COLLEGE OF APPLIED BUSINESS

PRESENTATION
OF
BUSINESS ETHICS AND SOCIAL RESPONSIBILITY
Evolution of CSR, Different views, theories and models of CSR

Presenters-
Pranay Sada
Amir Shrestha
Saurav Singh Maharjan

1
EVOLUTION OF CORPORATE SOCIAL
RESPONSIBILITY
What causes for the evolution of
CSR?

Climate Change Environmental Degradation

Poverty
Pollution

Are these symptoms of

an overriding problem?
 HISTORY OF CSR
Existence of large corporation started in Great
Britain during the second half of the eighteens
century.
Society has been totally impacted by this
economic shift, driving social change, economic
development
This shift spread to the rest of Europe during the
following half centuries and impacted societies
The social change led by the growing leading
class, the bourgeoisie impacted most of the
colonies (North America, Africa and India).
 EVOLUTION IN NEPAL
1950S Primary focus on business responsibility to
society.
1960 People & ideas were integrated in
characterizing social changes.
1970 Manager uses traditional management
functions dealing with CSR.
1980 Business & social intrest come closer and firm
became responsive to their shareholders.
1990 Idea of CSR became almost nationally
approved.
2000 Became important strategic issue even in
poor country.
 Theories of CSR
The present practice of corporate social
responsibility (CSR) has been depicted and
informed by three CSR theories:
The shareholder value theory of CSR.
The stakeholder theory of CSR.
The shareholder value theory of CSR
Sets purpose of form as maximization of financial returns
for shareholders.
Milton Friedman takes shareholders approach
Shareholders as economic engine and the group it should be
liable to.
Goal- maximize profits and return portion as reward for risk
Then the shareholders can decide what initiative to take part
in.
Shareholder value also argues in favor of increased financial
transparency.
 Friedmans statements reflects 3 assumptions-
Human, social and environmental costs of
business internalized others externalized.
Self interest as prime human motivator.
Nexus of contracts with those contracts having
impact on profitability
 Criticism
sole concentration on shareholder.
does not provide a clear measure of social
issues like employment, environmental issues,
or ethical business practices.
It can also disadvantage other stakeholders
such as customers.
 The stakeholder theory of CSR
Idea that organizations are dependent upon stakeholders for
success
Stake in the organization
Serve broader societal interest beyond the economic value of
shareholders
Ascribed to R.Edward Freemanmanagers have moral
obligation to consider and balance interests of all
stakeholders
It argues that the number of stakeholder pressure groups has
developed widely and the stakeholder forces impact on
business must not be underestimated.
 Criticism
assuming that the interests of the various
stakeholders can be, at best, compromised or
balanced against each other.
 Different Views On CSR
The classical view:-
primary responsibility of business is profit maximization.
Obligation of management is to satisfy stock-holders for their
investments.

The socio-economic view:-

Represents a narrow view of social responsibility, coupled with
acceptance of potential benefits to be associated with CSR as in the
avoidance of regulation, building good customer and supplier
relationships or networking.
business continues to pursue profit maximization while also trying to
meet social demand and derive some benefits in the process.
 The modern view:-
Captures a perspective in which a business sees added value
in serving a wider range of societal needs and expectations
and perceiving net benefits to flow from socially responsible
action.
This is consistent with the stakeholder approach to CSR.

Christian View:-
Excess wealth should be given to the less fortunate, wealthy
individuals have responsibility to share their blessings with
the poor.
A successful corporation should perform its social
responsibility more by returning a fair portion of its profits
to the people in the form of social services.
 Models of
Corporate Social
Responsibility
Saurav Singh Maharjan
151
 Economic Model
Business sole duty is to fulfill the economic functions
businesses were designed to serve

The social responsibility of business managers is simply to

pursue profit within the law

Profit: an indication that business is efficiently and

successfully producing the goods and services that society
demands

Denies that business has any social responsibilities beyond

the economic and legal ends for which it was created
 Philanthropic model
Philanthropy: the desire to promote the welfare of others, expressed
especially by the generous donation of money to good causes

Contribution to social need as a matter of philanthropy

Like individuals, business is free to contribute to social causes as a

matter of philanthropy
Business should be encouraged to contribute to society in ways that go
beyond the narrow obligations of law and economics

Within the philanthropy model, there are occasions in which charity

work is done because:
It brings the firm good public relations
It provides a helpful tax deduction
It builds good-will and/or a good reputation within the community.
 Philanthropic model
From the perspective of the narrow view of CSR,
only philanthropy done for reputational reasons
and financial ends is ethically responsible

From the perspective of the philanthropic model,

philanthropy done for financial reasons is not fully
ethical and not truly an act of social responsibility
 Social-web model
Views business as a citizen of the society in which it
operates and, like all members of a society, business
must conform to the normal ethical duties and
obligations that we all face

According to philosopher Norman Bowie, beyond the

economic views duty to obey the law, business has an
equally important ethical duty to respect human rights
It is expected of every person, whether they are acting as
individuals or within corporate institutions
Bowie identified his approach as a Kantian theory of
business ethics
 Social-web model
According to Bowie, business has a social
responsibility to respect the rights of its employees,
even when not specified or required by law.
Right to safe and healthy workplaces
Right to privacy
Right to due process
According to Bowie, business has an ethical duty to
respect the rights of consumers, even when not
specified in law.
Safe products
Truthful advertising
 Integrative model:
Serve some important social goals

Non-profit organizations: Pursue social ends as the

very core of their mission
Examples: NGOs, foundations, professional organizations,
schools, colleges, and government agencies

Some for-profit organizations have social goals as a

central part of the strategic mission of the organization
Example: Example: Grameen Bank with serious
commitment to sustainability
 Integrative model:
Even advocates of the narrow economic model of
CSR agree that these social goals should be part of
every business model

Social entrepreneurs demonstrate that profit is not

incompatible with doing good, and therefore one
can do good profitably.
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