“Corporate Social Responsibility

Final Notes

February 1, 2018

Compilation of Cited Literature

Prof. Ildefonso G. Mariquit (Llb)
Dept. of Management and Entraprenuership
 “CORPORATE SOCIAL RESPONSIBILITY
Lecture Notes of Prof, Ildefonso G. Mariquit (Llb.)
Many people have a vague idea of what
CSR is all about, a big corporation giving some
money to the environment or a community
initiative. Often CSR is thought to be nothing more
than a cynical public relations opportunity, a way
for Mega Corporations to gloss over its dumping of
chemicals into a nature reserve by spending a few
dollars on a youth center. (Ameinfo, 2005).
Bowen (1953) as cited by Carroll (2006) set
forth an initial definition of social responsibilities of
businessmen: “It refers to the obligation ob
businessman to pursue those policies, to make
those decisions, or to follow those lines of action
which are desirable in terms of the objectives and
values of the society”.
According to Carroll (2006) in the early
writings of CSR, it was referred more often as social
responsibility (SR) than CSR, because during those
days the modern corporation’s prominence and
dominance in the business sector had not yet
occurred. However, the publication of Bowen’s
book “Social Responsibilities of the Businessman” is
argued to be the mark of the modern period of
literature on this subject. Because of Bowen’s early
and influential work, Carroll submits that Howard
Bowen should be called the “Father of Corporate
Social Responsibility”. Bowen argued in his book
that corporate social responsibility is no panacea,
but it contains an important truth that must guide
business in the future.
Davis (1960) argued that social responsibility
is a nebulous idea but should be seen in a
managerial context. Furthermore, he asserted that
some socially responsible business decisions can be
justified by a long, complicated process of
reasoning as having a good chance of bringing long-
run economic gain to the firm, thus paying it back
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for its socially responsible outlook.
Frederick (1960) was also an influential
contributor to the early definitions of social
responsibility, according to him, social
responsibility mean that businessman should
oversee the operation of an economic system that
fulfils the expectation of the public. And this means
in turn that the economy’s means of production
should be employed in such a way that production
and distribution should enhance total socio-
economic welfare.
McGuire (1963) was another major
contributor to the definition of social responsibility.
He stated, “The idea of social responsibility
supposes that the corporation has not only
economic and legal obligations but also certain
responsibilities to society which extend beyond
these obligations”. He elaborated by saying that
the corporation must take an interest in politic, in
the welfare of the community, in education, in the
happiness of its employees and in the whole social
world about it.
Davis and Blomstrom (1966) defined social
responsibility as person’s obligation to consider the
effects of his decisions and actions on the whole
social system. Businessmen apply social
responsibility when they consider the needs and
interest of others who may be affected by the
business actions. In so doing, they look beyond
their firm’s narrows technical interest.
Davis (1967) revisited the revisited the
concept of CSR, he asserted “Social responsibility
moves large one step further by emphasizing
institutional actions and their effect on the whole
social system. He broadens the meaning from a
person’s view to the total system’s view.
Walton (1967) in his book, he presented a
number of different models of social responsibility.
His fundamental definition of social responsibility
recognizes the intimacy of the relationships
between the corporation and the society and
realizes that such relationships between the
corporation and society and realizes that such
relationships must be kept in mind by top managers
as the corporation and the related groups pursue
their respective goals.
Johnson (1971) presented a definition of CSR
as the pursuit of socioeconomic goals through the
elaboration of social norms in prescribed business
roles; or, to put it more simply, business takes place
within a socio-cultural system that outlines through
norms and business roles particular ways of
responding to particular situations and sets out in
some detail the prescribe ways of conducting
business affairs.
Manne & Wallich (1972) defined CSR by
arguing that any working definition requires three
elements: To qualify as socially responsible
corporate action; first, a business expenditure or
activity must be one for which the marginal returns
to the corporation are less than the returns
available from some alternative expenditure;
second, must be purely voluntarily; and third, must
 be an actual corporate expenditure rather than a
conduit for individual generosity.
Further, Professor Wallich (Manne & Wallich,
1972) wrote that the exercise of CSR involves three
basic elements: (1) the setting of objectives, (2) the
decision whether to pursue given objectives, and
(3) the financing of this objectives. He identified
circumstances in which CSR might be defensible,
but he favored stockholder instructions to the
corporation… to make corporations properly
responsible to stockholders’ interest.
