TARLAC STATE UNIVERSITY

COLLEGE OF BUSINESS AND ACCOUNTANCY

LUCINDA CAMPUS, TARLAC CITY

MAS 4

Corporate
Social Responsibility

Submitted by
Group 4:
Jerico T. Manalo
Crislaine M. Ramos
Gilda S. Dela Cruz
Xena Mae A. Pineda
Krisha Ann Marie M. Pamintuan
Iris V. Calma
Angela R. Garcia

Submitted to:
Jasper A. Yauder, CPA
 TARLAC STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
LUCINDA CAMPUS, TARLAC CITY

CONCEPTS OF CORPORATE SOCIAL RESPONSIBILITY

Bauer claims that “corporate social responsibility means seriously considering the impact of
the company’s actions on society. Davis and Blomstrom, on the other hand, define corporate
social responsibility as the “obligation of decision makers to take actions which protect and
improve the welfare of the society as a whole along with their own interests.”

McGuire, on his part says that, “the idea of social responsibility supposes that the
corporation has not only economic and legal obligations, but also certain responsibilities to
society which extend beyond these obligations.” While Epstein maintains that corporate social
responsibility is that which “relates primarily to achieving outcomes from organizational
decisions concerning specific issues or problems which have beneficial rather than adverse
effects upon pertinent corporate stakeholders.”

Among the different definitions of social responsibility, two more definitions are given
emphasis―Professor Keith Davis of Arizona State University defines social responsibility as
“the response of the corporation to issues beyond its narrow economic, technical, and legal
requirements. It is the obligation of the corporation to evaluate the effects of its decisions on the
external social system.”

However, Peter Drucker says that “the first responsibility to society is to operate at a
profit…Business is the wealth-creating organ of society. But what is important is that
management realizes that it must consider the impact of every business policy and business
action on society.”

Yet, truthfully speaking, CSR doesn’t have a universal definition. It remained as a concept
that has developed an emerging prevalence around the globe. It is said that business is as old as
the human civilization; conversely, corporate social responsibility is an evolving term that does
not have standard definition.

PERSPECTIVES ON CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility from a Historical Perspective

1. The Ancient and Medieval Period

 Greeks and Romans treated businessmen next to slaves.

 Elite of the society condemned businessmen.

 Catholic church became the most powerful institution in Europe.

 St. Thomas Aquinas (Compensatory Justice)

2. Period of Mercantilism

• Monopolies

• Gold and silver

• Colonization

• Galleon Trade (Kalakalang Galyon)

 TARLAC STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
LUCINDA CAMPUS, TARLAC CITY

3. Industrial Revolution

• Machines were introduced

• Businessmen regarded wealth as a symbol of moral excellence

• Rejecting the concept of social responsibility

• Karl Marx & Robert Owen “Social Reformists”

4.After the period of Depression (1930s to the present)

• Businesses have started to integrate corporate social responsibility as part of their

corporate structures and processes.

Historical Phases of Corporate Social Responsibility

Phase 1: Profit Maximizing Management (1800s to early 1900s) - Management must
maximize profit.
Phase 2: Trusteeship Management (Early 1900s)- Management was considered both as an
instrument of stockholders and as a trustee for all groups who contribute to the business
enterprise.
Phase 3: Quality of Life Management (1930s)- Security of basic goods and services was no
longer a principal problem. Business is expected to contribute to the improvement of the quality
of life, which involves cultural, social, educational, political factors and economic security.

Perspectives on Corporate Social Responsibility

Classical View - Supported by Milton Friedman, one of the most effective advocates of
economic freedom and free enterprise. The primary responsibility of business is Profit
Maximization

Managerial View - Does not emphasize profit maximization and interests of stockholders.

Public View - Includes the needs and interests of the whole society in contrast with the classical
and managerial view

Christian View - Based on the teachings of Jesus Christ as taught in the Bible. Excess wealth
should be given to the less fortunate.

