What is Productivity

In this post we’re going to take a deep look into the concept of productivity.

Here’s my personal definition of productivity:

Productivity = Value / Time

(productivity equals value divided by time)

By this definition there are two primary ways of increasing productivity:

1) Increase the value created
2) Decrease the time required to create that value

You can complicate this definition by including other factors like energy and resources,
but I prefer the simplicity of time because in most cases factors like energy and resources
are reducible to time anyway. Time also makes it very easy to compare different levels of
productivity, such as output per hour or per day.

Apparently you can make some significant gains on the time side. There are many
personal productivity optimizations which, especially if you introduce them in your
youth, will produce a massive net savings of time over the course of your life. Consider
your typing speed, for instance. If you invest the time to get your speed up to 90 words
per minute or faster, it will be well worth the initial time investment if you happen to do a
lot of typing over your lifetime, compared to allowing your speed to linger at 50 wpm or
slower year after year. The extra hours of practice will be nothing compared to the time
you save typing emails, letters, or blog entries over the next few decades. Other time-
based optimizations include improving your sleeping habits, minimizing commute time,
or dropping time-wasting habits like smoking.

The main limit of time-based optimizations is that the optimization process requires an
input of time itself. It takes time to save time. So the more time you invest in optimizing
time usage, the greater your initial time investment, and the greater your need for a long-
term payoff to justify that investment. This limit creates an upper bound for any time-
based optimizations you attempt, in accordance with the law of diminishing returns. The
more time you invest in any optimization attempt, the lower your net return, all else being
equal.

This law of diminishing returns points us back to the value side. While we might be stuck
with diminshing returns by trying to optimize the time side alone, we may notice that
working to optimize the value side is less limiting and more open-ended.

What is the “value” in our productivity equation?

Value is a quality you must define for yourself. Hence, any definition of productity is
relative to the definition of value. In circles where people can agree on a common
definition of value, they can also agree on a common definition of productivity. However,
in terms of your own personal productivity, you aren’t obligated to define value the same
way anyone else would. You are free to adopt your own definition, such that your pursuit
of greater productivity becomes a personal quest that produces the value that matters
most to you.

Too often we adopt a socially conditioned definition of value, which tends to be very
limiting. Perhaps we define value in terms of work output within our career, number of
tasks completed, number and quality of important projects finished, etc. You may not be
able to verbalize it clearly, but perhaps you have a working definition of value that feels
comfortable to you. You can tell when you’ve had a productive day and when you haven’t
based on how much value you created, in accordance with your own sense of what value
means.

But how much conscious thought did you put into your personal definition of value? I’m
going to challenge you to put a bit more thought into your definition, which will
consequently redefine your sense of productivity.

Impact
First, according to your definition of value, to what extent is the value provided? Who
receives the value? Yourself, your boss, your coworkers, your friends, your family, your
company, your customers, your team, certain investors, your community, your country,
the world, your family, God, all conscious beings, etc? What degree of value is ultimately
received by each person or group? Are you providing value to one person, 10 people, 100
people, 1000 people, millions of people, the whole planet? How much do you feel the
value you provide ripples outward beyond those you provide it to directly? How quickly
do those ripples dissipate? What’s your sense of the basic level of impact of your value?
Is it limited or expansive?

For example, if you’re the CEO of a Fortune 500 corporation or the leader of a country,
you’ll have a far greater ability to provide value to large numbers of people vs. if you
work as a janitor. The more people you can influence, the greater your potential value.
Greater leverage means greater potential impact.

Endurance
Secondly, how long does the value you create endure? An hour, a day, a week, a month, a
year, a decade, a lifetime, 100 years, 1000 years, 10,000 years, until the end of time? To
what extent does your value carry forward in time? Is it quickly consumed and forgotten?
Or does it continue to regenerate itself year after year? Does your value create ripples
through time?

The Mona Lisa is still providing value hundreds of years after its creation. But other
works of art do not provide any enduring value beyond the lifetime of the artist. They are
quickly abandoned and eventually replaced.
Essence
Thirdly, what is the essence of the value you produce? Do you help people survive?
Entertain them? Enlighten them? How much do others value what you produce? What
price would they be willing to pay for it? Do they consider your value essential, optional,
or undesirable? How unique is your value? Are you the only one who can provide it, or
are there plenty of equivalent choices?

The essence of value provided by a janitor is low because it is easy to find people to do
such work for little pay. The essence of value of a physicist is potentially enormous
because a new theoretical concept could yield a more accurate understanding of the
universe.

Volume
Lastly, what is the volume of value you create? How much of it are you putting out in a
given period of time? What is the quantity in which you produce that value?

For example, Picasso was a prolific artist who created hundreds of different works over
his lifetime. Other artists had a far lower volume of output.

So now we have this little formula:

Value = Impact x Endurance x Essence x Volume

And therefore:

Productivity = Impact x Endurance x Essence x Volume / Time

Now what’s interesting here is that most of the productivity literature I’ve read focuses
almost exclusively on volume and time. But those are the most limiting parts of this
equation. However, they’re also the easiest to write about.

I think the most important long-term factors to consider when optimizing productivity
(whether that of an individual, corporation, country, or other entity) are impact,
endurance, and essence. And the most important of these three is essence.

For example, let’s consider the productivity of a blogger.

The impact of a blogger’s value would be related to the blog’s traffic levels and overall
influence among its readers. How many people are reading the blog, and how much do
they value what the blogger writes? To improve impact a blogger could increase traffic to
the blog or improve his/her writing skills in order to have a deeper effect on the readers.
Impact can also be increased if the readers then go out and tell others about what they’ve
read. Furthermore, the blogger could use the blog as a means for self-exploration, thereby
increasing the impact of the blog on the blogger’s own life.

The endurance of a blogger’s value would be the long-term effect on the blog’s readers,
if any. Is the blog changing the long-term thinking and behavior patterns of its readers?
Do the readers quickly forget what they read on the blog, or does the information stay
with them? Are the readers permanently haunted by what they’ve read?

The essence of a blogger’s value depends on the topics the blogger writes about. Is the
blogger writing throw-away posts to get a laugh or generate traffic, or is there a serious
commitment to providing deep value? What is the nature of the blogger’s value delivery?
Is it financial advice that could help a person become wealthy? Does it provide solutions
to important problems? Or is it mostly fluff?

And of course the volume of a blogger’s value would be the quantity of words and posts
the blogger delivers.

Now extend this line of thinking to your life as a whole, well beyond the boundaries of
your career.

What is the ultimate impact of your life? How many lives are you touching? Are you a
person of influence? Or do you exist in relative obscurity?

What will be the endurance of your life’s value? Will your lifetime contributions turn out
to be largely insignificant? Or will your contributions ripple on for centuries? What of
your value will survive your own death? What of your value will you have the potential
to retain after you die (assuming there is an afterlife of sorts)?

And finally, what will be the essence of your life’s value? What is the heart of your
contribution? Are you here to play follow the follower? Are you in pursuit of a
worthwhile destiny? When you consciously consider the value you’re providing, do you
feel empty and fearful or peaceful and fulfilled? What is the meaning behind your deeds?
Was that meaning consciously chosen?

You cannot optimize your productivity without consciously and deliberately optimizing
these factors. True productivity is far more than volume / time. If you neglect the
importance of impact, endurance, and essence, you doom yourself to the pursuit of
spinning your wheels faster and faster and missing the whole point of life. And the worst
part is that as you live, you will know this to be true. You will sense the hollowness and
emptiness in all that you do. When you consider your output in light of the boundlessness
of time and space, it becomes nothing.

Essence is the single most important factor. Until you discover the true essence of your
life, you can never really be productive. You can take for granted that any task you
perform will have a nonzero impact, endurance, and volume. Those factors may be very
small if the task is trivial, but they’ll be greater than zero. However, if the core essence of
any task amounts to zero, then your total productivity is zero. If you miss the point of
your life, your ultimate productivity is zero, no matter how hard you work and how well
you attempt to optimize all the other factors. If you gain the whole world and lose your
soul, your ultimate payoff is zero.

That essence is your purpose.

This is why it’s so important to discover your life’s purpose. It doesn’t matter how long it
takes. In fact, the only truly productive task you can perform before you know your
purpose is to work to discover what that purpose is. The pursuit of essence is essential if
you wish to have a nonzero productivity.