Eilbert & Parket (1973) for the purposes of
their research they defined CSR as commitment of
the business to an active role in the solution of
broad social problems, such as racial
discrimination, pollution, transportation, or urban
decay. The result of their research was they found
out that the type of CSR activities which firms
engaged had affected organizational structure and
budget, the activities believed to be more
important than other organizational issues.
Ealls & Walton (1974) took a broader
perspective on what CSR means and how it evolved.
In its broadest sense, CSR represents a concern
with the needs and goals of society which goes
beyond the merely economic. Insofar as the
business system presently exist, it can only survive
in an effectively functioning free society if the CSR
movement represents a broad concern with
business’s role in supporting and improving the
social order.
Backman (1975) defined social responsibility
as the objectives or motives that should be given
weight by business in addition to those dealing with
economic performance such as; employment of
minority groups, reduction in pollution, greater
participation in programs to improve the
community, improve medical care, improve
industrial health and safety – these and other
programs designed to improve the quality of life are
covered by the broad umbrella of social
responsibility.
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Sethi (1975) discussed about the “dimension
of corporate social performance”, the process to
distinguish between corporate behaviors and might
be called “social obligation”, “social responsibility”
and ‘social responsiveness”. He stated that social
obligation is proscriptive in nature while social
responsibility is prescriptive. Social responsibility
by contrast goes beyond social obligation. Thus,
social responsibility implies bringing corporate
behavior up to the level where it is congruent with
the prevailing social norms, values, and expectation
of performance.
Preston and Post (1975) discussed social
responsibility as “public responsibility”, which
intended to define the function of organizational
management within the specific context of public
life. They also stated that in the principle of public
responsibility, “the scope of managerial
responsibility is not unlimited, as the popular
conception of ‘social responsibility’ might suggest,
but specifically defined in terms of primary and
secondary involvement areas.
Fitch (1976) defined CSR in terms of solving
social problems. He stated, “Corporate social
responsibility is defined as the serious attempt to
solve social problems caused wholly or in part by
the corporation”. His problem and solving
perspective on CSR was that firms, to be socially
responsible, must identify and define a social
problem and then, from an array of social
problems, decide which one to attack first.
Included in this process is making a distinction
between social and non social problems and then
identifying methods for attacking social problems.
Carroll (1979) proposed a four-part definition
of CSR that was embedded in a conceptual model
of corporate social performance (CSP). The
businesses should fulfill economic, legal, ethical
and discretionary responsibility. His basic
argument was that for mangers of firms to engage
in CSP they needed to have (a) a basic definition of
CSR, (b) an understanding of the issues for which a
social responsibility existed, and (c) a specification
of the philosophy of responsiveness to the issues.
He offered then the following definitions:
(1) The economic responsibility represents
the “expectations that society has of organizations
at a given point of time”. He contended that before
anything else, the business institution is the “basic
economic unit of the society”. As such it has a
responsibility to produce goods and services that
society wants and to sell them at a profit. All other
business roles are predicated on this fundamental
assumption.
(2) The legal responsibility, just as society
expects business to make profit as an incentive and
reward for its efficiency and effectiveness, society
also expect business to obey the law. The law
represents the basic “rule of the game” by which
business is expected to function. Society expects
business to fulfill its economic mission within the
framework of legal requirements set forth by the
society’s legal system.
(3) The ethical responsibility represents the
kinds of behaviors and ethical norms that society
expects business to follow. These extend to
behaviors and practices that are beyond what is
required by the law. Although they seem to be
always expanding, they nevertheless exist as
expectations “over and beyond legal
requirements”.
(4) The discretionary responsibility
represents voluntary roles that business assumes
but for which society does not provide as clear-cut
an expectation as it does in the ethical
responsibility. These are left to individual
managers’ and corporations’ judgment and choice;
however, the expectation that business perform
these still exists. This expectation is driven by social
norms. The specific activities are guided by
businesses’ desire to engage in social roles not
mandated or required by law and not expected of
Tuzzolino and Armandi (1981) sought to
develop a better mechanism for assessing CSR by
proposing a need-hierarchy framework patterned
after Maslow’s hierarchy of needs. They accepted
Carroll’s (1979) definition as appropriate for their
purpose, and then proceeded to say that it would
be helpful to have an analytical framework to
facilitate the operationalization of CSR. Their
organizational need hierarchy did not redefine CSR;
however, it sought to suggest that organizations,
like individuals, had criteria that needed to be
fulfilled or met, just as people do, as depicted in the
Maslow hierarchy. The authors illustrated how
organizations have physiological, safety, affiliate,
esteem, and self-actualization needs that parallel
those of humans as depicted by Maslow. They
presented the hierarchy as a “conceptual tool
whereby socially responsible organizational
performance could be reasonably assessed.