ASSESSMENT OF PRACTICE OF CORPORATE SOCIAL RESPONSIBILITY

 Arguments in Support of Corporate Social Responsibility

Long-run self-interest - In the long run, business enterprises will benefit from their own
investment by using their resources in reducing or eliminating social problems. A good social
and economic condition will offer an encouraging environment for businesses. Firms that assume
social responsibilities may suffer losses in the short-run but fulfilling social obligations is
beneficial for long-run survival of the firms. The short-term costs are, therefore, investments for
long-run profitability. Business organizations are powerful institutions of the society. Their
 TARLAC STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
LUCINDA CAMPUS, TARLAC CITY
acceptance by the society will be denied if they ignore social problems. To avoid self-destruction
in the long-run, business enterprises assume social responsibility.

Business resources - Businesses could use the huge resources in the improvement of societal
and environmental conditions and can be partly used for solving social problems. Some of these
business resources are manpower, funds, materials, management skills and technology

Viability of Business - As embodied in the deed of a corporation, businesses are granted powers
and privileges by the government due to their contribution to the economy and valuable service
to society. The government can also revoke the charter of a business once it fails to meet social
expectations. For this reason, businesses have to perform their social responsibilities. Non-
conformance to social norms may attract legislative restrictions. Government directly influences
the organizations through regulations that dictate what they should do and what not. Various
agencies monitor business activities. Organizations that violate regulations are levied fines and
penalties. To avoid such interventions, organizations have risen to the cause of social concerns.

Public Image - Charitable, civic and socio economic projects are some of the activities where
businesses take part. As they become active with such projects, their public image is also
enhanced. They leave to the society a very good impression of their corporate image that attracts
more competent recruits and a greater number of customers.

Profit from Social Problems - Businesses can turn problems into profits by being creative and
resourceful. An example is recycling of waste materials into other valuable goods.

 Assessment Against the Practice of Corporate Socia1 Responsibility

Profit Maximization – Corporate executives and managers are primarily responsible o investors
and stockholders. It is their duty to maximize the profit of their business, not the concerns of the
society.

Lack of Social Skills - Businessmen lack the appropriate skills in solving social concerns. Social
problems should be the concern of the government not the businessmen’s who are honed with
the disciplines involved in business. It is argued by the opponents of social responsibility that
basic function of a business enterprise is to look into economic viability of its operations. It is for
the Government to look after interests of the society.

Lack of Social Accountability -The social needs and problems should not depend on
businessmen. Businesses cannot be expected to solve social problems. This must be left to the
government.

Higher Product Cost - Businesses' active participation in social, charitable or civic projects
leads to additional expenses and wastes man hours of the company. In order to recover from such
losses, businesses increase the cost of their products that may also cause them a disadvantage
from the costs of the products of their competitors. Any social-benefit program where initial
costs exceed the benefits may not be taken up by enterprises even in the short run. Costs related
to social programs are adjusted or transfer the social costs by the business concerns in the
following ways:

(a) High prices:

The costs are passed to consumers by increasing prices of goods and services.
 TARLAC STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
LUCINDA CAMPUS, TARLAC CITY
(b) Low wages:

If managers maintain the level of prices, the social costs may be reflected in reduction of wages.

(c) Low profits:

If wages are stabilized, profits would be reduced, which will lower dividends to the shareholders.
Low profits will reduce managers’ desire to further engage in corporate social responsibility

FOUR CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility (CSR) can be described as embracing responsibility and

encouraging a positive impact through the company’s activities related to the environment,
consumers, employees, communities, and other stakeholders.

The four types of Corporate Social Responsibility are Philanthropic Responsibilities, Ethical
Responsibilities, Legal Responsibilities and Economic Responsibilities. Taking it from The
Pyramid of Social Responsibility, a four-part model developed by Archie B. Carroll and
published in the July-August 1991 issue of the Business Horizons.

FOUR CORPORATE SOCIAL RESPONSIBILITIES

1. Philanthropic Responsibilities

Business is one the most important pillar of the society. And therefore it should support and
improve the society whenever it can. If a business is making significant profits it is the business
responsibility that it should be philanthropic towards the society by donating funds or its goods
and services.

