Corporate Social Responsibility
- obligation of an organization to serve its own interests and those of society
- Organizational stakeholders are directly affected by the behavior of the organization and hold a stake in its performance
- Organizations have a social responsibility to serve the interest of its many stakeholders, such as: employees, customers, suppliers, owners, competitors, regulators, and interest groups.
- Leaders exert an acute influence on the organizations and its member’s behavior.
- Classical view--
- Socioeconomic view--
- QUOTE- Paul Samuelson, economist. “ A large corporation these days not only engage in social responsibility, it had damn well better try to do so.”
- Arguments against social responsibility:
-Reduced business profits
-Higher business costs
-Dilution of business purpose
-Too much social power for business
- Lack of public accountability - Arguments in favor of social responsibility:
-Adds long-run profits
-Improved public image
-Avoids more government regulation
-Businesses have resources and ethical obligation
Evaluating corporate social performance
- A social responsibility audit assesses an organization’s accomplishments and achievements in areas of social responsibility.
- Audit areas include concerns for ecology and environmental quality, truth in lending, product safety, consumer protection, and aid to education
- The criteria for evaluating corporate social responsibility are economic, legal, ethical, and discretionary.
- The audit moves step-by-step and goes into depth of social performance. An organization is meeting its economic responsibility when it earns a profit by providing goods and services desired by customers. Legal responsibility is fulfilled when an organization operates within the law and according to the requirement of various external regulations. An organization meets its ethical responsibility when its actions voluntarily conform not only to legal expectations but also to the broader values and moral expectations of society. The organizations discretionary responsibility voluntarily moves beyond basic economic, legal, and ethical expectations to provide leadership in advancing the well-being of individual’s communities, and society as a whole.
Social responsibility strategies:
- There are four corporate social responsibility strategies:
Defensive Strategy- seeks to protect the organization by doing the minimum legally required
Accommodative strategy- accepts social responsibility and tries to satisfy economic, legal, and ethical criteria
Proactive strategy- meets all the criteria of social responsibility, including discretionary performance
Social entrepreneurship
- Social entrepreneurs recognize that certain groups in their communities are encountering difficulties and they seek new ways to solve the problem
- Social entrepreneurs do these tasks for the benefit of society rather than for profit
Social entrepreneurship and business:
- Business social entrepreneurs ensure that profits generated from a specific project are used for the benefit of a specific groups
- Others advocated that for businesses to be socially responsible in a more realistic and desirable is through “strategic philanthropy,” where a business makes donations in areas that support the company’s interests and to organizations that they might have a connection with
- Caring capitalism is a term that describes companies making a difference in the community and these type of activities in which the milestone of relevant social goals relies on competitiveness in the marketplace.
- Social entrepreneurs that possessed many of the qualities of successful business entrepreneurs also had a strong commitment to help others.
- There are several steps in order to become a successful social entrepreneur:
2.Inject imaginations and vision into their approach
3.Recruit and motivate other to the cause and build essential networks
4.Secure the needed resources
5.Overcome obstacles and challenges and handle the associates risks
6.Introduce proper control systems for the venture