Strand (1983) presented a system paradigm
of organizational adaptations to the social
environment that sought to illustrate how such
related concepts as social responsibility, social
responsiveness, and social responses connected to
an organization-environment model. Although
offered no new or unique definition of CSR, his
model is notable because it represented another in
a continuing stream of efforts to associate concepts
as CSR to other similar notions and to organization-
environment interface.
Carroll (1983) elaborated further his 1979
four-part definition of CSR. He viewed that CSR
involves the conduct of a business so that it is
economically profitable, law abiding, ethically and
socially supportive. To be socially responsible…
then means that profitability and obedience to the
law are foremost conditions to discussing the firm’s
ethics and the extent to which it supports the
society in which it exist with contributions of
money, time and talent. Thus, CSR is composed of
businesses in an ethical sense, but are increasingly
strategic.
Jones (1980) entered the CSR discussion with
an interesting perspective; he defined CSR as the
notion that corporations have an obligation to
constituent groups in society other than
stockholders and beyond the prescribed by the law
and union contract. Two facets of this definition
are critical. First, the obligation must be voluntarily
adopted; behavior influenced by the coercive
forces of law or union contract is not voluntary.
Second, the obligation is broad one, extending
beyond the traditional duty to shareholders to
other social groups such as customers, employees,
suppliers, and neighboring communities.
four parts: economic, legal, ethical, and voluntary
or philanthropic.
Drucker (1984) made explicit in a number of
his earlier definitions and was implicit in several
others as well. His perspective was not simply the
compatibility of profitability and responsibility but
the idea that business ought to “convert” its social
responsibilities into business opportunities. He
made this point clear: that the proper ‘social
responsibility’ of business is “to tame the dragon”
that is to turn problem into economic opportunity
and economic benefit, into productive capacity,
into human competence, into well-paid jobs, and
into wealth.
According to Peter Drucker (1984),
management has three responsibilities: to make
profit; satisfy employees; and be socially
responsible. If management fails to carry out these
social responsibilities the production of wealth in
the long run will weaken society. Balancing profit
maximization and income generation on the one
side and discharging social responsibilities by
stockholders and citizens in general on the other
side is not an easy task. There has to be a very
vigilant civil society that can maintain the said
balance. Further, vigilant civilian actions have
sprung during these times as a result of the so
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called comeback of the neo-classical economic
philosophies whereby private global enterprises
are actively taking over the less efficient state-
owned and state-protected enterprises through
various privatization schemes like buy-outs, joint
venture, build operate and transfer (BOT), build
own and operate (BOO), build and transfer (BT),
subcontracting and so on.
Wartick &Cochran (1985) presented their
“evolution of the corporate social performance
model,” which extended the three dimensional
integration of responsibility, responsiveness, and
social issues which Carroll (1979) previously
introduced. One of the major contributions of
 these two authors was to recast Carroll’s three
aspects – corporate social responsibilities,
corporate social responsiveness, and social issues –
into a framework of principles, processes, and
policies. They argued that Carroll’s definition
embraced the ethical component of social
responsibility and should be thought of as
principles; social responsiveness should be thought
of as processes, and social issues management
should be thought of as policies.
Epstein (1987) provided a definition of CSR in
his quest to relate social responsibility,
responsiveness, and business ethics. He pointed
out that this three concepts dealt with closely
related, even overlapping, themes and concerns.
He defined CSR as it relates primarily to achieving
outcomes from organizational decisions
concerning specific issues or problems which (by
some normative standard) have beneficial rather
than adverse effects on pertinent corporate
stakeholders. The normative correctness of the
products of corporate action has been the main
focus of corporate social responsibility.
In addition to defining CSR, Epstein (1987)
defined corporate social responsiveness and
business ethics and then brought them together
into what he called the “social policy process”. He
added, “The nub of the corporate social policy
process is the institutionalization within business
organizations of the following three
elements…business ethics, corporate social
responsibility, and corporate social responsiveness.
