SOCIAL RESPONSIBILITY
The term social responsibility means different things to different people. Generally, corporate social responsibility is the obligation to take action that protects and improves the welfare of society as a whole as well as organizational interests. According to the concept of corporate social responsibility, a manager must strive to achieve both organizational and societal goals. Current perspectives regarding the fundamentals of social responsibility of businesses are listed and discussed through (1) the Davis model of corporate social responsibility, (2) areas of corporate social responsibility, and (3) varying opinions on social responsibility. A model of corporate social responsibility that was developed by Keith Davis provides five propositions that describe why and how businesses should adhere to the obligation to take action that protects and improves the welfare of society and the organization:
Proposition 1: Social responsibility arises from social power. Proposition 2: Business shall operate as an open system, with open receipt of inputs from society and open disclosure of its operation to the public.
Proposition 3: The social costs and benefits of an activity, product, or service shall be thoroughly calculated and considered in deciding whether to proceed with it.
Proposition 4: Social costs related to each activity, product, or service shall be passed on to the consumer.
Proposition 5: Business institutions, as citizens, have the responsibility to become involved in certain social problems that are outside their normal areas of operation.
The areas in which business can become involved to protect and improve the welfare of society are numerous and diverse. Some of the most publicized of these areas are urban affairs, consumer affairs, environmental affairs, and employment practices. Although numerous businesses are involved in socially responsible activities, much controversy persists about whether such involvement is necessary or appropriate. There are several arguments for and against businesses performing socially responsible activities. The best-known argument supporting such activities by business is that because business is a subset of and exerts a significant impact on society, it has the responsibility to help improve society. Since society asks no more and no less of
any of its members, why should business be exempt from such responsibility? Additionally, profitability and growth go hand in hand with responsible treatment of employees. customers, and the community. However, studies have not indicated any clear relationship between corporate social responsibility and profitability. One of the better known arguments against such activities is advanced by the distinguished economist Milton Friedman. Friedman argues that making business managers simultaneously responsible to business owners for reaching profit objectives and to society for enhancing societal welfare represents a conflict of interest that has the potential to cause the demise of business. According to Friedman, this demise almost certainly will occur if business continually is forced to perform socially responsible behavior that is in direct conflict with private organizational objectives. He also argues that to require business managers to pursue socially responsible objectives may be unethical, since it requires managers to spend money that really belongs to other individuals. Regardless of which argument or combination of arguments particular managers might support, they generally should make a concerted effort to perform all legally required socially responsible activities, consider voluntarily performing socially responsible activities beyond those legally required, and inform all relevant individuals of the extent to which their organization will become involved in performing social responsibility activities.
Federal law requires that businesses perform certain socially responsible activities. In fact, several government agencies have been established and are maintained to develop such business-related legislation and to make sure the laws are followed. The Environmental Protection Agency does indeed have the authority to require businesses to adhere to certain socially responsible environmental standards. Adherence to legislated social responsibilities represents the minimum standard of social responsibility performance that business leaders must achieve. Managers must ask themselves, however, how far beyond the minimum they should attempt to go difficult and complicated question that entails assessing the positive and negative outcomes of performing socially responsible activities. Only those activities that contribute to the business's success while contributing to the welfare of society should be undertaken.
Social Responsiveness
Social responsiveness is the degree of effectiveness and efficiency an organization displays in pursuing its social responsibilities. The greater the degree of effectiveness and efficiency, the more socially responsive the organization is said to be. The socially responsive organization that is both effective and efficient meets its social responsibilities without wasting organizational resources in the process. Determining exactly which social responsibilities an organization should pursue and then deciding how to pursue them are perhaps the two most critical
decision-making aspects of maintaining a high level of social responsiveness within an organization. That is, managers must decide whether their organization should undertake the activities on its own or acquire the help of outsiders with more expertise in the area. In addition to decision making, various approaches to meeting social obligations are another determinant of an organization's level of social responsiveness. A desirable and socially responsive approach to meeting social obligations involves the following:
Incorporating social goals into the annual planning process Seeking comparative industry norms for social programs Presenting reports to organization members, the board of directors, and stockholders on progress in social responsibility
Experimenting with different approaches for measuring social performance Attempting to measure the cost of social programs as well as the return on social program investments
S. Prakash Sethi presents three management approaches to meeting social obligations: (1) the social obligation approach, (2) the social responsibility approach, and
(3) the social responsiveness approach. Each of Sethi's three approaches contains behavior that reflects a somewhat different attitude with regard to businesses performing social responsible activities. The social obligation approach, for example, considers business as having primarily economic purposes and confines social responsibility activity mainly to conformance to existing laws. The socially responsible approach sees business as having both economic and societal goals. The social responsiveness approach considers business as having both societal and economic goals as well as the obligation to anticipate upcoming social problems and to work actively to prevent their appearance. Organizations characterized by attitudes and behaviors consistent with the social responsiveness approach generally are more socially responsive than organizations characterized by attitudes and behaviors consistent with either the social responsibility approach or the social obligation approach. Also, organizations characterized by the social responsibility approach generally achieve higher levels of social responsiveness than organizations characterized by the social obligation approach. As one moves from the social obligation approach to the social responsiveness approach, management becomes more proactive. Proactive managers will do what is prudent from a business viewpoint to reduce liabilities whether an action is required by law or not.
