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To know how important the CSR especially in the big businesses, and also ensure there are
positive social and environmental effects associated with the way the business operates.
Businesses that engage in active CSR efforts take stock of the way they operate in the world to
incorporate addressing cultural and social issues, with the aim of benefiting both in the process.
Not only can CSR models increase business and revenue, they promote change and progress
throughout the world, which often involves helping people with few or no resources.
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society/
context, CSR has emerged as a form of sustainability governance with advantages to the
economic, environment and social progress. Successful executives know that their long-term
success is based on continued good relations with a wide range of individuals, groups and
institutions. Smart firms know that business can’t succeed in societies that are failing whether
this is due to social or environmental challenges, or governance problems. Moreover, the general
public has high expectations of the private sector in terms of responsible behavior. Consumers
expect goods and services to reflect socially and environmentally responsible business behavior
at competitive prices. In the recent past organization had a choice to return back to the society
but due to competition, it has become an obligation for them to become socially responsible by
giving back to the society for them to improve their image in the eyes of the public. In as much
as these organizations are returning back to the society, do they benefit from this investment in
terms of increased profit, satisfy and retain customers and also increase market share.
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LITERATURE REVIEW
The concept and definition of CSR has evolved since its inception. Archie B. Carroll (1999)
follows the evolution of the CSR construct from the 1950s to the 1990s. Within this period,
CSR transformed from a basic definition, followed by an expansion of the literature and
CSR (Carroll, 1999). From the existing literature, CSR can be categorised into four main
theories with related approaches: Instrumental theories, political theories, integrative theories
and ethical theories (Garriga and Melé 2004, 51). The four main theories offer arguments and
According to instrumental theories, the corporation is viewed as the sole driver for wealth
creation and involvement in social activities is only a process to achieve economic results
(Garriga and Melé 2004, 51). The most well-known proponent of this theory is Milton
Friedman whose article titled “The Social Responsibility of Business is to Increase its Profits”
reflects his arguments about CSR (Friedman, 1970). Studies and approaches of instrumental
Michael C. Jensen and William H. Meckling (1976) and Stephen Ross (1973). Political
theories recognise that corporations inherently possess responsibility and power in the
political landscape of society (Garriga and Melé 2004, 51). There are three dominant
approaches under the umbrella of political theories of CSR. Keith Davis (1960) explored the
role and power that business has in society in accordance with corporate constitutionalism.
His argument was that the amount of power that businessmen have dictates their social
responsibilities and if the power is not used in a manner that society deems responsible they
will lose it (Garriga and Melé 2004, 56). The instrumental and political theories approach
opposed to the more people-centred approaches of integrative theories and ethical theories.
The propositions that are raised demonstrate the core arguments of opponents of CSR.
Corporations integrate the social demands of society into the management of business as
society shapes the existence, continuity and growth of the business in accordance with
integrative theories of CSR (Garriga and Melé 2004, 51). Studies on CSR in this field focus
influence that public policy and stakeholder decision-making has on social expectations.
Finally, ethical theories of CSR are based on the notion that corporations have ethical
responsibilities to society (Garriga and Melé 2004, 51). This branch of CSR considers
concepts such as sustainable development, universal rights and contribution to the common
good (Garriga and Melé 2004, 60-62). The work of Ralph Hamann and Nicola Acutt (2003)
critiqued business motivations of CSR by arguing for a partnership between civil society,
government and business. In a nutshell, one observes a progression of CSR theories from
complete opposition to CSR to growing support and justification for CSR. Studies based on
the four theories and their related approaches illustrate the ongoing debate about CSR. Within
this debate, one finds that these theories are also inter-related.
There are some limitations in the existing literature on CSR. First, there are few studies of
CSR in the extractive industry. For instance, Jedrzej G. Frynas (2005) conducted a study on
the effectiveness of CSR initiatives by multinational oil companies. In another study, Dima
Jamali and Ramez Mirshak (2007) apply Carroll’s and Wood’s conceptualisations of CSR to
Lebanon. Second, the few studies that investigate CSR initiatives in the extractive industry
are descriptive in nature and fail to explain how and why some MNMCs fail to adhere to their
CSR initiatives and the implications thereof. Explanatory research in the field of CSR focuses
unrelated factors in society. These include, amongst others, studies by Bob Manteaw (2007),
Patrick Bond (2008), Emmanuel K. Boon and Frederick Ababio (2009), and Kwesi
relationship between the intended CSR initiatives by MNMCs and the environmental, social,
economic or political aspects of society. This study will explore this relationship as it is
relationship between CSR and the concept of ‘social license to operate’ which MNMCs are
incorporating into their CSR strategies.