Wood (1991) revisited and reformulated
Carroll’s (1979) three-dimensional CSR model and
Wartick and Cochram (1985) formulation. She
formulated this into three principles. First, she
stated the principle of CSR that took Carroll’s four
domain (economic, legal, ethical, and discretionary)
and identified how they related to CSR principles of
social legitimacy (institutional level), public
responsibility (organizational level), and managerial
discretion (individual level). Second, she identified
the processes of corporate social responsiveness,
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which went beyond Carroll’s articulation of
responsiveness categories (reactive, defensive,
accommodative, and proactive) that Wartick &
Cochran (1985) had formulated as policies, and she
highlighted such processes as environmental
assessment, stakeholder management, and issues
management. Third, she took Wartick & Cochran
(1985) policies, which were their elaboration of
Carroll’s “social issues” category, and reorganized
them under a new topic of concern—outcomes of
corporate behavior. Like the two previous models,
Wood placed CSR into a broader context than just
a stand-alone definition. An important emphasis
on her was on outcomes or performance. Although
outcomes or performance were implicit in the
earlier models, Wood made this point more
explicit, and this was a meaningful contribution.
Carroll (1991) revisited his previous four-part
CSR definition. By this time, He was referring to the
discretionary component as philanthropic and
suggesting that it embraced “corporate
citizenship.” He stated, for CSR to be accepted by
the conscientious business person, it should be
framed in such a way that the entire range of
business responsibilities is embraced. It is
suggested here that four kinds of social
responsibilities constitute total CSR: economic,
legal, ethical and philanthropic. Furthermore, these
four categories or components of CSR might be
depicted as pyramid. To be sure, all of these kinds
of responsibilities have always existed to some
extent, but it has only been in recent years that
ethical and philanthropic functions have taken a
significant place. In summary, “The CSR firm should
strive to make a profit, obey the law, be ethical, and
be good corporate citizen”.
Brummer (1991) explained the theories of
corporate social responsibility. First, the classical
theory, the primary goal of organization is to secure
the shareholder’s financial goals. Second, the
stakeholder’s theory, corporate executives are
responsible to shareholders and other groups.
Third, the social demandingness theory, the goal of
corporation is to promote and protect certain
interests of the general public. Lastly, the social
activist theory, there exist universal standards to
determine responsible corporate conduct that is
independent of the interests of the stockholder.
In addition, business organizations have
become global and realize the importance of long-
term existence. They realize the inadequacy of the
classical philosophy that the goal of corporations is
merely financial. They now recognize the value of
their share in promoting the interest of the society
of which they are a part of and the need to comply
with standards to protect the environment where
they operate.
Iñigo (1995) cited that social responsibility is
the moral and ethical content of managerial and
corporate decisions over and above the pragmatic
requirements imposed by legal principle and the
market economy.
Pauli (1995) explained the main corporate
social responsibility (CSR) theories and related
approaches in four groups: (1) instrumental
theories, in which the corporation is seen as only an
instrument for wealth creation, and its social
activities are only a means to achieve economic
results; (2) political theories, which concern
themselves with the power of corporations in
society and a responsible use of his power in the
political arena;(3) integrative theories, in which the
corporation is focused on the satisfaction of social
demands; and (4) ethical theories, based on ethical
responsibilities of corporations to society. In
practice, each CSR theory presents four dimensions
related to profits, political performance, social
demands and ethical values.
Wheelen (1998) commented the difference
between ethical and discretionary responsibilities is
that few people expect an organization to fulfill
discretionary responsibilities, whereas many
expect an organization to fulfill ethical ones.
Bateman et. al. (1999) discussed about the
traditional view of social responsibility, it has
always been the contention that the “business of
business is business”. This means that businesses
are in existence for the profit motives of its
shareholders. Theorist like Friedman believes that
the responsibility of business is to produce goods
and services that are not contrary to public policy
and to conduct business in an open and
competitive manner that is free from fraud.
However, the traditional view would appear
appropriate during the 1960’s to 1970’s, even
much earlier. Population growth was at
manageable levels and pollution was tolerated in
the name of progress and convenience. In view of
the changing times however, this outlook may be
considered “obsolete.” Despite this, there are still
quite a number of businessmen today, as
evidenced by the continuous debates on the scope
of social responsibility, who believe that any cost
attributed to corporate social responsiveness is
contrary to sound business practice.
Furthermore, the modern theorist view
social responsibility cost as investment rather than
expenses. Bateman believed that investing in social
responsive acts is actually for the best interest of
the corporation. Additional cost incurred to
contribute to society may result in higher prices and
perhaps lower sales volume in the short term; but
this may be later on compensated by the additional
business they are able to generate from discerning
and committed customers.
In addition, socially oriented programs may
improve employee productivity that will eventually
improve a corporation’s profitability. The changing
view on corporate social responsibility can also be
attributed to the changing view of business.