Once you discover your essence, you’ll find that all those other factors begin to optimize
themselves very easily. Embracing essence creates passion, and passion increases impact,
endurance, and volume. Passion also makes time seem to pass more slowly. Passion
provides the energy and attracts the resources to manage time more efficiently. Passion
allows you to see the present moment as inherently complete and perfect instead of
perceiving life as incomplete and imperfect. The discovery of essence automatically
optimizes productivity as a whole.

Find a person who knows and embraces their life’s purpose, and you’ll find a truly
productive person. But in the absence of purpose, you’ll find busy-ness, but never
productivity — the volume of output created might as well be tossed on the trash heap. It
will have no power to endure.

Purpose is rooted in the permanent, the timeless, the unbounded. It is the essence of what
is real. Purpose is conscious and alive. Outside of purpose you can work only with the
temporary, the timebound, the limited — the ghost projections of reality but not reality
itself.

Be productive. Spend your time discovering your essence, and then devote the rest of
your life to working from your essence. Then you will live and work with a sense of
boundless productivity because essence itself is boundless.

Productivity Improvement
What is productivity?
A simple way of looking at productivity in a business organization is to think of it in
terms of the productivity model below.

Essentially, productivity is a ratio to measure how well an organization (or individual,

industry, country) converts input resources (labor, materials, machines etc.) into goods
and services.
This is usually expressed in ratios of inputs to outputs. That is (input) cost per (output)
good / service. It is not on its own a measure of how efficient the conversion process is.

The Productivity Conceptual Model below, takes the form of a 'productivity tree'. The
roots denote the inputs to the system, the trunk the conversion process and the foliage and
fruits the systems outputs.

The successful management of this process, is ultimately the key to survival of any
organization. It should be the concern of and a development goal for all organizational
members, irrespective of their position.
Productivity
From Wikipedia, the free encyclopedia

Jump to: navigation, search

For productivity in linguistics, see Productivity (linguistics).
For biological productivity, see Primary production.

Comparison of average total productivity levels between the OECD member states.
Productivity is measured as GDP per hour worked. Blue bars = higher than OECD-
average productivity. Yellow bars = lower than average.

Productivity is a measure of output from a production process, per unit of input. For
example, labor productivity is typically measured as a ratio of output per labor-hour, an
input. Productivity may be conceived of as a metric of the technical or engineering
efficiency of production. As such, the emphasis is on quantitative metrics of input, and
sometimes output. Productivity is distinct from metrics of allocative efficiency, which
take into account both the monetary value (price) of what is produced and the cost of
inputs used, and also distinct from metrics of profitability, which address the difference
between the revenues obtained from output and the expense associated with consumption
of inputs. (Courbois & Temple 1975, Gollop 1979, Kurosawa 1975, Pineda 1990, Saari
2006)

Contents
• 1 Economic growth and productivity
• 2 Main processes of a company
• 3 Surplus value as a measure of production profitability
• 4 Productivity model
• 5 Illustration of the real and income distribution processes
• 6 Depicting the development by time series
• 7 Measuring and interpreting partial productivity
 • 8 National productivity
o 8.1 Labour productivity and multi-factor productivity
o 8.2 Importance of national productivity growth
o 8.3 Sources of productivity growth
• 9 Aspects of productivity
o 9.1 Productivity studies
o 9.2 Increases in productivity
 9.2.1 Labor productivity
o 9.3 Marx on productivity
o 9.4 Productivity paradox
• 10 See also
• 11 Footnotes
• 12 References

• 13 External links

Economic growth and productivity

Components of economic growth (Saari 2006)

Activity can be identified with production and consumption. Production is a process of

combining various immaterial and material inputs of production so as to produce tools for
consumption. The methods of combining the inputs of production in the process of
making output are called technology. Technology can be depicted mathematically by the
production function which describes the function between input and output. The
production function depicts production performance and productivity is the metric for it.
Measures may be applied with, for example, different technology to improve productivity
and to raise production output.

With the help of the production function, it is possible to describe simply the mechanism
of economic growth. Economic growth is a production increase achieved by an economic
entity or nation. It is usually expressed as an annual growth percentage depicting (real)
growth of the company output (per entity) or the national product (per nation). Economic
growth is created by two factors so that it is appropriate to talk about the components of
growth. These components are an increase in production input and an increase in
productivity.(Genesca & Grifell 1992, Saari 2006)

The figure presents an economic growth process. By way of illustration, the proportions
shown in the figure are exaggerated. Reviewing the process in subsequent years
(periods), one and two, it becomes evident that production has increased from Value T1
to Value T2. Both years can be described by a graph of production functions, each
function being named after the respective number of the year, i.e., one and two. Two
components are distinguishable in the output increase: the growth caused by an increase
in production input and the growth caused by an increase in productivity. Characteristic
of the growth effected by an input increase is that the relation between output and input
remains unchanged. The output growth corresponding to a shift of the production
function is generated by the increase in productivity.

Accordingly, an increase in productivity is characterised by a shift of the production

function and a consequent change to the output/input relation. The formula of total
productivity is normally written as follows:

• Total productivity = Output quantity / Input quantity

According to this formula, changes in input and output have to be measured inclusive of
both quantitative and qualitative changes. (Jorgenson and Griliches 1967). In practice,
quantitative and qualitative changes take place when relative quantities and relative
prices of different input and output factors alter. In order to accentuate qualitative
changes in output and input, the formula of total productivity shall be written as follows:

• Total productivity = Output quality and quantity / Input quality and quantity

Main processes of a company

Main processes of a company (Saari 2006)

A company can be divided into sub-processes in different ways; yet, the following five
are identified as main processes, each with a logic, objectives, theory and key figures of
its own. It is important to examine each of them individually, yet, as a part of the whole,
in order to be able to measure and understand them. The main processes of a company are
as follows:

• real process
• income distribution process
• production process
• monetary process
• market value process

Productivity is created in the real process, productivity gains are distributed in the income
distribution process and these two processes constitute the production process. The
production process and its sub-processes, the real process and income distribution process
occur simultaneously, and only the production process is identifiable and measurable by
the traditional accounting practices. The real process and income distribution process can
be identified and measured by extra calculation, and this is why they need to be analysed
separately in order to understand the logic of production performance.

Real process generates the production output from input, and it can be described by
means of the production function. It refers to a series of events in production in which
production inputs of different quality and quantity are combined into products of different
quality and quantity. Products can be physical goods, immaterial services and most often
combinations of both. The characteristics created into the product by the manufacturer
imply surplus value to the consumer, and on the basis of the price this value is shared by
the consumer and the producer in the marketplace. This is the mechanism through which
surplus value originates to the consumer and the producer likewise. Surplus value to the
producer is a result of the real process, and measured proportionally it means
productivity.

Income distribution process of the production refers to a series of events in which the unit
prices of constant-quality products and inputs alter causing a change in income
distribution among those participating in the exchange. The magnitude of the change in
income distribution is directly proportionate to the change in prices of the output and
inputs and to their quantities. Productivity gains are distributed, for example, to
customers as lower product sales prices or to staff as higher income pay. Davis has
deliberated (Davis 1955) the phenomenon of productivity, measurement of productivity,
distribution of productivity gains, and how to measure such gains. He refers to an article
(1947, Journal of Accountancy, Feb. p. 94) suggesting that the measurement of
productivity shall be developed so that it ”will indicate increases or decreases in the
productivity of the company and also the distribution of the ’fruits of production’ among
all parties at interest”. According to Davis, the price system is a mechanism through
which productivity gains are distributed, and besides the business enterprise, receiving
parties may consist of its customers, staff and the suppliers of production inputs. In this
article, the concept of ”distribution of the fruits of production” by Davis is simply
referred to as production income distribution or shorter still as distribution.

The production process consists of the real process and the income distribution process. A
result and a criterion of success of the production process is profitability. The profitability
of production is the share of the real process result the producer has been able to keep to
himself in the income distribution process. Factors describing the production process are
the components of profitability, i.e., returns and costs. They differ from the factors of the
real process in that the components of profitability are given at nominal prices whereas in
the real process the factors are at periodically fixed prices.

Monetary process refers to events related to financing the business. Market value process
refers to a series of events in which investors determine the market value of the company
in the investment markets.

