2007-2008

Under Supervision of: Submitted by

Dr. Mehtab Kathawala
Shweta Shrimali

PACIFIC INSTITUTE OF MANAGEMENT

Pacific Hills, Airport Road, Udaipur
Ph. 0294-2490604-2491440 #Fax : 0294-2491339
Presumptive Analysis of the issue
Corporate Social Responsibility or CSR is gaining
prominence and organizations are using CSR strategically to create for
themselves an image of “socially responsible organizations” in the
minds of their stakeholders. Talk to people in the senior management and
they will tell you how deeply committed they are to some or the other
social cause. The program of social benefits runs across organizations in
different sectors and each is promoting a cause that aligns with the bigger
picture of inclusive growth. And believe it or not, no body is talking
about charity! Charity is passe. CSR today is more about involvement
with the community and social cause and not just a photographic
opportunity for signing up a cheque towards a charitable organization.
Batstone suggests that integrity and profitability are at the forefront of
CSR . He also suggest , ”there are 8 principles of creating and preserving
integrity and profitability ” they are:
1. Leadership and Governance: The directors and executives of a
company will align their personal interest with the fate of stakeholders
and act in a responsible way to ensure the viability of enterprise.
2. Transparency and Integrity: A company’s business operation will
be transparent to shareholders, employees, and the public and its
executives will stand by the integrity of their decisions.
3. Community: A company will think of itself as part of community as
well as a market.
4.Customer care: A company will represents its products honestly to
customers and honor their dignity up to and beyond a transaction.
 5. Valuing the worker :The worker will be treated as a valuable team
member , not just a hired hand.

Source: www.icfaiuniversitypress.org Effective Executive Sept. 2007 special issue

corporate social responsibility p.g. (11-12)

Source: www.icfaiuniversitypress.org Effective Executive Sept. 2007 special issue

corporate social responsibility p.g. (11-12)
 Introduction

It is increasingly being acknowledged that the short-term

focus of investment community may curb the development opportunities
of enterprises in the long term. It is argued that the exclusive
concentration on the bottom lion has caused some businesses to
disconnect from their environments (Korner, 2005). Corporate social
responsibility (CSR) has emerged as the human face of business
activities. CSR involves changing notions of human welfare and
emphasizing a concern about the social dimensions of business activity
that have a direct bearing on quality of life in the society. the following
paper therefore provides a way for business to concern itself with social
dimensions and pay some attention it its social impacts. The paper
reinstates that CSR stands for a mindset of constantly seeking for
solutions that take all stakeholders’ perception into account leading to
more sustainable solutions in an economie, environmental and societal
sense. By way of demonstrating the impotance of CSR for society at
large, the public policy perspections for finally the contribution to long-
term economic success of business, paper concludes with suggestions for
organizations on how to become more socially responsive:

Source: Environment Management Practices : An Indian Outlook, Editors Karunesh

Saxena, Nitesh Bhatt.
What is CSR all about?
It is argued that the concept of corporate social responsibility
develops essentially around the question of what the role of the
corporation should be. CSR, in its true sense, is hard work and must be
seen in conjunction with the basic functioning of the company. It must
radiate outwards to the society from within the core efficiencies of the
firm in order to strengthen them in a not-too-long-run. CSR, thus, self-
consciously raises the stakes for itself and doing so sets new targets and
challenges that eventually impact the industry as a whole (Yamak and
Suer, 2005). Researchers (papasolomou, 2005) opine that present
organizations are expected to practice “social responsibility” or be a good
“corporate citizen”. Therefore corporations should not only be judged on
their economic success but also on non-economic criteria.

Source: Environment Management Practices : An Indian Outlook, Editors Karunesh

Saxena, Nitesh Bhatt.
Conceptual Connotation
Corporate Social Responsibility is the continuing commitment by
business to behave ethically and contribute to economic development
while improving the quality of life of the workforce and their families as
of the local community and society at large.”
According to World Bank Group Corporate Social
Responsibility practice. “Corporate social responsibility is the
commitment of businesses to contribute to sustainable economic
development by working with employees, their families the local
community and society at large to improve their lives in ways that are
good for business and for development.”
Corporate spend heavily on marketing and branding
initiatives to promote their brand. CSR is one of the unique and cost-
effective ways to build brands. However, this type of branding does not
work in isolation.
The objectives of the CSR campaign may not be achieved even after the
CEO’s commitment to the cause and PR department’s timely release of
the message to media. CSR has to be used strategically. Having a CEO
committed to one cause and CFO to another, will not help the
organization create the desired image. Some of the points to be kept in
mind while building a CSR campaign are:
 Do not support too many causes. Your intent and ideas might be
genuine But supporting too many causes will not result in the
creation of desirable image.
 Do not change the causes you support frequently. One year you are
supporting environment and next year you abandon environment to