Previously, businesses were working under the
concept of a closed system but later on, managers
realized that businesses work within an open
system. This means, business decisions of
corporations have impact on various stakeholders
and consequently cannot be isolated from
economic and social consequences. Today, many
firms practice social responsibility in various ways.
Practicing social responsibility costs money. But
failing to emphasize social responsibility also has its
costs, whether in fines, increased regulations,
negative publicity, public disfavor, or loss of
customers. Customers, special interest groups, and
the general public are aware of the impact of
business on society and expect firms to do more
than try to make profits. Most managers today
regard the cost incurred in practicing social
responsibility as a necessary part of doing business.
Moreover, Bateman et. al. (1999)
suggested that businesses should consider the
social implications of their decisions. Corporate
social responsibility is seriously considering the
impact of the company’s action on society. Social
responsiveness is the ability of a corporation to
relate its operations and policies to the social
environment in ways that are mutually beneficial to
the company and to society.
The Dow Jones Sustainability Index (2005)
web site as cited by Holcomb et al (2007) defines
corporate sustainability as follows:
“Corporate sustainability is a business
approach that creates long-term
shareholder value by embracing
opportunities and managing risks
deriving from economic, environmental
and social developments. Corporate
sustainability leaders achieve long-term
shareholder value by gearing their
strategies and management to harness
the market’s potential for sustainability
products and services while at the same
time successfully reducing and avoiding
sustainability costs and risks”.
Schrader (2005) mentioned that traditional
sharing of tasks between the public and the private
sector has evolved and new forms of cooperation
have emerged. There are three main trends that
are responsible for this shift of paradigms: Firstly,
the importance of governments is diminishing in
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various sectors as, with reduced budgets,
governments are less and less able to guarantee
adequate education, health or insurance against
poverty. Increasing the public income through
raising taxes is usually very difficult. As a result,
countries lose a significant part of their capability to
shape the social agenda.
In higher education, according to Schrader
(2005), it is well known that increasingly the
needed money needs to come from non‐
governmental sources, more and more universities
have their own fundraising teams in place. In
parallel, the importance of companies is rising, as
with increased profits they have the financial
 backbone to assume responsibility in a globalized
world. This leads to an increased capability to
shape and influence national agendas.
Caroll (2006) pointed out that there are
four parts of social responsibility of business
encompasses the economic, legal, ethical, and
discretionary (philanthropic) expectations that
society has of organization at a given point in time.
First, economic aspect, the basic responsibility of
business is to produce goods and services of value
to society so that the firm may repay its creditors
and shareholders. Second, the legal aspect refers to
compliance with local, national and whenever
applicable, international laws. Third, the ethical
responsibility of an organization’s management is
to follow the generally held beliefs about behavior
in society. The final aspect which is discretionary
refers to any act or deed beyond that is required by
law or society. These responsibilities are purely
voluntary obligations a corporation assumes.
Caroll (2006) listed the four responsibilities
in order of priority. A business firm must first make
a profit to satisfy its economic responsibilities. To
continue in existence, the firm must follow the laws
– thus fulfilling its legal responsibilities. However,
those business managers have responsibilities
beyond the economic and legal ones. Having
satisfied the two basic responsibilities, the firm
should look to fulfilling its social responsibilities.
The discretionary responsibilities of today may
become the ethical responsibilities of tomorrow.
Social responsibility, therefore, includes both
ethical and discretionary, but not economic and
legal responsibilities. A firm can fulfill its ethical
responsibilities by taking actions that society tends
to value but has not yet put into law. When ethical
responsibilities are satisfied, a firm can focus on
discretionary responsibilities purely voluntary
actions.
Branco and Rodrigues (2007) describe the
stakeholder perspective of CSR as the inclusion of
all groups or constituents (rather than just
shareholders) in managerial decision making
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related to the organization’s portfolio of socially
responsible activities. This normative model implies
that the CSR collaborations are positively accepted
when they are in the interests of stakeholders and
may have no effect or be detrimental to the
organization if they are not directly related to
stakeholder interests. The stakeholder perspective
suffers from a wheel and spoke network metaphor
that does not acknowledge the complexity of
network interactions that can occur in cross sector
partnerships. It also relegates communication to a
maintenance function, similar to the exchange
perspective.
