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Chapter- II

Literature Review

2.0 Introduction :

A crucial element of every research work is the review of relevant literature. A

Literature Review is an overview on the topic of study and it is the stepping stone for

every research. It strengthens the research work with a comprehensive knowledge and

solid background. It traces the intellectual progression of the concepts.

Researchers (e.g., Carroll, 1979; Kantanen, 2005) consider Howard Bowen’s

1953 text Social Responsibilities of the Businessman as the first book on CSR in the

modern era. Despite more than five decades of research on this topic, its

conceptualization is still elusive (e.g., Arthaud-Day, 2005; Carroll, 1979; Clarkson,

1995; Friedman, 1970; Jones & Goldberg, 1982; Sethi, 1996, 2002, 2003). For

example, Manakkalathil and Rudolf (1995) defined CSR as “the duty of organizations to

conduct their business in a manner that respects the rights of individuals and promotes

human welfare”, which lacks descriptive accuracy and in turn makes it hard for

operationalization (Shen, 2006).

Shen (2006), after carefully reviewing CSR definitions throughout its history

during last few decades, draws several dimensions of CSR. These dimensions during

different decades starting from 1950s have been given below: 50s Dimension:

Obligation to the society; 60s Dimension: Relationship between corporation and

society; 70s Dimensions: Stakeholders ‟ involvement, well beings of citizens, a

philosophy that looks at the social interest, help solve neighbourhood problems;

improve the quality of life; economic responsibility, legal responsibility, ethical

responsibility, and discretionary responsibility; 80s dimensions: voluntariness;

economically profitable, law abiding, ethical and socially supportive; economic, legal,

ethical and voluntary or philanthropic; 90s dimensions: stakeholders‟ involvement;

obligation to society; environmental stewardship; people, planet, profit; 21st Century

dimensions: integration of social and environmental concern; voluntariness; ethical

behaviour; economic development; improving the quality of life of the citizens; human

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rights; labour rights; protection of environment; fight against corruption; transparency

and accountability; The summary of the above findings can be summarized in 10 major

dimensions as below:

� Obligation to the society;

� Stakeholders‟ involvement;

� Improving the quality of life;

� Economic development;

� Ethical business practice;

� Law abiding;

� Voluntariness;

� Human rights;

� Protection of Environment ; and

� Transparency & accountability.

The above discussions have led to land into the perceptions, knowledge and

evaluation of CSR definitions and their ten dimensions. All the CSR definitions, in last

six decades, more or less covered one or more of the above “Ten” dimensions. This

has created an opportunity in the CSR literature to get all the dimensions of CSR at a

glance (Shen, 2006).

Sanjay (2009) in his study observers that the concept of CSR has been

developing since the early 1970s, but there is no single, commonly accepted definition

of CSR.

One of the early references to CSR was made by Friedman who was of the view

that the one and only social responsibility of business is “to use its resources and

engage in activities designed to increase its profits so long as it stays within the rule of

the game ” (Friedman, 1962).

The World Business Council for Sustainable Development (WBCSD) has

defined CSR as “the continuing commitment of business to behave ethically and

contribute to economic development while improving the quality of life of the workforce

and their families as well as of the local community and society at large”.

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As per Business for Social Responsibility (BSR), CSR is defined as “Operating a

business in a manner that meets or exceeds the ethical, legal, commercial and public

expectations that society has of business. CSR is seen by leadership companies as

more than a collection of discrete practices or occasional gestures, or initiatives

motivated by marketing, public relations or other business benefits. Rather, it is viewed

as a comprehensive set of policies, practices and programmes that are integrated

throughout business operations, and decision-making processes that are supported

and rewarded by top management.”

The European Union has defined CSR as “the concept that requires an

enterprise to remain accountable for its impact on all relevant stakeholders. It is the

continuing commitment by business to behave fairly and responsibly and contribute to

economic development while improving the quality of life of the work force and their

families as well as of the local community and society at large (www.wbcsd.org).”

Hopkins(2003) defined CSR as treating the stakeholders of the firm ethically or

in a responsible manner. Ethically or responsible’ means treating stakeholders in a

manner deemed acceptable in civilized societies. “Social” includes economic

responsibility as well. Stakeholders exist both within a firm and outside-for example the

natural environment is a stakeholder. The wider aim of social responsibility is to create

higher and higher standards of living, while preserving the profitability of the

corporation, for people both within and outside the corporation.

Kotler and Lee (2005) have defined CSR as “a commitment to improve

community well being through discretionary business practices and contribution of

business resources”.

According to Wikipedia Corporate Social Responsibility (CSR) has been defined

as a concept whereby organizations consider the interests of society by taking

responsibility for the impact of their activities on customers, employees, shareholders,

communities and the environment in all aspects of their operations. This obligation is

seen to extend beyond the statutory obligation to comply with legislation and sees

organizations voluntarily taking further steps to improve the quality of life for employees

and their families as well as for the local community and society at large.

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There is no consensus on the definition of CSR and what it comprises. CSR

can be broadly defined as the responsibility of businesses to contribute to building a

better society.

A quick browse of web sites for the Fortune 500 reveals that CSR goes by many

names, including corporate social responsibility, corporate citizenship. Corporate

philanthropy, corporate giving, corporate community involvement, community relations,

community affairs, community development, corporate responsibility, global citizenship,

and corporate societal marketing (Kotler and Lee, 2005).

For purposes of focused discussion and applications for best practices, Kotler

and Lee (2005), prefer the use of the term corporate social responsibility and offer the

following definition: Corporate social responsibility is a commitment to improve

community well-being through discretionary business practices and contributions of

corporate resources.A key element of this definition is the word discretionary. They are

not referring here to business activities that are mandated by law or that are moral or

ethical in nature and perhaps therefore expected. Rather, referring to a voluntary

commitment a business makes in choosing and implementing these practices and

making these contributions. Such a commitment must be demonstrated in order for a

company to be described as socially responsible and will be fulfilled through the

adoption of new business practices and/or contributions, either monetary or non-

monetary. The term community well-being in this definition includes human conditions

as well as environmental issues.

Others have offered several distinct definitions of corporate social responsibility

(CSR). One from the World Business Council for Sustainable Development (2004)

reflects the council’s focus on economic development in describing CSR as “business,

commitment to contribute to sustainable economic development, working with

employees, their families, the local community, and society at large to improve their

quality of life.” The organization Business for Social Responsibility (2004) defines CSR

as “operating a business in a manner that meets or exceeds the ethical, legal,

commercial, and public expectations that society has of business.” This definition is

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somewhat broader as it encompasses business decision making related to “ethical

values, legal requirements, as well as respect for people, communities, and the

environment” (Kotler and Lee, 2005).

They also used the term corporate social initiatives to describe major efforts

under the corporate social responsibility umbrella and offer the following definition:

Corporate social initiatives are major activities undertaken by a corporation to support

social causes and to fulfill commitments to corporate social responsibility.

The causes most often supported through CSR initiatives are those that

contribute to community health (i.e., AIDS prevention, early detection for breast cancer,

timely immunizations), safety (designated driver programs, crime prevention, use of car

safety restraints), education (literacy, computers for schools, special needs education),

and employment (job training, hiring practices, plant locations); the environment

(recycling, elimination of the sue of harmful chemicals, reduced packaging); community

and economic development (low-interest housing loans); and other basic human needs

and desires (hunger, homelessness, animal rights, voting privileges, antidiscrimination

efforts).

Support from corporations may take many forms, including cash contributions,

grants, paid advertising, publicity, promotional sponsorships, and technical expertise,

in-kind contributions (i.e., donations of products such as computer equipment or

services such as printing), employee volunteers, and access to distribution channels.

Cash contributions may come directly through a corporation or indirectly through a

foundation it has established to focus on corporate giving on behalf of the corporation

(Kotler and Lee, 2005).

Corporations may be sponsoring these initiatives on their own or in partnership

with others. They may be conceived of and managed by one department within the

corporation, or by a team representing multiple business units.

Kotler and Lee (2005), have identified six major types of corporate social

initiatives.

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2.1 Increased Giving:

According to Giving USA, charitable giving by for-profit corporations has risen

from an estimated $9.6 billion in 1999 to $12.19 billion in 2002.

Cone/Roper’s Executive Study in 2000, exploring because initiatives from the

corporate perspective, found that 69 percent of companies planned to increase future

commitments to social issues (2004).

2.2 Increased Reporting:

According to KPMG, a US professional services firm, a 2002 survey of the

Global Fortune Top 250 companies indicated a continued increase in the number of

American companies reporting on corporate responsibility. In 2002, 45 percent of

these companies issued environmental, social, or sustainability reports, compared with

35 percent in their 1999 survey.

Major avenues for this reporting include corporate annual reports with special

sections on community giving and, increasingly, the publication of a separate annual

community giving report. Starbucks, for example, in 2003 published its second annual

Report on Corporate Social Responsibility and, in an opening letter from the Chairman

and CEO, emphasized that this report is a way “to provide transparency on our

business practices, measurements of our performance, and benchmarks for future

reports”. It further explains that Starbucks took additional measures in the second year

of reporting “to assure our stakeholders that the information in this report is accurate by

engaging an independent third party to verify its contents.”

A review of Fortune 500 web sites also indicates that a neither majority nor have

special reports on giving, with sections typically labeled “Corporate Social

Responsibility,” “Corporation Citizenship,” “Community Development,” “Community

Giving,” or “Community Involvement.” Many of these sections provide lengthy detail on

topics like annual giving amounts, philanthropic priorities, major initiatives, employee

volunteerism, and sustainable business practices.

