The debate about corporate social responsibility (CSR) began in the early 20th century, as

concerns about large corporations and their power came to the fore. Two broad principles
—charity and stewardship—have help to shape thinking about CSR.

The arguments for CSR tend to focus on the relationship between power and
responsibility, the need for good stakeholder relations, and business’ desire to forestall
government regulation. (The notion of “enlightened self-interest” also fits in here.)

Businesses need to balance economic, legal, and social responsibilities in order to achieve
long-run success. More generally, there is a often a relationship between good social and
good financial performance.

Further, firms that are seen as acting illegitimately are likely to face difficult relations
with employees, governments, communities, and consumers—which all have direct
impacts on the top and bottom lines.

One defense of the shareholder view of CSR is that shareholders take on a unique set of
risks, but other stakeholders are protected by contractual relations with organizations.
But Enron and other companies illustrate that most stakeholders take on risk—sometimes
without knowing it.

One result of increasing globalization is that there are many different voices around the
world with differing views on corporate social responsibility. What is seen as “ethical” in
one country may not be in another (like GMOs).

– Corporate Social Responsibility

– The idea that business has social obligations above and beyond
making a profit.
– Business has an obligation to constituent groups in society other
than stockholders and beyond that prescribed by law.

• What Does Social Responsibility Involve?

– Voluntary action
– Action before lawsuits or other actions that are taken to force a
firm to take action on a matter.
– An emphasis on means, not ends
– How the decision to act was reached, not the decision itself.

• Reactive Strategy
– Denying responsibility while striving to maintain the status quo by
resisting change.
• Defensive Strategy
– Resisting additional social responsibilities with legal and public relations
tactics.
Continuum of social responsibilities strategies

Strategies
• Reactive Strategy
– Denying responsibility while striving to maintain the status quo by
resisting change.
• Defensive Strategy
– Resisting additional social responsibilities with legal and public relations
tactics.
• Accommodation Strategy
– Assuming social responsibility only in response to pressure from interest
groups or the government.
• Proactive Strategy
– Taking the initiative in formulating and putting in place new programs that
serve as role models for industry.
Who benefits from CSR
• Altruism
– The unselfish devotion to the interests of others.
• Research Findings
– There is a positive correlation between industry leadership on a socially
responsible issue (pollution control) and profitability.
– Corporate social responsibility is a competitive advantage in recruiting
talented people.
• Enlightened Self-Interest
– A business ultimately helps itself by helping solve social problems.
• An Array of Benefits for the Organization
– Tax-free incentives to employees.
– Retention of talented employees.
– Help in recruiting the talented and socially conscious.
– Help in swaying public opinion.
– Improved community living standards.
– Others