In addition, social responsibility is
concerned with low individuals and organizations
deal with current social issues. The general public
has a rather broad and all inclusive definition of the
social responsibility of business organizations. The
public seems to feel that managers and business
organization should provide leadership in
rebuilding cities, wiping out poverty, controlling
crime, and cutting government red tape. Social
responsibility has come to mean participation in a
multitude of issues and problems. CSR is also about
looking at the relationship of a firm’s activities on
society and the environment. It would not be out of
line for a firm to introduce more environmentally
friendly measures as their approach to CSR. “For
example, several companies have reported
enhanced productivity and reduced costs from
introducing new technologies aimed at reducing
pollution”
Carroll (2009) defined corporate social
responsibility as the obligation of decision makers
to take actions which protect and improve the
welfare of society as a whole along with their own
interests. This definition suggests two active
aspects of social responsibility protecting and
improving. To protect the welfare of society
implies the avoidance of negative impacts on
society. To improve the welfare of society implies
the creation of positive benefits for society.
Caroll (2009) discussed an approach of
corporate social responsibility is becoming more
widely accepted is community based development
projects such as ; to help educate the community’s
children, as well as develop new skills for the adults,
the common approach of CSR is through the giving
of aid to local organizations and impoverished
communities in developing countries. Some
organizations do not like this approach as it does
not help build on the skills of the local people,
whereas community based development generally
leads to more sustainable development.
Caroll (2009) explained the proactive or
affirmative approach to social responsibility is the
most difficult, complex, and expensive concept for
organizations to implement. It involves accepting
five categories of obligation such as: (1) broad
performance criteria. Managers and employees
must consider and accept broader criteria for
measuring organization’s performance and social
role than those required by law and the market
place; (2) ethical norms. Managers and employees
must take a definite stand on issues of public
concern. They must advocate ethical norms for the
organization, the industry, and business in general;
(3) operating strategy. Managers and employees
should maintain or improve the current standards
of the physical and social environment.
Organizations must compensate victims of
pollution and other hazards created, even in the
absence of clearly established legal grounds; (4)
response to social pressures. Manages and
employees should accept responsibility for solving
current problems. They need to be willing to
discuss activities with outside groups and make
information freely available to them; (5) legislative
and political activities. Managers must show a
willingness to work with outside stakeholders for
the enactment of environmental protection laws.
They must promote honesty and openness in
government and in their own organization’s
lobbying and activities.
Sibal & Atienza (2010) discussed the
elements of corporate social responsibility namely;
a) corporations have responsibilities that go
beyond the production of goods and services at a
profit. b) these responsibilities involve helping to
solve social problems especially those they have
helped create. c) corporations have a broader
constituency than stockholders alone. d)
corporations have impact that go beyond simple
marketplace transactions. e) corporations serve a
wider range of human values than can be captured
by a sole focus on economic values.
Moreover, they mentioned about the
reasons why corporations should be socially
responsible. In general, the mass of consumers and
the public have higher level of education and are
hooked with better means of communication.
Public image can make or unmake corporations.
These consumers are very much concerned with
their collective welfare and they are always
pressuring the government to be more protective
of their rights and welfare especially against
unscrupulous local and foreign enterprises whose
usual stake in the business operation in a foreign
country is on the short term consideration.
Further, they said that citizens today are
more actively organized in the civil society and
volunteer organizations. They are supported by
state legislation, have forced corporations to
transform into enterprises solely concerned with
profits to socially responsible and community
oriented organizations.
In addition, they said that in the modern
economic system, capital and other physical assets
such as land and buildings are no longer the
premium factors of production but people with
skills and knowledge. Management therefore have
to equally serve the interest of all stakeholders of
the enterprise, not only the controlling
stockholders but also the employees, suppliers and
subcontractors, customers, the community and the
general public.
Sibal & Atienza (2010) further discussed
that the corporations now a days views themselves
as an integral part of society whose role is to help
that society develop which will in return assure the
corporation’s long-term existence. The values,
visions and strategic objectives of the corporation
should be compatible with that of society and the
community. Corporations are actually sub-systems
of the community or society. In addition,
globalization has increased the powers of business
organizations. They have been pressured to
comply with standards to improve their
competitiveness. They have taken initiatives to
improve the quality of their products and services,
improve working conditions, and strengthen
human resource development efforts as well as
their relations with communities. These
measures/initiatives are various aspects of
corporate social responsibility.
Sibal &
Atienza (2010) also cited that today’s business
enterprises are growing bigger and global. They
have been changing drastically from their laissez
faire industrial revolution origins. Corporations
now realize the importance of long-term existence
and investing into the future of their business
operations. They now feel the inadequacy of the
traditional classical economic philosophies where
their basic concern is limited to the efficient
transformation of scarce resources into goods and
services and in the process creating wealth
primarily for themselves. Business enterprises are
not only concerned with profits but also with the
social, human and ethical impact of their actions in
the society and the environment where they
operate.
