Corporate Social Responsibility (CSR) means different things to different people. The definitions represent three viewpoints – the sceptic view remains highly critical of CSR; the Utopian view takes stakeholders above shareholders; and the realistic view talks about grater acceptability of values and impact upon both the stakeholders and the society within which a firm operates.
Fundamentally, it is an ethical concept. ‘It involves changing notions of human welfare and emphasises a concern about the social dimension of business activity that has a direct impact on quality of life in the society.’ The basic idea of CSR is that business and society are interwoven rather than distinct entities; therefore, society has certain expectations for appropriate business behaviour and outcomes.
The word “responsibility” implies that business organisations have certain obligations towards the society in which they function to deal with social problems and contribute more than just economic services. CSR involves a balanced approach for organisations to address economic, social, and environmental issues in a way that aims to benefit people, community, and society.
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The CSR has three perspectives. From a technological perspective, CSR aims to improve ethical standards in the organisational decision-making process and should guarantee that management practices are in accordance with commonly accepted standards of behaviour.
From a political perspective, CSR describes corporate engagement with ecological and social issues that extend beyond the firm’s activities. The third perspective addresses corporations as intermediate actors bearing specific subsidiary co-responsibilities in society. This view describes non-voluntary responsibility of corporations and allows for defining corporate duties that go beyond good management practices and are more concrete than voluntary engagement.
Events around the world over the last few decades have emphasised the need for corporate entities, their stakeholders, governments and international organisations to take the issue of CSR seriously. Incidents such as the explosion at Union Carbide in Bhopal (India), the oil spillage in 1989 and 2010 in the US; a few corporate scandals like Mirror group UK 1991, BCCI UK 1991, Polly Paeck UK 1992, Enron USA 2001, World Com USA 2002, Parmalat Italy 2003, AIG and Lehman Bros USA 2007 remain fresh and indelible in our minds; and other issues such as climate change and global warming, human rights abuses, terrorism, money laundering, corporate and individual philanthropy, C02 emissions, poverty, inability to service and repay international debt, illiteracy, HIV/AIDS, the absence of clean running water and electricity, fraud, bribery and corruption affect most of the nations, if not all. The impact of these social problems will differ from country to country and some of the consequences are CSR related which require CSR related solutions.
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The field of CSR offers many opportunities and challenges. CSR is likely to provide following benefits:
i. Improvement in its shareholder value
ii. Increased customer loyalty
iii. Ability to form beneficial strategic alliances
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iv. Ability to attract motivated and committed workforce
v. Sympathetic media at critical times
vi. Ability to attract top class employees from top class universities
vii. Tax incentives given by tax authorities