Human responsibility
Refers to the responsibility of the organization towards the various parties associated with it, which are known as stakeholders in business parlance. These parties include employees, shareholders, the government, customers, investors, suppliers, competitors and the society at large.
Environmental responsibility
Refers to the organizations responsibility towards environment protection. The concept of social responsibility holds that an organization should work in a manner in which the interests of the stakeholders are protected or, at the very least, they are not adversely affected. It holds that the organization should work in an ethical manner and work in the best interests of the various parties associated with it. The realm of social responsibility extends beyond the legal responsibilities of an organization. It is voluntarily fulfilled by the organization.
The concept of corporate social responsibility has been criticized by certain experts, who believe that it is a cynical and selfish idea. They are of the opinion that corporates undertake projects for social welfare only because of the increase in reputation that they would get due to them.
1) Public expectations: Social expectations of business have increased dramatically since the 1960s. Public opinion in support of business pursuing social as well as economic goals is now well solidified. 2) Long run profits: Socially responsible businesses tend to have more and secure long run profits. This is the normal result of the better community relations and improved business image that responsible. 3) Ethical obligation: A business firm can and should have a conscience. Business should be socially responsible because responsible actions are right for their own sake. 4) Public image: Firms seek to enhance their public image to gain more customers, better employees, access to money markets, and other benefits. Since the public considers social goals to be important, business can create a favorable public image by pursuing social goals. 5) Better environment: Involvement by business can solve difficult social problems, thus creating a better quality of life and a more desirable community in which to attract and hold skilled employees.
6) Discouragement of further government regulation: Government regulation adds economic costs and restricts managements decision flexibility by becoming socially responsible, business can expect less government regulation.
7) Balance of responsibility and power: Business has a large amount of power in society. An equally large amount of responsibility is required to balance it. When power is significantly greater than responsibility, the imbalance encourages irresponsible behavior that works against the public good.
8) Stockholder interests: Social responsibility will improve the price of a businesss stock in the long run. The stock market will view the socially responsible company as less risky and open to public attack. Therefore, it will award its stock a higher price earning ratio.
9) Possession of resources: Business has the financial resources, technical experts, and managerial talent to provide support to public and charitable projects that need assistance.
10) Superiority of prevention over cures: Social problems must be dealt with at sometime. Business should act on them before they become serious and costly to correct and take managements energy away from accomplishing its goal of production goods and services.
2) Dilution of purpose: The pursuit of social goals dilutes businesss primary purpose: economic productivity. Society may suffer as both economic and social goals are poorly accomplished.
3) Costs: Many socially responsible activities do not pay their own way. Someone has to pay these costs. Business must absorb these costs or pass them on to consumers in higher prices.
4) Too much power: Business is already one of the most powerful institutions in our society. If it pursued social goals, it would have even more power. Society has given business enough power.
5) Lack of skills: The outlook and abilities of business leaders are oriented primarily toward economies. Business people are poorly qualified to cope with social issues.
6) Lack of accountability: Political representatives pursue social goals and ar6e held accountable for their actions. Such is not the case with business leaders. There are no direct lines of social accountability from the business sector to the public.
7) Lack of broad public support: There is no broad mandate from society for business to become involved in social issues. The public is divided on the issue. In fact, it is a topic that usually generates a heated debate. Actions taken under such divided support are likely to fail
The overall CSR activity pursues company goals related to the productivity, incl. keeping and upgrading the employees and workers qualification, human resources, incl. employees and workers motivation and setting up of teams, improving working environment.
Considerable part of the CSR operations of the enterprise is announced by publishing financial statements, capital rationing information and random pressreleases and articles of different subjects.
The term social responsibilities can be defined as the obligation of management towards the society and others concerned.
promote the public good, advances the basic values of society, and constitute to its stability, strength and harmony.
Increasing concern for the social responsibility of management, it is now recognized that besides taking care of the financial interest of owners, managers of business firms must also take into account the interest of various other groups such as employees, consumers, the government and the community as a whole. These interested groups are directly or indirectly affected by the pursuit of business activities and they are the stake-holders of the business enterprise.
