Ethics and corporate social responsibilities

Jayashree Sadri and Sorab Sadri
Ethics and Corporate Social
Responsibilities.
PROFESSOR JAYASHREE SADRI
AND
DR SORAB SADRI

Logic Of Ethical Organizations
 Ethical Organizations need to be value
centered.
 Value centered organizations have a positive
and mutually beneficial link with civil society.
 This link is primarily fulfilled through CSR
initiatives.

What Is C S R ?
 Corporate Social Responsibility is nothing
but what an organization does to influence
the society in which it exists. It could take
the form of community relations, volunteer
assistance programmes, special
scholarships, preservation of cultural
heritage and beautification of the city.

Mutual Expectations
 Any business needs a stable social environment
that provides a predictable climate for investment
and trade. At the same time, society also has
expectations from the business. In this manner,
businesses and society are interdependent and
businesses must take full account of societal
expectations.

Organization and Society
 It is a well accepted fact that an organization
exists within a given society.
 Its activities influence the social environment just
as the social environment influences its
activities.
 So CSR is increasingly being viewed, not only as
making good business sense, but also
contributing to long term prosperity of the
companies and ultimately its survival.

A Boundary Less Universe
 The span of this social environment has
expanded along with the breaking down of
international trade barriers, the globalization of
markets and the evolution of the concept of a
global village. The organization's social
responsibility has similarly expanded to engulf
peoples and regions outside an organization's
immediate business domain.

C S R As A Societal Need
 As corporate houses grow in strength in a rapidly
globalising environment, their contribution to the
development of society becomes increasingly
pertinent.
 The emergence of CSR has been critical for
millions of people left below the poverty line.
Innovative partnerships between businesses,
governments and civil societies hold the potential
to touch the lives of millions, leading to enhanced
quality of living through better access to
essential services.

CSR As A Brand Builder
 The challenge for successful company in the Indian as well
as the Global Economy is to build and maintain efficient,
effective and fair relationships with its global and local
stake holders.
 An increased brand value, greater access to finance,
stronger risk management and corporate governance,
healthier and safer work place, motivated people, customer
loyalty and enhanced confidence and trust are the benefits
of excellent CSR.

Quid Pro Quo?
 Along with rights and privileges
come duties and obligations. The
corporations enjoy certain rights and
privileges by way of government
policy ,legislation, custom and
practice. The corporations fulfill
their obligations and duties by
undertaking their social
responsibilities.

Changing Perceptions
 In a manner of speaking, this could also be the
corporations way of answering critics of big
business who saw nothing but faults in them. (e.g
Communists)
 As society evolved, attitudes towards big
business have changed. In India we have
embarked upon a change in attitude towards
business since liberalization, privatization and
globalization as well as during the unfolding of
the post WTO scenario.

Consumer Choice Options
 With this change came a change in the nature of
markets and competition. Market emphasis
moved from the consumer sector (ration cards
and queues for everything) to the producer sector
(quality, price and value addition). The choices
for the consumer were hitherto limited but now
they have been increased since there are more
players in the arena of business.
 After all, economic development brings in its
wake an increase in the number of available and
affordable choices.

The Coexistence Need
 The basic question that arises when we speak of
corporate social responsibility is “How should we
live in relation to one another?
 Society and corporations must co-exist and each
must contribute to the well being of the other
while seeking that other members of society do
not suffer. It should be a win-win situation where
the quality of life all around improves.

Quality of Life
 The essence of Corporate Social
Responsibility is the continuing
commitment by business to behave
ethically and contribute to economic
development while improving the quality
of life of not only its work force but their
families as well as civil society at large.

Views
 From time to time politicians and self styled
moral policemen of society make statements on
CSR. These are emotionally or politically
motivated more often than not and seldom arise
from serious study or thought.
 However, there are also some accepted and
definite views held by social thinkers on what
social responsibility is or means to different
corporations and people. We shall review the
most important among these views and find a link
between all of them.

ATTITUDES TOWARDS BUSINESS AND
GOVERNMENT.
 Andrew Carnegie and the Gospel of Wealth.
Charity Principle: Those in society who were more
fortunate should assist those others who were less
fortunate.
Stewardship Principle: Business and wealthy individuals
should view themselves as steward or caretakers holding
their property in trust for the benefit of society as a whole.

Milton Friedman and Honest Profit.
 According to Milton Friedman the purpose of
business is to make profit and that is all.
According to him, the only social responsibility of
business is to use its energies and activities
designed to increase its profits as long as it stays
within the rules of the game and engages in open
and free competition without deception and
fraud. Business is the custodian of the investor’s
interests.

Friedman’s Concept of Social
Ignorance
 He says that corporate officials are in no position
to determine the relative urgency of social
problems or the amount of organizational
resources required to be committed for a
problem.
 Business should produce goods and services
efficiently and leave the solution of social
problems to concerned individuals (NGOs) and to
the Government Agencies whose business is to
safeguard the interests of the (tax paying)
citizens .

KEITH DAVIS AND ENLIGHTENED SELF
INTEREST
 He propounded the Iron Law of Responsibility. In
the long run those who do not use their power in
a manner that society considers responsible, will
tend to lose it.
 This is often referred to as Enlightened Self
Interest where organizations realize that it is in
their own best interest to act in a way that
community considers socially responsible. In
USA there is a 5% club where a group of
companies donate five percent of their profits to
charity.

ROBERT ACKERMAN AND CORPORATE
SOCIAL RESPONSIVENESS.
 The issue is no longer responsibility but one of
corporate responsiveness.
 The question arises as to how do organizations
become aware of and then respond to social
issues. The theory of Corporate Social
Responsiveness focuses on how companies
respond to issues rather than trying to determine
their ultimate social responsibility.

ARCHIE CARROLL AND SOCIAL PERFORMANCE
 He combines social responsibility and social
responsiveness to form a social action approach. This is
like the sociologists who examine the causes and effects of
customs and practices within social groups.
Corporate policies and decision can reflect one of these
four stances :
1. Reactive
2. Defensive
3. Accommodative
4. Proactive

SOME SOCIAL WORK
UNDERTAKEN BY BPCL
 Infrastructure Development:
Provision for drinking water, tube wells,bore
wells, construction of schools, community halls,
health center, construction of sanitation block to
promote hygiene, street lights, etc.

BPCL Continued
 Education Support:
Provision of uniforms, notebooks, stationery, teaching
material , educational aids, sweater and food supplements,
educational scholarships to children from economically
backward classes for pursuing their studies, vocational
guidance for higher secondary children through
experienced psychologists.

B P C L Cont’d.
 Health Care:
 Regular health checkup for villagers by doctors,
provision of free medicine for minor ailments,
guidance on family welfare and general health
care, free medical dispensaries, cataract surgery.

BPCL Cont’d.
 Skill enhancement
Adult education, modern farming practices,
distribution of fruits saplings, cattle camps,
training on income generation vocations, helping
women promote awareness on social issues,
organizing regular lectures for women on family
life and education.
(Source : Economic Times)

Conclusion
 The basis of social responsibility lies in values
and beliefs of the organization, that in turn form
the backbone of ethics and so it is not wise to
separate the two.
 Indeed a corporation’s social role is based on
and flows from its Business Ethics.
 How this assists in promoting the corporate
business interest is another aspect of study.

We shall consider motivations for CSR
later on.
THANK YOU

Ethics and corporate social responsibilities

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