Chapter 6:

Business and

Corporate Social Responsibility

◦ Business depends upon society for the inputs like
manpower, resources, money etc.

◦ The very existence, survival and growth of any firm

depend upon its acceptance by society and its
environment.

◦ Business organizations have to earn social sanctions

without which they will collapse and die out
simultaneously as they exercise a remarkable influence
on our socioeconomic life style, they must understand
their responsiveness towards society.
 In this modern era, society is expecting
much more from business than in the past.

 Business firms are now no longer

considered as economic institutions, they
are now socio – economic institution where
basic reason to exist is not merely earning
profit.

 Though profit making is the basic objective

of any business and with out it, it wouldn’t
survive, but the concept of profitability has
been changed.
 Now profit in terms of goodwill creditability
and trust of society is more valuable than
profit in terms of money or return on
investments.

 The image of a company depends upon

service and satisfaction of the people.

 The long term survival of a company is

possible when a company does what is
favorable to the society and in the interest of
the customers, it serves.
An organization’s influence over employees,
customers, partners, shareholders, the
community and the environment cannot be
overstated.

CSR activities and programs are now quite

an integral part of organizational objectives.

Social Responsibility is thus an obligation of

decision makers to take actions which
protects and improve the welfare of society
as a whole along with their own interest.
 Why business should be
socially responsible?
Some genuine reasons are as follows:
◦
1. Long Term Survival
◦ If an organization wants to survive in the
long run, it has to establish a loyal brand
of customers, repeat customers etc.

◦ Suppose if they do harm to the society by

their irresponsible conducts, society will
not allow them to exit in the future.
 Why business should be
socially responsible?
Some genuine reasons are as follows:

2. Public Expectation

General public requires certain behavior
from organization apart from quality
products, fair prices, good services etc.
 While doing the businesses they should
not disturb any balance of society like
( pollution, crimes, corruption etc.)
Why…

3. Goodwill

As we know that goodwill cannot be begged or

borrowed, it can be earned and it will happen
when the organizations will understand and
discharge their social responsibilities.
Why…

4. Govt. Laws and Regulations

◦ Some times the government laws and

regulations force the business
organization to behave in socially
responsible manner to survive in the long
run.
Why…
5. Better Environment to Operate

◦ If an organization can improve the quality of life

of customers, try to integrate private good and
public good, more concentration on solving a
particular problem of the society, automatically
better it is able to solve its own problem and in
better environment it will get to operate.
Why…
6. Keep the Balance (Give and Take
Relationship)
Business organization exists and operates
with in society.
As it takes so much from society, so it also
owes something to the society.
When business men understand the fact that
they are social entities, with out society’s
approval they wouldn’t exist, they accept
their responsibilities towards society and
attempt to fulfill them.
 Social Responsibility Models

The interlink ages of business and society by system approach

 Social responsibility Models

As from above representation it is clear that business is part

of larger social system.
Any business takes inputs from society, does its processing
and provides the outputs to the same society. So the outputs
must be acceptable as well as desirable to the society. So the
mutual understanding and interactions between society and
business must be very sound.
The contribution which business makes to society and vis-a-
vis is very significant. So if the outputs of the processing are
not up to the satisfaction level of society, some preplanning
must be done till the desired results are accomplished.
So we say business is not considered economic institution
and should be considered as a social institution.
 1. Ackerman’s Model of Social
Responsibility
Ackerman insists and suggest that the basic goal of
any corporate entity should be social
responsiveness.
When firm decides to be social responsible, it has
to pass some developing stages like:
In the beginning of the process the top managers
and decision makers must learn of an existing social
problem.

The key players generally are the top management of

the company.

Once awareness about the existing situation is over,

proper and adequate planning should be done for
this it requires the firm must hire some specialist or
consultant so there would be no loopholes in the
planning stage.
The most effective stage is to implement
all the planning.

 Implementation should be of such kind

that it would become an integral part of
daily operations.

A true commitment through out all the

levels of organizations must be obtained.
 2. Carroll’s Model of
Social Responsibility
According to Carroll’s, there are four categories of social
responsibilities of business :
(a) Economic responsibilities –
The basic and primary responsibility of any business is to be
economic. Producing goods and services to satisfy society’s
needs and wants and generate profit by selling them.

(b) Legal Responsibilities –

Each and every business entity must operate with in the law
and legal frame work; these are considered as legal
responsibilities.
 2. Carroll’s Model of
Social Responsibility
(c) Ethical Responsibilities –
Ethical responsible means doing according to the expectations
of society might be not codified in a law.

(d) Discretionary Responsibilities –

Discretionary responsibilities are steps forward of
ethical responsibilities, in which firms go for
voluntary actions to serve society. Society will not
demand to be discretionary responsive, it is the
firm’s willingness to contribute something in the
wellbeing of society.
Levels of social
responsibility
Levels of Social
Responsibility
Main Social Responsibilities
of Business Organizations
Main responsibilities…
Main responsibilities…
Main responsibilities…
Main responsibilities…
Chapter & Course End
Thank you!!