Chapter1.the Problem and Its Background (1)

PAGE PWU-CDCEC CALAMBA ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNAContact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/

(02)420-8209

Chapter 1

THE PROBLEM AND ITS BACKGROUND

Introduction

Corporate Social Responsibility is the new “religion” in business.

Investor-owned companies are now rushing to compete on the basis of who

is more socially responsible, or who can best deliver its responsibility.

Social responsibility is the obligation of organization to make decision

and take actions that will enhance the welfare and interest of society as well

as the organization. Social responsibility is quite important to the society,

organization and human. There are several reasons to support the

importance of social responsibilities. It is related to the ethical responsibility,

and differentiates into difference level of social responsibilities, which is

economic, legal, ethical and philanthropic responsibility. There are six main

areas of social responsibility, the employees, providers of finance, consumer,

community and environment, and other organizations or groups.

For cooperative, social responsibility is their nature. As member-owned

and democratically-controlled enterprises, cooperative has a different and

unique approach to social responsibility. The view among cooperative

enterprises is that social responsibility is something which is a voluntary and

natural function of all cooperatives emanating from their values and

principles.

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The movement of cooperative social responsibility has given the

impetus to shift from simply doing good things in the community to one that

embrace the notion of improved accountability to stakeholders and the need

to explain themselves, and to maintain a license to operate. The idea of

social responsibility has opened up new understanding that all cooperative

organizations affect far more members than was perhaps realized in the past

and that these stakeholders have a legitimate right to at least know what is

going on, or even have some influence on them.

Cooperatives are known for their commitments to social responsibility.

According to Republic Act No. 9520 also known as Philippine

Cooperative Code of 2008, cooperative should practiced transparency and

accountability. The cooperative are required to submit social responsibility

audit to the Cooperative Development Authority (CDA).

Cooperative Development Authority (CDA) was created by virtue of

Republic Act No. 9520 in compliance with the provision of Section 15,

Article XII of the Philippine Constitution of 1987 which mandates Congress to

create an agency to promote the viability and growth of cooperatives as

instruments for equity, social justice and economic development. CDA is the

lead government agency in the registration, regulation, promotion and

development of cooperatives.

Cooperatives are defined as “autonomous associations of persons

united voluntarily to meet their common economic, social and cultural needs

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and aspirations through a jointly-owned and democratically- controlled

enterprises”.

Sulong sa Tagumpay Multi-Purpose Cooperative (STMC) has already

gone a long way — from the time when it took roots in Philips

Semiconductors Calamba, No. 9 Mt. Drive, Light Industry and Science Park II,

Brgy. Lamesa, Calamba City, Laguna. Now, STMC stands tall as landmark of

cooperative endeavors in Laguna.

Sulong sa Tagumpay Muliti-Purpose Cooperative is one of the most

viable and stable institutional based cooperative in the Region IV. Its

membership is about 1,600 individuals all regular employees of

STMicroelectronics Inc. and ST-Ericsson Philippines Inc. It offers a wide range

of basic services to its stakeholders, and presently it renders credit services,

financial and social responsibility, coop education and training. In 2007, it

won most outstanding cooperative in Laguna conferred by the Cooperative

Development Authority, making it number two in Laguna based on total

asset as of December 31, 2012.

The cooperatives’ organizational structures are good training grounds

for productive citizenship. Through the dynamic workings of the cooperative

structures, the members are afforded the opportunity to see a functioning

democracy and at work, to learn the enabling endowment of the value of

self-help and self-responsibility, to understand in a non-abstract way equality

and equity, to practice social responsibility and the caring for others, and of

solidarity, honesty, openness – values that a cooperative holds. Through

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their active participation, the members in consequence assimilate the

essences of these values, in a way that is incarnate and authentic. And

through these members, who in turn become purveyors and missioners of

these values to the community, the community gains, earns its peace, and

becomes a better place for all.

Theoretical Framework

This study is anchored on the code of social responsibility. Through

this theory social audit reports has been established.

The code of social responsibility framework runs through with the

seven cooperative principles. The principles identify and fastidiously

distinguish the cooperatives as business enterprises and people’s

organizations. They make for the cooperatives’ uniqueness, so distinct from

any other businesses or community organizations, and invariably spell the

cooperative difference. These principles are the empowering framework by

which cooperatives move on in their daily activities, without being lost in the

maze of their own operations. These are also the energizing tools upon which

the cooperatives look and grasp the future and assuredly cope up with the

future’s concomitant complications.