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2.3 Establishment of a Corporate Social Norm to Do Good:

Within these annual reports and on these web sites, there are also consistent

and similar messages from CEOs, signaling that commitments to corporate social

responsibility have entered the mainstream of corporate dialogue as a must-do, as

indicated in the following examples:

2.4 A shift from Obligation to Strategy:

In a seminal article in the Harvard Business Review in 1994, Craig Smith

identified “The New Corporate Philanthropy,” describing it as a shift to making long-

term commitment to specific social issues and initiatives; providing more than cash

contributions; sourcing funds from business units as well as philanthropic budgets;

forming strategic alliances; and doing all of this in a way that also advances business

goals.

One milestone Smith identified that contributed to this evolution was Supreme

Court decision in the 1950s that removed legal restrictions and unwritten codes which

up to that time had restricted, or at least limited, corporate contributions and

involvement in social issues. Subsequently, by the 1960s most U.S. companies began

to feel pressures to demonstrate their social responsibility and established in-house

foundations and giving programs.

One of the next milestones Smith cited was the Exxon Valdez oil spill in 1989,

which brought into serious question the philanthropy of the 1970s and 1980s, where

corporations tended to support social issues least associated with their line of business,

give to a variety of causes, and turn over management of their giving to separate

foundations. When Exxon then needed access to environmentalist for expertise and

support, management was “without ties to environmental leaders nurtured by the

foundations.” A final milestone that Smith identified was the emergence and visibility of

models in the 1990s such as one used at AT&T that proposed a new view of the role of

a corporate foundation and its relationship to the for-profit arm. Its perspective was that

not only should philanthropic initiatives of the foundation support business objectives

but that business units, in return, should provide support for philanthropic activities in

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the form of resources such as marketing expertise, technical assistance, and employee

volunteers.

David Hess, Nikolai Rogovsky, and Thomas W. Dunfee(2002) suggest that

another force driving this shift is the new “moral marketplace factor,” creating an

increased importance of perceived corporate morality in choice made by consumers,

investors, and employees. They point to several examples of marketplace morality,

including “investors choosing socially screened investment funds, consumers

boycotting Shell Oil because of its decision to sink the Brent Spar oil rig, and

employees’ desires to work for socially responsible firms.”

The following emphasizes contrasts to the more traditional approach to

corporate philanthropy with the new strategic approach in terms of best practice issues

of selecting, developing, implementing, and evaluating corporate social initiatives.

2.5 The Traditional Approach: Fulfilling an Obligat ion:

Prior to the 1990s, decisions regarding the selection of social issues to support

tended to be made based on themes reflecting emerging pressures for “doing good to

look good.” Corporations would commonly establish, follow, and report on a fixed

annual budget for giving, sometimes tied to revenues or pretax earnings. Funds were

allocated to as many organizations as possible, reflecting a perception that this would

satisfy the most constituent groups and create the most visibility for philanthropic

efforts. Commitments were more short-term, allowing the organization to spread the

wealth over a variety of organizations and issues through the years. Interestingly there

was more of a tendency to avoid issues that might be associated with core business

products, which might be perceived as self-serving, and to steer clear of major and

often controversial social issues such as AIDS, judging that these were best handled by

those with expertise in governmental or nonprofit organizations. Decisions regarding

issues to support and organizations to sponsor were also more heavily influenced by

preference (and wishes) of senior management and directors of boards than by needs

to support strategic business goals and objectives.

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When developing and implementing specific initiatives, the rule of thumb might

have been described as to “do good as easily as possible,” resulting in a tendency to

simply write a check. Most donors were satisfied with being one of many corporate

sponsors, as visibility for efforts was not a goal or concern. And because it would

require extra effort, few attempts were made to integrate and coordinate giving

programs with other corporate strategies and business units such as marketing, human

resources, and operations.

In terms of evaluation, it appears little was done (or asked for) to establish

quantifiable outcomes for the business or the social cause; the approach was simply to

trust that good happened.

2.6 The New Approach- Supporting Corporate Objectiv es as Well:

As noted earlier, Craig Smith described how in the early 1990s, many turned to

a new model of corporate giving, a strategic approach that ultimately impacted what

issues corporations supported, how they designed and implemented their programs,

and how they were evaluated.

Decision making now reflects an increased desire for “doing well and doing

good”. We see more corporations picking a few strategic areas of focus that fit with

corporate values; selecting initiatives that support business goals; choosing issues

related to core products and core markets; supporting issues that provide opportunities

to meet marketing objectives, such as increased market share, market penetration, or

building a desired brand identify; evaluating issues based on their potential for positive

support in times of corporate crisis or national policy making; involving more than one

department in the selection process, so as to lay a foundation of support for

implementation of programs; and taking on issues the community, customers, and

employees care most about.

Developing and implementing programs in this new model looks more like “doing

all we can to do the most good, not just some good,” It is more common for managers

to make long-term commitments and to offer in-kind contributions such as corporate

expertise, technological support, access to services, and donation of retired equipment.

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We see more efforts to share distribution channels with cause partners; to volunteer

employee time; to integrate the issue into marketing, corporate communications,

human resources, community relations, and operations; to form strategic alliances with

one or more external partners (private, public, nonprofit); and to have funding come

from additional business units such as marketing and human resources.

Evaluation now has increased importance, perceived as critical to answering the

question “What good did we do?” Trusting is not good enough. This input is valued as

a part of a strategic framework that then uses this feedback for course correction and

credible public reporting. As a result, we see increased pressures for setting campaign

goals, measuring outcomes for the corporation, and measuring impact for the cause.

Amid these increased pressures for evaluation of outcomes, program partners are

challenged with determining methodologies and securing resources to make this

happen (Kotler and Lee, 2005).

Mintzberg (1983) while studying the case for CSR observed that the concept of

social responsibility—once known as "noblesse oblige" (literally nobility obliges)—has

experienced a vigorous resurgence since the 1950s.

As Elbing ( 1970) notes, citing references in each case, the concept has been

discussed academically by professors, pragmatically by businessmen, politically by

public representatives; it has been approached philosophically, biologically,

psychologically, sociologically, economically, even a esthetically. The cynic attributes

this resurgence to what he sees as the illegitimate power base of the large, widely held

corporation: Social responsibility is a smokescreen to divert attention from the

disappearance of direct shareholder control (and some forms of market control as well).

The "professional" manager—the individual who moved into that power vacuum left by

the departing shareholders—sees social responsibility as a form of natural

enlightenment, a reflection of the coming of age of the corporation, if you like. These

two positions are, in fact, far less divergent than they seem: each tilts its own way

based on similar premises.

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As Drucker (1973) puts the latter case, "to have a society of organizations with

autonomous managements (later 'self-governing' institutions), each a decision-maker in

its own sphere, requires that managers, while private, also know themselves to be

public". Milton Friedman( 1962) begins with a similar premise—that social responsibility

reflects a shifting of power into the hands of people less subject to traditional forms of

control—but concludes, as a result, that it is a "fundamentally subversive doctrine".

Thus sits social responsibility, in the center, attacked from the left and from the right

and supported by those who have the most to gain from the status quo of corporate

power.

Sethi [1975] has called "social responsiveness"—anticipating and preventing

social problems as opposed to keeping up with them (his use of the term "social

responsibility"), or doing the bare minimum ("social obligation"). Carried to its logical

extreme—what Drucker(1973) has called "unlimited social responsibility" social

responsiveness postulates that "only business can do it"; in the words of George Cabot

Lodge, "Business, it is said, is engaged in a war with the evils of our time, a war it must

win".

The argument that social responsibility is a sound investment has been

developed most fully and literally by Edward Bowman(1973) of MIT. In a paper entitled

"Corporate Social Responsibility and the Investor", he proposes the hypothesis that

through the effect of a "neo-invisible hand," the market price of a company's stock is

affected by its social behavior. He attacks two "myths" in his paper that "corporate

social responsibility is dependent on either the noblesse oblige of the manager or the

laws of the government," and that "corporate social responsibility is in fundamental

'conflict with investor interests". Sometimes a company must pay directly for behavior

perceived as irresponsible; Bowman cites the case of the Dutch firm struck by unions

all over Europe because of the disruptive local effects of shutting down one plant.

Bowman’s(1973) broader argument is that the stock market responds to the

social behavior of the corporation, in terms of the market price of its stock, which

affects its cost of capital and its earnings. To support this case, Bowman argues that

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many institutional investors view firms that are not socially responsible as riskier

investments; also that churches, universities, and the like, as well as the "clean" mutual

funds, by paying attention to corporate social behavior, influence the market for a

corporation's stock. Furthermore, to the extent that investment portfolios are diversified,

actions by individual corporations, which benefit the corporate sector as a whole—for

example, by improving the environment—also benefit the individual investor (an

argument Bowman draws from Wallich and McGowan (1970).

Pointing the enlighted self-interest argument Mintzberg(1983), felt that it is

certainly not new; its orientation has simply changed. In an earlier era, the point was

religious and personal: "Be good or you will go to hell"—literally! Responsible behavior

paid off, if not in this life, at least in the next. Today the case is made in economic terms

(during this life), although it remains fundamentally the same. The gates of the treasury

in this world, if not those of the heavens in the next, will open to those who are socially

responsible. What has remained the same is the premise that one behaves responsibly

not because of ethics— because that is the "proper" way to behave—but because it is

to one's advantage to do so.

