1. What is Corporate Social Responsibility?

Corporate initiative to assess and take responsibility for the company's effects on
the environment and impact on social welfare. The term generally applies to company
efforts that go beyond what may be required by regulators or environmental protection
groups.

Corporate social responsibility may also be referred to as "corporate citizenship"

and can involve incurring short-term costs that do not provide an immediate financial
benefit to the company, but instead promote positive social and environmental change.

Source:http://www.investopedia.com/terms/c/corp-social-responsibility.asp

2. What is Corporate Social Responsibility in Theory?

Three Approaches to Corporate Responsibility

According to the traditional view of the corporation, it exists primarily to make
profits. From this money-centered perspective, insofar as business ethics are important,
they apply to moral dilemmas arising as the struggle for profit proceeds. These
dilemmas include: What obligations do organizations have to ensure that individuals
seeking employment or promotion are treated fairly? How should conflicts of interest be
handled? and What kind of advertising strategy should be pursued?
There are three theoretical approaches to these new responsibilities:
Corporate social responsibility (CSR)
The title corporate social responsibility has two meanings. First, its a general
name for any theory of the corporation that emphasizes both the responsibility to make
money and the responsibility to interact ethically with the surrounding community.
Second, corporate social responsibility is also a specific conception of that responsibility
to profit while playing a role in broader questions of community welfare.
As a specific theory of the way corporations interact with the surrounding community and larger
world, corporate social responsibility (CSR) is composed of four obligations:
The economic responsibility to make money. Required by simple economics, this
obligation is the business version of the human survival instinct. Companies that
dont make profits arein a modern market economydoomed to perish. Of course
there are special cases. Nonprofit organizations make money (from their own
activities as well as through donations and grants), but pour it back into their work.
Also, public/private hybrids can operate without turning a profit.
The legal responsibility to adhere to rules and regulations. Like the previous, this
responsibility is not controversial. What proponents of CSR argue, however, is that
this obligation must be understood as a proactive duty. That is, laws arent
boundaries that enterprises skirt and cross over if the penalty is low; instead,
responsible organizations accept the rules as a social good and make good faith
efforts to obey not just the letter but also the spirit of the limits
The ethical responsibility to do whats right even when not required by the letter or
spirit of the law. This is the theorys keystone obligation, and it depends on a
coherent corporate culture that views the business itself as a citizen in society, with
the kind of obligations that citizenship normally entails. When someone is racing
their Porsche along a country road on a freezing winters night and encounters
 another driver stopped on the roadside with a flat, theres a social obligation to do
something, though not a legal one
The philanthropic responsibility to contribute to societys projects even when
theyre independent of the particular business. A lawyer driving home from work may
spot the local children gathered around a makeshift lemonade stand and sense an
obligation to buy a drink to contribute to the neighborhood project. Similarly, a law
firm may volunteer access to their offices for an afternoon every year so some local
schoolchildren may take a field trip to discover what lawyers do all day.

The Triple Bottom Line

The triple bottom line is a form of corporate social responsibility dictating that
corporate leaders tabulate bottom-line results not only in economic terms (costs
versus revenue) but also in terms of company effects in the social realm, and with
respect to the environment. There are two keys to this idea. First, the three columns
of responsibility must be kept separate, with results reported independently for each.
Second, in all three of these areas, the company should obtain sustainable results.
The notion of sustainability is very specific. At the intersection of ethics and
economics, sustainability means the long-term maintenance of balance. As
elaborated by theorists including John Elkington, heres how the balance is defined
and achieved economically, socially, and environmentally:

Economic sustainability values long-term financial solidity over more

volatile, short-term profits, no matter how high. According to the triple-bottom-
line model, large corporations have a responsibility to create business plans
allowing stable and prolonged action. That bias in favor of duration should
make companies hesitant about investing in things like dot-coms. While its
true that speculative ventures may lead to windfalls, they may also lead to
collapse. Silicon Valley, California, for example, is full of small, start-up
companies.

