Jagjeet Kaur Dhawan
Business Ethics and Corporate Social Responsibility
Chapter 2: Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
•The basic CSR issue can be framed in terms of two key questions: Does business have
a social responsibility? If so, how much and what kinds?
The corporate social responsibility concept:
- Corporate social responsibility is seriously the impact of the company’s actions on
- The idea of social responsibility.. requires the individual to consider his [or her] acts in
terms of a whole social system, and holds him [or her] responsible for the effects of his
[or her] acts anywhere in that system.
Corporate Citizenship Concepts:
Corporate social responsibility – emphasizes obligation, accountability
Corporate social responsiveness- emphasizes action, activity
Corporate social performance- emphasizes outcomes, results
- The growth of these ideas has brought about a society more satisfied with business.
Historical perspective on CSR:
- Concept of business responsibility that prevailed in North America during most of our
history was fashioned after the traditional, or classical, economic model.
Adam Smith’s concept of the “invisible hand” was its major point of departure. The classical view
held that a society could best determine its needs and wants through the marketplace.
Thus, the “invisible hand” of the market transforms self-interest into societal interest.
Historical perspective includes:
- Economic model: the marketplace protected societal interest
- Legal model: laws protected societal interests
Modification of the economic model:
Modification of the classical economic model was seen in practice at least three areas:
a. Philanthropy – contributions to charity and other worthy causes- even during periods
characterized by the traditional economic view.
b. Community obligation – Voluntary community obligations to improve, beautify, and uplift
c. Paternalism – during the latter part of the 19th century and even into the 20th, paternalism
appeared in many forms. One of the most visible examples was the company town.
- The motivation was to keep government at arm’s length.
- From the 1950s to the present, the concept of CSR has gained considerable acceptance
and additional components.
Corporate social responsibility: evolving viewpoints:
Bauer definition of social responsibility: CSR considers the impact of the company’s
actions on society (Bauer) “Corporate social responsibility is seriously considering the
impact of the company’s actions on society.”
- Bauer’s definition has ambiguities.
Davis and Blomstrom defined corporate social responsibility as follows:
“ CSR requires decision makers to take action to protect and improve the welfare of
society as well as their own interests”.
- This definition is somewhat more pointed. It suggests two active aspects of social
responsibility – protecting and improving.
Joseph McGuire defined is quite general. McGuire places social responsibilities in
context vis-à-vis economic and legal objectives.
McGuire asserts: “CSR mandates that the corporation has not only economic and legal
obligations, but also social responsibilities.”
Epstein’s relates CSR to business management’s growing concern with stakeholders
and ethics. He asserts:
“CSR relates primarily to achieving outcomes from organizational decisions, which have
beneficial rather than adverse effects upon corporate stakeholders. The normative
correctness of the products of corporate action have been the main focus of CSR
Epstein’s definition is helpful because it concentrates on the outcomes, products, or
results of corporate actions for stakeholders, which are only implicit in the other
Carroll’s Four-Part Definition of CSR:
Carroll’s definition helps us to understand the component parts that make up CSR ->
CSR includes economic, legal, ethical, and discretionary (philanthropic) expectations that
society has of organizations at a given point in time.
Carroll’s four part definition attempts to place economic and legal expectations of business in
context by relating them to more socially oriented concerns.
- It may seem odd to call an economic responsibility a social responsibility, but in effect,
that is what it is.
- Our social system calls for business to be an economic institution. That is, institution
whose orientation is to produce goods and services that society wants to sell them at fair
prices – prices that society thinks represents the true values of good and services
delivered and that provide business with profits adequate to ensure its perpetuation and
growth and to reward its investors.
- It is also had laid down laws – under which business is expected to operate.
- Legal responsibilities reflect society’s view of “codified ethics” in the sense that they
embody basic notions of fair practices as established by our lawmakers.