There is growing recognition that mineral developers need to gain a ‘social license to operate’
(SLO) in order to avoid potentially costly conflict and exposure to social risks. This SLO is
obtainable from local communities. According to Jason Prno and Scott Slocombe (2012), “a
social license can be considered to exist when a mining project is seen as having the ongoing
approval and broad acceptance of society to conduct its activities” (Prno and Slocombe 2012,
346). SLO has been examined from the perspective of corporate responsibility, competitive
advantage and growth (Nelsen 2006); governance and sustainability theories (Prno and
Slocombe 2012); and stakeholder theory (Wilburn and Wilburn 2011). The emergence of
SLO has increased the standard of environmental and social performance of mineral
developers. Previously, mineral developers merely insured full compliance with host-country
environmental regulations. However, there is a growing recognition that full legal compliance
is insufficient in meeting society’s demands with regards to mining issues (Prno and
Slocombe 2012, 346). The concept of SLO has thus broadened the range of governing actors
by incorporating the state, mining companies, local communities, market actors and civil
The literature on SLO indicates that SLO is an emerging concept which lacks in-depth
analysis and theoretical refinement. Thus the study aims to extend the work on SLO by
demonstrating the link between CSR and SLO. The main argument is that SLO is necessary
to encourage MNMCs to adhere to CSR initiatives as mutually beneficial rather than forced
processes. Also, the study will examine community politics that drive national politics in the
mining sector.
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Responsibility: The companies must be concerned that the implementation of corporate social
responsibility willing increase their value in term of the responsibility not only in economic but
also responsible for the environment and social commitment. The upcoming corporate social
for all the consequences arising either intentionally or unintentionally to stakeholders. The theory
stated CSR activities not only generosity (charity) or the activity of mutual love (stewardship)
which are voluntary action which are understood by business men so far, but it involved an
inherent and fundamental obligation and has becoming a "spirit of life " in systems and business
practices. The underlying reason implies that CSR is a logical consequence of the existence of
human rights issued by the state to the company to live and thrive in certain environment. If there
is no harmony between human rights and obligations of the company in that environment, there
will live two parties, the company as gainers and society as the losers (Dellaportas, 2005).
Stakeholder Theory: This theory states that the success and sustainability of a company depends
on its ability to balance the various interests of the stakeholders. If able, then the company will
achieve ongoing support and enjoy a growing market share, sales, and profits. Stakeholder theory
is a theory that describes to any parties (stakeholders) who is responsible for the company.
Stakeholder theory assumes that the existence of the company requires the support of
stakeholders, therefore the activity of the company is also considering the approval of
stakeholders (Freeman, 1984; Garriga, 2004). The theory also advises that the company is not the
only entity that operates for its own profit, but should provide benefits to its stakeholders for
(Freeman, 1984; Garriga, 2004; Wilson, 2003). Legitimacy Theory: The original definition of
legitimacy theory is a generalized perception or assumption that the actions of an entity are
desirable, proper, or appropriate within some socially constructed system of norms, values,
beliefs, and definitions (Suchman, 1995). Legitimacy theory perceives that the company and the
surrounding community have close social relations as both are bounded in a social contract. The
theory of the social contract states that the company's presence in certain area because of
politically supported and guaranteed by government regulation and parliament which is also a
representation of the community. Thus, there is indirect social contract between the company and
the community in the costs and benefits, for the sustainability of a corporation (O’Donovan,
2002). Therefore, CSR is a fundamental obligation of a company that is not voluntary and the
disclosure practices of corporate responsibility should be implemented in such a way that the
activities and performance of the company can be accepted by society. Corporate Sustainability
Theory: The theory underlines that in order to live and grow sustainably, corporations must
integrate business goals with social and ecological objectives as a whole. Business development
should be based on three main pillars, i.e. economists, social, and environment in an integrated
manner, and does not sacrifice the wellbeing of future generations to live and meet their needs.
Corporate sustainability theory perceives society and the environment is the main pillar and
foundation that determines the success of a business enterprise; therefore, it must always be
protected and empowered. The theory identifies that the corporate growth and profitability are
essential. However, it also involves the corporation to pursue societal goals, specifically those
relating to sustainable development which include environmental protection, social justice and
equity, and economic development (Wilson, 2003). Political Theory: The economic domain
cannot be isolated from the environment in which economic transactions carried out. A financial
Since they cannot be isolated from the community and the environment, companies must
consider and implement CSR. Political theory focuses on a responsible use of business power in
political arena. The theory implies that social responsibilities of businesses occur from the
amount of social power that they have (Garriga, 2004). Justice Theory: The theory implies in a
free market capitalist system, profit or loss is highly dependent on the inequality of rewards and
privileges contained in earnings and compensation. Profit or loss reflects inequality between
parties who enjoyed or suffered by the existence of company. Therefore, the company should be
fair to the community and environment that endured the external impact of companies through
CSR programs (Freeman, 1984; Garriga, 2004). Signaling Theory: The theory discusses how the
company signals the external parties in providing information. The impetus was due to the
information asymmetry between management and external parties. To reduce the asymmetry of
information, the company must disclose information, both financial and nonfinancial. Manager
generally is motivated to deliver good information about the condition of the company to the
public because it can convince people to invest in the company. On the other hand, the external
parties would only have minimal information about the reliability of the information delivered. If
the manager can provide a convincing signal to the public which must be supported by the
underlying data, then the public will respond positively. One of the mandatory information to be
disclosed by the company is information about corporate social responsibility. This information
can be integrated in a company's annual report or a separate corporate social report. The
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Aust. J. Basic & Appl. Sci., 9(7): 248-250, 2015(Corporate social responsibility)
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a-significant-influence-on/
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https://onlinemasters.ohio.edu/blog/why-corporate-social-responsibility-matters-in-todays-
society/