2. Ethical Responsibilities

Ethical responsibilities include the behaviour of the firm that is expected by the society but not
codified in law. The factors of ethical responsibility include that the business must be
environmentally friendly. The primary focus on ethics is to provide fair labor practices for
businesses’ employees as well as the employees of their suppliers. Fair business practices for
employees include equal pay for equal work and living wage compensation initiatives.

3. Legal Responsibilities

Legal responsibilities are not only liable to the individuals in the society but also to the businesses in
the society. As business is an entity itself, it must also follow laws and rules. Every business has a
responsibility to operate within the boundaries set by the various commissions and agencies at every
level of the government. These rules and regulations are set for maintaining balance and the greater
good of the society.

4. Economic Responsibilities

The business itself is an economic activity. Its main function is to earn profits. To earn profits
means to understand the needs and demands of consumers whether it be regarding the quality of the
product or its price. Economic responsibility focuses on practices that facilitate the long-term
growth of the business, while also meeting the standards set for ethical, environmental and
 TARLAC STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
LUCINDA CAMPUS, TARLAC CITY
philanthropic practices. By balancing economic decisions with their overall effects on society,
businesses can improve their operations while also engaging in sustainable practices.

STAKEHOLDER ANALYSIS

Stakeholder Analysis- Is the identification and evaluation of corporate stockholders.

Three Steps Process

 1St Step – Identify primary stakeholders.

 2nd Step – Identify secondary stakeholders.
 3rd Step – Estimate the effect on each stakeholder group from any particular strategic
decision.

1St Step – Identify primary stakeholders

• Those who have direct connection with the corporation.

• Those who have sufficient bargaining power to directly affect corporate activities.

• Includes customers, employees, suppliers, shareholders and creditors.

• They are important to a firm meeting its economic and legal responsibilities

• The relationship between the firm and primary stakeholders is regulated by written or
verbal agreements and laws.

2nd Step – Identify secondary stakeholders

• Those who have indirect stake in the corporation but who are also affected by corporate
activities.

• Includes nongovernmental organizations (NGO’s), activist, local communities, trade

associations, competitors and government.

• Corporation’s relationship with secondary stakeholders is usually not covered by any

written or verbal agreement.

3rd Step – Estimate the effect on each stakeholder group from any particular strategic
decision.

• The firm must seriously consider the needs and wants of its primary and secondary
stakeholders.

SUSTAINABILITY OF CORPORATE SOCIAL RESPONSIBILITY

Suggests that the long-term financial well-being of every firm is directly tied to questions of
how the firm both affects and is affected by the natural environment.

CSR initiatives undertaken by companies are frequently directed at improving the

company’s “triple-bottom-line”—a reference to three types of performance metrics: economic,
social and environmental.
 TARLAC STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
LUCINDA CAMPUS, TARLAC CITY

Dow Jones Sustainability Index

Environmental Sustainability- includes environmental reporting, eco-design and efficiency,

environmental management systems, and executive commitment to environmental issues.

Economic Sustainability- includes codes of conduct and compliance, anti-corruption policies,

corporate governance, risk and crisis management, strategic planning, quality and knowledge
management, and supply chain management.

Social Sustainability- includes corporate citizenship, philanthropy, labor practices, human

capital development, social reporting, talent attraction and retention, and stakeholder dialogue.

Business Response to Sustainability Issues:

Triple-Bottom-Line Approach

The triple bottom line (TBL) is a framework or theory that recommends that companies
commit to focus on social and environmental concerns just as they do on profits. The TBL posits
that instead of one bottom line, there should be three: profit, people, and the planet. A TBL seeks
to gauge a corporation's level of commitment to corporate social responsibility and its impact on
the environment over time.

People- refer to the various social initiatives that make up CSR strategies.

Planet- refers to a firm’s ecological impact and environmental practices.

Profit- encompasses not only the profit a firm earns for its shareholders but also the economic
impact the company has on society more generally.