Mintzberg(1983), noted that many of the self-interest arguments, by trying to

make a case for social responsibility, in fact make a stronger one for other controls on

the corporation—pressure campaigns from special interest groups, perhaps regulations

from government. For Bowman, or those worried about them," responsibility is a sound

investment because pressure groups make it so. Only in its purest form—as an ethical

position—can corporate social responsibility stand by itself.

According to Mintzberg(1983) the most elementary attack comes from those

who simply do not trust the corporation. They view all of the talk of social responsibility

as a giant public relations campaign. The head can pronounce; the hands do not

necessarily respond. Thus, Cheit (1964) refers to the "Gospel of Social Responsibility,"

"designed to justify the power of managers over an ownerless system": "Managers

must say that they are responsible, because they are not". And Chamberlain(1973 )

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writes, "The most common corporate response to criticism of a deficient sense of social

responsibility has been an augmented program of public relations".

Theodore Levitt (1958) argues, for example, that the typical senior executive of

the large corporation is there because he is an expert on his own business, not on

social issues. By having had to devote so much time to learning his business, "he has

automatically insulated himself from the world around him", denying himself the

knowledge and skills needed to deal with social issues. Others make a related case by

claiming that the orientation of business organizations toward efficiency and control

renders their leaders inept at handling complex social problems, which require flexibility

and political finesse. Harrington( ) writes, for example, that "what cities need are

'uneconomic' allocations of resources. . . . Businessmen, even at their most idealistic,

are not prepared to act in a systematically un business like way".

Tumin (1964), bases his argument on "the principle that competition or greed

causes to depart from the rules (and the rules of social responsibility, as noted, are

vague and not officially enforced in any event), forcing others to follow suit. Business,

as a result, "tends to bring out, standardize, and reward the most unsocialzed impulses

of man". There is a good deal of evidence to back up the cynicism of these commen-

tators, as we shall see. But before we turn to it, let us consider a final and more far-

reaching attack on social responsibility.

According to Mintzberg (1983) some critics ask what values will be embedded in

the "socially responsible" choices of businessmen. How much of business ideology—

bigger is better, competition is good, material wealth leads to a better society, etc.—will

come along with these choices? Others ask to what extent business can be allowed, or

expected, to dominate society. In a paper entitled "The Dangers of Social

Responsibility," Levitt (1968) comments that "its guilt-driven urge" has caused the

modern corporation to reshape "not simply the economic but also the institutional,

social, cultural, and political topography of society". He sees the continuation of this

trend as posing a serious threat to democracy: "business statesmanship may create

the corporate equivalent of the unitary state". And then there is the argument that the

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function of business is economic, not social. Social responsibility (at least in its pure

form) means giving away the shareholders' money: It weakens the firm's competitive

position, and it dilutes the efforts of its managers, who are supposed to focus on

economic productivity. The best known voice here is that of Milton Friedman(1970 ):

To Friedman (1970): "There is one and only one social responsibility of

business—to use its resources and engage in activities designed to increase its profits

so long as it stays within the rules of the game, which is to say, engages in open and

free competition without deception or fraud".

To test his contention that it pays to be good, Bowman (1973) teamed up with

Haire using an interesting research methodology. They performed a line-by-line content

analysis of the 1973 annual reports of eighty-two food processing companies in order

to ascertain the percentage of total prose devoted to issues of corporate social

responsibility. This figure was then used as a surrogate for actual company concern

and activity, which they related to company performance.' Bowman and Haire (1976 )

found that those firms with some social responsibility prose performed significantly

better than those with none (14.7% return on equity vs. 10.2% over the preceding five

years, a difference significant at the 2% level).

Albareda, L., Lozano, J. M., & Ysa, T. (2007) analyze different CSR public policies

adopted by European governments to promote responsible and sustainable business

practices. The authors are able to analyze the various methods by developing a framework

to understand the approaches and perspectives of governments in designing and

implementing these policies. The article includes a thorough review of literature focused on

governments and CSR, as well as official documents on CSR published by the European

Commission. The article also includes other studies based on geographical comparative

analyses of government behavior and CSR culture in Europe and North America, which

reveal that European policymakers have undertaken a wide range of public initiatives to

promote CSR in contrast to a lack of policies in the United States. Also, United States–

based companies had a less accepting attitude than European companies toward the

acceptance of the public CSR policies. Following are three elements that emerged from the

literature:

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• The voluntary nature of the company’s initiatives;

• The emerging networks and soft tools; and

• Multi-stakeholders’ dialogue and new government challenges.

Building on these elements, the authors construct an analytical model to

understand CSR governmental approaches. Finally, the authors present four models of

government action in the development of CSR-endorsing public policies in 15

European Union countries: the Partnership Model, the Business in the Community

Model, the Sustainability and Citizenship Model, and the Agora Model. (Agora is a

Greek word meaning “a public gathering place or forum”—to refer to the model used to

implement and enforce CSR in Mediterranean countries, including Greece, Italy,

Portugal, and Spain).

Bendell, J. (2005),critically examines the accountability of western and northern

nongovernmental organizations (NGOs) and multi-stakeholder initiatives (MSIs),

partnerships between governments, business, and civil society. The author states that

various analyses have suggested that the (supposed) intended beneficiaries of CSR

activity and MSIs have had only a limited influence on them (Bass, 2001; Bendell,

2000; Utting, 2002). In fact, many of these organizations are heavily influenced by large

companies. The author points out the limited amount of participation in MSIs from the

global south and the related implications of such on discourse and practice. The author

also demonstrates how the way in which the problems and solutions are defined serves

the commercial interests of the northern participants, to the detriment of southern

stakeholders and intended beneficiaries. To illustrate his argument, the author reviews

the structure and operations of some MSI organizations: Worldwide Responsible

Apparel Production (WRAP), Social Accountability International (SAI), Sustainable

Agriculture Network, and the Forest Stewardship Council. A snapshot of that content

references WRAP’s principles and standards, which govern 615 factories from 56

countries that deliver 85 percent of clothing sales in the United States, designed to

benefit clothing and footwear manufacturing workers, mostly in the global south; yet 11

of its 12 board members are from the United States. Also, SAI’s emphasis on

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assessment and certification generates concerns, on the part of the author, related to

speed of the actual audits, training of the auditors, confidentiality of the findings,

objectivity (in the eyes of the auditor), and neutrality (offering no constructive advice

toward making improvements). In concluding, the author gives reasons why these

conditions may exist and provides suggestions and recommendations toward improving

them. One of the suggestions is to include more democracy in the process.

As external and internal views on ethics and CSR differ, Berenbeim, R. E. (2006)

questions whether there is a way to integrate them into a single model for an ethical

company. A contrast between Enron’s and Johnson & Johnson’s approaches to CSR

reflect an outcome, for the former, of strategic versus moral calculation, whereas the latter

encompasses a decision-making process that is ingrained into the company culture. The

comparison is used to illustrate the value of integration between a company’s ethics,

principles, and its CSR initiatives, which enhance leader decision making.

Berkhout, T. (2005) critically examines corporate gains as the strategic engine for

long-term corporate profits and responsible social development. He highlights corporate

green-washing, the voluntary adoption of a token social or environmental initiative intended

to enhance a company’s corporate image. He points out that CSR provides the starting

point that businesses need to begin moving toward sustainability. For CSR to achieve its

potential, companies must push to seek something other than the lowest short-term cost

for the highest short-term gain. The author identifies the following challenges facing a

company that wants to operate under the principles of CSR:

• How to balance its social and environmental responsibilities with its clearly defined economic responsibility to earn a profit; • How evolving norms and rules determine what constitutes acceptable

corporate behavior; • How CSR’s glass ceiling is merely a reflection of society’s expectations; and • How corporations are beginning to see a strategic value in CSR beyond

improved public relations or the short-term bottom line.

The principles of CSR are encouraged by the author in order to take meaningful

steps toward sustainability. The Natural Step founded in Sweden in 1989 requires

businesses to meet specific ecological and human conditions for all aspects of their

corporate agendas. The Natural Step framework is appealing because it draws a line in the

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sand in terms of what is sustainable practice and what is not sustainable practice. Over

100 companies around the world have started to work with the Natural Step framework.

The level of integration varies from company to company. In concluding, the author does

not recommend that companies currently engaged in CSR throw away their work in the

area and start anew with the Natural Step or a similar framework. He recommends that

companies need to ensure that their short-term economic goals do not continue to override

their long-term social, environmental, and economic responsibilities to society and the

natural environment.

Blowfield, M. (2005) posits that developing a critical approach to CSR not only

requires to know how CSR affects company behavior in developing countries, but also to

ask if, and how, business is affecting the meaning of development itself. The author argues

in this article that business is indeed affecting development, and one of the ways this

happens is by allowing business thinking to dominate the way we view the world and to

become the norm against which everything else is tested for true and false value. The

reader is cautioned that even though there may be areas of overlap between

developmental and business goals, companies engage with developing economies for

commercial reasons, not developmental ones. The author states that the following are

long-term tests:

• Whether CSR can help companies redefine the meaning of good business practice in the interests of the poor and marginalized;

• Whether CSR helps development practitioners manage the possibilities and consequences of global capitalism for poor countries more effectively.

A number of negotiable and nonnegotiable fundamental values and tenets of

business are highlighted and analyzed, indicating that only those that are deemed

negotiable are addressed through CSR, while the nonnegotiable values result in limitations

of approaches to CSR. The author also states that understanding how business affects

development depends on our distinguishing between the business case and the case for

business.

