Ethics and corporate social responsibilities

Jayashree Sadri and Sorab Sadri

Ethics and Corporate Social

Responsibilities.

PROFESSOR JAYASHREE SADRI

DR SORAB SADRI

Logic Of Ethical Organizations Ethical Organizations need to be value

centered. Value centered organizations have a positive

and mutually beneficial link with civil society. This link is primarily fulfilled through CSR

initiatives.

What Is C S R ?

Corporate Social Responsibility is nothing but what an organization does to influence the society in which it exists. It could take the form of community relations, volunteer assistance programmes, special scholarships, preservation of cultural heritage and beautification of the city.

Mutual Expectations

Any business needs a stable social environment that provides a predictable climate for investment and trade. At the same time, society also has expectations from the business. In this manner, businesses and society are interdependent and businesses must take full account of societal expectations.

Organization and Society

It is a well accepted fact that an organization exists within a given society.

Its activities influence the social environment just as the social environment influences its activities.

So CSR is increasingly being viewed, not only as making good business sense, but also contributing to long term prosperity of the companies and ultimately its survival.

A Boundary Less Universe

The span of this social environment has expanded along with the breaking down of international trade barriers, the globalization of markets and the evolution of the concept of a global village. The organization's social responsibility has similarly expanded to engulf peoples and regions outside an organization's immediate business domain.

C S R As A Societal Need

As corporate houses grow in strength in a rapidly globalising environment, their contribution to the development of society becomes increasingly pertinent.

The emergence of CSR has been critical for millions of people left below the poverty line. Innovative partnerships between businesses, governments and civil societies hold the potential to touch the lives of millions, leading to enhanced quality of living through better access to essential services.

CSR As A Brand Builder

The challenge for successful company in the Indian as well as the Global Economy is to build and maintain efficient, effective and fair relationships with its global and local stake holders.

An increased brand value, greater access to finance, stronger risk management and corporate governance, healthier and safer work place, motivated people, customer loyalty and enhanced confidence and trust are the benefits of excellent CSR.

Quid Pro Quo?

Along with rights and privileges come duties and obligations. The corporations enjoy certain rights and privileges by way of government policy ,legislation, custom and practice. The corporations fulfill their obligations and duties by undertaking their social responsibilities.

Changing Perceptions In a manner of speaking, this could also be the

corporations way of answering critics of big business who saw nothing but faults in them. (e.g Communists)

As society evolved, attitudes towards big business have changed. In India we have embarked upon a change in attitude towards business since liberalization, privatization and globalization as well as during the unfolding of the post WTO scenario.

Consumer Choice Options

With this change came a change in the nature of markets and competition. Market emphasis moved from the consumer sector (ration cards and queues for everything) to the producer sector (quality, price and value addition). The choices for the consumer were hitherto limited but now they have been increased since there are more players in the arena of business.

After all, economic development brings in its wake an increase in the number of available and affordable choices.

The Coexistence Need

The basic question that arises when we speak of corporate social responsibility is “How should we live in relation to one another?

Society and corporations must co-exist and each must contribute to the well being of the other while seeking that other members of society do not suffer. It should be a win-win situation where the quality of life all around improves.

Quality of Life

The essence of Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of not only its work force but their families as well as civil society at large.

From time to time politicians and self styled moral policemen of society make statements on CSR. These are emotionally or politically motivated more often than not and seldom arise from serious study or thought.

However, there are also some accepted and definite views held by social thinkers on what social responsibility is or means to different corporations and people. We shall review the most important among these views and find a link between all of them.

ATTITUDES TOWARDS BUSINESS AND GOVERNMENT.

Andrew Carnegie and the Gospel of Wealth.

Charity Principle: Those in society who were more fortunate should assist those others who were less fortunate.

Stewardship Principle: Business and wealthy individuals

should view themselves as steward or caretakers holding their property in trust for the benefit of society as a whole.

Milton Friedman and Honest Profit.

According to Milton Friedman the purpose of business is to make profit and that is all. According to him, the only social responsibility of business is to use its energies and activities designed to increase its profits as long as it stays within the rules of the game and engages in open and free competition without deception and fraud. Business is the custodian of the investor’s interests.

Friedman’s Concept of Social Ignorance He says that corporate officials are in no position

to determine the relative urgency of social problems or the amount of organizational resources required to be committed for a problem.

Business should produce goods and services efficiently and leave the solution of social problems to concerned individuals (NGOs) and to the Government Agencies whose business is to safeguard the interests of the (tax paying) citizens .

KEITH DAVIS AND ENLIGHTENED SELF INTEREST

He propounded the Iron Law of Responsibility. In the long run those who do not use their power in a manner that society considers responsible, will tend to lose it.

This is often referred to as Enlightened Self Interest where organizations realize that it is in their own best interest to act in a way that community considers socially responsible. In USA there is a 5% club where a group of companies donate five percent of their profits to charity.

ROBERT ACKERMAN AND CORPORATE SOCIAL RESPONSIVENESS.

The issue is no longer responsibility but one of corporate responsiveness.

The question arises as to how do organizations become aware of and then respond to social issues. The theory of Corporate Social Responsiveness focuses on how companies respond to issues rather than trying to determine their ultimate social responsibility.

ARCHIE CARROLL AND SOCIAL PERFORMANCE

He combines social responsibility and social responsiveness to form a social action approach. This is like the sociologists who examine the causes and effects of customs and practices within social groups.

Corporate policies and decision can reflect one of these four stances :

1. Reactive 2. Defensive 3. Accommodative 4. Proactive

SOME SOCIAL WORK UNDERTAKEN BY BPCL

Infrastructure Development:

Provision for drinking water, tube wells,bore wells, construction of schools, community halls, health center, construction of sanitation block to promote hygiene, street lights, etc.

BPCL Continued

Education Support:

Provision of uniforms, notebooks, stationery, teaching material , educational aids, sweater and food supplements, educational scholarships to children from economically backward classes for pursuing their studies, vocational guidance for higher secondary children through experienced psychologists.

B P C L Cont’d.

Health Care:

Regular health checkup for villagers by doctors, provision of free medicine for minor ailments, guidance on family welfare and general health care, free medical dispensaries, cataract surgery.

BPCL Cont’d.

Skill enhancement

Adult education, modern farming practices, distribution of fruits saplings, cattle camps, training on income generation vocations, helping women promote awareness on social issues, organizing regular lectures for women on family life and education.

(Source : Economic Times)

Conclusion

The basis of social responsibility lies in values and beliefs of the organization, that in turn form the backbone of ethics and so it is not wise to separate the two.

Indeed a corporation’s social role is based on and flows from its Business Ethics.

How this assists in promoting the corporate business interest is another aspect of study.

We shall consider motivations for CSR later on.

THANK YOU

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