More than a thousand workers are directly employed or assigned by subcontractors at Bulyard Shipbuilding Industry EAD.
Despite the extremely volatile economic environment the enterprise always puts efforts for assuring favourable working environment and building teams as well as balancing between work and private life of the employees and encouraging higher results. This is boosted by setting up, carrying out and attendance of diverse events for different occasions.
Bulyard carries out career planning by means of courses, training, incl. indoor, for the employees and workers, apprenticeship, probation for students and pupils of
vocational schools and universities (Varna Technical University, Naval Academy, Varna, Nautical School, Varna) in order to let them get awareness of the facilities and the process. The attendance of different specialized courses and indoor training are arranged in case of necessity.
The environmental protection related responsibilities are assigned to persons in charge of this particularly.
One of the related assignments is the collection of data on the quantitative impact of the work process of the shipyard on the environment such as toxic gas and dust emissions, consumption of power, water, consumables, recycling etc. We do commit ourselves to strictly follow, be acquainted with and observe the
environment
related
legislation
regulations.
Being socially responsible company, Bulyard takes account of the presence of ecological risk when taking new projects and investments.
In relation to the environmental protection activity, by virtue of orders, all employees, workers and subcontractors are obliged to keep their working stations tidy and to keep the environment clean. The company is pursuing ways of diminishing the toxic emissions, encouraging the efforts for saving renewable and non-renewable sources.
Serious factor influencing on the research process and determining the choice for new suppliers and subcontractors is the environmental protection commitment. The company expects from the subcontractors to follow the environmental protection policy and power and water sources conservation. In addition to the existing company practices, Bulyard undertakes financial support of different ecology related causes, affecting not only the company territory but also the community as a whole.
Ethics
and
responsibility
towards
the
interested
parties
As a socially responsible company Bulyards stand determines the significance of all interested parties, namely subcontractors, employees, clients, competitors, state bodies, regulating the relevant activities (for instance Regional Inspectorates of Environment and Water). The shipyard tolerates transparency and correct attitude and expects back even amount of clarity, equity and loyalty. By means of the bunch of measures in this aspect the shipyard strive to do their best to keep balance between their interests and those of all the interested parties. From this point of view the stand of the relevant audiences towards the corporate social responsibility is important to us. This inevitably helps for building up mutual credit. If necessary the CSR related issues are discussed on symposia, seminars, fairs, meetings (including meetings of BULNAS with the participation of the members of the association), at meetings with potential subcontractors and partners, in written correspondence, circulars, company orders and reports.
Participations
in
socially
significant
projects
The commitment to keep the environment clean incl. erection of a treatment plant, replacement of water supply installation etc., support of a number of initiatives and events important to the region and preservation of the employment, facilitate the entire activity of Bulyard towards participations in socially significant and useful projects.
Charity
We sympathize with our employees lives and the society in general. We care about their health by collecting funds and arrangement of campaigns to help employees and workers of Bulyard in dire straights, collecting money for orphans and homeless and neglected children, financial support to organizations and institutions.
Social responsibility has certain costs. It's not the natural thing to be responsible. Greed and selfishness work against social responsibility. When greed and selfishness become higher values, social responsibility goes out the window.
One of the problems with our culture is that we worship wealth. People who have a lot of money are heroes to us and we strive to emulate them. We see wealth and power as an indicator of merit and virtue. But people who are rich and want to be richer, and corporate and industrial leaders whose jobs are to put the prosperity of their companies at the top of their priorities, often trivialize social responsibility, and this sets the tone for the whole culture.
The arguments against social responsibility are that it costs too much; it's a drag on the economy, that it provides a negative incentive by cushioning failure, etc.
The evolution of social responsibility in India refers to changes over time in India of the cultural norms of corporations' engagement of corporate social responsibility (CSR), with CSR referring to way that businesses are managed to bring about an overall positive impact on the communities, cultures, societies and environments in which they operate.[1] The fundamentals of CSR rest on the fact that not only public policy but even corporates should be responsible enough to address social issues. Thus companies should deal with the challenges and issues looked after to a certain extent by the states.[2] Among other countries India has one of the most richest traditions of CSR Much has been done in recent years to make Indian Entrepreneurs aware of social responsibility as an important segment of their business activity but CSR in India has yet to receive widespread recognition. If this goal has to be realised then the CSR approach of corporates has to be in line with their attitudes towards mainstream business- companies setting clear objectives, undertaking potential investments, measuring and reporting performance publicly.
phases of famine and epidemics by providing food from their godowns and money and thus securing an integral position in the society. With the arrival of colonial rule in India from 1850s onwards, the approach towards CSR changed. The industrial families of the 19th century such as Tata, Godrej, Bajaj, Modi, Birla, Singhania were strongly inclined towards economic as well as social considerations. However it has been observed that their efforts towards social as well as industrial development were not only driven by selfless and religious motives but also influenced by caste groups and political objectives.
