BMS 405 PUBLIC RELATIONS III
HANDOUT 7: CORPORATE SOCIAL RESPONSIBILITY
There is no universally accepted definition of corporate social responsibility (CSR).
Social responsibility is an ethical ideology or theory that an entity, be it an organization or individual, has an obligation to act to benefit society at large. Social responsibility is a duty every individual or organization has to perform so as to maintain a balance between the economy and the ecosystem.
There is always a trade-off between economic development, in the material sense, and the welfare of the society and environment. Social responsibility means sustaining the equilibrium between the two.
The responsibility can be ‘negative,’ in that it is a responsibility to refrain from acting (resistance stance) or it can be "positive," meaning there is a responsibility to act (proactive stance).
Social responsibility is voluntary; it is about going above and beyond what is called for by the law (legal responsibility). It involves an idea that it is better to be proactive toward a problem rather than reactive to a problem. Social responsibility means eliminating corrupt, irresponsible or unethical behaviour that might bring harm to the community, its people, or the environment before the behaviour happens.
While primarily associated with business and governmental practices, activist groups and local communities can also be associated with social responsibility, not only business or governmental entities.
There is a large inequality in the means and roles of different entities to fulfil their claimed responsibility. This would imply the different entities have different responsibilities, in so much as states should ensure the civil rights of their citizens, that corporations should respect and encourage the human rights of their employees and that citizens should abide with written laws.
Individual Social Responsibility
Individual social responsibility or ISR is the responsibility of every individual for his/her actions. It is morally binding on everyone to act in such a way that the people immediately around them are not adversely affected. ISR is a commitment everyone has towards the society – contributing towards social, cultural and ecological causes.
ISR is based on an individual’s ethics. Instead of giving importance only to those areas where one has material interests the individual supports issues for philanthropic reasons. “ISR is viewed as a tool for CSR”. ISR forms the base for CSR or Corporate Social Responsibility because if everyone in a business organization does his/her bit the bigger things automatically fall into place.
Business and ethical principles
Businesses can use ethical decision making to strengthen their businesses in three main ways.
1 To increase productivity. This can be done through giving employees benefits like better health care or better pensions. This makes employees feel they are valued people with a vested interest in what the company does and how it is run. When the company is perceived to feel that their employees are a valuable asset and the employees feel they are being treated and such, productivity increases.
2 To make decisions that affect stakeholders that are outside of the business environment, for example customers and suppliers. For example, in 1982 Johnson & Johnson, discovered that some bottles of Tylenol contained cyanide and so customers stopped buying Tylenol it. And the company lost lots of money. Johnson & Johnson chose to loose even more money and invest in new tamper resistant seals and announce a major recall of their product. Johnson & Johnson had to lose money to be socially responsible. But in the long run they gained the trust of their customers. Now when people look at other products, there is a sense of faith and trust in that Johnson & Johnson would not allow a product to harm people just to meet their own profits.
3 To make decisions that allow for government agencies to minimize their involvement with
the corporation. For instance if a company is proactive and follows government guidelines for emissions of pollution and gets involved in the community and addresses concerns that the public might have; they would be less likely to have government agencies investigate them for environmental concerns.
Corporate Social responsibility pyramid
Archie B. Carroll’s CSR pyramid stated that a socially responsible corporation should simultaneously ‘strive to make a profit, obey the law, be ethical, and be a good corporate citizen’.
He specifically distinguished between philanthropic and ethical responsibilities noting that many corporations assume that they are being socially responsible by being good corporate citizens in the community. Several scholars and economists have in fact rejected philanthropy as a legitimate corporate action.
Carroll himself stated that philanthropy, while highly desirable, is actually less important than the first three components of CSR. It should be noted that even though the four components have been discussed as separate constructs, they are not mutually exclusive.