Blowfield and Frynas (2005) in their editorial set the tone for a new direction in CSR

research to determine what CSR does and could mean for the poor and marginalized in

developing countries. They assert that claims about CSR contributions to alleviate poverty

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and achieve other developmental goals are unwarranted. The authors identify CSR as an

umbrella term for a variety of theories and practices that recognize the following:

• That companies have a responsibility for their impact on society and the natural environment, sometimes beyond legal compliance and the liability of individuals;

• That companies have a responsibility for the behavior of others with whom they do business (e.g., within supply chains); and

• That business needs to manage its relationship with wider society, whether for reasons of commercial viability or to add value to society.

Further, they discuss criticisms of CSR that included two schools of thought:

“CSR is bad capitalism” and “weak CSR is bad development.” The authors then identify

and discuss four areas that need to be addressed to answer critical CSR questions: the

meaning of CSR for developing countries, its relationship to international governance,

its analytical limitations, and the consequence of thinking in terms of the business case

for CSR.

In this paper Campbell, J. L. (2007) draws on the literature on institutional

analysis in sociology and on comparative political economy in political science to

explore a broad set of institutional conditions under which socially responsible

corporate behaviors are likely to occur. After providing a literature review to focus

discussion and after defining socially responsible corporate behavior as a threshold

below which corporations no longer behave in socially responsible ways, the author

presents the following seven propositions that influence a corporation’s level of social

responsibility.

1. Financial condition of the firm and health of the economy; 2. Too much or too little competition; 3. Institutional factors such as well-enforced state regulation; 4. Well-organized and effective industrial self-regulation; 5. Private, independent organizations, including NGOs, social movement

organizations, institutional investors, and the press; 6. Important business publications, business school curricula, and other

educational venues in which corporate managers participate; and 7. Membership in trade or employer associations, which are organized in

ways that promote socially responsible behavior.

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This article by Cornelius, N., Wallace, J., & Tassabehji, R. (2007) examines the

attention falling on business schools as providers of education and training for

managers and senior executives. They investigate the nature of motivation and

commitment to ethics tuition provided by business schools. They also investigate any

relationship between ethics education and provisions in MBA courses, the teaching and

research that underpins the nature of CSR in schools delivering specific programs, and

corporate identity (CI) of the schools and their parent institutions. It concludes that CSR

is a subset of the CI model as proposed by Melewar and Jenkins. The top business

schools predominantly offer proactive education, with the lower tier offering a more

reactive form of education.

Frame, B. (2005) who is in undertakes consultancy and research in sustainable

development and CSR with international donors, national and local governments, and the

private sector, and has worked in this area for over 20 years, mostly in South Asia and

China. In this paper he is calling on the development donor community, which includes

donors such as the United Kingdom Department for International Development, the United

States Agency for International Development, and the Australian Government Overseas

Aid; private consulting companies; and NGOs to improve their internal track records in

terms of CSR accounting, by putting appropriate CSR measures into their internal and

supply-chain activities. One example of a lack of cohesive process is that, when they

evaluate competitive bids, donors do not formally credit companies bidding for

development contracts with involvement in CSR processes. Behavior changes in donor

organizations, which would influence further change in the supply chain, are needed and

might well be achieved with the introduction of CSR measures such as voluntary disclosure

on socially responsible investments, the reduction and mitigation of carbon emissions, and

voluntary CSR reporting. Further, there is a need for greater dissemination of good practice

and more pressure to be exerted on NGOs to prove themselves as ethical, transparent,

and accountable as those they seek to influence (Murphy, 2003). To facilitate this process,

the author offers a modified CSR framework. The framework relates changes in

governance approach, transparency, and accountability, as related to various business

paradigms ranging from “business as usual” at one extreme to “restoration of capital” at the

other, with three additional stages in between. Further, the author provides a guide for CSR

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activities, consisting of a set of internal and external indicators that mark level of

sustainability (weak or strong) for the various activities. Finally, the author warns that CSR

is here to stay and that it is independent of the political climate surrounding global

protocols. In addition, early adopters are setting an important trend that needs to become

mainstream normative behavior.

Frynas, J. G. (2005) observes that despite its spending of over US $500 million in

2001 alone and despite a long list of community development programs and other CSR

initiatives, the effectiveness of CSR initiatives in the oil, gas, and mining sectors has been

increasingly questioned. And there is mounting evidence of a gap between the stated

intentions of business leaders and their actual behavior and impact in the real world,

according to this author. In addition he states, to the extent that expectations for CSR now

encompass delivering development solutions, the typical business case model for CSR

must now be expanded to include the broader context of international development. This

paper provides a critical account that suggests that the actual and potential contribution of

oil companies to development faces structural constraints and that the current CSR agenda

may be inappropriate for addressing social problems in developing countries and may

divert attention from broader political, economic, and social solutions for such problems.

The author discusses four important factors in a firm’s decision to embark on community

development projects: obtaining a competitive advantage, maintaining a stable working

environment, managing external perceptions, and keeping employees happy. Citing

community development failures of oil giants, including Texaco, Shell, and BP, the fol-

lowing explanations for the failures were offered: the primacy of the “business case,”

incompatibility of corporate objectives with developmental objectives, country- and context-

specific issues, failure to involve the beneficiaries of CSR, lack of human resources, social

attitudes of oil company staff, a focus on technical and managerial solutions, and failure to

integrate CSR initiatives into a larger development plan. The author concludes that as CSR

exists today in the oil industry, it has limited potential for fostering genuine local community

development in practice.

Gil Estallo, M. D. A., Finer de-la Fuente, F., & Griful-Miquela, C. (2007) posit that

CSR is a new management tool and not a fashionable concept, and they seek to analyze

the advantages and limitations thereof, to define a management model for achieving

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responsibility within or among organizations. The authors offer a concept of “company” with

supply chain management at its center, surrounded by competitors, customers, collabora-

tors, and providers. They highlight a point of contention with Friedman’s 1966 statement

indicating that it did not take into account all of the people that must cooperate and perform

in order to make a profit. In addition, they indicate that maximizing profit is simply a

mathematical concept, as there is always the possibility of achieving a higher performance.

The authors state that in the current business context of extreme competition and rapidly

changing information, companies have to treat every one of their human collectives

responsibly and adapt to the context in which it is located in order to grow and make

profits. They hypothesize that CSR, appearing at the beginning of the twenty-first century

as a management tool, will remain through time, and they offer a number of facts in its

support. The article concludes with Argandona’s 1997 list of aspects found within a

company ruled by ethical criteria; limitations of CSR; and a formal model using economic,

social, environmental, and business indicators.

Graafland, J., & Van de Ven, B. (2006) using a sample of 111 Dutch companies, by

empirical study tests the hypothesis that a positive strategic and moral view of CSR

stimulates small and medium enterprises to undertake CSR efforts. For the purpose of the

study, managers’ strategic views of CSR (the extrinsic motive), as well as their moral views

(the intrinsic motive), have been measured through a single-item approach and with

reference to five stakeholder groups: employees, customers, competitors, suppliers, and

society at large. The extrinsic motive is constructed as a company’s moral duty, while the

intrinsic motive sees CSR for its contribution to the long-term financial success of the

company. Results show that a vast majority of respondents had a positive view of CSR in

both dimensions. Nevertheless, there is a weak correlation between strategic CSR and

actual CSR efforts. The strategic view generates active policies only toward consumer

relations and partially toward employee relations, but not with regard to the other three

stakeholders. Even though the first step for the implementation of CSR is a growing

awareness of the strategic importance of CSR by top company leadership, the findings of

this study reveal that a positive strategic view of CSR is not a sufficient condition for a firm

to actually undertake enhancement measures. CSR implementation is more related to

moral commitments than profit maximization, and this suggests a cautious view of CSR

and its financial advantage.

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Grossmanx, L. (2004) in this article presents the RepuTex social responsibility

rating system, which provides independent measures of social responsibility performance.

Like a credit rating, RepuTex rates any type of organization, be it government, private,

publicly listed, or not-for-profit. RepuTex uses four key indicators to measure an

organization’s social performance. To maintain the established community foci for

RepuTex, the assessment criteria in each category are made available for public comment.

During this time, community stakeholders, companies, expert bodies, and interested

parties may provide feedback and input. An analysis of RepuTex’s results shows that

employee management is the area of highest correlation to overall results, but high-

achieving companies generally perform at high levels across all categories. In conclusion,

one of the gains from the connected economy is transparency.

Hartman, L. P., Rubin, R. S., & Dhanda, K. K. (2007) reviews a study conducted on

CSR. A cross-cultural analysis of communication of CSR activities in a total of 16 United

States and European corporations was conducted. The authors contract two major

approaches to CSR initiatives. The results support the expectation that U.S. companies

tend to communicate about and justify CSR using economics or bottom-line terms and

arguments, whereas European companies rely more heavily on language or the theories of

citizenship, corporate accountability, or moral commitment. Results also indicate that

European companies do not value sustainability to the exclusion of financial elements, but

instead project sustainability commitment in addition to financial commitment. U.S.–based

companies focus more heavily on financial justifications, while European–based companies

incorporate both financial and sustainability elements in their justification of CSR. In

conclusion, the authors posit that U.S.–based companies favor more heavily economic

justifications for engaging in CSR and those European Union–based companies favor

sustainability arguments in order to bolster their actions in stakeholder engagement.

Bryan W. Husted is a professor of management at EGADE Graduate School of

Business at the Technológico de Monterrey in Mexico and is Alumni Associate

Professor of Business Ethics at the Instituto de Empresa in Spain. In this article Husted

examines three CSR governance structures—in-house, outsourcing, and

collaborative—and presents a framework for companies to determine which structure

would be the most effective (the greatest social good at the least cost). Outsourcing

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occurs when firms make charitable contributions to nonprofit organizations that

undertake charitable, social, educational, community, and scientific work. In-house

projects involve extensive corporate participation in the planning, execution, and

evaluation of social projects, generally implemented at the organizational unit.

