Corporate Social Responsibility

The concept of CSR Pyramid, proposed by Carroll (1983) divides business obligations into four levels, explaining requirements of obligations in each level, as well as their importance. Economic responsibility is considered to be core responsibility of the business and it relates to profit maximisation. Economic responsibility is mainly self-regulatory in a way that if a business entity neglects or fails to meet its economic responsibilities it is just a matter of time before the business becomes a history. Legal responsibility of a firm relates to adhering to rules and regulations of the respective government. Meeting legal responsibilities is critically important for businesses and the case study of Enron can be mentioned to explain the potential negative consequences of abusing legal responsibilities. Ethical responsibilities for a business entity relate to certain responsibilities that go beyond basic economic and legal requirements for a business entity. Ethical responsibilities are usually expected by organizational stakeholders, but usually there are no government laws and regulations to enforce these responsibilities. However, each case is different and there might be instances where governments may interfere in relation to ethical issues. Philanthropic responsibility is understandably placed at the highest level of responsibilities because it is not generally expected and mainly initiated for advertisement and public relations purposes. Philanthropic acts engaged by businesses may include sizable donations to various causes or local communities, or contributing to society in other ways. Although Carroll’s CSR Pyramid is widely considered to be a substantial contribution to the development of the field of CSR, it has been criticized by various authors. Hockerts et al. (2008) criticise this framework by arguing that there is no need to represent CSR as a hierarchy. In other words, according to Hockerts et al. (2008), unlike Maslow’s Hierarchy of Needs, in Carroll’s CSR Pyramid there are weak or…

Generally, views on CSR are divided into two categories: narrow and broad (Crane and Matten, 2007). Narrow view considers the only objective for business entities to consist of profit maximisation. On the contrary, according to the supporters of the broad view to CSR apart from their primary objective of maximising profits businesses are also responsible towards the society and community in which they operate in terms of addressing possible negative implications of their business practices.   Urip (2010) convincingly argues that the numbers of supporters of narrow view to CSR have sharply declined in recent years due to the increasing level of focus CSR related issues are attracting from various organisational stakeholders.  Amao (2011) further expands this point and associates the penalties for neglecting CSR aspect of business practice with damage to brand image and customer goodwill, and consequent threat to company’s long-term growth.   References Amao, O. (2011) “Corporate Social Responsibility, Human Rights and the Law: Multinational Corporations in Developing Countries” Taylor & Francis Crane, A & Matten, D, 2007, “Business Ethics” second edition, Oxford University Press, Oxford, UK Urip, S. (2010) “CSR Strategies: Corporate Social Responsibility for a Competitive Edge in Emerging Markets” John Wiley & Sons

According to Blowfield and Murray (2008, p.21), as taken from Carroll (1979), company CSR activities can be classified into the following four groups: Economic responsibility. The responsibility of private entities of offering products and services to the marketplace according to the needs of society in order to make a profit. Legal responsibility. Companies have to operate within the boundaries of law in order to achieve their aims and objectives. Ethical responsibility. Ethical responsibilities of businesses include the types of responsibilities that are important, but at the same time they are not covered by law e.g. fair-trade.  Discretionary responsibilities. Company responsibilities in this form, like philanthropy initiatives are not necessarily expected by societies, but they are usually welcomed by societies and create positive image for the business. This classification is also known as Carrol’s Pyramid of CSR and is best illustrated on the following figure: Source: Global Integration Business Consultants (2011, online) Alternatively, CSR initiatives are classified by Kotler and Lee (2005) into six broad categories that can are illustrated on the following table: Type of CSR activity Descriptions Cause promotions Resources spent by companies to promote a specific cause that benefits society in many levels such as eliminating poverty or fighting against child abuse Cause –related marketing A marketing campaign initiated by a business that highlights positive correlation between the amount of sales for the business and the amount of contribution to support a specific cause. Corporate Social Marketing Businesses promoting social causes such as healthy eating, caring about parents, quit smoking etc. Corporate Philanthropy This form of CSR involves businesses donating money or products of the company in substantial amounts in order to support specific causes. Community volunteering Businesses engaging their employees to work in a community sector for a specified number of hours on a voluntary basis Socially…