CORPORATE SOCIAL RESPONSIBILITY: GLOBAL

PERSPECTIVE, COMPETITIVENESS, SOCIAL

ENTREPRENEURSHIP & INNOVATION

By:

Er. Manoj Joshi*

mj_32@gawab.com

and

Dr S. P Tiwari**

and

Vindhyalaya Joshi***

Foot note
* The author is BE, MIE (Mech), PGDFM, MBA, MIMA, Chartered Er. He has been associated with the Industry at senior position and in research for 151/2
years and currently an Assistant Professor (Strategy, Entrepreneurship & Innovation) with Sahara Arts and Management Academy, Lucknow. He is an active
Life member of Institution of Engineers (India); Lucknow Management Association, Association of Knowledge Workers Lucknow, All India Management
Association, Indian Economic Association, Society of Entrepreneurship Educators at ISB, Hyderabad.

**The author is a Professor, Head of Department of Economics & Dean Faculty of Arts with Dr. R. M. L Avadh University, Faizabad. He is an avid researcher
with specialisation on Rural Economics and life member of Indian Economic Association

***The author is retired Sr. Research Professor with the Department of Education, UP, India. He is a Philosopher with interest areas like Political Science,
Economics and General Management.

Electronic copy available at: http://ssrn.com/abstract=999348

Abstract

"Profit making & Social Responsibility" is an oxymoron and can be strongly debated.
Profit making is the essential reason for an enterprise to prolong and grow. Social
responsibility is the fundamental duty of the "state" that must focus upon the
upbringing of its stake holders with social justice. This includes proactive
participation by the governance in elevating "quality in work life" of its citizens. Thus
attempting the balance of wealth and social justice/empowerment, shall invite a
synergy between the Public-Private partnership in enhancing the competitive
existence & growth of national economy.

"State is a necessary evil". The primordial responsibility is governance and to bring

order from disorder. The concept of "city-states" like Greece existed, which portrayed
high level of self governance and self sustenance. Besides this, for a nation to be
healthy and prosperous, the state must not hinder "Liberty". The world has witnessed
social unrest as a cause of economic disparity, inequality, social injustice etc.
resulting into world wide protests, cross border and internal disputes, civil wars,
battles, regional and the world wars.

Hence, there must be continuous efforts to reduce this economic disparity amongst the
country men but the irony being that the State is unable to execute its primary duties
in the form of social responsibilities, either because (i) it is not able to mobilise funds,
(ii) funds available are not adequate against the requirement, (iii) it is not able to
utilise the funds or/and (iv) there is lack of governance and will power.

As a result, the entrepreneurs in the micro community or corporate, emerge as

"entrepreneur cartel(s)" to carry out this important assignment. They participate as
"social entrepreneurs" and emerge as drivers to engine of economic and social growth.
Strategic innovation, hence, emerges as an imperative tool towards a globally
competitive existence and performance.

Electronic copy available at: http://ssrn.com/abstract=999348

Background
The world has witnessed over a period of time, short or extended, provocations
leading to battles and wars that were as a result of economic disparity, social injustice
and inequality. Heart throbbing social issues have rocked this globe emanating within
the developed or the developing nations. Apartheid, Racism, Ku Klux Klan (KKK)
and many more innumerable organisations effaced out as a result of strong social
disparity. The Berlin wall unfortunately created a symbol of distinct identity and
economic disproportion, thereby forcing the separated hearts to bring it down.
Formation of USSR based on strong social reforms could not carry out its stability
that later witnessed an internal resistance leading to disintegration and reforming as
Common wealth of Independent States. Criminal Entrepreneurship off late has
emerged out in most parts of the globe that has opened new doors for amassing wealth
through despicable means. Cross border terrorism, battles and World wars that
became inevitable have been a consequence of an extended version of despondency.
Research reveals that most of these organisations have or are being lead by so called
social unfit individuals, nurturing criminal minds for fighting injustice caused to them
or to their society at large. Adolf Hitler was one of them, where in his biography,
Mein Kamph, he claimed extreme ends of poverty influencing and corrupting the
mind surreptitiously, giving birth to a vengeance personality.