Cooperatives around the world generally operate according to the

same core principles and values, adopted by the International Co-

operative Alliance in 1995. Cooperatives trace the roots of these principles

to the first modern cooperative founded in Rochdale, England in 1844. These

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http://www.ica.coop/al-ica/

http://www.ica.coop/al-ica/


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principles are also embodied in RA9520. Approved and enacted into law in

2008.

These principles are: Voluntary and open membership. This

principle affirms the fundamental importance of people choosing by their

own volition to make commitments to their cooperatives. This further affirms

the universally accepted general commitment to recognize the fundamental

dignity of all persons regardless of gender, social status and cultural

preferences, race, political affiliation and religious beliefs, as long as they

have uses for their cooperative’s products and services and are willing to

accept the obligations of membership.

Second Principle is democratic member control. Democracy

generally refers to rights — the right to vote and be voted upon, equal voting

rights, etc. — and to obligations. In STMC, however, democracy is not only

about rights and obligations of members; it most importantly integrates in

the idea of democracy, the fostering itself and the promotions of the spirit of

democracy within the organization.

The third principle is Member economic participation. The

economic participation of the members in STMC is a three-sided affair. The

first side is the members’ capital contribution, which comes in four ways: (a)

the subscription of share capital, (b) putting in of savings deposits, (c) the

building-up of the collectively owned reserves, (d) the plowing back of

dividends in the form of new shares, and (e) participation in special fund

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campaigns for special projects. The second side is the members’ enjoyment

of the fruits out of the usage of the products and services of the cooperative.

Fourth principle is autonomy and independence. This principle

addresses the essential nature of STMC to be autonomous. This means

vigilance, in various ways, of its independence. When it enters into

agreements, either with government or with other business entities,

cooperatives have to define in very clear terms that relationship with them,

in the same way that businesses controlled by capital are autonomous in

their dealings with government or with other businesses.

Fifth principle is Education, training and information. Education

and training are vital components of STM’s’ life. Education is engaging the

minds of members, elected officers, managers and employees to

comprehend fully the complexity and richness of cooperative thoughts and

actions. Training means making sure that all those who are, in one way or

another, involved in cooperatives have or are fully provided with skills that

are required to carry out their functions efficiently, effectively and

responsibly. Training also includes preparing the young for leadership

positions and good citizenship in the future.

Sixth principle is Cooperation among cooperatives. It has to be

recognized that cooperators have in common their individual vulnerability

and powerlessness in the marketplace, and the inadequacy of their personal

wealth to meet their needs for subsistence and welfare. For cooperation to

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be practiced by economically vulnerable people, the only way is for them to

act together, to organize themselves into cooperatives. That is one of the

essences of cooperatives. However, cooperatives can only achieve much on

a local level — this one has to be recognized. Beyond are so much more. To

achieve full potential, cooperatives must enter into practical and rigorous

collaboration with other cooperatives. This can be done through alliances,

mergers or joint ventures, by way of large-scale business enterprises that

can have real impact on the members and the community.

The seventh and last cooperative principle is Concern for

community. STMC exist primarily for the benefit of its members. Because of

this reason, they carry with them a very strong affinity with the communities

of the members.

The seven principles are not simply measuring sticks. They are

guidelines upon which the stakeholders continuously evaluate the

cooperative in a more socially responsible way. They equally raise the

question of how the cooperatives can better carry out their work in

conformity with the directions suggested in each of the principles, as they

raise the challenge of how the cooperatives conform to the directions and

practices as suggested by the integrated application of all the principles.

Cooperatives are independent of government and other private

businesses and for social responsibility to be accepted by a conscientious

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business person, it should be framed in such a way that the entire ranges of

business responsibilities are embraced.

Archie Carroll (2000), a business management professor at the

University of Georgia: “The social responsibility of business encompasses the

four kinds of social responsibilities: economic, legal, ethical and

philanthropic. Furthermore, these four categories or components of social

responsibility might be depicted as a pyramid.

Figure 1. “The Pyramid of Corporate Social Responsibility

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At the most basic level, companies have an economic responsibility

to be profitable so that they can provide return on investment to their

owners or investors, create jobs for the community, and contribute goods

and services to the economy.

Of course, businesses are also expected to obey all laws and

regulations. Legal responsibilities reflect a view of "codified ethics" in the

sense that they embody basic notions of fair operations as established by

our lawmakers. They are depicted as the next layer on the pyramid to

portray their historical development, but they are appropriately seen as

coexisting with economic responsibilities as fundamental precepts of the free

enterprise system.

Business ethics comprises principles and standards that guide

behaviour in the world of business. Although economic and legal

responsibilities embody ethical norms about fairness and justice, ethical

responsibilities embrace those activities and practices that are expected

or prohibited by societal members even though they are not codified into

law. Ethical responsibilities embody those standards, norms, or expectations

that reflect a concern for what consumers, employees, shareholders, and the

community regard as fair, just, or in keeping with the respect or protection of

stakeholders' moral rights.

