Principles of Management

Corporate Social Responsibility

Introduction
The Davis Model of Corporate Social
Responsibility
A generally accepted model of corporate social
responsibility was developed by Keith Davis.
Davis’s model is a list of five propositions that describe
why and how business should adhere to the obligation
to take action that protects and improves the welfare
of society as well as that of the organization:
 Propositions
Social responsibility arises from social power
Business shall operate as a two-way open system, with open receipt of
inputs from society and open disclosure of its operations to the public
The social costs and benefits of an activity, product, or service shall be
thoroughly calculated and considered in deciding whether to proceed
with it
The social costs related to each activity, product, or service shall be
passed on to the consumer
Business institutions, as citizens, have the responsibility to become
involved in certain social problems that are outside their normal areas
of operation
A New Skill for Managers
Discussions of the responsibilities of business and its role in
society have been motivated by the growing awareness of
unfair or discriminatory business behavior and an increasing
number of social and environmental scandals

Businesses are now expected to behave in responsible ways.

This entails:

A managerial obligation to take action that protects and

improves both the welfare of society as a whole and the
interests of the organization.
Social responsibility arises from social power

Business has a significant amount of influence on, or

power over, such critical social issues as minority
employment and environmental pollution.

Society’s legal system does not expect more of

business than it does of each individual citizen
exercising personal power.
Business shall operate as a two-way open system, with open
receipt of inputs from society and open disclosure of its
operations to the public

Business must be willing to listen to what must be

done to sustain or improve societal welfare.

Society must be willing to listen to business reports on

what it is doing to meet its social responsibilities.

There must be ongoing, honest, and open

communications between business and society’s
representatives if the overall welfare of society is to be
maintained or improved.
The social costs and benefits of an activity, product, or service
shall be thoroughly calculated and considered in deciding whether to proceed
with it

Technical feasibility and economic profitability are not

the only factors that should influence business
decision making.

Business should also consider both the long- and

short-term societal consequences of all business
activities before undertaking them.
The social costs related to each activity, product, or
service shall be passed on to the consumer
Business cannot be expected to completely finance
activities that may be socially advantageous but
economically disadvantageous.

The cost of maintaining socially desirable activities

within business should be passed on to consumers
through higher prices for the goods or services related
to these activities.
Business institutions, as citizens, have the responsibility to
become involved in certain social problems that are outside their
normal areas of operation
Business possesses the expertise to solve a social
problem with which it may not be directly associated,
it should be held responsible for helping society solve
that problem.

Because business eventually will reap an increased

profit from a generally improved society, business
should share in the responsibility of all citizenry to
generally improve society
Issues related to CSR
Employment conditions

Environmental sustainability

Consumer affairs

Social problems/wellfare

Quality of life