The fact is that most of them effaced as an output of a beleaguered journey that
reluctantly compelled these so called individual(s) and societies for their survival. We
must therefore combine our efforts and generate enough will to curb this menace by
reducing economic and social disparity before it becomes catastrophic.

Then it was the turn of the so called industrialisation, witnessing critical issues like
dumping, child labour, exploitation of women, labour in mines, industrial hazards,
pollution of all kinds, chemical waste, de-forestation of hills, rain forest etc that
opened up new dimensions of creating caters of social and environmental misbalance.
Mountains have become dumping grounds of human waste, rivers have started
eroding faster, and global warming has fuelled, disturbing climatic conditions. Cities
are emerging with sensitive problems that any layman could witness in daily life.
Besides every high rise building one can sight a cluster of children of a lesser god, a

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common term used for those near or below the poverty line. Makeshift houses are
thronging besides the canals, railway tracks, in open and worst a living out of the left
over. This is just a trailer of a reality, which bites that could disturb and visibly shake
any human being with a rational understanding towards human life. Why I said so
human, because they have a better right than animals, else must not exist. Can we
arrest if not completely, partially, with the effort of distributing wealth directly or by
innovative means that could reduce the gap between the high ended means of human
living to the very basic want for survival. The wealthy must rise from competitive
bickering and engage in their effort towards social responsibility, else their naked
wealth and prodigal living styles is waiting to be challenged by those fighting death.
After all they have nothing to loose!

Hence, it is imperative to awaken our perspective on understanding that are we in the

process of discussing how to create and maximise wealth for those who are already
wealthy or we are here to debate for elevating the quality of life for those who are
needy (I mean those surrounding us)?

Profit making & social responsibility, an oxymoron is strongly debatable. Profit

making is the fundamental dimension for an enterprise to sustain, perform and grow,
which means wealth maximisation and mobilisation; whereas social responsibility is
the fundamental accountability of the state that focuses on social enlistment in its
totality.

According to Bluntschli, the German scholar, "the state is a combination or

association of men in the form of government and governed on a definite territory,
united together into a moral organised masculine personality or, more shortly, the
state is the politically organised national person of a definite country" (Gilchrist R. N,
1950 ). Noted philosopher, Greene has stated that will, not force is the basis of a state.
Plato in his famous contribution the Republic touched upon the good men and the
good life, which he connoted life in a good state, and with the means for knowing
what these are and for attaining them (Sabine, G, H, 1957)

Researchers continuously debate, "State is the necessary evil" and "State is the
obstruction of obstructions". The primordial responsibility of the state is to bring

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order from disorder. While Anarchy, Monarchy, Autocratic and Democratic are the
forms of the State, Democracy propounds upon "by the people, for the people and the
people". It is important for balancing the power i.e. Executive, Judiciary and
Legislative. The concept of "city-states" like Greece existed that portrayed high level
of self governance and self sustenance. Besides this for a nation to be healthy and
prosperous the state must not hinder "Liberty" in its entirety, i.e. natural liberty, civil
liberty, political liberty and national liberty (Laski, H, 1954). Value (marketable
value) is the corner- stone of the economic structure (Marx, Karl, 1847). Hence, it
becomes additionally crucial for the State to deliver social responsibility, for
monitoring the growth as well as balance. But the irony is that the State is unable to
execute its primary duties in the form of social responsibilities either because of the
following reasons:

1. Not able to mobilise funds

2. Funds available are not adequate against the requirement
3. Not able to utilise the funds
4. Lack of governance and will power

Hence, the entrepreneurs in the micro community emerge as "Entrepreneur Cartels" to

carry out this important mission or an act of being largesse. After all, there must be a
driving force to keep the consumers brand loyal and alive. It is the economic
disparity, inequality of wealth, income and property disparity that grudgingly compels
the corporate to participate as "drivers to engine of economic and social growth", with
all means and might.

What is Corporate Social Responsibility (CSR)?