Sibal &Atienza (2010) pointed out the basic
idea of CRS is that business and society are
interwoven. There are role expectations guided by
the following principles:
1. Principle of Legitimacy. Refers to society’s
granting of legitimacy and power to
“Corporate Social Responsibility | 2/1/2018
business and the possibility of losing that
power. Society grants it power to operate
as an institution but it can also take away
the power if the organization does not
perform what is expected of it.
2. Principle of Public Responsibility, business
is responsible for outcomes related to its
involvement in society. The nature of
responsibility will vary as their programs
and activities differ. The principle
emphasizes the relationship of the firm to
its specific social, ethical, cultural and
natural environment.
 3. Principle of Managerial Discretion.
Managers can choose and decide on the
approaches to achieve the corporation’s
social responsibility. Their discretion is
dependent on available opportunities,
choices and resources.
Moreover, today’s corporate battle cry is to
look deeper into CSR by going profit maximization
and philanthropy towards creating long lasting
business solutions to social problems. To be able to
continue doing good deeds, a business must be
commercially successful to be able to sustain
contribution to the communities. Corporate
entities at present take a broader perspective in
their roles in societies and communities.
The “business of business” according to
Juan Luz and Teodoro Montelibano (1999) is also
“developing people, not only within the company
but also in the community that it serves.
Further, the criteria for the success of an
enterprise is not only in terms of profits but also in
terms of social political contributions to society like
decreasing pollution, reducing unemployment,
improving peace and order situation and so on.
Corporations not only contend with trade unions,
consumer groups, media and government
regulatory agencies but also with environmentalist,
civil rights activitists, women’s organizations. Tribal
communities and in the specific communities
where it operates, “Some social scientist even
maintain that the corporation operates on a
franchise granted by the people a franchise that
can be withdrawn if the people feel they are not
benefiting from it.
Sibal & Atienza (2010) explained the
practice of CSR is a must for all business entities and
organizations. The major actors of the industrial
relations system, namely, leaders of organizations
of labor civil society, management or
administrators/ employers and government
officials or bureaucrats, have their respective roles
to play. To be socially responsible, management
“Corporate Social Responsibility | 2/1/2018
should be efficient and competitive in order to
bring the benefits of its successful operations to all
its stakeholders, customers, owners, and
stockholders, employees, supplies, government
and the community.
Further, the government officials and
bureaucrats should act as society’s planner
enforcer and equalizer in their governance of
society and communities. They should create
favorable social, political and economic
environments that will create a level playing field
for all the actors of society in the pursuit of their
respective goals and interests. The leaders of labor
and civil society organizations, usually supported by
other actors like organizations within academe,
media, and church, should continue to put pressure
on both the government officials and corporate
managers to encourage them to pursue economic
development and job creation and to prevent them
from utilizing their combined economic and
political power and influence in putting at a
disadvantage the workers and ordinary citizens of
society.
RELATED STUDIES
Most of the researches about CSR have
been centered on the positive benefits to the
community, of which there are many, and which
also seems to find much agreement among
academics and business executives. The new
direction is relating CSR to profitability. Therefore,
in an effort to provide some practical examples and
substance to this paper we focused on studying the
dynamics of the relationship between CSR and
profitability, by presenting related studies relating
CSR to profitability of the organization.
Bowman and Haire (1975) conducted a
study to ascertain the extent to which companies
were engaging in CSR. They chose to operationalize
CSR by measuring the proportion of lines of prose
devoted to social responsibility in the annual
reports of the companies they studied. Although
not providing a formal definition of CSR, they
illustrated the kinds of topics that represented CSR
as opposed to those that were strictly “business”.
The topics they used were usually subheads to
sections of annual report. Some of these subheads
were corporate responsibility, social responsibility,
social action, public service, corporate citizenship,
public responsibility, and social responsiveness. A
review of their topical approach indicates that they
had a good idea of what CSR are generally meant.
Holmes (1976) conducted a study in which
she sought to gather “executive perception of
corporate social responsibility”. She had no clear
definition of CSR, rather, she chose to present
executives with set of statements about CSR,
seeking to find out many of them agreed or
disagreed with the statements. Like Bowman and
Heir “topics” Holmes’s statements addressed the
issues were generally felt to be what CSR was all
about during that time period. She sought
executive opinions on businesses’ responsibilities
for making a profit, abiding by regulations, helping
to solve social problems, and short-run and long-
run impacts on profits of such activities. She
further added to the body of knowledge about CSR
by identifying the “outcomes” that executive
expected from their firms’ social involvement and
the “factors” executive used in selecting areas of
social involvement.