Source: www.icfaiuniversitypress.org Effective Executive Sept. 2007 special issue

corporate social responsibility p.g. (46-47)
 support aged people. Such adhoc CSR activities will not have a
sound impact.
 Select a cause that fits with the overall core business proposition
and which your audience can relate to very well.
 Promote the cause you select and work with organizations that
support your cause.
 Create communication messages that reach out to all the
stakeholders and not just few.

Source: www.icfaiuniversitypress.org Effective Executive Sept. 2007 special issue

corporate social responsibility p.g. (47)
Importance of CSR

CRS offers many advantages from the PR perspective

 Help in building positive corporate image – as a socially responsible

organization and can help can help in achieving different goals of

the organization : the high involvement of the company in CSR
develop strong commitment towards solutions of problems in the
local community.
 Improved employee involvement, thus contributing to improved

employee loyalty . The effective executive especially in the global

arena today must consider the construct of the CSR on a daily
basis. However, before one examines this, sometimes every elusive
construct, one must set out to operationally define social
responsibility .
Help in attracting right talent
Regular appearance in media (of course that would depend upon what
the company does and what it is does differently ) enhance brand
recall
According to Prof Kesav Vithal Nori, VP, TCS Hyderabad, at an
individual level, these initiatives help in leadership and character
building among employees and at the company level. Social
recognition, Many feel that such activities help in creating for the
organization.

Source: www.icfaiuniversitypress.org Effective Executive Sept. 2007 special issue

corporate social responsibility p.g. (48)
 Dimensional Magnitude

A CSR Pyramid For Developing Countries

Having considered the various drivers for CSR in developing
countries, the question is: Are current Western conceptions and models of
CSR in developing countries? If we consider the most popular model –
Archie Carroll’s CSR Pyramid, comprising economic, legal, ethical and
philanthropic, responsibilities- this is almost entirely based on research in
an American context. Even so, several empirical studies suggest that
culture may have an important influence on perceived CSR priorities.

Hence, IO would argue that the order of the CSR layers in

developing countries- if they are taken as an indicator of relative
emphasis assigned to various responsibilities- differ from Carroll’s
classic pyramid. Hence, in developing countries, economic
responsibilities still get the most emphasis. However, philanthropy is
given second highest priority, followed by legal and then ethical
responsibilities. Is illustrated in exhibit II. Each element will be briefly
discussed in turn.

Economic Responsibilities
It is well known that many developing countries suffer from
a shortage of FDI, as well as from high unemployment and widespread
poverty. It is no surprise, therefore, that the economic contribution of
companies in developing countries is highly prized, by governments and
communities alike. This should not be seen in negative light, but rather as
a more development – oriented approach to CSR that focuses on the
enabling environment for responsible business in developing countries
and that brings economic and equity aspects of sustainable development
to the forefront of the agenda.
Philanthropic Responsibilities
Philanthropic Responsibilities in Europe tends to be rather
more compulsory via the legal framework than discretionary acts of
successful companies or rich capitalists like in the US. In this respect,
developing countries have more in common with the American model,
although philanthropy generally gets an even higher priority as a
manifestation of CSR.
Partly, this is a result of strong indigenous traditions of
philanthropy in developing countries, as previously discussed. However,
there are several other reasons as well.
Legal responsibilities
In developing countries, legal responsibilities generally have
a lower priority than in developed countries. This does not necessarily
mean that companies flaunt the law, but it is far less of a pressure for
good conduct. This is because in many developing countries, the legal
infrastructure is poorly developed, and often lacks independence,
resources and administrative efficiency.
Many developing countries are also behind he developed
world in terms of incorporating human rights and other issues relevant to
CSR into their legislation.