The Sanskrit saying, "Atithi Devo Bhav", means – "the one who comes to you for
being served, should be taken to be as God", is considered to be the highest order of
responsibility, be it to individuals or to the society. Thus, the phrase social
responsibility has its roots in Indian context. This phrase has long been in use with
growth of industries and corporate. It not only reflects the "passage of time" in its
impact and transformation, but its meaning and understanding has been affected by

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the growth of society, nations and changes in their appreciation of cultural heritage
and background (Gupta D et al, 2006 ).

CSR is also concerned with treating the stakeholders of the firm ethically or in a
responsible manner. Ethically or responsible means, treating stakeholders in a manner
deemed acceptable in civilised societies. Stakeholders exist both within a firm and
outside. The wider aim of social responsibility is to create higher and higher standards
of living, while preserving the profitability of the corporation, for peoples both within
and outside the corporation (Hopkins, M, 2006). Some companies use the terms
“corporate citizenship”, some “the ethical corporation”, while others use “good
corporate governance” or “corporate responsibility”

CSR, the driving force

Companies engaged in making profits also contribute to some, although obviously not
all, aspects of social development. Every company should not be expected to be
involved in every aspect of social development. There will be increased costs to
implement CSR, but the benefits are likely to far outweigh the costs. Global concerns
have been given an additional edge by the awful events of 11 September. The collapse
of Enron and WorldCom, and their auditor Arthur Andersen, due to uncertain
accounting practices, has raised the level of scrutiny of large companies, as well as
their auditors (Hopkins, M, 2004).

Enterprises operate around seven areas: 1. shareholders and potential investors; 2.

managers; 3. employees; 4. customers; 5. business partners and contractors or
suppliers; 6. the natural environment; 7. the communities, within which they operate,
including national governments. Over $US1 trillion in assets are under management
in the United States in socially and environmentally responsible portfolios. In the
United Kingdom, pension fund trustees are required to incorporate their policy on
Socially Responsible Investment (SRI) in their statement of investment principles
(Hopkins, M, 2006).

The Global Reporting Initiative (GRI) is currently the industry leader in providing a
set of voluntary principles for companies in the area of CSR. It was established in

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1997 with a mission to elevate sustainability reporting. CSR is a concept whereby
companies incorporate social and environmental concerns in their business operations
while interacting with their stakeholders on a charitable foundation.

Incorporating CSR in the main agenda, the enterprises would be able to address issues
like excessive exploitation of labour, bribery and corruption. There would be certain
level playing field creating a competitive environment for the firms to engage in a
healthy battle for their profitable existence, as well as their duties towards their
overall surroundings. This would further deter the rogue companies for engaging
themselves in the business battle through nefarious means. Ultimately, the people and
their society would emerge out victorious with distributed wealth and congenial
living.

In the longer term, more affluent customers and enhanced wide-reaching income
distribution is perceptibly excellent for business and socially good environment. The
curiosity is should business be directly involved in these issues, or simply pays taxes
and rely on governments and public organisations to use them taxes astutely?

For enterprises or so called corporate(s), reputation is built around trust, reliability,

quality, transparency, integrity, dependability and interrelationships. Investment in
people as asset is the most important criterion for its useful existence. The firm(s)
must retain quality employees too and CSR becomes as a visible tool. Innovation &
creativity becomes a vital tool for the strategy. CSR aids in complying with
governments, communities and other stakeholders in enhancing a company's
reputation.

Good corporate citizenship can provide business benefits in eight areas (Hopkins, M,
2006) that are reputation management; risk profile and risk management; employee
recruitment, motivation and retention; investor relations and access to capital;
learning and innovation; competitiveness and market positioning; operational
efficiency and license to operate. Thus the issue of corporate sustainability has
become an important debatable topic amongst the erudite.

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United Nations Environment Programme (UNEP) focuses on ten measures for
business performance that are: (1) human and intellectual capital, (2) customer
attraction, (3) brand value and reputation, (4) risk profile, (5) licence to operate, (6)
operational efficiency, (7) shareholder value, (8) access to capital, (9) revenue, and
(10) innovation. These are also linked to: (a) ethics, principles and values; (b) triple
bottom line commitment, (c) environmental process focus, (d) accountability and
transparency, (e) focus on environmental product, (f) socio-economic development;
(g) workplace conditions, (h) engaging business partners, (i) human rights, and (j)
engaging non-business partners.