Surplus value as a measure of production profitability

Profitability of production measured by surplus value (Saari 2006)

The scale of success run by a going concern is manifold, and there are no criteria that
might be universally applicable to success. Nevertheless, there is one criterion by which
we can generalise the rate of success in production. This criterion is the ability to produce
surplus value. As a criterion of profitability, surplus value refers to the difference between
returns and costs, taking into consideration the costs of equity in addition to the costs
included in the profit and loss statement as usual. Surplus value indicates that the output
has more value than the sacrifice made for it, in other words, the output value is higher
than the value (production costs) of the used inputs. If the surplus value is positive, the
owner’s profit expectation has been surpassed.

The table presents a surplus value calculation. This basic example is a simplified
profitability calculation used for illustration and modelling. Even as reduced, it comprises
all phenomena of a real measuring situation and most importantly the change in the
output-input mix between two periods. Hence, the basic example works as an illustrative
“scale model” of production without any features of a real measuring situation being lost.
In practice, there may be hundreds of products and inputs but the logic of measuring does
not differ from that presented in the basic example.

Both the absolute and relative surplus value have been calculated in the example.
Absolute value is the difference of the output and input values and the relative value is
their relation, respectively. The surplus value calculation in the example is at a nominal
price, calculated at the market price of each period.

Productivity model

Productivity model (Saari 2006)

The next step is to describe a productivity model (Courbois & Temple 1975, Gollop
1979, Kurosawa 1975, Saari 1976, 2006) by help of which it is possible to calculate the
results of the real process, income distribution process and production process. The
starting point is a profitability calculation using surplus value as a criterion of
profitability. The surplus value calculation is the only valid measure for understanding the
connection between profitability and productivity or understanding the connection
between real process and production process. A valid measurement of total productivity
necessitates considering all production inputs, and the surplus value calculation is the
only calculation to conform to the requirement.

The process of calculating is best understood by applying the clause of Ceteris paribus,
i.e. "all other things being the same," stating that at a time only the impact of one
changing factor be introduced to the phenomenon being examined. Therefore, the
calculation can be presented as a process advancing step by step. First, the impacts of the
income distribution process are calculated, and then, the impacts of the real process on
the profitability of the production .

The first step of the calculation is to separate the impacts of the real process and the
income distribution process, respectively, from the change in profitability (285.12 –
266.00 = 19.12). This takes place by simply creating one auxiliary column (4) in which a
surplus value calculation is compiled using the quantities of Period 1 and the prices of
Period 2. In the resulting profitability calculation, Columns 3 and 4 depict the impact of a
change in income distribution process on the profitability and in Columns 4 and 7 the
impact of a change in real process on the profitability.

Illustration of the real and income distribution

processes

Variables of production performance (Saari 2006)

Measurement results can be illustrated by models and graphic presentations. The

following figure illustrates the connections between the processes by means of indexes
describing the change. A presentation by means of an index is illustrative because the
magnitudes of the changes are commensurate. Figures are from the above calculation
example of the production model. (Loggerenberg van et al. 1982. Saari 2006).

The nine most central key figures depicting changes in production performance can be
presented as shown in Figure. Vertical lines depict the key figures of the real process,
production process and income distribution process. Key figures in the production
process are a result of the real process and the income distribution process. Horizontal
lines show the changes in input and output processes and their impact on profitability.
The logic behind the figure is simple. Squares in the corners refer to initial calculation
data. Profitability figures are obtained by dividing the output figures by the input figures
in each process. After this, the production process figures are obtained by multiplying the
figures of the real and income distribution processes.

Depicting the development by time series

Productivity and income distribution development (Saari 2006)

Development in the real process, income distribution process and production process can
be illustrated by means of time series. (Kendrick 1984, Saari 2006) The principle of a
time series is to describe, for example, the profitability of production annually by means
of a relative surplus value and also to explain how profitability was produced as a
consequence of productivity development and income distribution. A time series can be
composed using the chain indexes as seen in the following.

Now the intention is to draw up the time series for the ten periods in order to express the
annual profitability of production by help of productivity and income distribution
development. With the time series it is possible to prove that productivity of the real
process is the distributable result of production, and profitability is the share remaining in
the company after income distribution between the company and interested parties
participating in the exchange.

The graph shows how profitability depends on the development of productivity and
income distribution. Productivity figures are fictional but in practice they are perfectly
feasible indicating an annual growth of 1.5 per cent on average. Growth potentials in
productivity vary greatly by industry, and as a whole, they are directly proportionate to
the technical development in the branch. Fast-developing industries attain stronger
growth in productivity. This is a traditional way of thinking. Today we understand that
human and social capitals together with competition have a significant impact on
productivity growth. In any case, productivity grows in small steps. By the accurate
measurement of productivity, it is possible to appreciate these small changes and create
an organisation culture where continuous improvement is a common value.

Measuring and interpreting partial productivity

Measurement of partial productivity refers to the measurement solutions which do not
meet the requirements of total productivity measurement, yet, being practicable as
indicators of total productivity. In practice, measurement in production means measures
of partial productivity. In that case, the objects of measurement are components of total
productivity, and interpreted correctly, these components are indicative of productivity
development. The term of partial productivity illustrates well the fact that total
productivity is only measured partially – or approximately. In a way, measurements are
defective but, by understanding the logic of total productivity, it is possible to interpret
correctly the results of partial productivity and to benefit from them in practical
situations.

Comparison of basic measure types (Saari 2006)

Typical solutions of partial productivity are:

1. Single-factor productivity
2. Value-added productivity
3. Unit cost accounting
4. Efficiency ratios
5. Managerial control ratio system

Single-factor productivity refers to the measurement of productivity that is a ratio of

output and one input factor. A most well-known measure of single-factor productivity is
the measure of output per work input, describing work productivity. Sometimes it is
practical to employ the value added as output. Productivity measured in this way is called
Value-added productivity. Also, productivity can be examined in cost accounting using
Unit costs. Then it is mostly a question of exploiting data from standard cost accounting
for productivity measurements. Efficiency ratios, which tell something about the ratio
between the value produced and the sacrifices made for it, are available in large numbers.
Managerial control ratio systems are composed of single measures which are interpreted
in parallel with other measures related to the subject. Ratios may be related to any
success factor of the area of responsibility, such as profitability, quality, position on the
market, etc. Ratios may be combined to form one whole using simple rules, hence,
creating a key figure system.
The measures of partial productivity are physical measures, nominal price value measures
and fixed price value measures. These measures differ from one another by the variables
they measure and by the variables excluded from measurements. By excluding variables
from measurement makes it possible to better focus the measurement on a given variable,
yet, this means a more narrow approach. The table below was compiled to compare the
basic types of measurement. The first column presents the measure types, the second the
variables being measured, and the third column gives the variables excluded from
measurement.

National productivity
Productivity measures are often used to indicate the capacity of a nation to harness its
human and physical resources to generate economic growth. Productivity measures are
key indicators of economic performance and there is strong interest in comparing them
internationally. The OECD publishes an annual Compendium of Productivity Indicators
that includes both labour and multi-factor measures of productivity.

Labour productivity and multi-factor productivity

Labour productivity is the ratio of (the real value of) output to the input of labour. Where
possible, hours worked, rather than the numbers of employees, is used as the measure of
labour input. With an increase in part-time employment, hours worked provides the more
accurate measure of labour input. Labour productivity should be interpreted very
carefully if used as a measure of efficiency. In particular, it reflects more than just the
efficiency or productivity of workers. Labour productivity is the ratio of output to labour
input; and output is influenced by many factors that are outside of workers' influence,
including the nature and amount of capital equipment that is available, the introduction of
new technologies, and management practices.

Multifactor productivity is the ratio of the real value of output to the combined input of
labour and capital. Sometimes this measure is referred to as total factor productivity. In
principle, multifactor productivity is a better indicator of efficiency. It measures how
efficiently and effectively the main factors of production - labour and capital - combine to
generate output. However, in some circumstances, robust measures of capital input can be
hard to find.

Labour productivity and multifactor productivity both increase over the long term.
Usually, the growth in labour productivity exceeds the growth in multifactor productivity,
reflecting the influence of relatively rapid growth of capital on labour productivity.

