Corporate Social Responsibility

Prof. Kumar Neeraj Sachdev

6168-F
Department of Humanities and Social Sciences
 Case Study
A man approaches a professional sales person in an authorized agency to
complain that his Laptop has stopped working and he asks him to replace
the motherboard of his Laptop. The sales person in the course of
examination finds that the Laptop motherboard is working fine and Power
IC of Laptop motherboard needs replacement. The sales person has three
options. First, he can replace Laptop motherboard and collect five
thousand and five hundred rupees. Second, he can talk to the customer
and refuse to do as asked for but informs that all that is needed is to
replace Power IC of Laptop motherboard and collect one thousand
rupees. Third, the sales person explains the whole situation to the
customer with all the relevant information about the product and his
expert advice and then lets him decide whether he wants him to replace
the whole Laptop motherboard or only the Power IC of Laptop
motherboard. What do you suggest and why?

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 Case Study
Ram Kumar, a sales professional, had the best record for
sales in HIPRO. He was very good at demonstrating his
company’s computers. He spoke persuasively on their
ethical policies and their record of being the first
computer company in technical standards. But he didn’t
tell the clients that spare parts of their computers were
non-standard and available only with them. Their systems
also did not match with others in the field. Consequently,
other service companies could not carry out their repair
jobs. HIPRO’s own service department had therefore a
monopoly. Were Ram Kumar and HIPRO ethically
consistent and impartial?
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 Business Ethics: The Issues

• Corporate Social Responsibility

• Stakeholders
• Marketing
• Advertising
• Occupational Health

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 A Quote
“Although corporations are primarily business
organizations run for the benefit of shareholders, they
have a wide-ranging set of responsibilities - to their
own employees, to customers and suppliers, to the
communities in which they are located, and to society at
large.”
John R. Boatright and Bibhu Prasan Patra

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 Principles and Values in Business

• Business life is cooperative and represents a

corporate responsibility towards society.
• Corporate social responsibility may involve
taking advantage of an economic opportunity
that is judged to be less profitable but socially
more desirable than available alternatives.

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 Meaning of CSR

Corporate Social Responsibility (CSR) means

the voluntary assumption of responsibilities
that go beyond the purely economic and legal
responsibilities of business firms and making
decisions that may fairly balance the claims of
all key stakeholders.

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 Expectations
CSR means addressing the ethical and social
expectations that society has from business
and making decisions that fairly balance the
claims of all key stakeholders.

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 Three Circles of Corporate Responsibilities

Responsibilities of Corporations:

Social:
Ethical
Behavior; Legal: Well-being of Environment,
Addressing Investors, Employees, Customers
and People
social problems:
Poverty, Pollution, Economic:
Products, Jobs
Unemployment
and Economic
And Public Growth
Welfare
in general

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 Examples of CSR
• Choosing to operate on an ethical level other than what the law
requires
• Making contributions to civic and charitable organizations and
nonprofit institutions
• Providing benefits to employees and improving the quality of
life in the workplace beyond economic and legal requirements
• Taking advantage of an economic opportunity that is judged to
be less profitable but more socially desirable than some
alternatives
• Using corporate resources to operate a program that addresses
some major social problem

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 Arguments for CSR
• Moral Minimum of the Market
– Open and free competition, without deception or fraud; face-to-face
civility in honesty, good faith and fairness
• Power and Responsibility
– In addition to moral minimum, some self-imposed restraint in the form of
a voluntary assumption of social responsibility is necessary for corporate
activity to secure the public welfare…In the long run, those who do not
use power in a manner which society considers responsible will tend to
lose it.
• Giving a Helping Hand to Government
– The urgency of the need;
– The proximity of a corporation to the need;
– The capability of a corporation to respond effectively;
– The likelihood that the need will not be met unless a corporation acts.
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 Benefits of CSR
• Reduced Operating Costs
• Enhanced Brand Image and Reputation
• Increased Sales
• Customer Loyalty
• Increased Productivity and Quality
• Increased Ability to Attract and Retain
Employees
• Reduced Regulatory Oversight
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 Concluding Remark
Corporate Social Responsibility is not an
additional burden on the corporation but an
ethical concern to serve the needs of and be
fair to people and environment.

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 Case Study
Ramco was reviewing its new ten-tonner truck model. The axle strength
was designed to be slightly over strong for this load. The launching
advertisements had flashed across the media. Just a day before, they
were to release the truck in the market, Jethmalani proudly showed it off
to Buta Singh, his ex-driver who now ran a trucking service. Buta Singh
asked if the axle was OK. Jethmalani said that it was designed for 10 tons.
But Buta Singh said that this would prove a disaster and lead to serious
road accidents as the trucks are usually loaded up to 18 tons by fitting side
boards. Jethmalani smiled smugly and said that the company could not
be held responsible for such foolishness. If he had to design the axle for
18 tons, the costs would go up by Rs. 20, 000. ‘Why should I do
something, which the law does not require of me? Moreover, Arcland will
release their trucks sooner than we can replace the axles,’ he said. Do you
agree with Jethmalani?

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 Thank you.

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