Collaboration involves a partnership between the firm and a nonprofit organization.

Specific factors related to the firm’s choice of governance structure discussed in the

article include the following:

• The factor of cost coordination (reduced costs when two departments or companies work together to provide a product or service);

• The factor of motivation (assurance that individuals or companies fulfill their agreements);

• The concept of centrality (closeness of fit between the firm’s CSR activity and its mission and objectives); and

• The concept of specificity (the extent to which the firm is able to capture a share of the profit stream generated by its investments in CSR), from which the decision-making framework is developed.

Joseph, E. (2002) presents the unsustainable depletion of natural resources,

perpetuation of poor health, and imposition of dangerous working conditions as just some

of the external costs imposed by international commercial operations. These costs are

borne by developing countries that do not receive adequate compensation from companies

responsible for social and environmental damage. At the national level there are significant

barriers to regulating companies to ensure that they manage their social and environmental

impacts. Prescriptive legislation often leads to tokenistic responses, and regulation can

become an inaccurate reflection of society’s concern because it is lagging behind public

opinion. At the international level, because of inadequate global governance and

discrepancies between national social and environmental laws, improvements in corporate

practices often have to rely on voluntary actions. There are abundant recognized

international standards—those set by ILO, OECD, and UN—for protecting workers, human

rights, and the environ ment, for example. However, where these are not incorporated into

national legislation or are not applicable to overseas operations, their effectiveness is much

diminished. The author points out how companies take voluntary action when market

forces reward them for doing so. How companies improve their performance can be driven

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by the reaction of institutional investors and stakeholders, employees, suppliers,

customers, community representatives, and NGOs.

Pressure from stakeholders can be a formidable force for improvements in behavior.

The author states that a critical question for policymakers is how effective a means of

improving corporate behavior can reporting on social and environmental impacts be? The

United Kingdom and European Union are currently grappling with the relative merits of

mandatory, as opposed to voluntary, social and environmental reporting. Organizations

charged with auditing or verifying reports rarely comment on issues that they report. The

author concludes that the use of voluntary guidelines such as GRI reduces the ability of

stakeholders to make comparisons across companies, because of the flexibility over what

individual companies report on. A three-tiered requirement depending on the relevance to

the organization is recommended. Even if laws are put in place, disclosure is necessary but

does not have sufficient impact on market forces to apply pressure to companies.

Kotler, P., & Lee, N. (2005) their book identifies six major initiatives under which

most social responsibility–related activities fall. The six social initiatives explored are as

follows:

• Cause promotion; • Cause-related marketing; • Corporate social marketing; • Corporate philanthropy; • Community volunteering; and • Socially responsible business practices.

Case studies are presented to illustrate these distinctions. Additionally, 25 best

practices, assembled to guide decision making in the area of CSR, are presented. The

book is intended to help maximize the impact on corporate investments to do the most

social, environmental, and economic good. A theoretical perspective is presented along

with personal accounts of companies. The book contains proven recommendations and

real-world advice on social initiatives. Socially responsible companies such as Ben &

Jerry’s, IBM, Washington Mutual, Johnson & Johnson, Microsoft, The Body Shop,

Hewlett-Packard, and American Express are featured. The final chapter of the book

presents ten recommended strategies for success. It is written for executives,

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administrators, and program managers of NGOs and public-sector agencies who are

seeking contributions from corporations for developing and implementing initiatives

intended to support a social cause.

Lewicka-Stralecka, A. (2006) identify the opportunities and limitations of CSR in

the so-called countries of transformation, or Central and Eastern European countries,

particularly focusing on Poland and drawing from previous cumulative knowledge as

well as the results of various sociological research. Nine factors are discussed:

• the business image; • the legal background; • the job market situation; • the corruption and the correlates of economic stagnation and social decline; • the socialist associations and the CSR rhetoric; • the blurred boundaries of CSR the underdevelopment of the civic society; • the economic reality and ethical standards; and • the attempts at self-regulation of business.

A big emphasis through the paper is posed on cooperation between business

representatives and stakeholders at any level. Following are the obstacles that have

been clearly identified:

• negative image of business; • dysfunctional legal background; • corruption; • weakness of the III sector; • difficulty of the economic situation of many companies; • lack of ethics and ethical standards; and • difficult situation in the job market.

The implementation is nevertheless bound to be a lengthy process requiring

involvement, effort, and determination from authorities, as well as from business and

business leaders and non-governmental organizations. Although there are some

serious limitations, there are also circumstances that allow implementing CSR in a

practical way in the economy, and there are positive examples of such practices. CSR

is promoted in Poland mainly by foreign companies with a local branch, through

informational and educational actions, and through programs that involve business in

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actions for society and the natural environment that are locally implemented and are

overcoming regional obstacles. And this is particularly true for foreign partners from

within the European Union.

The authors Mackey, A., Mackey, T. B., & Barney, J. B. (2007) build on the

observation that equity holders may sometimes have interests besides simply maximizing

their wealth when they make their investment decisions. The authors present a theory that

suggests the conditions under which firms will engage in socially responsible activities,

even if those activities reduce the present value of a firm’s cash flow. Adopting definitions

of CSR that focus on voluntary firm actions designed to improve social or environmental

conditions and the market (versus accounting) definition of firm performance, the authors

develop a simple model of supply and demand for opportunities to invest in socially respon-

sible firms. The market definition of firm performance encompasses ways that socially

responsible corporate activities can create or destroy shareholder wealth. It also

encompasses the assumption that the United States capital markets are semi strong and

efficient (Fama, 1970).

The model seeks to determine whether socially responsible investing will improve,

reduce, or have no impact on a firm’s market value. The findings reveal that if the demand

for socially responsible investment opportunities is greater than the supply, then economic

value will be created, and thus, managers in publicly traded firms might fund socially

responsible activities that do not maximize the present value of the firm’s cash flow.

However, the authors caution that if supply exceeds demand, the opposite impact on firm

value may occur.

Malini, M. (2006) reflects on the adoption of CSR in emerging economies and on

some milestones that have been already placed. The first argument raised is that a

smart approach, considering universal norms and values, is needed to lead the

transformative potential of CSR as a movement. This approach would also control and

avoid the environmental and social consequences of rapid growth. Furthermore, it is

necessary to have energetic national corporate leadership along with solid homegrown

constituencies demanding higher corporate standards. Social and political contests are

then the fundamental part of the journey of negotiating the balance between society,

state, and market.

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The thoughts suggested by the authors for companies who embrace CSR are:

• Stay critical.

• Do not believe the hype.

• Recognize the success but retain perspective and a critical mind.

• Demand accountability from the top.

• Seek consistency: design mechanisms to ensure consistency between different

departmental aims and objectives.

• Own and share CSR as a living practice and culture.

• Focus on the local: find practical local expression to stand a chance of

implementing global norms and standards.

Marshall, J. (2007) discusses the gender differences in CSR leadership,

exploring whose voices are becoming dominant, what forms of leadership men and

women take, and how women are change agents and exercise symbolic power to

shape discourses and practices of ecological sustainability and matters of social

justice. White male voices are currently dominating CSR, though these leaders are

unusual people, radical and daring. Women are more likely to be represented on the

field of philanthropic giving because women’s potential to influence discourses is

limited. These male figures are “tempered radicals,” using their status and masculinity

to critique business practices and advocate change. They are open to criticism, to

perceptions of hypocrisy, and to feelings of isolation. The women figures in CSR

leadership are often invited to speak but are not insiders; they are labeled as “activist.”

They are speakers, orators. They are from “elsewhere” (e.g., the voice from the devel-

oping world). They choose the margin as a space for radical openness. Their

messages are raw and confronting, and they are unmoderated radicals. They are

questioning the foundations of business and society. Men operate in the mainstream,

while women operate at the margins. Women and men leaders are differently placed in

the world of CSR, but both affect the context of the debate. CSR favors masculinity, but

the work of women at the margins is also crucial.

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The starting point of the study by Morsing, M., Schultz, M., & Nielsen, K. U.

(2008) is the challenge between the need to be perceived as socially responsible

across stakeholders and the difficulty of communication in corporate CSR-related

matters. The cultural paradox in communication of CSR is that while the general

population has a high regard for those companies associated with social responsibility,

companies are being encouraged either not to communicate about their CSR or to

communicate in a less conspicuous way. Based on empirical data, an “inside-out”

approach is suggested as a method for companies to motivate organizational support

for corporate CSR communication. The inside-out approach to CSR activities means

that initially employees are the key stakeholders of concern for these activities; this in

turn will increase the likelihood of employees’ commitment and they will

organizationally support the corporate CSR agenda. In particular, a CSR

communication model proposing two different communication processes is proposed—

the expert and the endorsed communication processes. The model targets internal as

well as external stakeholders with corporate CSR messages. The conclusion of the

empirical testing of the model is twofold: first of all, analysis is called for on how

employees are integrated into the CSR communication process; secondly, there is the

need for a better understanding of how the corporate communication process differs in

implicit and explicit CSR approaches.

