SOCIAL RESPONSIBILITIES

PRESENTATION BY: PROF SAUMYA BADGAYAN

TRADITIONAL VIEW OF BUSINESS RESPONSIBILITY

there is only one & only social responsibility of business: to use its resources & engage in activities designed to increase its profit so long as it stays within the rules of the game , which is to say, engage in open free competition without deception or fraud This view was given by Friedman & believed in business as an entity to generate profits.

CARROLLS FOUR RESPONSIBILITIES OF BUSINESS

NATURE OF SOCIAL RESPONSIBILITY

World business council has defined CSR as beyond law commitments which includes
Corporate governance & ethics Health & safety Environmental stewardess Human rights (including core labour rights) Human Resource Management Community involvement, development & investment. Involvement of & respect of Aborginal people. Corporate philanthropy Customer satisfaction & adherence to principles of fair competition. Anti bribery & anti corruption measures Accountability, transparency, & performance reporting Supplier relation , for both domestic & international supply chains.

PRESSURES LEADING TO SOCIAL RESPONSIBILITY

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1. GOVERNMENT PROGRAMS: Most government pressures concern compliance with existing regulations. But governments are also major sources of potential rules , a fact that business need to take note of.

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2. COMMUNITY INTERESTS & DEMANDS: Firms undertake many programs that benefit society in general, not necessarily favouring stakeholders . E.g. TEACH FOR INDIA initiative.

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3. ENVIRONMENTAL CONCERNS: environmental programs of firms mainly results from standards established by govt agencies. e.g. Bio Gas , CNG, PUC, Project Tiger etc.

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4. SHAREHOLDERS / INVESTORS PRESSURE: large shareholders such as pension funds have long range interest in the financial success of their investment.

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5. COMPETITIVE ADVANTAGE: this comprises of the following factors Factor conditions: these include the availability of trained workers , high quality scientific & technological institutions, adequate physical infrastructure, transparent & efficient administrative processes & natural resources

 DEMAND CONDITIONS: sophisticated local customers enhance regions competitiveness by providing firms with insight into emerging customer needs & applying pressure for innovation.

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RELATED & SUPPORTING INDUSTRIES: American express depends on travel related expenses for large part of its credit cards & travel agency revenues.

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CONTEXT FOR STRATEGY & RIVALRY: Policies that encourages investment , protect intellectual property , open to local markets to trade, break-up or prevent formation of cartels& monopolies, & reduce corruption make a location a more attractive place to do business.

ARGUMENTS FOR SOCIAL RESPONSIBILITY

1. 2. 3. 4. 5. 6. 7. Changed public expectation of business. Better environment for business Public image Avoidance of government regulation Balance of responsibility with power. Business has resources. Let business try in frustrations people are turning to business. 8. Prevention is better than cure. 9. Moral responsibility.

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10. Citizenship argument. 11. Duty of gratitude. 12. Globalization.

ARGUMENTS AGAINST SOCIAL RESPONSIBILITY

1. Profit maximization: business is for profit intent. Thus all actions by managers are actually directed towards the same. Thus managers are agents of stockholders & all their decisions are controlled by their desire to maximize profits for the stock holders while reasonably complying with the law & social customs.

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2. SOCIETY HAS TO PAY THE COST : another argument is that these costs of social responsibility , society shall have to pay. 3. LACK OF SOCIAL SKILLS: managers are trained to deliver profits for their employers. They lack the social skills. TISS etc are producing professionals for this work especially & are being employed by major corporate.

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4. BUSINESS HAS ENOUGH POWER: It is assumed that business has enough power. These influences are felt in throughout society; in education; in the home & in market place. It mold social values. Business as an institution is not considered good & considering giving it more power is vicious.

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5. Social overhead costs: cost on social responsibility is considered to be a social cost so why SPEND

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6. Lack of accountability : when business have a profitability attached to it, why would they take the ownership & accountability of CSR. 7. Lack of Broad support: many people would want the business to take CSR, but it lacks support from small groups.

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8. DRUCKER, FRIEDMAN & LEVITTS VIEW: Peter Drucker if you find an executive who wants to take social responsibility , fire him fast. Levitt: argued against corporate social responsibility fearing that business value becomes compromised.

BARRIERS OF SOCIAL RESPONSIBILITY

1. The Individual Manager: These managers are responsible for social action program of any organization. Their carriers can be in jeopardy if their actions are considered compromising / trade off which are unprofitable. 2. The Organization: organizations focus on profits thus it becomes the barriers of social responsibility.

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3. The Industry : there may be no support from competitors in the same industry for social action program. 4. The Division: the profitability of the division may seemed compromised if its level of profit stands compromised owing to CSR.

CORPORATE ACCOUNTABILITY

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1. Towards employees: responsibility towards employees is in the form of just selection, training, promotions, fair wages, levelling out variations in employment, comfortable working conditions, safety, health & environment , social measures scope of initiation & advancement, participative management, workers education & hike.

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2. Towards consumers: producing & supplying quality goods to the consumers at reasonable price, avoiding artificial scarcity, revealing truth in advertising & labels, keeping up the delivery schedules , providing prompt after sales services, preventing formation of monopolies with intention of exploiting customers & guaranteeing the buyers about the lifetime performance of products.

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3. Towards Government : complying with the govt laid laws such as payment of taxes properly, executing govt contracts, making services of executive available for the govt. deducting income tax & amounts to be invested in national saving certificates (NSC) from wages & salaries of the employees & acting as a willing partner with the govt in pursuit of public welfare.

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4. Towards The Owners: this covers areas such as managing the business profitably, ensuring fair & regular return on capital employed , guaranteed capital appreciation & consolidating the financial position of business so that it can withstand fluctuating fortunes so common in business.

LIMITS OF SOCIAL RESPONSIBILITY

1. Cost: CSR costs money . Whether a company decides to build a temple, hospital, adopt a village, build institutes etc it costs money. 2. Efficiency: it affects the efficiency adversely. Since an organization is committed to employees, an organization runs a plant even at the cost of incurring a loss.

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3. Relevance: there is only one obligation to business i.e. run the same at a profit. Tata tea garden kidnapping. 4. Scope & complexity: society has many complex problems & the scope of CSR is too wide & deep which cannot be solved or resolved by a single company.

COMMON CHARACTERISTIC OF CSR

Thank you