Importance of national productivity growth

Productivity growth is a crucial source of growth in living standards. Productivity growth

means more value is added in production and this means more income is available to be
distributed.
At a firm or industry level, the benefits of productivity growth can be distributed in a
number of different ways:

• to the workforce through better wages and conditions;

• to shareholders and superannuation funds through increased profits and dividend
distributions; · to customers through lower prices;
• to the environment through more stringent environmental protection; and
• to governments through increases in tax payments (which can be used to fund
social and environmental programs).

Productivity growth is important to the firm because it means that it can meet its (perhaps
growing) obligations to workers, shareholders, and governments (taxes and regulation),
and still remain competitive or even improve its competitiveness in the market place.

There are essentially two ways to promote growth in output:

• bring additional inputs into production; or

• increase productivity.

Adding more inputs will not increase the income earned per unit of input (unless there are
increasing returns to scale). In fact, it is likely to mean lower average wages and lower
rates of profit.

But, when there is productivity growth, even the existing commitment of resources
generates more output and income. Income generated per unit of input increases.
Additional resources are also attracted into production and can be profitably employed.

At the national level, productivity growth raises living standards because more real
income improves people's ability to purchase goods and services (whether they are
necessities or luxuries), enjoy leisure, improve housing and education and contribute to
social and environmental programs.

‘Productivity isn't everything, but in the long run it is almost everything. A country's
ability to improve its standard of living over time depends almost entirely on its ability to
raise its output per worker. World War II veterans came home to an economy that doubled
its productivity over the next 25 years; as a result, they found themselves achieving living
standards their parents had never imagined. Vietnam veterans came home to an economy
that raised its productivity less than 10 percent in 15 years; as a result, they found
themselves living no better - and in many cases worse - than their parents’ (Krugman,
1992). Paul Krugman 1992, The Age of Diminished Expectations: US Economic Policy
in the 1980s, MIT Press, Cambridge, p. 9.

‘Over long periods of time, small differences in rates of productivity growth compound,
like interest in a bank account, and can make an enormous difference to a society's
prosperity. Nothing contributes more to reduction of poverty, to increases in leisure, and
to the country's ability to finance education, public health, environment and the arts’
(Blinder and Baumol, 1993). Alan Blinder and William Baumol 1993, Economics:
Principles and Policy, Harcourt Brace Jovanovich, San Diego, p. 778.

Sources of productivity growth

In the most immediate sense, productivity is determined by:

• the available technology or know-how for converting resources into outputs

desired in an economy; and
• the way in which resources are organised in firms and industries to produce goods
and services.

Average productivity can improve as firms move toward the best available technology;
plants and firms with poor productivity performance cease operation; and as new
technologies become available. Firms can change organisational structures (eg core
functions and supplier relationships), management systems and work arrangements to
take the best advantage of new technologies and changing market opportunities. A
nation's average productivity level can also be affected by the movement of resources
from low-productivity to high-productivity industries and activities.

National productivity growth stems from a complex interaction of factors. As just

outlined, some of the most important immediate factors include technological change,
organisational change, industry restructuring and resource reallocation, as well as
economies of scale and scope. Over time, other factors such as research and development
and innovative effort, the development of human capital through education, and
incentives from stronger competition promote the search for productivity improvements
and the ability to achieve them. Ultimately, many policy, institutional and cultural factors
determine a nation's success in improving productivity.

Aspects of productivity
Productivity studies

Productivity studies analyze technical processes and engineering relationships such as

how much of an output can be produced in a specified period of time (see also
Taylorism). It is related to the concept of efficiency. While productivity is the amount of
output produced relative to the amount of resources (time and money) that go into the
production, efficiency is the value of output relative to the cost of inputs used.
Productivity improves when the quantity of output increases relative to the quantity of
input. Efficiency improves, when the cost of inputs used is reduced relative the value of
output. A change in the price of inputs might lead a firm to change the mix of inputs used,
in order to reduce the cost of inputs used, and improve efficiency, without actually
increasing the quantity of output relative the quantity of inputs. A change in technology,
however, might allow a firm to increase output with a given quantity of inputs; such an
increase in productivity would be more technically efficient, but might not reflect any
change in allocative efficiency.
Increases in productivity

Companies can increase productivity in a variety of ways. The most obvious methods
involve automation and computerization which minimize the tasks that must be
performed by employees. Recently, less obvious techniques are being employed that
involve ergonomic design and worker comfort. A comfortable employee, the theory
maintains, can produce more than a counterpart who struggles through the day. In fact,
some studies claim that measures such as raising workplace temperature can have a
drastic effect on office productivity. Experiments done by the Japanese Shiseido
corporation also suggested that productivity could be increased by means of perfuming or
deodorising the air conditioning system of workplaces. Increases in productivity also can
influence society more broadly, by improving living standards, and creating income.
They are central to the process generating economic growth and capital accumulation. A
new theory suggests that the increased contribution that productivity has on economic
growth is largely due to the relatively high price of technology and its exportation via
trade, as well as domestic use due to high demand, rather than attributing it to micro
economic efficiency theories which tend to downsize economic growth and reduce labor
productivity for the most part. Many economists see the economic expansion of the later
1990s in the United States as being allowed by the massive increase in worker
productivity that occurred during that period. The growth in aggregate supply allowed
increases in aggregate demand and decreases in unemployment at the same time that
inflation remained stable. Others emphasize drastic changes in patterns of social
behaviour resulting from new communication technologies and changed male-female
relationships.

Labor productivity

Main article: Labour productivity

Labour productivity is generally speaking held to be the same as the "average product of
labor" (average output per worker or per worker-hour, an output which could be
measured in physical terms or in price terms). It is not the same as the marginal product
of labor, which refers to the increase in output that results from a corresponding increase
in labor input. The qualitative aspects of labor productivity such as creativity, innovation,
teamwork, improved quality of work and the effects on other areas in a company are
more difficult to measure.

Marx on productivity

Main article: labor theory of value

In Karl Marx's labor theory of value, the concept of capital productivity is rejected as an
instance of reification, and replaced with the concepts of the organic composition of
capital and the value product of labor. A sharp distinction is drawn by Marx for the
productivity of labor in terms of physical outputs produced, and the value or price of
those outputs. A small physical output might create a large value, while a large physical
output might create only a small value - with obvious consequences for the way the labor
producing it would be rewarded in the marketplace. Moreover if a large output value was
created by people, this did not necessarily have anything to do with their physical
productivity; it could be just due to the favorable valuation of that output when traded in
markets. Therefore, merely focusing on an output value realised, to assess productivity,
might lead to mistaken conclusions. In general, Marx rejected the possibility of a concept
of productivity that would be completely neutral and unbiased by the interests or norms
of different social classes. At best, one could say that objectively, some practices in a
society were generally regarded as more or less productive, or as improving productivity
- irrespective of whether this was really true. In other words, productivity was always
interpreted from some definite point of view. Typically, Marx suggested in his critique of
political economy, only the benefits of raising productivity were focused on, rather than
the human (or environmental) costs involved. Thus, Marx could even find some
sympathy for the Luddites, and he introduced the critical concept of the rate of
exploitation of human labour power to balance the obvious economic progress resulting
from an increase in the productive forces of labor.

Productivity paradox

Main article: Productivity paradox

Despite the proliferation of computers, there has not been any observable increases in
productivity as a result.[1] One hypothesis to explain this is that computers are productive,
yet their productive gains are realized only after a lag period, during which
complementary capital investments must be developed to allow for the use of computers
to their full potential. Another hypothesis states that computers are simply not very
productivity enhancing because they require time, a scarce complementary human input.
This theory holds that although computers perform a variety of tasks, these tasks are not
done in any particularly new or efficient manner, but rather they are only done faster. It
has also been argued that computer automation just facilitates ever more complex
bureaucracies and regulation, and therefore produces a net reduction in real
productivity.[2] Another explanation is that knowledge work productivity and IT
productivity are linked, and that without improving knowledge work productivity, IT
productivity does not have a governing mechanism.[clarification needed]

SOCIAL, IMPLICATIONS OF WASTE MANAGEMENT

Introduction

Waste Management (WM) is a dynamically emerging field with vaste scope. The
growing urbanization and industrialization is making WM a complex problem with
serious sociological, ecological and economic implications. A sustained effort is needed
to restore the socio-ecological balance of nature in order to optimally harness the
available resources.
This paper emphasizes to deal with the problem of waste in totality considering its
technical as well as social aspects and highlighting the social implications of effective
WM. A sort of social cost-benefit analysis should be done prior to the implementation of
any W M programme. It has been emphasized that in the socio-economic resource
structure of India, Management of waste plays an important role.