Abbott and Monsen (1979) sought to
reveal more about CSR’s meaning in research study
involving a content analysis of the annual reports of
Fortune 500 companies. Their article presented a
corporate “social involvement disclosure” (SID)
scale that purported to reveal a measurement of
firms’ CSR. They accepted as their measure of CSR
self-reported disclosures about social involvement
topics that had been derived from content analysis
of annual reports of 500 companies. The condition
of the data was performed by then “Big 8”
accounting firm of Ernst and Ernst. Ernst and Ernst
had developed an annual unpublished summary
reporting whether the annual reports of these firms
indicated activities for specific social involvement
categories. Their study was not designed to clearly
define CSR but rather to existing data to get some
ideas about measuring CSR. In the study they
proceeded to note changes over time, the direction
and scope of social involvement and the effect of
this involvement appeared to have on profitability.
Cochran & Wood (1984) made an empirical
study on CSR; it must be observed that scholars
were becoming interested in the question of
whether socially responsible firms were also
profitable firms. If it could be demonstrated that
they were, this would be an added argument in
support of the CSR movement. They surveyed the
various ways in with social performance and
financial performance had been operationalized in
the past, and decided to use a reputation index as
their measure of CSR. The reputation index was
early developed by Milton Moskowitz, an observer
of the CSR scene and a writer. Moskowitz, in the
early 1970s, had developed a reputational index in
which he categorized firms as “outstanding,”
“honorable mention,” or worst. They admitted the
weaknesses of this CSR measure and called for new
measures.
Aupperle, Carrol, and Hatfield (1985) also
made an empirical study seeking to understand the
relation between corporate social responsibility
and profitability. What was unique with this
particular research study was that it was one of the
first to be used a definitional construct of CSR from
the theoretical literature as its measure of
corporate social responsibility. The study
confirmed the priorities of the four components in
this sequence: economic, legal, ethical, and
discretionary. In a later part of the study, they
partitioned the four definitional components to
separate the “economic”, which the labeled as
“concern for economic performance” (on the part
of the firm) from “legal, ethical and discretionary,”
which they labeled “concern for society” (on the
part of the firm). In essence, then, they
acknowledged that not everyone sees the
economic responsibility as a part of the social
responsibility but rather considers it something
business firms do for themselves. Further, they
stated that “the social orientation of an
organization can be appropriately assessed through
the importance it places on the three non-
economic components compared to the economic.
Carroll (1994) surveyed 50 academic leaders
in the social issues in management field and found
some very interesting data. The findings of the
study was useful, it helped to position CSR
definitional literature in the total scheme of things.
The concept of CSR has had a long and diverse
history in the literature. As theory is developed and
research is conducted, scholars may revise and
adapt existing definitions of CSR or new definitions
may come into the literature.
In a study done by Brown and Dacin (1997)
the result suggests that CSR associations have a
significant influence on consumer responses to
new products. The results of all studies
demonstrate that negative CSR associations
ultimately can have a detrimental effect on overall
product evaluations, whereas positive CSR
associations can enhance the product evaluations.
Apostol (2003) cited the benefits of CSR in the
conducted by the Ashbridge Business School in
2001 namely; (1) enhanced brand and company
reputation (2) improved social and environmental
risk management (3) improved employee relations
(4) better stakeholders relations (5) improved
community relations (6) proactive change
management strategies (6) improved financial
performance from all of the above.
Synthesis
The above given related citations of
literature were meant to give substances to the
present study, to elaborate conceptual and
research understanding about Corporate Social
“Corporate Social Responsibility | 2/1/2018
Responsibility (CSR) practices of institutions. It
provided numerous insights which help these
researchers to be more cognizant of their study, be
well versed of its mechanics, components and
direction and to be knowledgeable in various
aspects of CSR practices. Furthermore,
those cited literatures and studies provided both
the researchers and readers of this study an
overview of CSR functions.
Some of the studies were very closely similar with
the present study in certain aspects, such as the studies of
Apostol, Brown & Dacin, Carroll and Holmes; these were
studies about the corporate social responsibility (CSR)
practices of different institutions. It helped the researchers to
have clearer ideas about their study.
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