Source: www.icfaiuniversitypress.org Effective Executive Sept. 2007 special issue

corporate social responsibility p.g. (61)
Prevalence
Other areas of reported CSR performance examined by
Baskin show that emerging markets lag the OECD significantly on
reporting on business ethics and equal opportunities (with the exception
of South Africa), are roughly on par for environmental reporting, and
show comparable reporting variance on women on company boards (e.g.
high in Norway and South Africa, low in Japan and Latin America);
reporting on training and occupational health and safety also varies (e.g.
high in South Africa and Western Europe, low in North America and
Asia).
Despite the limitations of using reporting as an indicator of
CSR performance and the danger of representing regions by just a few
countries ( e.g. only two of the 53 countries in Africa were included in the
sample), the Baskin study does provide some insights into the level of
CSR activity in developing countries, concluding that “there is not a vast
difference in the approach to reported corporate responsibility between
leading companies in high income OECD countries and their emerging
market peers. Nonetheless, corporate responsibility in emerging markets,
while more extensive than commonly believed, is embedded in corporate
strategies, less pervasive and less politically rooted than in most high-
income OECD countries.”
Asia is the most covered region in the writing on CSR in
developing counties. A 2005 survey of CSR reporting in Asia finds that
nearly three quarters of large companies in India present themselves as
having \CSR policies and practices versus only a quarter in Indonesia.
Falling somewhere between these two extremes are Thailand (42%),
Malaysia (32%) and the Philippines (30%). They also infer from the
research that the evolution of CSR in Asia tends to occur in three waves,
with community involvement being the most established form of CSR,
followed by successive second and third waves of socially responsible
production process and employee relations.
In another 2005 comparative survey, looking at CSR in 15
countries across Europe, North America and Asia, Richard Wellford
speculates that the low response rates from countries like Hong Kong,
Malaysia, Mexico and Thailand may in itself be an indicator of CSR
being less prevalent in developing countries. This seems to be born out by
the research findings, in which these counties fairly consistently
underperforms when compared with the developed countries across 20
aspects of CSR measured by the survey. More specially, Malaysia is
generally, the weakest in terms of CSR performance, with Thailand being
relatively stronger on external aspects (such as child labor and ethics) and
Hong Kong being generally better on internal aspects (such as non-dis-
crimination and equal opportunities.

Source: www.wikipedia.com corporate social responsibility

 Examples:
CSR Initiatives Undertaken by Dew Indian Corporate
Corporate CSR Focus and Initiatives
Infosys Infosys Foundation: through creating opportunities and
Technologies working towards a more equitable society, the Infosys
Foundation has made small, but effective strides in the
areas of healthcare, education, social rehabilitation and the
arts. Promoted by Infosys Technologies Limited, the
Foundation offers the promise of a better tomorrow,
through its projects across India.
Focus Areas: Healthcare, Social Rehabilitation, Learning
and Education, Art and culture. Source
http://www.infosys.com/infosys_foundation_index . htm
Hero Honda Hero Honda motors takes considerable pride in its
stakeholder relationships, especially in ones developed at
the grassroots. The company believes it has managed to
bring an economically and socially backward region in
Dharuhera, Haryana, into the national economic
mainstream. Some initiatives taken include :
• Setting of integrated Rural development Center on
Delhi Jaipur Highway
• Setting up of Raman Munjal Vidya Mandir-A
modern senior secondary school
• Raman Munjal Memorial Hospital
• Vocational Training Center
• Adult Literacy Programs
• Marriages of underprivileged girls
 Source: http://www.herohonda.com/co_csr.htm
ONGC ONGC takes a proactive approach towards socioeconomic
development by identifying projects at the plant level by
involving the district administration, local representatives
and recognized voluntary organizations. Priority is given
to areas around the projects with the following themes:
Education, Healthcare and Family welfare, Community
Development.
Source: http://ongcindia.com/community.asp
Hindustan HLL is very committed to social and inclusive
Lever development of the community. Some of the major
Limited projects taken by HLL include: Project Shakti; The
project which aims to empower underprivileged rural
women, targets small villages with population of less than
2000 people or less. It provides income-generating
opportunities, health and hygiene education through the
Shakti Vani program, and creating access to relevant
information through the iShakti community portal.
Yashodham: Rebuilding Lives- HLL has reconstructed a
village in the Bhachau Taluka of Gujarat’s Kachch
district. The village, which has been named Yashodhbam,
was dedicated to its 1100 residents in December 2002.
The residents belong to Nani Chirai village, which was
completely wrecked by the devastating earthquake of
January 2001.
Soruce: http://www.hll.com/citizen_lever/csrcom.asp