"temples of modern India". Under his influence businesses established trusts for schools and colleges and also helped in setting up training and scientific institutions. The operations of the trusts were largely in line with Gandhi's reforms which sought to abolish untouchability, encourage empowerment of women and rural development.
necessary. In 1965 Indian academicians, politicians and businessmen set up a national workshop on CSR aimed at reconciliation They emphasized upon transparency, social accountability and regular stakeholder dialogues. In spite of such attempts the CSR failed to catch steam.
For example, a more comprehensive method of development is adopted by some corporations such as Bharat Petroleum Corporation Limited, Maruti Suzuki India Limited, and Hindustan Unilever Limited. Provision of improved medical and sanitation facilities, building schools and houses, and empowering the villagers and in process making them more self-reliant by providing vocational training and a knowledge of business operations are the facilities that these corporations focus on.Many of the companies are helping other peoples by providing them good standard of living. On the other hand, the CSR programs of corporations like GlaxoSmithKline Pharmaceuticals focus on the health aspect of the community. They set up health camps in tribal villages which offer medical check-ups and treatment and undertake health awareness programs. Some of the non-profit organizations which carry out health and education programs in backward areas are to a certain extent funded by such corporations. Also Corporates increasingly join hands with Non-governmental
organizations (NGOs) and use their expertise in devising programs which address wider social problems. For example, a lot of work is being undertaken to rebuild the lives of the tsunami affected victims. This is exclusively undertaken bySAP India in partnership with Hope Foundation, an NGO that focuses mainly on bringing about
improvement in the lives of the poor and needy . The SAP Labs Center of HOPE in Bangalore was started by this venture which looks after the food, clothing, shelter and medical care of street children. CSR has gone through many phases in India. The ability to make a significant difference in the society and improve the overall quality of life has clearly been proven by the corporates. Not one but all corporates should try and bring about a change in the current social situation in India in order to have an effective and lasting solution to the social woes . Partnerships between companies, NGOs and the government should be facilitated so that a combination of their skills such as expertise, strategic thinking, manpower and money to initiate extensive social change will put the socio-economic development of India on a fast track.
Examples
The first company that comes to mind as a beacon of good corporate governance is the Indian IT industry bellwether, Infosys. Indeed, Infosys is one of the companies that has set benchmarks for other companies not only in India but all over the world in the way corporate governance and social responsibility are handled and projected to the outside world. The point here is that companies not only need to walk the talk for CSR but also broadcast their achievements to the world at large.
Another company that has done an exceptional job of portraying itself as a good corporate citizen is the TATA group in India and The Body Shop (formerly owned by Anita Roddick) company in the United States.
While these two companies are at different ends of the spectrum as far as their product lines and lines of business are concerned, the public perceives these companies favourably mainly due to the visionary leaders that have led these companies as well as the reputation that has been established through decades of doing the right thing. Taken together with Infosys and companies like Sony Ericsson, these corporations reap the benefits of being good corporate citizens in terms of increased revenues and top of the mind brand recall by dint of being model corporate citizens. The key take away from this discussion is that companies do gain tangible and intangible benefits by practising CSR and by projecting an image of good governance and social responsibility to the external world. Of course, we have seen how companies resort to Green Washing and spin to project something which does not exist fully or partially. The point about these examples is that these companies not only pursue socially and environmentally responsible strategies but also make it a point to be on cordial terms with all the stakeholders (the suppliers,
governmental agencies, employees, consumers and society at large) which translates into measurable and immeasurable benefits to these companies. Finally, being a good corporate citizen brings its own benefits to the companies. For instance, it is common to find leaders from these companies sitting on various boards and advisory committees which speak volumes about the high esteem in which they are held. This translates into instant recognition and a halo effect which for all practical purposes is like the adulation that rock stars and sports personalities receive from the people. The point here is that good corporate behavior is rewarded at some point or the other and hence, companies must seek to do well and do the right thing always. While not preaching, some of these companies also help other companies in actualizing their visions for society and by being transformational change agents as well as catalysts for CSR. In conclusion, CSR as a business imperative must not be accepted grudgingly or half heartedly. Instead, it must be practiced with full vigor and straight from the heart passion and this certainly helps the companies in the long run. After all, business is not all about the next quarter only.