THE CONCEPT OF CORPORATE

SOCIAL RESPONSIBIITY
 Again we say, the fundamental reason for
examining the activities of business from the
moral perspective is for the promotion of the
common good, protection of the individual’s
interests and the preservation of the human
society in general. Without ethics, business will
be chaotic because there wil be no understanding
and agreement about what is wrong and right in
human conduct. Ethics in any field must be
rooted in a sense of morality and justice that is
associated with human action. Social
responsibility, is a moral obligation of each
and every individual, institution, business and
organization since they all compose the society.
 In this chapter there are several definitions of corporate
social responsibility. One is from the author Bauer who
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 outcomes from
organizational decisions concerning specific issues or
problems whic have beneficial rather than adverse effects
upon pertinent corporate stakeholders. The normative
correctness of the results of corporate actions has been the
focus of corporate social responsibility.”
 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 it’s narrow economic,
technical and legal requirements. It is the obligation of the
corporation to evaluate the effects of it’s decisions on the
external social system.”
Peter Drucker, on the other hand, says that, “one
of the responsibilities of business to society is to operate at
a profit. Business is a 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. It has to consider whether the
action is likely to promote the public good, to advance the
basic beliefs of society, to contribute to it’s stability,
strenght and harmony. The ultimate responsibility of
management to itself, to our heritage, to our society and to
our way of life.”
 Corporate social responsibility, while it doesn’t
have a universal defination, is 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 a standard definition. Corporate social
responsibility means extending beyond the
business’ compliance with laws and other legal
requirements. It means fulfilling the moral
obligations of the business by involving itself with
commitments and activities that contribute to and
help improve the condition of the society, the
community and the environment.
 CORPORATE SOCIAL
RESPONSIBILITY FROM A
HISTORICAL PERSPECTIVE
 The Ancient and Medieval Period
During the ancient times, people believed that
businessmen and wealthy people should do business to the
community as part of public or social service. To make money
or to lend money is an activity greatly despised. The Greeks and
Romans treated businessmen next to slaves. Businessmen
pressured by society that even Plato, the Greek philosopher and
follower of Socrates, who taught, wrote and presented his ideas
in the form of dramatic dialogues, recommended that such
activities be probihited. Criticisms against the evil of business
came far and wide during the medieval period when the
Catholic Church became the most powerful institution in
Europe. The Catholic Church did not trust the business system
and deemed profit-motive as anti-Christian, believing that the
merchant never or seldom pleases God. It was St. Thomas
Aquinas who justified that business could exist as long as it
was used for the good of the community. St. Thomas
Aquinas was responsible for introducing the concept of
compensatory justice which maintains that prices and
wages should be fair.
 Period Of Mercantilism
The power of the Catholic Church as the most
influential institution in Europe diminished at the
onset of mercantilism, a politico-economic
philosophy. European governments actively
participated in business activities and established
monopolies. To them, the main source of power
and prestige among nations is the acquisition of
gold and silver through trade. Colonization of more
territories became rampant as these territories
were used as sources of raw materials and cheap if
not free labor. The galleon trade or kalakalang
galyon is an example of this practice which shows
that the Philippines was not spared.
 The Industial Revolution
The industrial revolution is the time when
machines were introduced, thus contributing to
improved production and business growth. Along with
these improvements was the change in the
businessman’s attitude and values towards business.
The capitalists in England were the ones who
thoroughly enjoyed this prerogative. They were given
the free hand to run their business and all their
activities became unrestrained. Furthermore,
capitalists abused unrestrained business activities by
cheating and selling their poor quality products at ver
high prices. Karl Marx and Robert Owen, fighting
against the capitalists, were both responsible in
exposing these abuses, therby earning for them the
titles “social reformists.”
 After The Period Of Depression (1930 to the
present)
At the onset of 1930’s, the government, especially
in progressive countries, protected the welfare of the
public against the abuses of businesses.thereon up to a
decade ago, businesses viewed social responsibility as
an adherence to rules and regulations and compliance
with administrative and legal standards.ethics in
business and social responsibility are now given serious
attention by more and more companies as they realizes
that their success lies in earning the confidence and
respect of thr society. Business have started to integrate
corporate social responsibility as part of their corporate
structures and processes. This then has resulted to the
creation of innovative and proactive solutions to
societal and environmental concerns.
Historical Phases of
Corporate Social
Responsibility
 Social Responsibility has gone through three phases, each
phase corresponding to particular characteristics, according to
Professor Robert Hay and Ed Gray, as presented in the
following illustration.
Phase 1: Profit Maximizing
Management (1800’s to early
1900’s)