Prahalad, C. K., & Hammond, A. (2003) opined that misconceptions and

inaccurate assumptions exist about business opportunities and profitability at the

bottom of the economic pyramid. While incomes average only US $2,000 per year,

there are four billion people in this sector. Thus, these authors argue, when

multinational corporations (MNCs) provide basic goods and services that reduce costs

to the poor and help improve their standard of living (while generating an acceptable

return on investment) the results benefit everyone. Further, by serving the poor,

business can gain new sources of rapid revenue growth, greater efficiencies with cost

reduction initiatives for the MNC, which also translate to increased purchasing power

for the local consumers, as well as access to innovation. Strategies for MNCs to

profitably expand their businesses and serve the world’s poor are as follows:

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• Expand the understanding of managers about the bottom of the pyramid (BOP)

markets;

• Make structural changes within companies;

• Create venture groups and internal investment funds;

• Establish business development task forces; and

• Reach out to external partners (entrepreneurs, NGOs, community groups, and

so on).

Serving as Deputy Director of the United Nations Research Institute for Social

Development, Utting, P. (2005) examines the reasons for civil society mobilization on CSR

issues, the types of organizations involved, and their different forms of activism and

relations with business. The author then proceeds to identify the ways in which business is

engaging with and shaping the CSR agenda, and why it has become a proactive player.

Finally, the author considers how this agenda may evolve on the basis of recent

developments in CSR activism and regulation. This analysis supports the author’s

argument that the CSR agenda can deal with some of the worst symptoms of under-

development, such as poor working conditions, pollution, and poor factory-community

relations, but that it does not deal with the key political and economic mechanisms through

which transnational companies (TNCs) undermine the development prospects of poor

countries. The author states that the future of the dual CSR movements (civil society

organizations versus business) will depend on the degree of convergence and coregulation

between the sectors. It will depend as well on new forms of activism centered on “corporate

accountability,” while issuing cautions regarding biases toward business in these multi-

stakeholder initiatives. Referencing Newell (2001) and Bendell (2004), the author points out

that unlike CSR, which emphasizes moral compulsion, corporate accountability suggests

that TNCs have to answer to their stakeholders and be held to account through some

element of punishment or sanction. These changes will lead to a new approach to CSR,

one that is focused more on attention to complaints procedures, or complaints-based

systems of regulation that facilitate the task of identifying, investigating, publicizing, and

seeking redress for specific instances of corporate malpractice as a complement to

regulatory systems.

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Werther, W. B., Jr., & Chandler, D. A. (2006) present the book in three distinct

components: Part I of this book defines corporate social responsibility; segregates the

firm’s stakeholders into three groups: organizational, economic, and societal; discusses

various CSR pros and cons for the corporation using economic, moral, and rational

arguments; and provides reasons for CSR’s growing importance and relevance. The

authors state that corporate leaders must strive to operate from a multiple stakeholders’

perspective, trying to balance results (profits) and methods (operational activities). A

“strategic lens” concept, which includes vision, mission, strategy, and tactics, with CSR

serving as the filter, was considered one of the key ingredients in developing a CSR stra-

tegic plan. And opportunities and/or constraints of environment (external), competencies

(internal), and structure (internal) were all also considered key components in developing a

CSR strategic plan. Finally, this part of the text discusses the firm’s CSR threshold: “the

point at which CSR becomes obviously critical to strategic success.”

Part II of the book is comprised of CSR issues and case studies. The different

viewpoints (pros and cons) of CSR are examined: why it is a growing concern to students

and leaders and the identification of various stakeholders, their importance and impact.

Archie Carrols presents the pyramid of CSR—economic, legal, ethical, and discretionary—

representing moral, rational, and economic arguments for CSR. The practical application is

presented as corporate examples of CSR. Collectively the case studies form a base for

discussion and explanations that are enriched by exploring Internet links. Topics ranging

from governance and accountability to self-interest and economic viability illustrate the

direct impact of CSR on corporate behavior, decisions, and strategies within the

organization and within the marketplace and society.

Part III offers a variety of information sources focused on specific subjects of CSR.

2.7 Some experiences of CSR:

The following organizations were accessed on June 2, 2009 through a Google

search using corporate social responsibility as the key search term with an aim to

identify the activates being undertaken by Business organizations under the aegis of

CSR.

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Starbucks: The company is focused on developing commitment to being a responsible

company which includes efforts to be open and honest about the successes and

challenges. Each year since 2001, the company has published CSR report and

considers it a global responsibility.

Sun Microsystems: The company believes that they have been able to implement

throughout Sun’s history, programs and practices that reflect their long-held values and

address the issue of corporate responsibility. They are committed to meeting the

needs of not only our stakeholders-our customers, employees, investors, and parents

but of the global community as well.

Under the policy of Eco Responsibility they accept that “Sun leads the industry in

offering a portfolio of eco responsible products and services that deliver powerful,

sustainable, energy-efficient computing solutions that don’t compromise on capacity

and security.” Their Eco Responsibility initiative also focus on how they run their

business, and includes efforts to shrink carbon emissions, develop an alternative-

energy strategy, and otherwise reduce the environmental impact of their operations.

Statoil Hydro Norway: The company addresses the balance of environment and

society. Centered on sustainability, their non-financial statements feature environment,

safety, society, and health and working environment. Its positioning acknowledges the

interests and opinions of its stakeholders. Their ability to create value depends on

maintaining high ethical standards as they regard ethics as an integral part of business

activities. They focus on high ethical standards and have an open dialogue on these

issue. Similar conduct is expected from the business partners. Thus aim to create a

values-based performance culture.

As part of its sustainability commitment, the company says: “Emissions of

greenhouse gases and environmental pollutants are among the biggest challenges of

our times. We are helping to overcome these problems by developing new technology

and making effective use of natural resources.”

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Sony Corporation: The company reasoned that CSR is the foundation of innovation,

or innovation is the instrument for achieving CSR: “True to our DNA, Sony continues to

address the challenge of realizing new potential through creative technologies,

products and services and a spirit of innovation that focuses on contributing to society.

The challenge is achieved under the partnership with diverse stakeholders.” It

connects CSR and its rationale for Corporate Governance:

Sony is committed a strong corporate governance. As a part of this effort, Sony

adopted a “Company with Committees” corporate governance system under the

Japanese Company Law. In addition to complying with the requirements of laws and

regulations, Sony has introduced its own system to help improve the soundness and

transparency of its governance by strengthening the separation of the Directors

function from that of management and advancing the proper functioning of the statutory

committees. Under Sony’s system, the Board of Directors define the respective areas

for which each of the Corporate Executive Officer is responsible and delegates to them

decision-making authority to manage the business, thereby promoting the prompt and

efficient management of the Sony Group. Thus by developing standards for corporate

governance Sony is trying to establish basic ethical standards and values which form

the basis to undertake the initiatives of CSR.

Timberland Corporation: The company relies on its CSR standards and social

relationships to set, implement, measure, and report its commitment to CSR as part of

its reputation management. Starting in 2008, Timberland is reporting on key CSR

performance indicators on a quarterly basis. They believe this represents an evolution

in their reporting process from static data presentation to dynamic information

exchange; from corporate statement to stakeholder engagement; and from delay

annual reports to quarterly updates. In addition, this level of disclosure and reporting

will provide invaluable feedback loops to help them achieve the bold goals set forth in

our long term CSR strategy. Timberland’s CSR principles grow from this philosophy.

Timberland’s commitment to corporate social responsibility is grounded in the

values that define their community humanity, humility, integrity and excellence. For

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over 30 years, “community” has been synonymous with the ethic of service the desire

to share their strength for the common good. Their approach to building and sustaining

strong communities includes civic engagement, environment stewardship and global

human rights.” This statement serves as a platform for four areas of standards and

policies: Energy, products, workplaces, and service.

Gap Incorporated’s: The company CSR, program focuses on improving factory

conditions, caring for the environment, investing in communities, and supporting its

employees. It says it is dedicated to CSR principles in all it does and says: “At Gap

Inc., we believe we should go beyond the basics of ethical business practices and

embrace our responsibility to people and to the planet. We believe this brings

sustained, collective value to our shareholders, our employees, our customers and

society.”

AT & T : The company features diversity as one of its major CSR principles. The

company recognizes diversity and respects it as the corner stone of their policy. They

aim to strengthen and partner with the various diverse communities by contributing to

their overall economic growth and to the expansion of markets.

They aim to develop mutually beneficial business relationships with

Minority/Women and Disabled Veteran-Owned Business Enterprises (M/W and

DVBEs) by utilizing these firms as primary contractors and as subcontractors. It is the

policy and practice of AT & T to promote and increase business opportunities for

Minority, Women and Disabled Veteran Business Enterprises (M/W/and DVBEs) to

ensure that they receive their fair market share of AT&T is recognizing its commitment

to the communities in which it serves and the marketplace in which it conducts

business.

It relies on the following certification agencies like: National Minority Supplier

development council, Women’s Business Enterprises National Council, Association for

service Disabled Veterans and other Government Agencies to help implement and

assess the organization’s accomplishments toward diversity.

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Marathon Oil Corporation : The company addressed one of the themes central to the

CSR by focusing on Social Responsibility: Commerce. Conscience and Compassion.

Once considered mutually exclusive, these three ideas have converged in a powerful

global concept Corporate Social Responsibility (CSR). Marathon, as a responsible

corporate citizen, seeks opportunities to strengthen the communities and countries in

which it has the privilege to operate, through sustainable practices and initiatives.

Marathon’s approach to social responsibility is rooted in their belief of “Living

Our Values”, a touchstone philosophy for the entire Company. These core values,

which encompass longstanding commitments to health and safety, environmental

stewardship, honesty and integrity, corporate citizenship and high performance form

the foundation for the comprehensive approach that shapes the way they choose to do

business. Its CSR philosophy stresses another theme in this project. Marathon’s

commitment to Corporate Social Responsibility (CSR) means, being accountable for

our actions to a broad range of stakeholders-investors, employees, customers,

suppliers, communities, business partners, host governments and others who have a

stake in how the company conducts itself.