Social sustainability values balance in peoples lives and the way we live. A
world in which a few Fortune 500 executives are hauling down millions a year,
while millions of people elsewhere in the world are living on pennies a day
cant go on forever. As the imbalances grow, as the rich get richer and the
poor get both poorer and more numerous, the chances that society itself will
collapse in anger and revolution increase. The threat of governmental
overthrow from below sounds remotealmost absurdto Americans who are
accustomed to a solid middle class and minimal resentment of the wealthy.

Environmental sustainability begins from the affirmation that natural

resourcesespecially the oil fueling our engines, the clean air we breathe,
and the water we drinkare limited. If those things deteriorate significantly,
our children wont be able to enjoy the same quality of life most of us
experience. Conservation of resources, therefore, becomes tremendously
important, as does the development of new sources of energy that may
substitute those were currently using.
 Stakeholders Theory
Stakeholder theory, which has been described by Edward Freeman and others,
is the mirror image of corporate social responsibility. Instead of starting with a
business and looking out into the world to see what ethical obligations are there,
stakeholder theory starts in the world. It lists and describes those individuals and
groups who will be affected by (or affect) the companys actions and asks, What are
their legitimate claims on the business? What rights do they have with respect to
the companys actions? and What kind of responsibilities and obligations can they
justifiably impose on a particular business? In a single sentence, stakeholder theory
affirms that those whose lives are touched by a corporation hold a right and
obligation to participate in directing it.
Source: http://catalog.flatworldknowledge.com/bookhub/reader/1695?
e=brusseau-ch13_s02

3. What are the critiques of Corporate Social Responsibility?

Neil chamberlain, a Corporate Social Responsibility author and critic, concludes
that every business's social responsibility movement is an effect 'trapped' in the business
system itself. The dream of socially responsible corporation can transform our society is
illusionary. The critics reason for failure of corporate social responsibility argue for
corporations too risk averse and redirected management time and financial resources
away from the corporation's core economic mission. The companies reflect two
misconceptions:

The people responsible to manage companies only care about one purpose:
maximizing profit. The managers have diversified preferences to promote civic
purposes. Their ability to achieve non-financial objectives are restrained by
competitive pressures unfaltering their personal commitments.
It cannot be a business's financial interest to act responsible. Companies have
been pressurized by activists, consumers, employees and investors who make
significant changes in corporate policies.
Corporate Social Responsibility is seen as catering to public relational purposes.
The corporations believe in using it as a means of preventing governments from
implementing effective regulations.

Source: http://www.socialresponsibility.vinsign.com/Criticisms-of-Corporate-Social-
Responsibility.html

4. What is stakeholder theory?

The argument on Stakeholders Theory is based upon the assertion that maximizing
wealth for shareholders fails to maximize wealth for society and its members and that
only a concern with managing all stakeholder interests achieves this.

Stakeholder theory states that all stakeholders must be considered in the decision
making process of the organization. The theory states that there are 3 reasons why this
should happen
-It is morally and ethically correct way to behave
-Doing so actually also benefits the shareholders
 -It reflects what actually happens in the organization

Source: David Crowther, Guler Aras. 2008. Corporate Social Responsibility. Ventus
Publishing ApS.

5. What is corporate citizenship?

Corporate citizenship is dened as transcending philanthropy and compliance,
and as addressing how companies manage their social and environmental impacts as
well as their economic contribution. Corporate citizens are accountable not just to
shareholders, but also to stakeholders such as employees, consumers, suppliers, local
communities and society at large.

Source: Corporate Citizenship: Proting from a sustainable business. The

Economist Unit. 2008

6. Discuss corporate sustainability and business ethics.

Corporate Sustainability can be regarded as the corporate response to sustainable

development represented by strategies and practices that address the key issues for the
worlds sustainable development.
Sustainable development is about creating the conditions for better quality of life for
everyone, now and in the future, based on eco-efficiency and innovative solutions for
engaging everyone and particularly the developing countries in the global economy.

