Chapter No: 1

The Attitude of Firm towards CSR (LU Factory)

Introduction
Corporate social responsibility (CSR) concept is emphasized from the couple of years in the
economy of the country. Globalization and enhanced awareness has raised importance of CSR,
which results in new demands as well as fair means for citizens. Unfortunately, the concept of
CSR is more emphasized at government level but not at local level. On the other hand enhanced
social media has raised demands from the government to make improvements in the living status
of population. Therefore, because of increasing focus on the role of business in the society
progressive firms use it in order to distinguish it from local firms. Therefore, resources are
owned by shareholders .so, Shareholders play an important role in shaping CSR (Ham brick &
mason, 1984; carpenter et al., 2004).Hence the main idea behind CSR is that ethically firm has
responsibility to work towards goals defined by shareholders (Clarkson, 1995; Wad dock et al.,
2002).therefore, CSR is less emphasized by firms because of lack of resources in our country,
because lack of qualified labor mostly shareholders consider it costly except few reputed firms.
More generally, CSR is the set of activities that contribute to societal benefits or working in a
manner that meets the societal needs in positive way (BSR, 2001).Private sector is half of
economy so, it should also emphasize the CSR for maximizing societal benefits. Some examples
of CSR in LU Factory including, Use of quality full raw materials, use of pure fine flour in
making biscuits, Friends of All Pakistan Women's Association (FAPWA) for building schools
and dispensaries for the people of Yusuf Goth, Pariya Goth and Kutchar Kundi, supporting
Citizens Police Liaison Committee (CPLC) on various projects, Providing financial assistance to
needy cancer patients both at the Shaukat Khanum Memorial Cancer Hospital and Research
Centre and the Aga Khan University Hospital, Providing financial assistance to needy patients
for eye surgery at Al-Shifa Trust Eye Hospital, Sukkur.For the last six years, together with the
office of French Consul General, sole sponsors of Al-Mehran Tibbi Imdad, the only charitable
organization creating hospitals for the terminally ill poor cancer patients in Pakistan.
However, because of delay in CSR we are still reclining in understanding practices of CSR at the
cultural, economic, and at the social level for example exploring some laws at the institutional
and national level for promoting social corporate responsibility (Jones, 1999).so, there is strict
need to highlight of CSR in developing countries. In this context, there is value added in
exploring the role of Firm towards CSR context, and gauging the extent to which CSR is
practiced in the firm LU Factory Beyond the boundaries of public relations.
Although CSR has received less attention in the developing countries.CSR has been the major
concerns from the couple of years in the Pakistan whether governmental or non government

firms. Although issues relating to health hazards products, safe product. These issues have been
raised the attention of the government and still strict need of legislation to prevent CSR
problems. But on the other hand, in the developing countries like Pakistan because of lack of
implementation of laws of CSR has failed to protect the rights of consumers.
Objective of the study:
To develop some procedures that enable managers and top executives to determine
appropriate level of CSR in investment, in social project.
To develop some CSR supporting policies at the firm level.
To explore real situation of CSR and the performance of CSR strategy in LU Factory,
To demonstrate Attitude of firm Towards CSR.
Problem Statement:

To analyze the CSR performance of Lu Factory operating in Sukkur district,

documenting their views and practices of CSR at sukkur level.
To analyze whether there is enough practical consideration or there is still need to fill this
gap of CSR.

Chapter No: 2
Literature Review
Every country has its own approach regarding CSR (Chappell and Moon, 2005).Holmes (1976)
found that perception of executives has changed about CSR in recent years. In addition, to more
profit oriented, business should co operate with them in solving problem whether they are
concerned or not in that particular problem? (Holmes,1976). Moreover, most businessman
showed optimistic approach about CSR but, unfortunately, because of less supportive
environment, less CSR supportive organizational rules, less support of CSR from customers,
shareholders fails to provide CSR .However, But in the real sense businesses has greater power
to address social issues. According to (de la Cruz Deniz Deniz and CabreraSuarez, 2005; Quazi
and OBrien, 2000) the role of business is to provide goods and services within legal framework
(Angelidis et al., 1998). The more emphasis here is on the legal and economic roles of business
de la Cruz Deniz Deniz and CabreraSuarez, 2005; Quazi and OBrien, 2000). According to Ford
and Mc Laughlin (1984) in a developing country like Pakistan there is strict need to balance the
responsible and irresponsible behavior. Therefore, it is fact that CSR is observed in firms on the
short term basis rather than long run as well as on the demand of customers. Moreover,
developing countries face more problems of lack of resources and lack of qualified labor; by
keeping such view, businesses require enough resources to support CSR like financial and
managerial resources to actively contribute in societal activities or product with societal
attributes but, unfortunately peoples fails to access the CSR in products because of weak
borrowing power which in turns, discourage the firm in terms of returns. Businesses should
morally consider social performance as a necessary part of its operation which in turns,
successful business operations positively impact the economy (Teoh & Gregory thong,
1986).overall, the manufacturing sector
In Pakistan, Gilles and Leinbach (1983) there appeared to be little room for CSR. Although there
were some positive attitudes towards CSR, there were some negative attitudes towards it. The
decision to allocate resources and to change the organization as when deciding CSR
commitmentsusually starts and ends with the management board (Hambrickand Mason, 1984;
Carpenter et al., 2004).However, it is also fact that because of more competition factor results in
less cooperation in CSR across the geographical expansion(Harvard business school).
Unfortunately, companies in developing countries, because of shareholders more adherences to
profit emphasis have forgotten the simple legal compliance (Juholin, 2004). Therefore, it is
mostly observed that most shareholders and executives of the company contradict between cost
and resources while practicing CSR (Harvard business school,2016).However, it is also fact that
because of more competition factor results in less cooperation in CSR across the geographical
expansion (Harvard business school,2016).
In examining the role of firm towards CSR the seven determinants play an important role in
shaping role of firm towards CSR (1)family way of upbringing,(2)traditional norms of that

particular country(3)institutional practices(4)training(5)conduct of leaders(6)Religious

practices(7)Conduct of peers.
Teoh & Gregory thong (1986) believed that standards need to be established at the national level
and other mandatory regulation needs to be implemented for its realistic portrait for contributing
to CSR. By Pettit (2005) In his words, in the underdeveloped areas there is serious deficit of the
allocation of resources properly as well as serious deficit of proper allocation of responsibility
.by keeping such views, there is strict need to establish some CSR supporting policies for
example passing some ordinances from the parliament as well some laws for businesses for real
enforcement of CSR at the national and local business level (Aaronson, S. A., and J. Reeves,
2002).The practice of CSR varies from country to country and from developed to developing
countries( Chapple and Moon ,2005).
The main reason behind little practice of CSR in developing countries is the lack of resources,
and lack of awareness in workforce, leads to unwise use of resources, leads to decreased
efficiency, leads to wastage of resources, finally, fail to allocate resources for CSR( Friedman ,
1970).
It is also observed that firms also play their role of CSR as response to societal demands ,but on
the other hand, in the underdeveloped areas the CSR is demanded company provide them but
they fail to access it because of more price .in the under developed area the companies play role
of CSR in the form of CSR.
However, it is mostly observed that role of successful businesses in CSR is higher than non
successful businesses. According to watchdog approach, In order to enhance role of firm towards
CSR in the country it is important to establish some policies for supporting CSR in government
sector along with private sector.