Finally, philanthropic responsibility refers to activities that are not

required of business but promote human welfare or goodwill. Philanthropy

encompasses those corporate actions that are in response to society’s

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expectation that businesses be good corporate citizens. This includes

actively engaging in acts or programs to promote human welfare or goodwill.

The distinguishing feature between philanthropy and ethical

responsibilities is that the former are not expected in an ethical or moral

sense. Communities desire firms to contribute their money, facilities, and

employee time to humanitarian programs or purposes, but they do not

regard the firms as unethical if they do not provide the desired level.

Therefore, philanthropy is more discretionary or voluntary on the part of

businesses even though there is always the societal expectation that

businesses provide it.

Based from the above-cited theoretical framework, the proponents of

the study have conceptualized his research as shown in the figure given

below.

INPUT PROCESS

OUTPUT

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Code of Social Responsibility of STMC based on the Seven

Cooperative Principles• Open & Voluntary Membership• Democratic Members’ Control• Members’ Economic Participation• Autonomy & Independence• Education, Training & Information• Cooperation Among Cooperatives• Concern for Community

Promotion of the Welfare of Stakeholders based on the four

components of social responsibility

• Economic Responsibility• Legal Responsibility• Ethical Responsibility• Philanthropic Responsibility

• Identification of the problems

Data Analysis• Data Collection and Organization

Comparative Analysis• Difference in assessments on observance of CSR

Correlation Analysis• Relationship between observance of CSR and promotion of welfare of stakeholders of STMC

DevelopedGuidelines on

Managing Social Responsibilities


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Figure 2Paradigm of the study

The researcher made use of the paradigm of the study as shown in

Figure 2 to formulate Guidelines for managing social responsibility.

The first block are the inputs of the study which contain the code of

social responsibility based on the seven cooperative principles. It also

includes the promotion of the welfare of stakeholders based on the four

components of Social Responsibility.

On the second block are the processes conducted in the study, it

includes problem identification, data analysis with regards to data collection

and organization, comparative analysis; to compare the assessments of the

officers and members on the observance of code of social responsibility and

lastly the correlation analysis to compare the relationship of code of social

responsibility and the stakeholders welfare.

The expected output of the study is to develop guidelines managing

social responsibilities.

Statement of the Problem

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Feedback


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This study aimed to make an intensive study of Sulong sa Tagumpay

Multi-Purpose Cooperative observance of its code of social responsibility for

the welfare of its stakeholders.

Specifically, it sought answers to the following questions:

1. How is the code of social responsibility at Sulong sa Tagumpay

Multi-purpose Cooperative (STMC) assessed by its officers and

members observed in terms of the following cooperative

principles:

1.1 open and voluntary memberships

1.2 democratic members control

1.3 member’s economic participation

1.4 autonomy and independence

1.5 education, training and information

1.6 co-operations among cooperatives

1.7 concerns for community

2. Is there a difference in the assessments of the two groups of

respondents on the observance of the code of social

responsibility along the above mentioned aspects?

3. How is the welfare of its stakeholders promoted in terms of the

following social responsibility components:

3.1 Economic responsibility

3.2 Legal responsibility

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3.3 Ethical responsibility

3.4 Philanthropic responsibility

4. To what extent is the observance of the code of social

responsibility for cooperative related to the promotion of the

welfare of the stakeholders of ST Multi-purpose cooperative?

5. Based on the findings of the study, what action plan can be

proposed to further improve the observance of the code of

social responsibility?

Significance of the Study

The researcher deems that the following would benefit from the

current study:

Researcher. The study would give him ideas on how important the

Code of Social Responsibility in cooperative. If time comes he becomes a

Manager or a Board of Director, the knowledge he gains from the study

would give him deeper understanding of the reasons why it is important to

be socially responsible.

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The Company. The study may provide accurate information on the

evaluation of Code of Social Responsibility in the company as observed by

the employees. In addition, this study will serve as an eye opener to the

management to understand and realize the essence of social responsibility

and its impact to the organization.

The Staff. Regarding their employees, cooperatives have since their

foundations always favored education and training so that employees feel

considered not only as a workforce, but as human beings to be respected

and whose well‐being matters.

The Coop Members. The study will encourage the members to

development and support a wide range of social and cultural initiatives.

Future Researcher. The study may provide empirical evidence of a

current scenario which they want to further explore and study in the future.

This may also serve as their basis for other research work related to social

responsibility and stakeholder’s welfare.