Today, more than ever, organizations are focused on environmental and social

responsibility as a strategic objective. Only 6 percent say it’s a lower priority. To be

sustainable, businesses are now embracing a relatively new objective optimizing their

operations to improve environmental and social outcomes in a manner that maximizes

overall performance. As a result, executives face entirely new decisions and must

manage an intricate new set of trade-offs. The demand for the implementation of an

affirmative action policy in the corporate sector is gradually acquiring greater support

and simultaneously strident opposition (Sekhar and Praseeda, 2006). The TERI Poll of

perceptions on CSR in India in 2001 reveal that people trust the media and NGO’s

better than industry for the committed implementation of CSR (Noronha, 2004).

The rating of CSR given by Karmayog, an organization established in 2004 for

the year 2008 show a clear cut picture of the CSR displayed by Indian industries.

Karmayog is a unique organization that connects citizens, civil society groups,

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corporate, academicians, media and government through online and offline methods.

Karmayog has undertaken a study and rating of the 1000 largest Indian companies in

2008. This is the second CSR study and rating by Karmayog, the first one being done

in 2007 for the largest 500 companies in India, and this was the first-of-its-kind rating in

Indian and the world.

The table given below presents a bird’s eye view of the activities being

undertaken by famous business organizations under the blanket of CSR:

Table-2.1

CSR Activity

Sl.No. Company CSR Activity Undertaken

1. Starbucks Responsible corporate citizen consider CSR a global responsibility

2. Sun Microsystems Eco Responsibility, Alternative source of energy, shrink carbon emissions

3. Statoil Hydro, Norway Building new technology for making effective use of resources and reduce green house gasses

4. Sony Corporation Build partnership with stakeholders and implement effective corporate governance

5. Timberland corporation Community service 6. Gap Incorporated Implement ethical business practices 7. AT/T Establish mutually beneficial business

relationships with Minority/Women and Disabled Veteran-Owned Business Enterprises

8. Marathon Oil Corporation Commitments to health and safety, environmental stewardship

Action in CSR may span over a diverse set of thematic areas Health and

Education, Lively Hood, Poverty alleviation Environment, water, Housing Energy,

Microfinance, Women empowerment, Child development and Infrastructure. Yet, is

clearly noticed that, most corporation focus only on environment and community

service as their CSR action areas. While women Empowerment and poverty alleviation

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were neglected areas with minimal intervention. The reason for environment focus

could the stringent government laws compelling the organizations adhere to

environmental friendly practices. This raises a question of what should be the focus of

CSR. Can individual business organization decide it? Or should there be

governmental involvement in distributing CSR responsibility to corporate so that each

and every thematic areas can be addressed instead everyone jumping into the

bandwagon of environment.

Results of the Karmayog CSR Rating of the 1000 largest Indian companies-2008:

Table-2.2

CSR Rating

Karmayog CSR Rating 2008

Number of Companies Percentage

5/5 0 0%

4/5 10 1%

3/5 45 5%

2/5 221 22%

1/5 231 23%

0/5 (lowest) 493 49%

Total 1000 100%

An analysis of 35 industry sectors has been done for the 1000 companies of

India were studied, and the Banking sector was identified as one of the best performing

sectors with 57% of the 40 companies studied doing CSR. This may be due to the

mandatory regulations on social sector expenditure for PSUs. The Construction sector

is one of the sectors with very low CSR activity, as 63% of the 57 companies studied

are doing no CSR work. It may be understood that India has a long way to go in

attaining maturity in implementation of CSR.

A new survey on corporate community involvement released in 2004 by Deloitte

& Touche USA LLP indicated that 72 percent of employed Americans want to work for

a company that is involved in charitable causes, when deciding between two jobs with

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the same location, responsibilities, pay and benefits. This survey presents a glimpse

into the situation where business and the general public are paying increasing attention

to the topic of corporate social responsibility (CSR), and in particular, CSR strategies

by multinational corporations (MNCs).

More specifically, the ever-increasing impact of MNCs on global economy made

the CSR policies of these corporations more open to public scrutiny. The media, non-

governmental organizations (NGOs), and activist groups have constantly questioned

activities of MNCs in developing countries, particularly with regard to issues such as

forced labor, bribery, and so on (Broadhrust, 2000; Panapanaan, Linnanen, Karvonen,

& Phan, 2003; Raynard & Forstater, 2002). On the other hand, MNCs currently are still

managing CSR haphazardly or unsystematically (Panapanaan et al., 2003); Helmer,

2005). For instance, these companies address CSR narrowly as personel issues, or

environmental protection problems, or philanthropy (Panapanaan et al., 2003; Smith,

2003).

2.8 The CSR activities of 120 leading British compa nies, Business in the

Community (2007) Armstrong Community-skills and education, employability and

social exclusion were frequently identified as key risks and opportunities. Other major

activities were support for local community initiatives and being a responsible and safe

neighbor.

� Environment-most companies reported climate change and resource-use as key

issues for their business; 85 percent of them managed their impacts through an

environmental management system.

� Marketplace-the issues most frequently mentioned by companies were research

and development, procurement and supply chain, responsible selling,

responsible marketing and product safety. There was a rising focus on fair

treatment of customers, providing appropriate product information and labeling,

and on the impacts of products on customer health.

� Workplace-this was the strongest management performing area as most

companies have established employment management frameworks that can

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cater for workplace issues as they emerge. Companies recognized the crucial

role of employees to achieve responsible business practices. Increasing

emphasis was placed on internal communications and training to raise

awareness and understanding of why CSR is relevant to them and valuable for

the business. More attention was being paid to health and well-being issues as

well as the traditional safety agenda. More work was being done on diversity,

both to ensure the business attracts a diverse workforce and to communicate

the business case for diversity internally.

Business in the Community also reported a growing emphasis on responsible

business as a source of competitive advantage as firms move beyond minimizing risk

to creating opportunities. A survey conducted by Industrial Relations Services (Egan,

2006) found that:

� Most employees believe that employment practices designed to ensure the fair

and ethical treatment of staff can boost recruitment and retention;

� Relatively few employers are strongly convinced of a positive link to business

performance or productivity;

� The issue of ethics in employment is often viewed as part of a broader social

responsibility package;

� Policies on ethical employment most commonly cover HR practice in the areas

of recruitment, diversity, redundancy/dismissal proceedings and employee

involvement.

2.9 In Practice:

Social Responsibility of Corporate Business are as follows:

� Business should perform acts which promote social good;

� Business should also act to prevent occurrence of social harm; and

� Business should maximize profits within the ceiling set by the law.

In Indian conditions, the laws are strict as regards the first two responsibilities.

The courts have ordered the closure of many units, in and around Delhi, which were

considered to be discharging harmful effluents, polluting the environment.

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� Social responsibility;

� Corporate responsibility.

Social responsibility: This aspects deals with the purpose for which a company exists

to perform or act, within the limits of the freedom to do so.

Corporate responsibility: This aspect pertain to the liability of a company to the

business/actions done in its name. Corporate responsibility is also known as the

responsibility of the corporation, corporations have a legal status, has given rise to two

opposite strands of thought on this aspect namely, nominalist and realist positions.

Nominalist position is that corporations are mere collections of individuals. This

though contrasts with the realist position. Realist position puts forth that corporations

have altogether a separate existence, meaning and legal personality.

The difference in the status of corporations as viewed in the two approaches

above, has importance in moral philosophy which applies to business ethics and social

responsibility of organizations. For illustration, if ‘personhood’ is assigned to human

beings, an organization can be regarded as a person, when it is known to be simply a

collection of individuals. However, a problem arises when an organization is

collectively regarded as an individual, whereas, in reality it is an autonomous body and

an indivisible entity.

The opposite view (realist) that corporations have a separate existence and are

not a collectivity of individuals, gives rise to the awkward question whether they ought

to be regarded as moral persons also. If it is assumed that corporations are capable of

moral actions, it follows that they are also capable of moral accountability, blame and

criminal liability.

Opponents of the above view may question as to how it could be legally or

morally justified to charge a company, employing some 15,000 staff with an offence,

when it will not be tenable to charge the large number of spectators at a cricket match

with public offence because the large crowd includes a few rioting hooligans.

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The above arguments are samples of opposite views that are raised when a loss

of life occurs in a public transport accident, like in the railways. Volley of incriminations

follow against the organization involved and its staff, prosecuting them on charges of

absolute negligence and corporate manslaughter.

Corporate social responsibility and ethical issues frequently overlap each other

in organizations. However, these topics should be diagnosed and (the corporate social

responsibility and business ethics) divided into ethical business circles for the

convenience of managing them. These circles will involve the internal and external

activities of the organization, as outlined below.

� Internal business circle: The innermost circle includes ethical issues affecting the

relationship between people/colleagues. For instance, fairness, confidentiality,

transparency and loyalty have direct bearing on the employees’ relations with

the management. Company shareholders’ issues would also be included in this

circle;

� External ethical business circle: There can be three external ethical business

circles as follows:

� One circle may focus on the ethics of marketing, customer relations and issues affecting the pricing and promotion policies of the organization;

� Second circle may involve the relationship with other companies such as, suppliers, and includes issues regarding payment and working with suppliers who are known to treat their staff harshly and inhumanly. Also issues of mergers and insider trading are covered in this; � Third outer/ethical business circle may deal with the company’s relation

with local community. It may also cover issues on staff regulation and impact on the environment and responses to cultural diversity.

