CHAPTER 3
CORPORATE SOCIAL RESPONSIBILITY
CORPORATE SOCIAL RESPONSIBILITY (CSR)
• Corporate social responsibility is an organisation’s obligation to maximize its positive
impact on stakeholders and minimize its negative impact.
• Corporate social responsibility is what an organisation should or must do for society’s
benefits combining both obligatory and voluntary aspects.
• Corporate social responsibility is organisation’s concern for the welfare of society,
including obligations that go beyond legal requirements and contractual agreements.
• Corporate social responsibility reflects society’s concerns it can influence and
restrain organisation’s behaviours.
LEVELS OF CSR
• There are four levels of social responsibility:
- Economic
- Legal
- Ethical
- Philanthropic
ECONOMIC RESPONSIBILITY
• Companies have a responsibility to be profitable at an acceptable level to meet the
objectives of shareholders and create value.
• Maximizing stakeholder wealth and/or value.
Company must ensure its survival and growth, this is a foundation for fulfilling other
responsibilities and increasing social welfare.
LEGAL RESPONSIBILITY
• Abiding by all laws and government regulations (compulsory).
• Legal responsibility relates to:
- Regulating competition
- Protecting consumers
- Protecting natural environment
- Promoting safety and equality
- Noticing and preventing bad behaviours
- ...
ETHICAL RESPONSIBILITY
• Following standards of acceptable behaviour as judged by stakeholders.
• Company make decisions that are right, honest, transparent, and fair to all
stakeholders, going beyond legal obligations.
• Company remains and protects values/social norms by the way that is considered to
be good.
Company is respected and accepted by society Gain profits, complete economic
responsibility
PHILANTHROPIC RESPONSIBILITY
• Philanthropy relates to promoting human welfare and goodwill by making voluntary
donations of money, employee time, and other resources that can contribute to
communities and society.
• A company's contributions can be categorized into four dimensions:
- Enhancing quality of life, family well-being, and life enjoyment
- Sharing burdens with the government by helping stakeholders
- Improving leadership skills for employees
- Fostering ethical culture to limit unethical behaviours, promoting the moral
development of employees.
BUSINESS ETHICS AND CSR
Business Ethics CSR
Comprises principles and values that A commitment of company with society, a
regulate company’s decision and “contract” of company
behaviours
Expresses desires and expectations of Expresses desires and expectations driven
company that arise internally, thereby by external factors; it also reflects
indicating a voluntary commitment company’s concerns to consequences from
its decision to society, thus indicating
voluntary and compulsory aspects
MOTIVATION FOR CSR
• Society’s concern regarding the economic, cultural, and social impacts of a company’s
decisions.
• Company’s awareness of company’s special role within the community, leading to
voluntary actions for a better, healthier society, and reflecting a sense of corporate
citizenship.
• Company earns profits from community so company has to be responsible with community
• Company’s operations might cause harms for some stakeholders, therefore, company has to
be responsible with stakeholders
• Company can create competitive advantage, therefore, gaining positive support from
community
STAKEHOLDERS
• Internal stakeholders: employees, managers, shareholders
• External stakeholders: customers, suppliers, intermediaries, government, trade
associations, competitors, labour union, community, media, special interests groups,...
STAKEHOLDERS
• Different stakeholders lead to different concerns and benefits.
• Stakeholders may possess specific rights that entitle them to require the company to act
in accordance with their needs and wants.
• Stakeholders can affect the existence and development of company.
• Stakeholders also have responsibilities with society.
Stakeholders may either agree with, collaborate in support of, or oppose the ethical
issues of the company.
It is essential to identify, understand, and address their values and expectations.
RESPONSIBILITY WITH STAKEHOLDERS
Responsibility with owners (shareholders):
• Company abide by the rights and the prescribed scope of use of the entrusted assets.
• Company respect and protect the economic interests of onwers; ensure the equitable
distribution and appropriate utilization of the accrued profits.
• Company clearly and honestly report about operational activities for owners.
• Company fulfill the social responsibilities anticipated by the owners.
• …
RESPONSIBILITY WITH STAKEHOLDERS
Responsibility with employees:
• Company generates employment opportunities for the workforce and enable them to fully
enjoy the fruits of their labour.
• Company creates good and safe working environment.