WAYS AND MEANS OF PROMOTING ETHICAL BEHAVIOR WITHIN THE

ORGANIZATION IN RELATION TO THE OUTSIDE WORLD

An ethical behavior is the application of moral principles in a given situation. It means to behave
according to the moral standards set by the society which we live in. It can be identified in both
individual relationships and work relationships. It is essential for a society to function properly.

Within an organization, these are the set of values, moral principles, and standards that need to
be followed by both employers and employees in the workplace. It is the set of rules and
regulations that need to be followed by all staff of the workplace. These ethics are implemented
by employers to foster both employee-employee relationship and employee-customer
relationships.

On the other hand, ethical behaviors can also be evidenced in work relationships. Co-workers
should maintain an ethical standard between each other to ensure a healthy work environment.
This behavior is evidenced by certain values and principles maintained within the relationships,
such as integrity, transparency, honesty or fairness. These are ethical standards that should be
respected between the parties to maintain an ethical environment.
 TARLAC STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
LUCINDA CAMPUS, TARLAC CITY

Examples:

Ethical Behaviors Unethical Behaviors

 Obey The Company’s Rules & Regulation  Taking Credit for Others Hard
 Communicate Effectively Work
 Develop Professional Relationships  Verbal Harassment/Abuse
 Take Responsibility  Violence
 Professionalism/Standards  Non-Office Related Work
 Be Accountable  Sexual Harassment
 Sex for Job/Promotion
 Uphold Trust
 Late Night Out/Unpaid
 Show Initiative without being told
Overtime
 Respect Your Colleagues
 Verbal Harassment
In relation to outside world Undue Pressure

It can stimulate positive employee behaviors that lead to organizational growth, just as unethical
behavior in the workplace can inspire damaging headlines that lead to organizational demise.

Simply put, organizational stakeholders that include individuals, groups and organizations of
various types enter into a relationship with a business organization for that business to protect
their interests in a specific way. Therefore, there is a mutual expectation that stakeholders and
business organizations act in an ethical manner and in each other’s best interest.

A decision to act unethically, by the organization or a stakeholder, can strain the relationship and
damage the reputation of the organization. The increased risk of reputational damage and harm
from negative headlines is often the catalyst for organizations to promote and encourage ethical
behavior and prevent and report unethical behavior. Furthermore, where many individuals are
connected to social media with mobile technology, the risk that unethical behavior will cause
reputational damage to an organization is arguably much greater that in decades past, as behavior
is more easily recorded on video, captured in photos, shared online and propelled into headlines.

However, there are benefits of ethical behavior in the workplace beyond the avoidance of
reputational harm. An organization that is perceived to act ethically by employees can realize
positive benefits and improved business outcomes. The perception of ethical behavior can
increase employee performance, job satisfaction, organizational commitment, trust and
organizational citizenship behaviors. Organizational citizenship behaviors include altruism,
conscientiousness, civic virtue, sportsmanship and courtesy.

WAYS AND MEANS TO PROMOTE ETHICAL BEHAVIOR

Have Rules - Organizations need to have predefined rules and regulations regarding workplace
ethics. These rules and regulations should be given to new employees together with their
employment contract.

Workplace-CODE-OF-CONDUCT - Also having the rules written at strategic places at the

workplace will also help remind people about the rules. People tend to unconsciously imbibe
things they see every day.
 TARLAC STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
LUCINDA CAMPUS, TARLAC CITY
Accept Feedback/Complaint - Make it easy for employees to send feedback or complaint in
case of harassment, abuse or any other unethical activities going on in the workplace. With tools
like

Form plus, you can create an online forms to receive complaint on workplace harassment or any
other unethical behaviors

List consequences for unethical behaviors - Consequences for unethical behaviors should also
be placed alongside the rules at strategic places in the organization. That way, if anyone wants to
ignore the rules despite seeing them, the fear of getting punished will stop him or her from going
ahead.

Swift Justice/Disciplinary Action - Some Companies often cover up issues of rape, sexual
harassment, etc. when the perpetrator is a high ranking member of the organization. Things like
this should not be accommodated. Irrespective of who breaks the rule, there should be swift
disciplinary action by the organization.