Nike’s tagline “just Do It” was changed to “Just Stop It by

protesters.
Source: www.icfaiuniversitypress.org Effective Executive Sept. 2007 special issue
corporate social responsibility
 In its corporate history. Nike has often been attacked by
NGOs for its sweatshops overseas. A sweatshop is a manufacturing
workplace that treats its workers inhumanely, paying low wages,
imposing harsh and unsafe working conditions, and demanding levels of
performance that are harmful to the workers.
In the 1970s most Nike shoes were made in Taiwan and
South Korea. When the workers in these countries began to organize
themselves for better wages and working conditions, Nike shifted to
Indonesia, China and also Vietnam. It is argued that Nike preferred these
countries as their protective labor laws were poorly enforced and cheap
labor was abundantly available.
Nike does not won any factories; it contracts the work to
various factory owners across the globe. Nike claims that it is in the
business of “marketing” shoes, not manufacturing them.
In 1996, Nike was severely embarrassed on the child labor
issue when a major story in the life magazine featured a photograph of a
very young Pakistani boy sewing a Nike soccer ball. In response, Nike
CEO Phillip knight, announced in a press conference that it will raise the
minimum age of the factory workers.
However, in October 200, the BBC program Panmorama
revealed that Nike has been suing a factory in Cambodia which breaks
their own strict code of conduct and anti-sweatshop rules. Nike then
made a commitment to ensure that all underage workers will be removed
from the factory and will receive their salary while they attend school till
the age of 16. While this will benefit those underage workers, it raises the
question did Nike have to wait for journalists to discover these underage
workers? What about its own monitoring programs? How many other
children are working in other Nike contract factories undiscovered?
It should also be mentioned that child labor, much worse
bonded labor, is difficult to monitor. In many areas where Nike factories
are located, poverty is so terrible that people present false age certificates
in order to get work.
In 1997, Nike was in the news when one of the company’s
own factory monitoring reports (conducted by Ernst and Young) leaked
to the New York Times. This documented serious safety issues in one of
the contract factories of Nike in Vietnam, including exposure to
dangerous levels of toxic fumes from solvents like Toluene. This was up
to 117 times the Vietnamese legal level. Exposure to Toluene causes
central nervous system depression, damage to liver, kidneys, skin, and
eye irritation. Scientific evidence also links exposure to Toluene vapors
with miscarriages.
Though Nike has since insisted on the contract factories
meeting the US Occupational safety and Health Administration’s
standards, rights groups challenge Nike for a more transparent system of
monitoring factory safety standards.
Officials at Nike admit that they have not been as vigilant as
they could have been in the past when it comes to monitoring working
conditions; but now things are changing.
While companies like Nike tried to avoid responsibility for
factory conditions by saying they were “just the buyer”, the anti-
sweatshop movement has made this excuse unacceptable and forced the
retailers to take responsibility for the workers who make their products.

