid of CSR," which holds that an
organization's economic, legal, ethical, and philanthropic responsibilities are what drive it to
create value for society and correspondingly with profitability. .According to this theory, the
amount of duties that must be fulfilled determines how CSR and profitability are related.
In countries United Kingdom, European Union, United States, China, and India is
mandated to have social responsibility report by their publicly listed companies. 85% of
companies in the S&P 500 Index published sustainability or corporate responsibility reports
in 2017 (Standard and Poor's 500,2017). Worldwide, 98% of companies reported some level
of detail on sustainability in 2022, and 69% obtained assurance on at least some of their
sustainability disclosures. Those numbers are up from 91% reporting on sustainability and
51% obtaining assurance in 2019, the first year covered by the report. Aligning with the
SDG, the International Federation of Accountants (IFAC) and AICPA & CIMA, together as
the Association of International Certified Professional Accountants, have jointly published
the fourth annual installment of The State of Play: Sustainability Disclosure and Assurance.
(Bryan Strickland, 2024). Along with the revisions in reporting requirements, the Philippine
Financial Reporting requirements also anticipates adoption. These figures strongly suggest
that CSR will play a larger role in achieving the SDGs.
In major, publicly traded companies, corporate social responsibility (CSR) is
becoming a strategic tool for achieving a competitive edge. But what about micro, small, and
medium-sized businesses? As a result, we researchers made the decision to undertake
research on how CSR affects MSE profitability and budget allocation. Previous studies
discuss the significance and effects of corporate social responsibility in business. We close
the knowledge sweep left by previous studies by concentrating on the effects of corporate
social responsibility (CSR) on budget allocation and how businesses might maximize CSR to
increase profitability. Considering certain limitations such as company size and resources.
The factors include lack of managerial strategies vision, poor activity pyritizations, scarce of
benchmarking practices, excessive regulation and lack of knowledge interchanging.
Our research is limited on measuring corporate social responsibility (CSR) in
economic, environmental (sustainable), and social (ethical and legal) activities. In order for
the researchers to legitimately draw conclusions, this study is based on a sample of
(numbers) MSE (may be sector) functioning in Dagupan using specific criteria and sample
methodologies.
The purpose of this research is to dispel myths regarding the positive or negative
connection between variables and to provide a clearer picture of how CSR should be applied
to business budgets. It also addresses the noted restriction on the use of CSR. Moreover,
strengthening the bonds between the companies' stakeholders.