Phase 2: Trusteeship
Management (Early 1900’s)

Phase 3: Quality of Life

Management (1930’s)
 Phase 1
• Management must maximize profit.
• Individual drive for profit maximization would ultimately
create wealth for the nation.
• Business systems as profit maximizers are used as tools for
the elimination of economic scarcity.
• Businesses ignored unsafe working conditions, paid
starvation wages used child labor in order to maximize profit.
• Problems of cultural minorities, unsafe products, unfair
advertising and urban poor problems were given title if no
attention at all.
• Abuses of capitalism were extremely rampant and the
government tolerated these deplorable business practices.
 Phase 2
• Management was considered both as an
instrument of stockholders and as a trustee for
all groups who contribute to the business
enterprise.
• Aside from profit maximization, management’s
concern was also to maintain a fair balance in
the interests of employees, customers, creditors,
stockholders and the community.
 Phase 3
• Security of basic goods and services was no longer a principal
problems.
• Social economic problems brought about by economic growth
expanded the concept of social responsibility of management.
• Society demanded management’s active participation in helping
solve social and environmental problems in view of the vast
resources(funds, manpower, materials, management skills and
technology) of businesses.
• Business is expected to contribute to the improvement of the quality
of life, which involves cultural, social, educational, political factors
and economic security.
• Society is unstable if the quality of the people is poor. Businesses
contribute for a good quality of life and society.
• A prosperous society is the best environment for a business to thrive
in. Businesses will benefit from its self-investment in society.
 Perspective on Corporate
Social Responsiblity
People’s attitudes, values and management
culture differ. Consequently, each has a social
responsibility in society since every indidual,
body or institution makes up a society.
Businesses have different viewpoints on social
responsibility as well.
 CLASSICAL MANAGERIAL PUBLIC VIEW CHRISTIAN
VIEW VIEW VIEW
The primary Does not emphasizes Includes the needs Excess wealth should
reponsibility of profit maximization and interest of the be given to the less
business is profit and interests of whole society in fortunate. Wealthy
maximization. stockholders. contrast with the individuals have a
classical and responsibility to share
managerial views. their blessings with the
poor.

Obligation of To balance the interests Establishes harmony A successful

management is to of employees, with both business corporation should
satisfy stockholders for customers, suppliers, operations and public perform its social
their investments. and the local plant interest. responsibility more by
community is the role returning a fair portion
of managers of big of its profits to the
businesses. people in the form of
social services.

Supportedly by Milton Based on the teachings

Friedman, one of the of Jesus Christ as
most effective taught in the Bible.
advocates of economic
freedom and free
enterprise.
 Assessment on the
Practice of Corporate
Social Responsibility
1. 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.

2. Business resources – Businesses could use their huge resources

in the improvement of societal and environmental conditions. Some
of these business resources are manpower, funds, materials,
management skillsand technology.

3. Viability of Business - As embodied in the deed of a

corporation, businesses are granted powers and privileges by the
government due to their contributions to the economy and valuable
services to society.

4. Public Image - Charitable, civic and socio-economic projects are

some of the activities where businesses take part. They leave to the
society a very good impression of their corporate image that attracts
more competent recruits and a greater number of customers.

5. Profit from Social Problems - Businesses can turn problems

into profits by being creativesa and resoureful. An example is
recycling of waste materials into other valuable goods.
 The End
Submitted by:
Stephanie Landicho
Danica de Torres

Grade 11 Einstein