Waste Management: An Overview

From system's view point, waste has been visualized as any unnecessary input to or any
undesirable output from any system encompassing all types of resources, viz., manpower,
material energy, space, time, capital, utilities and services, data and information etc. The
resource-based classification of waste is shown in Figure 1. Waste Management (WM) is
conceptualized as a multidisciplinary activity to minimize the overall wastivity of the
system under consideration (1, 2, and 5). A systematic approach to WM encompassing
the waste of all kinds of resources at all stages should be adopted. However, as the
material constitutes a major faction of the total product cost, material wastes are of
critical importance.

Complementarity of Waste Management and Resource Management

A system basically takes some input, process it and gives the desired output, as shown in
Figure 2 i.e., some input is essential, in whatever form, for the functioning of a system.
An ideal system is conceptualized to transform the total input into useful or desirable
output. In view of the known physical laws of nature the existence of an ideal system is
not possible, i.e. 100 per cent utilization of resources is not practically possible for any
system. To paraphrase, some waste is inevitable in the functioning of any system.

The main objective of WM is to minimize the waste this aiming at the ideal system, while
the resource management aims to maximize the utilization of the resources. The goal of
waste and resource management is same, i.e., optimal utilization of the available
resources for higher efficiency and growth of the system, but the approaches are different.
The relationship of waste and resource management is shown in Figure 3. It can be said
that waste and resource management are complementary to each other. If one is primal
formulation of a problem, the other is dual.

Concept of Wastivity

An ideal or perfect system will be one that consumes just the right amount of resources,
leaving no idle, unutilized (nonrecoverable) or lost resource, or any undesirable output.
The concept of "wastivity" which is yet in the rudimentary stages may prove to be a good
measure of performance, both at macro and micro levels, and will be helpful in the sound
planning and monitoring of various systems at different levels of hierarchy.

"Wastivity of any system is defined as the ratio of the waste to the input"?
Depending upon the level of waste under consideration the wastivity may be categorized
as gross wastivity and net wastivity. The wastivity for each type of input indirectly
assesses the productivity of each type of input. Both productivity and wastivity are
complementary to each other, which bears in it the inherent cause-effect phenomenon.
The cause, i.e. wastivity is checked, the effect, i.e. productivity, will automatically be
improved.

The Functional Elements of Waste Management

The problems associated with the management of waste in today's society are complex
and diverse in nature. For an effective and orderly management of wastes the
fundamental aspects and relationships must be identified and clearly understood. The
efficient WM comprises the guide identification of waste generated/caused, economic
reduction, efficient collection and handling, optimal sense and recycling, and effective
disposal of waste leaving no environmental problems. WM can thus be functionally
classified into five basic elements, viz., generation, reduction collection, recycling and
disposal. However, Waste Management (WM) should be viewed in totality considering
the inter-relationship of basic functional elements/ systems as shown in Figure 4. One of
the objectives of WM is to optimise these basic functional systems to provide the most
efficient and economic solution, commensurate with the constraints imposed.

By considering each element separately it is possible to:

(i) Identify the fundamental aspects and relationships involved in each element:
(ii) Develop, wherever possible, quantifiable relationships for the purpose of making
engineering comparisons, analysis and evaluation.

Socio-economic Benefits of Waste Management Programmes

Some of the social and economic benefits of effective WM programmes and systems are
as follows:

i. Cheaper products due to increased productivity. Reduced scarcity of materials by way

of material conservations.
ii. Economic gains by salvaging waste materials.
iii. Introduction of newer products by recycling/reusing wastes.
iv. Relief from energy crisis.
v. More hygienic, safe and pollution free environment.
vi. Lesser public nuisance due to reduction in diseases.
vii. Neat, clean and comfortable living conditions and higher standard of living.
viii. Reduced uncertainty, better prediction and control of natural calamities by nature
conservation.
ix. Preservation of heritage, fauna and flora.
x. Control over unemployment and the development of a healthier society, and.
xi. Speedier and sustained national development and self-reliance.

Development of Economic System

Many a time growth and development of the economic system are treated as
synonymous. The consumption of resources is considered a growth measure. More
consumption does not necessarily mean more development. The development of the
economic system is dependent upon the effectiveness of utilization of the inputs, which is
very much related to the management of waste in the economy. It is advocated here that
the waste parameters deserve explicit consideration in view of their important role in
various systems. The need to incorporate waste as a parameter in socio-economic
planning can hardly be overemphasized by taking into consideration the crisis of vita fly
needed resources, balanced economic growth of the nation, and the awareness for a
cleaner and hygienic ****

The techno-economic structure has conventionally been concentrating on intermediate

means and intermediate ends. The ultimate means and ultimate ends in the spectrum, as
shown in Figure 5, (4) have most of the time been ignored. This has led to serious social
as well as ecological problems at both the ends. In order to minimize such socio-
ecological problems the base has to be widened to incorporate the ultimate means as well
as the ultimate end. WM can provide answer to interlink various stages from the ultimate
means to the ultimate ends in an effective manner.

he low entropy resources are being consumed exorbitantly and in the process high
entropy wastes are generated. This is leading to a continuous increase of the entropy of
the whole socio-economic system. This rate of growth of entropy has to be checked if the
human race wants to survive for tong and at a higher level of development. The entropy
can be brought under control by managing the waste in the economic system effectively.
The technology and WM can be taken as a substitute of negentropy, (3) as the
technological progress enables the economic extraction of lower grade natural resources
and improved technology and WM result in lower wastivity of the economy.

Socio-Technical System

From socio-technical system's viewpoint every organization is an integrated system

having interacting technical and social sub-systems as shown in Figure 6. The
organization taken both the technical and social inputs, gives the output of technical as
well as social nature, and generates both the technical and the social system waste. The
relationship of technical and social system waste is shown in Figure 7. The technical
system's waste increase the social system's waste and vice versa. Waste, whether
technical or social, affects the social system within the system and the environment
through the links of quality, productivity and environmental pollution.
In this regard selection of technology is an important managerial consideration. A wrong
choice of technology will lead to consequent waste of resources as well as cause social
problems. For example; if a capital intensive technology is selected, for a country like
India with vast amount of manpower available, in a sector where it is not needed, it will
result in the waste of capital, manpower and energy. Managers can play a vital role in the
selection of appropriate technology.

Social Responsibilities and Interfacing Problems

It is the social responsibility of every scientist, technologist and manager to design and
manage systems which are leading to minimum level of wastivity as shown in Figure 8.
There are two sub-systems in the technology cycle. One is technology development
system and the other is technology management system. Scientists, technologists and
managers have their social responsibilities with respect to both the systems. However, the
scientists and technologists have higher responsibilities for the technology development
system, whereas the managers are more responsible for the technology management
system.Scientists and technologists fulfil their social responsibilities by designing and
developing technologies that minimize the wastivity, and there, meet the social needs of
the system and the environment in the best possible manner.

Manager's social responsibilities are also very wide, and by managing the system's waste
they contribute towards better performance of social system by obviating some
interfacing socio-economic problems such as resource crisis, environmental pollution,
psychological and social stresses.

Conclusion

The need and importance of WM in the socio-economic system has been emphasized and
the social implications of effective WM are highlighted. It is concluded that in order to
create awareness in this regard the engineering curricula should incorporate some topics
on systems approach to WM and its socio-economic implications. It is hoped that, if the
professionals come out of the narrow conventional approach to WM and adopt a broader
systems approach to WM, it will help in the development of a better socio-economic
Paper presented in the curriculum Development Workshop, New Delhi on Social
Responsibilities of Scientists, Technologists. Co-ordinator Prof Anuradha Sharam & Prof
Raka Sharan.

Many industries in India have also developed various technologies for disposal of waste,
for e.g. Solid wastes and Fly ash etc has been discussed in this paper.

* Click here to have an idea about such technologies in one of the companies.
Further Waste Management analysis

We have discussed the issues related to waste management in our earlier modules. These
also constitute future challenges for us. In response to government and public pressures,
the health care industry has in the past few years directed a significant effort toward the
proper and safe management of medical waste streams. Medical waste is classified as a
bio hazardous waste which may result in human infection and transfers of disease. This
also includes injury and infection with many viruses and the Humans Immunodeficiency
Virus to laundry workers, nurses, emergency personnel, and refuse workers who may
come into contact with medical waste.