CSR as a need

Presently enterprises have little or no choice left for speedily engaging themselves in
CSR activities that must be reflected in their social report. These are audited and must
conform to industrial norms, if the firm wishes to comply and compete globally. Thus
the effort will lead in protecting and enhancing a company's reputation. This will
additionally establish the management's obligation to resonate ethical behaviour at the
same time shall raise the stakeholder confidence.

However the firm engaging in CSR but restrain it self intelligently and bring out a
rational balance between its profitability, an essential perquisite to its survival and its
endeavour to social responsiveness. Thus it would be advisable for them to create the
chare holders value in an ethically yet socially conscientious way. They must adhere
to the norms laid by International Labour Organisation (ILO) that include issues like
the right to organise and bargain collectively, minimum age for employing children,
embargo on forced labour and a assurance on acceptable working conditions
(maximum number of hours per week, weekly rest period, minimum wage, minimum
workplace safety and health standards and the abolition of prejudice in employment)

The Outcomes and our Query

CSR makes a difference as it connects the stakeholders and the human resource
policies. It also takes into account the impact it makes to those inside and outside the
enterprise. Public awareness has strongly increased as a result of many industrial

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disasters, unethical and maligned business practices etc. that either resulted in human
and environmental catastrophe or caused irrecoverable loss of property and wealth.
There is eventually no escape. All concerned are answerable in the court of law and
when inevitable at times face the irrepressible dangerous consequences from the
affected.

We must be able to address certain issues like who are the key stakeholders of a firm?
Does the firm engaged in business and CSR adapt to standards as set by the governing
bodies? Does the core culture reflect its positive attitude towards addressing issues
concerning labour, human rights and environmental concerns? To what extent do
ethics, principles and value govern the business? Will sustainability and social
accountability remain parallel in the top agenda? Does CSR really address the
branding and reputation of the enterprise?

The issues are more baffling but cannot be ignored. There might be unique responses
if not complete answers to the curiosity, yet they remain as an important guiding force
for the overall societal subsistence of the profitable enterprise. Hence, the managers
must evolve some formulae with respect to their industry, firm type, economic and
social environment, legal presence, mandatory systems etc. which ever is a nexus to
their profitable-socially responsive existence.

Competitiveness and CSR

Thus we need to understand what the relationship between competitiveness and CSR
is and what is the new meaning of competitiveness in the light of CSR?

Zadek and his colleagues state “some of the measures demanded of companies in the
name of corporate responsibility are incompatible with current business models and
markets. Pharmaceutical companies cannot alone provide affordable drugs to the
poor, and the footwear companies cannot just decide to pay workers in Mexico or
Vietnam a wage comparable to that earned by workers in London or New York
(Zadek, S et al, 2003).

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Opportunistic CSR is always counter-productive (Zsolnai, L, 2006). The Green Paper
published in 2001 defines CSR as “a concept whereby companies integrate social and
environmental concerns in their business operations and in their interaction with their
stakeholders on a voluntary basis.”

Competitive Prowess

It is the ethical conduct by heart that shall remain as a driving force that will evince
gains to any enterprise. The pressure will be on firms to fit into the ecological, social
and cultural position within their functioning. Typically speaking, many global firms
have strategically positioned themselves by producing or engaging in activities that
have virtually few in the competition, thus enabling them to be market leaders in their
expertise area. Either they produce products that are environmentally safe, recyclable,
or engage in ethical practices that brings in harmony around their existence. I
presume, each company can find a unique method to develop an invincible shield that
embraces them to firmly hold their geographic presence and markets simultaneously
and at the same time be profitable and effable. Social responsiveness shall elevate
their status connected with all stake holders and emanate as a bugle of leadership.
Hence, these enterprises should adhere to the core values and remain committed
towards creating a congenial socio-economic and healthy environment for mutual
trust, interdependency, existence and profitability, else face the aftermath resulting
from its disproportionateness.