Corporate sustainability means that your service or product does not compete in the
marketplace only in terms of its superior image, power, speed, packaging, etc. Additionally,
your business must deliver products or services to the customer in a way that reduces
consumption, energy use, distribution costs, economic concentration, soil erosion,
atmospheric pollution, and other forms of environmental damage. The Ecology of
Commerce (1993).
Source: http://www.csrquest.net/default.aspx?articleID=13113&he
Ethics concern an individual's moral judgments about right and wrong. Decisions taken
within an organization may be made by individuals or groups, but whoever makes them will be
influenced by the culture of the company. The decision to behave ethically is a moral one;
employees must decide what they think is the right course of action. This may involve rejecting
the route that would lead to the biggest short-term profit.
Ethical behavior and corporate social responsibility can bring significant benefits to a business.
For example, they may:

Attract customers to the firm's products, thereby boosting sales and profits

Make employees want to stay with the business, reduce labour turnover and therefore
increase productivity

Attract more employees wanting to work for the business, reduce recruitment costs and
enable the company to get the most talented employees

Attract investors and keep the company's share price high, thereby protecting the
business from takeover.
Unethical behavior or a lack of corporate social responsibility, by comparison, may damage a
firm's reputation and make it less appealing to stakeholders. Profits could fall as a result.

Source: http://businesscasestudies.co.uk/cadbury-schweppes/ethical-business-practices/the-
importance-of-ethics-in-business.html#ixzz3NssQjyMZ

7. Discuss corporate social performance.

CSP can be defined as a construct that emphasizes a companys responsibilities to multiple
stakeholders, such as employees and the community at large, in addition to its traditional
responsibilities to economic shareholders (Turban and Greening 1996, p.658) For example,
investors are increasingly using socially responsible investing (SRI) screens to select or avoid
investing in firms according to their environmental and social preferences (Chatterji et al. 2009).
Similarly, a growing number of consumers purchase eco-labeled products that signal a lower
environmental and social impact of corporate operations (Loureiro and Lotade 2005)

8. Discuss the history of corporate social responsibility

a. The nature and scope of corporate social responsibility has changed over time.
The concept of CSR is a relatively new onethe phrase has only been in wide
use since the 1960s. But, while the economic, legal, ethical, and discretionary
expectations placed on organizations may differ, it is probably accurate to say
that all societies at all points in time have had some degree of expectation that
organizations would act responsibly, by some definition.
In the eighteenth century the great economist and philosopher Adam
Smith expressed the traditional or classical economic model of business. In essence,
this model suggested that the needs and desires of society could best be met by the
unfettered interaction of individuals and organizations in the marketplace. By acting in a
self-interested manner, individuals would produce and deliver the goods and services
that would earn them a profit, but also meet the needs of others. The viewpoint
expressed by Adam Smith over 200 years ago still forms the basis for free-market
economies in the twenty-first century. However, even Smith recognized that the free
market did not always perform perfectly and he stated that marketplace participants
must act honestly and justly toward each other if the ideals of the free market are to be
achieved.

In the century after Adam Smith, the Industrial Revolution contributed to radical
change, especially in Europe and the United States. Many of the principles espoused by
Smith were borne out as the introduction of new technologies allowed for more efficient
production of goods and services.

In the late nineteenth century many of these individuals believed in and practiced
a philosophy that came to be called "Social Darwinism," which, in simple form, is the
idea that the principles of natural selection and survival of the fittest are applicable to
business and social policy. This type of philosophy justified cutthroat, even brutal,
competitive strategies and did not allow for much concern about the impact of the
successful corporation on employees, the community, or the larger society. Thus,
although many of the great tycoons of the late nineteenth century were among the
greatest philanthropists of all time, their giving was done as individuals, not as
representatives of their companies.

In the 1960s and 1970s the civil rights movement, consumerism,

and environmentalism affected society's expectations of business. Based on the general
idea that those with great power have great responsibility, many called for the business
world to be more proactive in (1) ceasing to cause societal problems and (2) starting to
participate in solving societal problems. Many legal mandates were placed on business
related to equal employment opportunity, product safety, worker safety, and the
environment.

Operative Question: Is CSR boon or bane to the society?

Boon. These companies are those who provide the needs of the society. Even if
theyre main purpose is to gain profit, theyre still able to give what the society wants. In
addition to that, these companies also follow rules and apply ethical conducts while
delivering these services to the society and they are the one who initiates to render
services needed by the people.