• No discrimination.
• Company enable employees to participate in and contribute to solve the company’s issues.
• Company cultivates professional expertise for employees.
• Company cares about employee’s welfares.
• Company ensures the confidentiality of information and respect the privacy of employees.
• …
RESPONSIBILITY WITH STAKEHOLDERS
Responsibility with customers:
• Company respects customer’s rights.
• Company ensures customer’s safety.
• Company satisfies customer’s needs and wants.
• Company provides customer service that is characterised by honesty, fairness, and
integrity.
• Company ensures the confidentiality of information and respect the privacy of
customers.
• Company emphasizes the customers' long-term welfare.
• ...
RESPONSIBILITY WITH STAKEHOLDERS
Responsibility with competitors:
• Healthy competition: respecting competitors and engaging in competition that is both
legally compliant and ethically sound
• To cooperate in business with competitors
• To cooperate and collaborate in addressing social issues
• To protect competitors
• ...
RESPONSIBILITY WITH STAKEHOLDERS
Responsibility with community:
• To create jobs
• To protect community’s safe and health
• To conserve natural resources and energy sources
• To protect the environment, reduce waste, and minimize emissions
• To mitigate the adverse environmental impacts of product consumption
• To contribute and support for local organisations
• …
RESPONSIBILITY WITH STAKEHOLDERS
Responsibility with government:
• To respect and comply laws
• To pay attention to business ethics
• To fulfill social responsibilities and actively contribute to the sustainable
development of the economic system.
• …
IMPLEMENTING RESPONSIBILITY WITH STAKEHOLDER
1. Identify and assess stakeholders:
• Identifying stakeholders
• Recognizing stakeholder needs, wants, and desires
• A proper assessment of the power held by a given stakeholder includes an
evaluation of the extent to which that stakeholder collaborates with others to
pressure the firm.
• Prioritizing the stakeholders that are most important to engage.
IMPLEMENTING RESPONSIBILITY WITH STAKEHOLDER
2. Integrate the company's responsibilities toward its relevant stakeholders
and embed them within the corporate culture:
• Corporate social responsibility must be inherently integrated with
organisational culture
• The company's values and standards must implicitly embody its
responsibilities toward relevant stakeholders
• Broadly disseminate within the company an understanding of the various
stakeholder groups, their potential impact, and the company’s orientation
toward them
Create a responsible business culture
IMPLEMENTING RESPONSIBILITY WITH STAKEHOLDER
3. Adapt stakeholder’s needs and wants:
• Identifying specific actions tailored to each stakeholder.
• Meeting and surpassing the expectations of each stakeholder.
• Mobilizing and allocating resources.
• Inviting the participation of relevant stakeholders who are involved in the
situation.
Fostering support and engagement of society with the company.
4. Gaining stakeholder feedback
PERSPECTIVES ON IMPLEMENTING CSR
1. Classical perspective:
• Companies should focus solely on achieving economic objectives and
internal responsibilities, while delegating other obligations to specialized
organizations, social institutions, and government.
2. “Taxation” perspective:
• When a company utilises social resources, it assumes not only economic
responsibilities but also broader obligations to society.
PERSPECTIVES ON IMPLEMENTING CSR
3. The “Management” perspective/right of ownership and utilization of
assets:
• A company plays a role as an agent on behalf of the true owner of these
resources, which is society. Its rights are temporary, therefore, company has
to fulfill responsibilities with society.
4. Stakeholder perspective:
• A company’s operations affect many internal and external stakeholders;
therefore, it has to adapt interests and objectives of all stakeholders
simultaneously.
APPROACHES TO IMPLEMENT CSR
1. Priority order:
• (1) Economic, (2) Legal, (3) Ethical, (4) Philanthropic
2. Importance order:
1 - Fundamental and minimum obligations - both economic and legal
2 - Official and essential obligations - including economic, legal, and ethical
aspects
3 - Pioneering, voluntary obligations - including economic, legal, ethical, and
philanthropic aspects
APPROACHES TO IMPLEMENT CSR
3. Situation order:
• Decision-making situations differ from one another: the stakeholders
involved, their concerns, and the obligations to be fulfilled are not the same
in each situation. Therefore, it is crucial to adopt a flexible and context-
sensitive approach.