Scope and Limitation of the Study

This study discusses the observance of the code of social

responsibility of Sulong sa Tagumpay Multi-purpose Cooperative. This

involves the Officers and members of the cooperative.

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A social responsibility begins by defining the scope and focus of the

entire procedure. The scope and focus includes the areas of decisions and

actions, the objectives of the whole exercise and the objectives of each area

of concern and the measurement methodologies.

The scope and focus may incorporate all the areas of decisions and

actions that are of concern to social responsibility at STMC. It is good, of

course, to look at how the STMC performs in the most comprehensive way.

Definition of Terms

To facilitate better understanding of the study the following terms are

define operationally.

Accountability. It refers to the obligation of organization to

account for its activities, accept responsibility for them, and to disclose the

results in a transparent manner. It also includes the responsibility for money

or other entrusted property.

Capital Contribution. It is commonly known as paid-up capital. It

can be separate account within the stakeholder’s equity section of the

balance sheet, or it can be split between additional paid in capital account

and a common stock account.

Cooperativism. It comes from the verb to cooperate, that also

means to work together with people to realize the same objective.

Cooperatives. It is defined as “autonomous associations of persons


15


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and aspirations through a jointly-owned and democratically controlled

enterprises.

Corporate Social Responsibility. It refers to the continuing

commitment by 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.

Democracy. It means fundamental to highlight the cooperative

difference and represents members and governance. Criteria include

democratic participation, education, training, diversity, Board representation,

dividends and satisfaction.

Dividend. This means that for every share you own, you are paid a

portion of the cooperative’s earnings.

Economic Responsibility. It refers to the ultimate goal of any

business to make a profit and create shareholder value by providing goods

and services that people want to buy or invest in.

Ethical Responsibilities. It Involves those standards, norms, or

expectations that reflect a concern for what consumers, employees,

shareholders, and the community regard as fair, just, or in keeping with the

respect or protection of stakeholders' moral rights

Good Citizenship. It means to conduct oneself in accordance with

the rights, duties, and privileges of being inhabitant of a geographical

location by means of birth or naturalization.

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Institutional Based Cooperative. It refers to cooperative that

established by the member of a private corporation. It operates inside the

company. Their members are all regular employees who voluntarily joined

the cooperative.

Legal responsibilities. It pertains a view of "codified ethics" in the


our lawmakers.

Patronage Refund. It is the return of profits to the member

customer.

Philanthropic Responsibilities. It encompasses those corporate

actions that are in response to society’s expectation that businesses be good

corporate citizens.

Principles. It refers to guidelines by which cooperative put their

values in to practices.

Self-Help Organization . It is define as a group of people who come

together to form savings and credit organization. This process creates an

ethic that focuses on savings first.

Social Audit. It refers to the procedure that simply looks on a

business organization’s own currently running documentation and reporting.

Yet: it allows the organization to assess its social impact and ethical

performance vis-à-vis its stated vision-mission-goals; it enables the

organization to develop a process within, whereby it can account for its

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social performance, report on that performance and draw up an action plan

to improve that performance.

Sustainable Development. It refers to the development that meets

the needs of the present without compromising the ability of future

generations to meet their own needs.

Stakeholders. Refer to Officers and members of Sulong sa

Tagumpay Multi-Purpose Cooperative.

Values. It Means cooperative are based on the values of self-help,

self-responsibility, democracy, equality, equity and solidarity. In the tradition

of their founders, co-cooperative members believe in the ethical values of

honesty, openness, social responsibility and caring for others.

Statement of the Problem

This study aimed to make an intensive study of Sulong sa Tagumpay

Multi-Purpose Cooperative observance of its code of social responsibility for

the welfare of its stakeholders.

Specifically, it sought answers to the following questions:

1. How is the code of social responsibility at Sulong sa Tagumpay Multi-

purpose Cooperative (STMC) assessed by its officers and members

observed in terms of the following cooperative principles:

1.1 open and voluntary memberships

1.2 democratic members control

1.3 member’s economic participation

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1.4 autonomy and independence

1.5 education, training and information

1.6 co-operations among cooperatives

1.7 concerns for community

2. Is there a difference in the assessments of the two groups of

respondents on the observance of the code of social responsibility

along the above mentioned aspects?

3. How is the welfare of its stakeholders promoted in terms of the

following social responsibility components:

3.1 Economic responsibility

3.2 Legal responsibility

3.3 Ethical responsibility

3.4 Philanthropic responsibility

4. To what extent is the observance of the code of social responsibility for

cooperative related to the promotion of the welfare of the stakeholders

of ST Multi-purpose cooperative?