In a recent survey conducted in the United States and Japan and reported by the world
health organization (WHO) (1994), it was found that injuries by sharps constitute about
1-2 % per annum for nurses and maintenance workers and 18 % per annum for outside
waste management workers. In Japan, the survey indicated that injuries by sharps
constitute about 67% for in hospital waste handlers and 44% for outside waste
management workers.

In order to reduce the risks associated with medical waste, proper management
mechanism should be adopted by health care facilities to protect the health of the staff
within the medical facility, waste collection workers and the public once the waste has
left the facility for final disposal. These mechanisms include.

- Waste identification

- Segregation

- Storage and

- Treatment

However, as a first-step in the implementation of a waste management system, the

management of a medical facility should conduct an audit of the generated waste streams.
The purpose of this audit is to specify the locations of the waste generation points and
types and amounts of generated waste. An accurate estimate of the medical waste
amounts provides the management of a health care facility the tools for.

1. Predicting the cost of operating its medical waste management system in relation to the
fees for waste transport, treatment and disposal.

2. Improving environmental performance by monitoring the amounts of generated waste

from each medical activity, and undertaking proper measures to enforce waste quantity
minimization.

WHO/ UNEP (1997), the World Health Organization has adopted the following
definitions.
· Medical activities: - any practices related to the diagnosis, monitoring, treatment or
prevention of disease or alleviation of handicap in human or animals. These include
emergency services, nursing, dental, veterinary, pharmaceutical or similar practices,
investigation, teaching and research, or the collection of blood for transfusion.

· Medical waste: the total waste streams arising form medical activities which consist
wholly or partly human or animal tissue, blood or other bodily fluids, excretions, drugs or
other pharmaceutical products, swabs or dressings, or syringes, needles or other sharp
instruments, being waste which unless rendered safe, may prove hazardous or infectious
to any person coming into contact with it.

· Healthcare or medical facilities: the sites carrying out all kinds of medical activities as
defined above. These include, but not limited to, hospitals, healthcare centres, medical
and dental clinics, laboratories, blood banks, pharmacies etc.

The WHO regional guidelines (1994) presents some examples of heath care waste
classification systems in the western pacific countries. Accordingly a sound approach for
classifying wastes for the purposes of determining their quantities is to adopt
classification system which corresponds to the locally implemented methods for waste
collection, treatment and disposal.

Waste management and sustainable development:

Kofi A Anan (2002) observed Sustainable development rests on three pillars: economic
growth, social progress and protection of our environment and natural resources. When
the idea first burst onto the scene in 1987 with the publication of our common future, it
was meant to go beyond the ecosystem approaches of the past, which put environmental
issues on the political map but did not take fully into account these other key concerns.
Despite this advance, and despite considerable efforts and significant achievements since
the "Earth summit "the latest readings reveal a planet still in need of intensive care.
Poverty, pollution and population growth; rural poverty and rapid urbanization; wasteful
consumption habits and growing demands for water, land and energy continue to place
intense pressures on the planet's life support systems, threatening our ability to achieve
sustainable development.

There is little chance of protecting the environment without a greater sense of mutual
responsibility, especially in an age of interdependence, and especially since the
environmental "footprint" left by some societies is so much larger than that left by others.

Leadership qualities coupled with technical competence are a potent prescription for
engineers and managers shouldering the heavy responsibility of socio-economic
development of the country. Corporations are driven by vast engine of consumer
satisfaction; many are also responsible for environmental destruction. Corporations and
businesses also generate pollution, contributing to what has been called the "trash crisis".
They have not only been accused of generating trust, but also environmental racism, a
charge that turns our attention to where that trash is going and has gone. According to
Benjaarn F-Charis Jr. "a deliberate getting people of color communities for toxic waste
facilities" and an "official sanctioning of the life- threatening presence of poisons and
pollutants in our communities". Minorities bear a greater burden form lead poisoning
airborne toxins and contaminated drinking water. Says Deeohn Ferris an attorney for the
National Wildlife Federation.

The condition is called as "environmental racism" an environmental researcher hope

Taylor says "small dirty industries have a tendency to locate in minority communities for
two reasons; one is cheap labor and two relative lack of knowledge about environmental
concerns ".

Environmental Racism analyzes the pattern of placing hazardous facilities in

communities in many countries and also makes a connection between this phenomenon
and dumping hazardous wastes in third - world countries often a discussion of ethics in
business or corporate social responsibility is reduced to a stank conflict between making
profits for shareholders vs. assuming social responsibilities to the entire community
(Grossman, 1971)

Milton Friedman (1970) a Nobel Prize economist raises the question whether business
has social responsibilities? Some business people have expressed the view that they ought
to not merely be concerned with maximizing profits but also concerned about
"discrimination" and "Avoiding pollution". According to Friedman corporations have
"artificial responsibilities "but not "but as a whole". He argues that they are employees of
stakeholders and that their duty is to make as much money as possible comparable with
the "basic rules of the society "those embodied in law and those embodies in ethical
custom. The executive is thus just an agent of those who own the corporation and his
primary responsibility is to them. He must not make corporate decisions in manners that
does not promote " the best interests of his employers" and if he does he is spending
someone else's money to promote a "social objective and this in Friedman's view
amounts to fixation a function reserved in our political system to the government. If an
executive so acts, he is taxing people without being represented. Fried man thinks this is
typical or socialism. He claims that executives may lack expertise to make such
decisions, for e.g., how to might inflation or to ascertain how much stakeholders advocate
pursuit of social objectives.

There is a counter argument to Friedman's view's that has been given by a legal theorist
Christopher Stone. He says that "the managers of the corporation are to be steered almost
wholly by profit, rather than what they think proper for society on the whole". Stone
takes the position that it may be better to leave the running of corporations to the market
and the law rather than "to have corporate managers implementing their own vague and
various notions of what is best. However, this view applies only if the law and the market
can keep corporations within "desirable bounds" of social responsibilities.
One example of these circumstances is the displacing of third-world farmers by huge
agribusiness companies in order to grow crops for export to other countries. Stakeholder
is a relatively new term invented to contrast with "Shareholder". This suggests that
many individuals and groups beside shareholder are interest groups, retirees, host
communities and customers to name a few.

Thus, aims of CRS areas are as follows:

Companies now perform in non-financial arenas such as human rights, business

ethics, environmental policies, corporate contributions, community development,
corporate governance, and workplace issues.

Social and environmental performances are considered side by side with financial
performance. From local economic development concerns to international human rights
policies, companies are being held accountable for their actions and their impact.

Companies are also more transparent in disclosing and communicating their policies
and practices as these impact employees, communities, and the environment.

In the new global economy, companies that are responsive to the demands of all of their
stakeholders are arguably better positioned to achieve long-term financial success. It is no
longer optional for a company to communicate its environmental and social impacts; such
information is pertinent in an information-driven economy, and improved communication
has become critical for sustainable business growth.

CSR has become the password to not only overcome competition but to ensure
sustainable growth. It has been supported not only by the shareholders but stakeholders
by and large encompassing the whole community. Corporate Virtue Is In is the slogan
as it offers so many advantages including a hike in profits.

CSR is the point of convergence of various initiatives aimed at ensuring socio-economic

development of the community which would be livelihood oriented as a whole in a
credible & sustainable manner.

The above discussion suggests that there is Benefits of CSR too. Some of these are
presented below:

o Improved financial performance

o Reduced costs

o Enhanced brand image and reputation

o Increased sales and customer loyalty

o Customer satisfaction

o Increased productivity and quality

o Increased ability to attract and retain employees

o Reduced regulatory oversight

o Brand Visibility, recognition and awareness

o Increased market share

o Favourable positioning

o Competitive mileage

o More engaged investors

o Environmental sustainability

o Forging of partnerships

According to Wikipedia encyclopedia, corporate social responsibility (CSR) is an

expression used to describe what some see as a company's obligation to be sensitive to
the needs of all of its stakeholders in its business operations. The principle is closely
linked with the imperative of ensuring that these operations are "sustainable" i.e. that it is
recognized that it is necessary to take account not only of the financial/economic
dimension in decision making also the social and environmental consequences
"_Sustainable Development"_.