Hence, an important element termed “Social Entrepreneurship” emerges as a key

initiative by individuals or group(s) already engaged in some sort of business.

Social Entrepreneurship

Social Entrepreneurs endeavour to "create social" value through innovative,

entrepreneurial business models. The potential market for these entrepreneurs is huge
because of the wide range of social needs that remain unsatisfied by existing markets
and institutions. Social entrepreneurs often create tremendous value when they cater
to very basic humanitarian needs; for example, by providing medicines or food, which

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can be a matter of life or death for those who receive them. However, the challenges
these entrepreneurs face are severe. Their “customers” may be willing, but often
unable, to pay even a small portion of the cost of the products and services provided.
Many social entrepreneurs operate in developing countries that have no structures or
resources that would enable and support traditional entrepreneurship (Seelos et al,
2004).

As a consequence these social entrepreneurs must create fresh business models and
organisational structures, which connect profitable existence to social value. Social
entrepreneurship (SE) may provide some enthralling new insights and supplement
designs for more socially suitable and sustainable business strategies. They discover
new and competent ways to create products, services or structures, thus enabling them
to cater to social needs to accomplish sustainable development. Entrepreneurship is
consequence of an opportunity recognition and orientation, while accounting the
characteristics of the individuals involved who are highly motivated. Conventionally,
most people would connect entrepreneurship with the quest of a business opportunity
in order to make a living and in the case of SE this business opportunity is a social
need that cannot be fulfilled by either markets or social systems. Entrepreneurs are
determined to do no matter what it is in their influence to do to accomplish their
goals. Their very nature of being flexible, creative and inventiveness produce
tremendous performance in exercising their idea into outcome.

Social Entrepreneurs distinguish themselves from other individuals by the very nature
of their concerns for serving for a social cause. They possess “entrepreneurial quality”
and at the same time have respect for their surrounding. At times social entrepreneurs
do not even know of their own presence, until they are recognised by people or
organisations.

Major global issues that attract social responsibility are eradication of poverty and
hunger, universal primary education, promoting equality and empower women,
reducing child mortality, child and bonded/forced labour, health, combating
HIV/AIDS/Malaria and other critical diseases, ensuring environmental sustainability
and green presence and Developing a global partnership for interdependent
development.

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Areas where enterprises around the globe are actively engaged in CSR initiatives
additionally are:

1. Water conservation
2. Revival of traditional arts and crafts
3. Culture and heritage
4. Environmental protection
5. Greening the Environment
6. Transforming, managing wastes and garbage handling
7. Good health for all
8. Providing means for better and respective livelihood
9. Rural welfare
10. Primary and adult education
11. Disaster management and relief
12. Sports

Hence to carry forward this mammoth task, the Enterprises will have to evolve an
innovative process or system that would perhaps provide it an edge over its
competition. It has to be evolved and cannot be replicated. Thus it is necessary to
research why some enterprises are able to create more value than others! How do
some sectors create more wealth than others? Why confident nations do better than
others and what is the underlying cause for such successes in creation of wealth?
(Joshi, M et al 2007)

"Strategic Innovation" is the answer. It is termed as strategic because such innovations

have everlasting impact on the survival of the enterprise. "Innovativeness" is thus an
indescribable asset that drives such new combinations. Corporate Social
Responsibility with an innovative approach as its "lethal weapon" will create an
everlasting brand for the enterprise's presence and overall growth

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Gupta, D, K; Saxena K, (April 2006), "Corporate Social Responsibility in Indian

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Hopkins, Michael, (May 2004), "Corporate Social Responsibility: an issue paper",

Policy Integration department World commission on the Social Dimension of
Globalisation, ILO, Geneva", Working paper 27

Joshi, M; Joshi, N and Joshi, V, (March 9, 2007), "Business War: Competitive

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Laski, Harold, J, (1954), “Liberty the modern State”, George Allen & Unwin ltd,
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