To sum up, A. Carroll’s integrative concept of to social responsibility is based on

the four principles as follows:

� Economic responsibility refers to the belief that the business has obligations to be productive and is responsible to meet the needs of the consumers in the society.

� Legal responsibility refers to the need for the business to indicate concern that economic responsibilities are discharged within the ceiling of the written law.

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� Ethical responsibilities, refers to unwritten codes, norms and values, implicitly derived from the society (which extend to more than the legal provisions) which may be undertaken or ignored.

� Discretionary responsibility refers to responsibilities that are voluntary or philanthropic in nature and as such, are difficult to ascertain and evaluate.

Positive Correlation between CSR and Business Success:

An emerging body of literature and other data suggests a positive correlation

between corporate social responsibility and business success. The following are some

example:

� The Dow Jones Sustainability Group Index has found that companies that focus

on a ‘triple bottom line’ of economic, environmental, and ethical sustainability

outperform other companies in the stock market. The Index found that the six

best environmental performers in the chemicals industry out-perform the six

lowest performers by 9.2 percent per year in annual return.

� A 1999 Cone Roper study found that 68 percent of customers would ‘have no

problem’ paying more for a product that is linked to a good cause.

� A two-year study by The Performance Group, a consortium of seven

companies-Volvo, Unilever, Monsanto, Imperial Chemical Industries, Deutsche

Bank, Electrolux, and the German insurer Gerling-concluded that improving

environmental compliance and developing environment-friendly products can

enhance company earnings per share, increase profitability and also be

important in wining contracts or investment approval in emerging markets.

� A 1999 study, cited in Business and Society Review, showed that 300 large

corporations found that companies which made a public commitment to rely on

their ethics codes outperformed companies that did not do so by two to three

times, as measured by market value added.

� A 1997 DePaul University study found that companies with a defined corporate

commitment to ethical principles do better financially (based on annual

sales/revenues) than companies that don’t.

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� In 1997, Coca-Cola experienced a 490 percent increase in the sales of its

products at 450 Wal-Mart stores during a six-week campaign with Mothers

against Drunk Driving, in which the company donated a portion of its sales to

the organization.

� At the request of IBM, UCLA professor David Lewin studied 156 companies to

determine the link between corporate philanthropy and significantly higher

returns on assets or financial investments. Lewin concluded that corporate

philanthropy can, over time, enhance business performance.

� A Wirth Worldwide survey found two out of three Americans saying that if there

is ‘a suspicion’ that a certain product harms the environment or endangers

public health, they would avoid the product, ‘even if there is no scientific

evidence that it causes any harm’. Source: The Green Business Letter, Feb-

2000.

� The 1997 Access Omnibus Survey by Business in the United Kingdom found

that 86 percent of consumers said they have amore positive image of a

company if they see it ‘doing something to make the world a better place’.

Sixty-four per cent said that cause-related marketing ‘should be a standard part

of a company’s business practices’.

A 1999 Millennium Poll of 25,000 citizens a cross 23 countries conducted by

Environics International Ltd., in cooperation with The Prince of Wales Business

Leaders Forum and the Conference Board, concluded ‘public pressure on companies

to play broader roles in society will increase significantly over the next few years’.

Among its finding, the poll found that: 90% of the people surveyed want companies to

focus on more than profitability; 60% of the people, in forming impressions of

companies focus on corporate citizenship ahead of brand reputation or financial

factors; 40% said they responded negatively to or talked negatively about companies

they perceived as not being socially responsible; 17% reported actually avoiding the

products of companies they perceived as not being socially responsible.

General ideas about social responsibility need to be translated into specific

actions. Socially responsible companies can adopted social programmes, set social

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goals, honour stakeholder interests, and seek optimum profits, rather than miximum

profits.

Social Responsibility and Organizational Stakeholders:

The internal and external groups that emerged during the trusteeship period

have grown in strength and size. Today, every manager must be aware of the needs of

the stockholders; customers; suppliers; creditors; and all the men and women,

managers and non-managers, who work full-or part-time for the organization. This

philosophy is reflected in Johnson & Johnson’s credo: “We believe

Table-.2.3

Comparison of Managerial Values

Profit Maximization Management

Trusteeship Management Quality –of -Life Management

Economic values

� Raw self-interest � Self-inertest � Contributor’s interest

� Enlightened self-interest � Contributor’s interest � Society’s interests

What’s good for me is good for my country

What’s good for GM is good for our country.

What is good for society is good for our company.

Profit maximize Profit satisfier* Profit is necessary, but…..

Money and wealth are most important.

Money is important, but so are people.

People are more important than money.

Let the buyer beware.(caveat emptor)

Let us not cheat the customer.

Let the seller beware. (caveat venditor).

Labour is a commodity to be bought and sold

Labor has certain rights, which must be recognized.

Employee dignity has to be satisfied.

Accountability of management is to the owners.

Accountability of management is to the owners, customers, employees, suppliers, and other contributors.

Accountability of management is to the owners, contributors, and society.

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Technology Values Technology is very important

Technology is important but so are people.

People are more important than technology

Social values Employee personal problems must be left at home

We recognize that employees have needs beyond their economic needs.

We hire the whole person.

I am a rugged individualist, and I will manage my business as I please.

I am an individualist, but I recognize the value of group participation.

Group participation is fundamental to our success.

Political Values That government is best which governs least.

Government is a necessary evil.

Business and government must cooperate to solve society’ problems.

Environmental Values The natural environment controls the destiny of humankind.

Human beings can control and manipulate the environment.

We must preserve the environment in order to lead, a quality life.

Esthetic Values Esthetic values? What are they?

Esthetic values are okay, but not for us.

We must preserve our esthetic values, and we will do our part.

*Profit satisfier means generating a satisfactory return.

Source: Adapted from R. Hay and E.Gray (1974). Social responsibilities of business managers, Academy of Management Journal- 17:142. Copyright 1974 by Academy of Management, Reproduced with permission of Academy of Management in the format Text book via Copyright Clearance Center.

Not everyone agrees that contemporary organizations should be driven by the

principles of charity and stewardship. This should not, however, be seen as an

argument for obstructionism. Proponents of corporate social responsibility have

suggested that firms that take a major role in tackling social issues are good investment

risks and will eventually be more profitable than less socially responsive firms. Current

research, however, does not show a simple or a consistent relationship between social

responsibility and profitability.

These mixed finding should not be interpreted as a contradiction, nor are they

intended to confuse you. What they tell us is that although socially responsible

behavior can favorably impact on organization’s bottom line, unfortunately, this is not

always the case. At times the financial costs of being socially responsible force firms

into an unfavorable financial position versus firms that are not socially responsive.

What is not clear from the research at this point is when it will be financially profitable to

be socially responsible and when it will not. A profitability claim cannot legitimately be

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used to argue either for or against corporate social responsibility. Other arguments,

however, need to be considered.

2.10 Arguments for and against Social Responsibilit y:

Those who argue in favor of organizations acting in socially responsible ways

offer many reasons. Among them:

� The assumption of social responsibility balances corporate power with corporate responsibilities;

� The voluntary assumption of social responsibility discourages the creation and imposition of government regulations;

� Acts of social responsibility by organizations help correct the social problems (such as air and water pollution) that organizations create;

� Organizations, as members of society, have a moral obligation to help society deal with its problems and to contribute to its welfare.

Sociologists have suggested that, because society has many needs, an

organization can be categorized according to (1) the needs it fulfills and (2) the benefits

that society derives from the organization’s existence. Critics of corporate social

responsibility have, in essence, used the sociologists’ analysis to propose that each

type of organization in society should specialize. In their view, corporations exist solely

to provide goods and services and to earn profits. Thus, curing society’s social ills

becomes the responsibility of other organizations including governmental and

charitable organizations. Among the major arguments corporate social responsibilities

are:

� The costs of socially responsible behavior lower a corporation’s operating efficiency and thus weaken its ability to offer goods and services at the lowest possible competitive cost;

� The costs of socially responsible behavior are often passed along in the form of lower dividends to stockholders, lower wages for employees, or higher prices for consumers;

� Accepting social responsibility sends mixed signals about an organization’s goals to both organization and community members. Organization members may have difficulty meeting goals if they do not know whether their primary mission is to make a profit or to act responsibility. Community members may develop unrealistic expectations that the organization is unable to fulfill. For

216

example, expecting an organization to keep a plant open to protect jobs in the community, even when the plant becomes unprofitable, may be asking too much of the organization;

� By assuming social responsibilities, corporations would become even more powerful, and many already exercise too much power over society;

� Business people are trained in such areas as marketing, finance, and manufacturing, not in how to deal with social problems.

The arguments for and against corporate social responsibility have led to the

emergence of two distinct sides in the social responsibility debate.

An Argument against - Economist Milton Freidman, while at the University of Chicago,

argued that managers should not be required to earn profits for business owners while

simultaneously trying to enhance societal welfare. In his view, these two goals are

incompatible and will lead to the demise of business as we know it. Friedman has also

suggested that forcing organizations to engage in socially responsible behavior may be

unethical, because it requires managers to spend money that belongs to other

individuals-money that otherwise would be returned to stakeholders in the form of

higher dividends, wages, and the like.

An Argument in Favor - Keith Davis, professor emeritus of management at Arizona

State University, provides another perspective on corporate social responsibility. To

him, organizations are members of society. Because they take resources from society

for their own use, they have a responsibility to return to society a value for those

resources. Society should be able to determine the nature of the value to be returned

and to expect organizations to assist in solving social problems. After all, organizations

are social instruments that exist and operate at the discretion of society.

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