A company's stakeholders are all those who are influenced by and/or can influence a
company's decisions and actions, both locally and globally. These include (but are not
limited to): employees, customers, suppliers, community organizations, subsidiaries and
affiliates, joint venture partners, local neighborhoods, investors, and shareholders (or a
sole owner).

Today's heightened interest in the proper role of businesses in society has been promoted
by increased sensitivity to environmental and ethical issues. Issues like environmental
damage, improper treatment of workers, and faulty production leading to customers
inconvenience or danger, are highlighted in the media. In some countries Government
regulation regarding environmental and social issues has increased, and standards and
laws are also often set at a supranational level. Some investors and investment fund
managers have begun to take account of a corporation's CSR policy in making investment
decisions. Some consumers have become increasingly sensitive to the CSR performance
of the companies from which they buy their goods and services. These trends have
contributed to the pressure on companies to operate in an economically, socially and
environmentally sustainable way... Corporations have often, in the past, spent money on
community projects, the endowment of scholarships, and the establishment of
Foundations. They have also often encouraged their employees to volunteer to take part
in community work thereby create goodwill in the community which will directly
enhance the reputation of the company and strengthen its brand. CSR goes beyond
charity and requires that a responsible company will take into full account the impact on
all stakeholders and on the environment when making decisions. This requires them to
balance the needs of all stakeholders with their need to make a profit and reward their
shareholders adequately. This holistic approach to business regards organizations as being
full partners in their communities.

The benefits of CSR to businesses vary depending on the nature of the enterprise, and are
typically very difficult to quantify. It should be noted that the definition of CSR used
within business can vary from the strict 'stakeholder impacts' definition and will often
include charitable efforts and volunteering.
The Environment issues for CSR are likely rest on one or more of these arguments these
are:-

- Human resources
- Risk management
- Brand differentiation
- License to operate
- Diverting attention

Corporate Social Responsibility can be an important aid to recruitment and retention,

particularly within the competitive graduate market in the environment.

Managing risk is a central part of many corporate strategies. Reputations that take
decades to build up can be ruined in hours through incidents such as corruption scandals
or environmental accidents. These events can also draw unwanted attention from
regulators, courts, governments and media. Building a genuine culture of 'doing the right
thing' within a corporation can offset these risks.

In crowded marketplaces companies strive for environmental factors, which can separate
them from the competition in the minds of consumers.

By taking substantive voluntary steps corporations can persuade governments and the
wider public that they are taking current issues like health, safety, diversity or the
environment seriously and so avoid intervention.

Major corporations which have existing reputation problems due to their core business
activities may engage in high-profile CSR programs to draw attention away from their
perceived negative impacts. Thus, as part in health initiatives corporations have installed
very visible wind-turbines on the roofs of some petrol stations in some countries.

Though CSR is a widely talked about concept, there are still many criticisms against it.
Some critics of CSR, such as the economist Milton Friedman, argue that a corporation's
principal purpose is to maximize returns to its shareholders, whilst obeying the laws of
the countries within which it works. Others argue that the only reason corporations put in
place social projects is utilitarian; that they see a commercial benefit in raising their
reputation with the public or with government. Proponents of CSR, however, would
suggest a number of reasons why self-interested corporations, seeking to solely to
maximize profits are unable to advance the interests of society as a whole.

Key challenges to the idea of CSR include: - the rule of corporate law that a corporation's
directors are prohibited from any activity that would reduce profits - other mechanisms
established to manage the principal-agent problem, such as accounting oversight, stock
options, performance evaluations, deferred compensation and other mechanisms to
increase accountability to shareholders.

There are various views regarding CSR.

Some would argue that it is self-evidently "good" that businesses should seek to minimize
any negative social and environmental impact resulting from their economic activity. It
can also be beneficial for a company's reputation to publicize (for example) any
environmentally beneficial business activities. A company which develops new engine
technology to reduce fuel consumption will be able to promote its CSR credentials as
well as increase profits.

Some commentators are cynical about corporations' commitment to CSR and Sustainable
Development and say that the idea of an "Ethical company" is an oxymoron.

But as with any process based on the collective activities of communities of human
beings (as companies are) there is no "one size fits all". In different countries, there will
be different priorities, and values that will shape how business act.

There is a growing global role the pressure on business to play a role in social issues will
continue to grow. Over the last ten years, those institutions which have grown in power
and influence have been those which can operate effectively within a global sphere of
operations. These are effectively the corporate and the NGOs. Those institutions which
are predominantly tied to the nation state have been finding themselves increasingly
frustrated at their lack of ability to shape and manage events. These include national
governments, police, judiciary and others.

There is a growing interest, therefore, in businesses taking a lead in addressing those

issues in which they have an interest where national government have failed to come up
with a solution. The focus Unilever has on supporting a sustainable fisheries approach is
one example. Using the power of their supply chain, such companies are placed to have a
real influence. National governments negotiating with each other have come up with no
solutions at all, and ever-depleting fish stocks. That is not to say businesses will
necessarily provide the answers - but awareness is growing that they are occasionally
better placed to do so than any other actors taking an interest.
There are various arguments against Corporate Social Responsibility; some of the
arguments have been discussed below. These are as follows:
(Mallen Baker, April 2001)

Argument - I

Businesses are owned by their shareholders - any money they spend on so-called social
responsibility is effectively theft from those shareholders who can, after all, decide for
themselves if they want to give to charity.

This is the voice of the laisser-faire 1980s, still being given powerful voice by advocates
such as Elaine Sternberg. Sternberg argues that there is a human rights case against CSR,
which is that a stakeholder approach to management deprives shareholders of their
property rights. She states that the objectives sought by conventional views of social
responsibility are absurd. Not all aspects of CSR are guilty of this, however. Sternberg
states that ordinary decency, honesty and fairness should be expected of any corporation.

In the first instance, this case strongly depends on the model of social responsibility
adopted by the business being a philanthropic one. The starting point assumption is that,
through CSR, corporations simply get to "give away" money which rightfully belongs to
other people. If CSR is seen as a process by which the business manages its relationships
with a variety of influential stakeholders who can have a real influence on its license to
operate, the business case becomes immediately apparent. CSR is about building
relationships with customers, about attracting and retaining talented staff, about
managing risk, and about assuring reputation.

Argument - II

The leading companies who report on their social responsibility are basket cases -
the most effective business leaders don't waste time with this stuff.

Looking at the most recent times, "Most Respected Companies" survey by the Financial
Times. Who are the most respected companies and business leaders at the current time?

In the first instance, very few businesses operate in a black or white framework, where
they are either wholly virtuous or wholly without redemption. There are many aspects in
the way Jack Welch restructured General Electric which would play to the kind of agenda
recognizable to advocates of social responsibility - in particular that of employee
empowerment.

Also, many of the leading companies with regard to their social responsibility are equally
successful companies. The same "Most Respected" survey named IBM and Motorola as
leaders as well - and these are companies that have been much more strongly associated
with the CSR movement. Coca Cola achieved its place partially because of its profile in
social responsibility.

Argument - III

Our company is too busy surviving hard times to do this. We can't afford to take our
eye off the ball - we have to focus on core business.

It's all very well for the very big companies with lots of resources at their disposal. For
those fighting for survival, it's a very different picture. You can't go spending money on
unnecessary frills when people are being laid off one morale is rock bottom. And the odd
bit of employee volunteering won't make any difference to our people when they feel
cynical and negative about how the company operates.

Managing your social responsibility is like any other aspect of managing your business.
One can do it well, or one can do it badly. If the process of managing social responsibility
leads you to take your eye off the ball and stop paying attention to core business, the
problem is not that you're doing it at all - it's that you're doing it badly. Well managed
CSR supports the business objectives of the company, builds relationships with key
stakeholders whose opinion will be most valuable when times are hard, and should
reduce business costs and maximize its effectiveness. The following statements would
help to look at the situation more objectively.

Times are hard, therefore it is in my interest to pollute more and run an increased risk of
prosecutions and fines, not to mention attracting the attention of environmental pressure
groups

Times are hard; therefore I can afford to lose some of my most talented people - serving
or potential - by erecting barriers on the basis of race, gender, age or sexual orientation.
And it doesn't matter if employment tribunals occur as a result of my poor employment
practices.

Times are hard; therefore I need to ignore changing values in my customer base towards
socially responsible goods and services. I can keep making things just the way I always
have.