5. Based on the findings of the study, what action plan can be proposed

to further improve the observance of the code of social responsibility?

Significance of the Study

The researcher deems that the following would benefit from the

current study:

19


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Researcher. The study would give him ideas on how important the

Code of Social Responsibility in cooperative. If time comes he becomes a

Manager or a Board of Director, the knowledge he gains from the study

would give him deeper understanding of the reasons why it is important to

be socially responsible.

The Company. The study may provide accurate information on the

evaluation of Code of Social Responsibility in the company as observed by

the employees. In addition, this study will serve as an eye opener to the

management to understand and realize the essence of social responsibility

and its impact to the organization.

The Staff. Regarding their employees, cooperatives have since their

foundations always favored education and training so that employees feel

considered not only as a workforce, but as human beings to be respected

and whose well‐being matters.

The Coop Members. The study will encourage the members to

development and support a wide range of social and cultural initiatives.

Future Researcher. The study may provide empirical evidence of a

current scenario which they want to further explore and study in the future.

This may also serve as their basis for other research work related to social

responsibility and stakeholder’s welfare.

Scope and Limitation of the Study

20


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This study discusses the observance of the code of social

responsibility of Sulong sa Tagumpay Multi-purpose Cooperative. This

involves the Officers and members of the cooperative.

A social responsibility begins by defining the scope and focus of the

entire procedure. The scope and focus includes the areas of decisions and

actions, the objectives of the whole exercise and the objectives of each area

of concern and the measurement methodologies.

The scope and focus may incorporate all the areas of decisions and

actions that are of concern to social responsibility at STMC. It is good, of

course, to look at how the STMC performs in the most comprehensive way.

Definition of Terms

To facilitate better understanding of the study the following terms are

define operationally.

Accountability. It refers to the obligation of organization to

account for its activities, accept responsibility for them, and to disclose the

results in a transparent manner. It also includes the responsibility for money

or other entrusted property.

Capital Contribution. It is commonly known as paid-up capital. It

can be separate account within the stakeholder’s equity section of the

balance sheet, or it can be split between additional paid in capital account

and a common stock account.

21


(02)420-8209

Cooperativism. It comes from the verb to cooperate, that also

means to work together with people to realize the same objective.

Cooperatives. It is defined as “autonomous associations of persons


and aspirations through a jointly-owned and democratically controlled

enterprises.

Corporate Social Responsibility. It refers to the continuing

commitment by 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.

Democracy. It means fundamental to highlight the cooperative

difference and represents members and governance. Criteria include

democratic participation, education, training, diversity, Board representation,

dividends and satisfaction.

Dividend. This means that for every share you own, you are paid a

portion of the cooperative’s earnings.

Economic Responsibility. It refers to the ultimate goal of any

business to make a profit and create shareholder value by providing goods

and services that people want to buy or invest in.

Ethical Responsibilities. It Involves those standards, norms, or

expectations that reflect a concern for what consumers, employees,

shareholders, and the community regard as fair, just, or in keeping with the

respect or protection of stakeholders' moral rights

22


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Good Citizenship. It means to conduct oneself in accordance with

the rights, duties, and privileges of being inhabitant of a geographical

location by means of birth or naturalization.

Institutional Based Cooperative. It refers to cooperative that

established by the member of a private corporation. It operates inside the

company. Their members are all regular employees who voluntarily joined

the cooperative.

Legal responsibilities. It pertains a view of "codified ethics" in the


our lawmakers.

Patronage Refund. It is the return of profits to the member

customer.

Philanthropic Responsibilities. It encompasses those corporate

actions that are in response to society’s expectation that businesses be good

corporate citizens.

Principles. It refers to guidelines by which cooperative put their

values in to practices.

Self-Help Organization . It is define as a group of people who come

together to form savings and credit organization. This process creates an

ethic that focuses on savings first.

Social Audit. It refers to the procedure that simply looks on a

business organization’s own currently running documentation and reporting.

Yet: it allows the organization to assess its social impact and ethical

23


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performance vis-à-vis its stated vision-mission-goals; it enables the

organization to develop a process within, whereby it can account for its

social performance, report on that performance and draw up an action plan

to improve that performance.

Sustainable Development. It refers to the development that meets

the needs of the present without compromising the ability of future

generations to meet their own needs.

Stakeholders. Refer to Officers and members of Sulong sa

Tagumpay Multi-Purpose Cooperative.

Values. It Means cooperative are based on the values of self-help,

self-responsibility, democracy, equality, equity and solidarity. In the tradition

of their founders, co-cooperative members believe in the ethical values of

honesty, openness, social responsibility and caring for others.

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Chapter1.the Problem and Its Background (1)

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