Advantages
Source: www.icfaiuniversitypress.org Effective Executive Sept. 2007 special issue
corporate social responsibility
 Within the currently emerging global society, businesses
have embraced CSR not only as a value reflective of their new role in
contributing to societal goals, but also as a strategy for improving their
profits. Increasingly, businesses are seeking to maintain corporate
identity, while at the same time upholding social and environmental
standards, and confronting concerns of social elusion and community
development (Okech ,2004).
Author cites the Tylenol case as a classic example of
CSR. In the 1980s, after reports that some Tylenol bottles were laced
with cyanide, Johnson recalled 31 million bottles worth more than
$100million) to protect the public and the brand’s reputation. Today,
Tylenol remains one of the best selling brands (Cutlip et al., 1994).
Today, CSR has become the vehicle through which businesses are seen to
influence social cohesion, alongside other institution such as educational
organizations, government entities. and religious organizations (Oketch,
2004).
CSR can facilitate a better brand image too. The Body
Shop has successfully managed to launch multinational operations
profitably building a strong reputation on the basis of corporate social
responsibility. Hence, corporate identity is reflected on corporate image,
and an organization’s relationships with its target audience, are by image.
A positive image that people share about an organisation can
yield influence on the quality of the relationships. This in turn assures
that a company with a good image can more easily attract audiences that
influence the success of the organization such as: investors, partners,
employees, and customers. Research studies indicate that nine out of ten
consumers use the reputation of an organization in order to decide which
product or service they will buy from those that are similar in price and
quality (Popasolomu, 2004)
 If pursued proactively rather than reactively, CSR can also
be utilized to segment markets and position products profitably. Brand
value needs to be protected, and this is achieved more readily if company
quality policy and strategy are aligned with the values of both employees
and customers. The ever-increasing market power of global fast-food
retailers, and their high visibility through branding, has made them a
target both for government public interest campaigns and for citizens’ and
consumer lobby groups. Inevitably, CSR initiatives have become a
valuable strategy for responding to or counteracting, challenges of this
nature (Schroder et al., 2005).
CSR will work more effectively if the underlying
philosophies have been internalized through cultural learning and change,
which is not purely market focused, but also concerns itself with the
nature and attitudes of employees. By building and developing brand
goodwill, genuine CSR may also serve as an insurance policy for brand
value if things should ever go wrong (Schroder et al. 2005)
CSR provides a number of advantages to business like
lowering and limiting litigation, reduction in taxes, protecting brand
image, improving customer satisfaction and reducing absenteeism,
employee turnover and increasing the ability to retain talented employees
etc. (Sharma and Talwar, 2005). Authors suggest that a company must
establish a legacy of trust by implementing community programmes
(philanthropy, voluntarism, partnerships, in kind donations) that improve
the quality of community life and promote the company’s long-term
business strategies and goals.
Conclusions:
Source: Environment Management Practices : An Indian Outlook, Editors Karunesh
Saxena, Nitesh Bhatt.
 CSR stands for mindset of constantly seeding for solution
that take all stakeholders’ perception into account leading to more
sustainable solutions in an economic, environmental and social sense.
More and more companies are now realizing that they can no more
function or be judged solely on the basis of hteir thick bottom lines and
ful;filling their economic objectives only. A positive impact on
employees, cuystomers and community at large has assumed an equal or
greater significance in the overall success of the companies and building
their brand image. This realization ahs bade them undertake socally
responsive actions. There seems to be an underlying assumption of the
ligiutimacy of a particular economic system and its central actors; that is,
corporations are central, legitimate, and functional actors in social
relations within a capatilist economic structure (Risa L. Lieberwitz,
2005). A socially responsible business is cognizant that the well being of
its community affects the success of its operations.
It is also critical for companies to not only develop CSR
initiatives but to develop communication strageties that reaches various
stakeholders viz. shareholders, customers and employees
(www.timesfoundation.indiatimes.com) a well designed and implemented
corporate social initiative can lead to many benefits for both the business
and community. CSR is not a one directional endeavor (Oketch, 2004).
Rather, it is two dimensional link between corporations and society. As
business benefit from loyal customers, the loyal customers also benefit
from the business.

Source: Environment Management Practices : An Indian Outlook, Editors Karunesh

Saxena, Nitesh Bhatt.
Limitation

CSR is entwined in the strategic planning process of many

multinational organizations. The reasons or drive behind social
responsibility towards human and environmental responsibility whether
driven by ulterior motives, enlightened self-interest, or interests beyond
the enterprise, is subject to much debate and criticism.

Some critics argue that corporations are

fundamentally entities responsible for generating a product and/or service
to gain profits to satisfy shareholders. Milton Friedman and others argue
that there is no place for social responsibility as a business function.
These critics point to the rule of corporate law that prohibits a
corporation's directors from any activity that would reduce profits.

Other critics argue that the practice cherry-picks the good

activities a company is involved with and ignores the others, thus
'greenwashing' their image as a socially or environmentally responsible
company. Still other critics argue that it inhibits free markets or seeks to
pre-empt the role of governments in controlling the socially or
environmentally damaging effects of corporations' pursuit of self-interest.

Source: www.icfaiuniversitypress.org Effective Executive Sept. 2007 special issue

corporate social responsibility