Times are hard, so I can ignore the fact that the local communities around my plant are
poor living environments with low education achievement, meaning that my best staff
won't want to live in them and our future staff will need supplementary training in basic
skills such as literacy which they should be getting at school. Our company can be an
island of prosperity in a sea of deprivation.

Argument - IV
It's the responsibility of the politicians to deal with all this stuff. It's not our role to
get involved

Business has traditionally been beyond morality and public policy. We expect
governments to provide the legal framework that says what society will put up with.
There's no point, for instance, allowing smoking to remain legal - even making large tax
receipt from it - and then acting as though tobacco companies are all immediately beyond
the pale. if one considers smoking illegal , then put a ban on it, otherwise let people
decide for there selves and choose what is good and bad for them.

Outside of that "macro" scale, the argument holds up less well. Many companies actually
spend considerable time and money seeking to influence the formation of public policy in
their area of interest. And since that area of interest can range far and wide - from
international treaties on climate change, through to domestic policy on health (such as
that relating to smoking) or transport - the fact is the lobbying activities of companies
show that they have a role like it or not. And if that lobbying has involved blocking
legislation that serves a social end purely in order to continue to profit in the short term,
then the company is on very dodgy ground.

If CSR is simply about obeying the law and paying taxes, then perhaps the above
statement is fair comment. If it is about managing the demands and expectations of
opinion formers, customers, shareholders, local communities, governments and
environmental NGOs - if it is about managing risk and reputation, and investing in
community resources on which you later depend - then the argument is a nonsense.

Argument - v

I have no time for this. I've got to get out and sell more to make our profit line.

There are a number of views that have business managers about environmental
performance, how difficult a sell waste minimization was to managers who really needed
to save money. Study after study after study has shown that just about any business you
can think of, if it undertakes waste minimization for the first time, can shift 1% of its
overall turnover straight onto its bottom line. That is not an insignificant figure. And yet,
getting out and selling more product somehow remains more attractive for business
managers than making more profit through wasting less. It will take a long time and a
change in fundamental attitudes towards doing business before this one shifts.

Argument - VI
Corporations don't really care - they're just out to screw the poor and the
environment to make their obscene profits

Corporations have their share of things to answer for; the fact is that if one is interested in
the real solutions to world poverty or environmental degradation, one has to have some
kind of view about how solutions will be found.

The solutions to these common problems will either be common solutions or they won't
be solutions. By all means give careful scrutiny to those who wield the most power. But
recognize CSR as a business framework which enables the common solution of wealth
creation as if people and the environment mattered.

Argument -VIII

Another argument against CSR is -"Is Corporate Social Responsibility an

Oxymoron"?

The voices calling for corporate reform are getting louder. "Corporate social
responsibility is an oxymoron", according to a recent book and documentary film "the
Corporation" by law professor Joel Bakan. Corporations are like amoral "psychopaths" -
manipulative, incapable of being empathic or remorseful, and, while causing tremendous
damage to the environment and other elements of the public interest, they refuse to take
responsibility for their behaviour. Harsh words, but they resonate with those uttered by
critics of corporate power throughout history.

Corporations are powerful institutions. They do not serve humanity well when their
pursuit of profits leads to strategies that degrade the environment, violate human rights
and the dignity of employees, endanger public health and safety and otherwise undermine
the welfare of communities.

People who run corporations are mostly decent human beings; many are pillars of their
communities. They care about the environment and other people; they want to be
recognized as good citizens. Corporate abuse of the public interest does not stem from
flaws in the characters of corporate personnel; it stems from a flaw in the rules under
which corporations operate.

State laws that create corporations promote behaviour which managers and shareholders
do not condone in their personal lives. Those laws encourage managers to act as if
shareholders are psychopaths -- concerned only that their company makes more and more
money without regard for the human or environmental costs. They allow managers to
excuse the damage they do by claiming they are only doing what the law requires -
promoting the interests of shareholders.

Legislatures pass laws to control that behaviour, but they are merely treating the
symptoms of a problem while ignoring its underlying cause. A better solution, to prevent
the problem from occurring in the first place, is to change the laws that create it.

People understand that doing well and doing good are not mutually exclusive.
Shareholders are increasingly supporting stockholder resolutions that address issues of
corporate responsibility, even when those resolutions support action that may not be in
their short-term financial interest. More and more corporations are taking steps to protect
the environment and to adopt policies that enrich the communities in which they operate.
But these changes are slow, piecemeal and vulnerable to backsliding.

Corporations have the potential to embrace human values if we, the citizens in whose
name the corporate laws were enacted, demand it. To deal effectively with institutions
that exhibit psychopathic behaviour, as with psychopathic individuals, it is essential to
provide structure, embodied in a code of conduct that articulates expectations and
standards clearly, sets limits on such behaviour and proscribes appropriate sanctions
when the code is breached.

By asking the state legislators to enact the Model Code for Corporate Citizenship, which
would add the following sentence to the corporate law which suggests that "The pursuit
of profits must not come at the expense of the environment, human rights, public health
and safety, the dignity of employees or the welfare of communities. This takes us to the
next section of this module on policy considerations.

Policy Considerations are important aspects of environmental studies. In this module we

understand the policy implications and environmental laws. There are various laws
related to environment protection in India. These are related to pollution, water , air.

About Murata's
Definition of “Zero Emissions”

Murata defines zero emissions as zero direct landfilling of waste as well as zero
landfilling of waste matter remaining after intermediate treatment (i.e., a 100% recycling
rate). However, Murata ﾁ fs zero emission and recycling rate targets exclude waste matter
that the Company is unable to process on its own, such as excess sludge in remediation
tanks.

Agenda of Meetings between Waste Management Officers

• Inspections of waste management sites at each plant, office and subsidiary

• Presentations and information sharing on waste-reduction case studies
• Exchange of views among participants
• Lectures presenting the latest waste-management information by external experts
Meetings between Waste Management Officers

In fiscal 2006, the amount of waste generated in our offices, plants and subsidiaries in
Japan totaled 31,596 tons, a decrease of approximately 3,674 tons from fiscal 2000. In
terms of waste materials generated per unit of net production, this is a decrease of about
38% - in line with our targets.

Furthermore, when constructing new office buildings and plants, we maintain a 100%
record for recycling of construction waste materials.

Collaboration between Group facilities is vital to reducing waste and raising recycling
levels. Accordingly, we periodically hold meetings for the officers responsible for waste
management in respective plants, offices and subsidiaries. At these events, participants
exchange information and opinions, such as through the presentation of case studies.
Murata is striving to reduce waste liquids and plastics, which account for approximately
70% of total waste. In fiscal 2006, we continued our efforts from the previous year to
reduce effluent and bolster polyethylene (PET) film material recycling.

As a result of management of recycling and proper separation of wastes, the materials

recycling ratio for fiscal 2006 stayed on target at 100%.

Murata attained zero emissions of waste for its domestic plants during fiscal 2003. In
fiscal 2006, we set a new target of zero emissions for our overseas operations by fiscal
2010, and are currently working toward this goal.

To promote enhanced waste management, Murata has introduced an electronic manifesto.

During fiscal 2007, this will be implemented at the Head Office and Yasu Plant, with
extension plans for all domestic facilities during fiscal 2008.

Murata discharges used polyethylene (PET) and polypropylene

(PP) along with other plastics from its manufacturing sites. By
separating this waste, we can facilitate recycling as textile products Katsumi Oka
or agricultural materials, while reducing waste matter. Environmental
Management Section,
Using equipment developed by Murata, we are aggressively Administration
promoting separation of extraneous matter from PET. I strongly feelDepartment,
that it is the social responsibility of a manufacturer in a recycling- Izumo Murata
oriented society to establish waste separation technologies as a Manufacturing Co.,
complement to product manufacturing technologies. Ltd.
Murata is prioritizing reduction of groundwater at plants and in processes with intensive
consumption. In addition, we are promoting the cyclic use of groundwater by reusing
reuse cooling water for vacuum pumps by re-cooling it with heat exchangers.

During fiscal 2006, the amount of water used at our offices, plants and subsidiaries in
Japan was 8.1 million m3, achieving our target for a reduction of 35% or more from
fiscal 2000 figures in terms of consumption per unit of net production.

We are currently striving toward a target of a 55% or more cut in domestic water
consumption per unit of net production by fiscal 2010.