Critics argue that CSR distracts from the fundamental economic role of businesses; others argue that it is nothing more than superficial window-dressing; others argue that it is an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations though there is no systematic evidence to support these criticisms. A significant number of studies have shown no negative influence on shareholder results from CSR but rather, a slightly positive correlation with improved shareholder returns.
Pressure on Corporations to be Socially Responsible
Globalization has played a significant role in being the catalyst for corporate social responsibility. It is not surprising that multinational corporations (MNCs) are the main proponents of CSR since much is at stake for them.
Most leading MNCs are headquartered in Western liberal democracies where organizations are pressured by government regulation, the mass media, and citizen groups (NGOs) to be socially responsible.
MNCs have a presence around the world, with supply chains and manufacturing factories situated in numerous countries. In addition, business operations have become more transparent with the advancement of modern information and communication technologies.
This heightened visibility ensures that unethical or irresponsible corporate actions are increasingly susceptible to public scrutiny and criticism. For example, Nike struggled to regain its reputation years after a sweatshop labor scandal despite its efforts to implement better working conditions. A 2001 Social and Environmental study ranked Nike at the top of the list of corporations that had failed to fulfil their corporate responsibilities.
History
Modern CSR was born during the 1992 Earth Summit in Rio de Janeiro, when UN-sponsored recommendations on regulation were rejected in favour of a manifesto for voluntary self-regulation put forward by a coalition of companies called the World Business Council for Sustainable Development. Its version of events was endorsed by the US, the UK and other western governments. The British government, for example, is still a vocal supporter of voluntarism.
The trend of Corporate Social responsibility as it is commonly known today started when large conglomerate companies such as Nike and Shell were exposed by activist and NGOs for their malpractice, human rights violations and environmental negligence. This shocked the world which largely affected their reputation and resulted in plummeting profits.
As a reaction to this the companies invested in CSR strategies to regain the previously enjoyed loyalty and profits. Hence, CSR has always been sceptically debated as it was often implemented as a reaction to public out roar. Critics believe it to be a form of ‘window dressing’ controversial companies behaviours to ensure customer/stakeholder dedication and encourage guilt free investments and spending.
These debacles are reminders that focusing only on economic interests is becoming increasingly detrimental not just to the reputation, but also the very survival of corporations.
On a more positive note, the Asian tsunami disaster brought about an unprecedented level of humanitarian concern and response from businesses, NGOs, and governments as has the recent earthquake in South Asia. Indeed, at the core of corporate social responsibility (CSR) is the need for corporations to go beyond their economic and legal obligations, and act responsibly towards multiple stakeholders including the society at large.
In the new millennium, failure to do so will threaten their very legitimacy to operate. The continuing search for a balance between the interests of multiple stakeholders and profitability, fuelled by publics’ rising expectations of the social obligations of corporations, has paved the way for the global spread of the CSR movement.
FURTHER READING
Soo-Yeon Sim and Bryan H Reber, Public relations’ place in corporate social responsibility: Practitioners define their role. Public Relations Review, Vol 34 Issue 4, November 2008, Pages 337-342. http://www.sciencedirect.com/science/article/pii/S0363811108001100
Christian Aid, Behind The Mask, the Real Face of Corporate Social Responsibility. baierle.files.wordpress.com/2007/11/behind-mask.pdf
Masha Vahldieck, Is Corporate Social Responsibility A Public Relations Incentive Or Can It Be A New Form Of Development Aid? http://www.ucl.ac.uk/network-for-student-activism/w/Is_Corporate_Social_Responsibility_A_Public_Relations_Incentive_Or_Can_It_Be_A_New_Form_Of_Development_Aid%3F
Robert L. Heath and Lan Ni, Corporate Social Responsibility: Three R’s: Reputation, Relationship, and Responsive Rectitude. http://www.instituteforpr.org/topics/corporate-social-responsibility-three-rs/
Wayne Visser, Corporate Social Responsibility in Developing Countries. www.waynevisser.com/chapter_wvisser_csr_dev_countries.pdf
The above are also available from Prof Rooney as pdf files
