Corporate Social Responsibility 2016-2017

Theme : Theoretical Base of CSR

Session Sub-themes Theories of CSR Generation of CSR Drivers of CSR Models of CSR Discussion article : Why can companies no longer afford to ignore their social responsibilities

Five Stages of CSR

Compelling Factors for Integrating CSR ethos and principles into corporate activities Greater stakeholder awareness of corporate ethical, social and environmental behaviour Direct stakeholder pressure Peer pressure Investor pressure An increased sense of social responsibility (Ernst and Young, 2002)

Compelling Factors for Integrating CSR ethos and principles into corporate activities (contd.) Moral obligation Sustainability License to operate Reputation (Porter and Kramer, 2006)

Compelling Factors for Integrating CSR ethos and principles into corporate activities (contd.) Improved financial performance and profitability Reduced operating costs Long term sustainability for companies and their employees Increased staff commitment and involvement Enhanced capacity to innovate Good relations with government and communities Better risk and crisis management Enhanced reputation and brand value Development of closer links with customers and greater awareness of their needs. Jones et al., 2009

Parameter of responsibility of a company Where should lines be drawn between corporate , public and civil society in terms of their responsibility to deliver “public good “?

Parameter of responsibility of a company Profits Political performance Social demands Ethical values

Theoretical bases of CSR Instrumental Theories Political Theories Integrative Theories Ethical Theories

Instrumental Theories focus on economic objective Maximization of shareholder value Strategies for achieving competitive advantages Social investments in competitive context Natural resource-based view of the firm and dynamic capabilities Strategies for the bottom of the pyramid Cause –related marketing CSR as a mere means to the end of profits

Political Theories Based on the interaction and connections between business and society Social power of a corporation is emphasized, specifically in its relationship with society and its responsibility in the political arena associated with this power Social Contract Theory Corporate Citizenship

Political Theories Social Contract Theory Corporation as organization enter into social contracts with other members of society, & receive resources, goods and societal approval to operate in exchange for good behaviour. Davis explored the power that business has on society and the impact of this power. Enunciated Social power equation & Iron law of responsibility Corporate Citizenship The term is introduced by practitioners to enunciate the business and society relationship. The term “citizenship” taken from political science is at the ore of corporate citizenship Approaches on corporate citizenship are focused on rights, responsibilities and possible partnerships of business in society,

Integrative Theories Based on how business integrates social demands Business depends on society for its continuity and growth Issues management The principle of public responsibility : social justice Stakeholder management Corporate social performance

Integrative Theories Issues management The principle of public responsibility Following the laws and regulations but also the broad pattern of social directions reflected in public opinion, emerging issues, formal legal requirements and enforcement or implementation practices Scope of managerial responsibility in the firms social environment : Primary and secondary Primary responsibilities : essential includes the economic task of the firm such as locating and establishing facilities, procuring suppliers, engaging employees, carrying out its production function and marketing products/services Secondary involvements are a consequence of primary responsibilities and include career and earning opportunities for some individuals, which come from the primary activity of selection and advancement of employees. Issues management An approach which arose in the 70’s to focuses on corporate responses to social issues. It is the process by which the corporation can identify , evaluate and respond to those social and political issues which may impact significantly upon it. Other factors which have been considered include the corporate responses to media exposure, interest group pressures and business crises,

Stakeholder’s Theory Managing for stakeholders is about creating as much value as possible for stakeholders, without resorting to tradeoffs. The basic idea is that businesses, and the executives who manage them, actually do and should create value for customers, suppliers, employees, communities, and financiers (or shareholders). They need to pay careful attention to how these relationships are managed and how value gets created for these stakeholders.

Ethical Theories The relationship between business and society is embedded in ethical values and as a consequence, firms ought to accept social responsibilities as an ethical obligation above any other consideration Universal Rights Sustainable development The common good approach Trusteeship theory ( Indian Scenario)

Ethical Theories Sustainable development Universal Rights Human rights have been taken as the basis of CSR Human-rights based approaches for corporate responsibility have bee proposed. UN Global Compact is one such approach which includes nine principles in the areas of human rights, labour and environment Sustainable development Although this approach was developed at the macro level, it demands a relevant corporate contribution

Ethical Theories The common good approach The approach maintains that business as with any other social group or individual in society , has to contribute to the common good , because it is a part of society Business should be neither harmful to nor a parasite on society, but purely contribute to the well- being of the society Business contributes to common good in different ways, such as creating wealth, providing goods and services in an efficient and fair way, at the same time respecting the dignity and the inalienable and fundamental rights of the individuals

Trusteeship Theory: Indian Perspective Based on Gandhian Philosophy ( 1939) Perceived business as a form of service to the community. Trusteeship principle No recognition to the right of individual property Resources must be held and utilized for the benefit of society Management is the trustees of the stakeholders and must work towards optimizing stakeholder value , not merely maximizing shareholder value

Statist Model ( State Intervention) Models of CSR: India Philanthropic Model Statist Model ( State Intervention) ( Friedman Model) Liberal Model ( Freeman Model) Stakeholder Model

International Framework for CSR : ISO 26000 Principles of SR 1. Ethical behaviour 2. Respect for rule of law 3. Respect for international norms of behaviour 4. Respect for and considering of stakeholder interests 5. Accountability 6. Transparency 7. Precautionary approach 8. Respect for human rights Organizational Governance Implementing SR Core Subjects 7.3 Working With Stakeholders 7.2 Defining scope 7.4 Integrating into organization 7.5 Implementing in daily practise Labour Practises Environment Human Rights Consumer issues Community & society development Fair operating practises 7.7 Evaluating performance 7.8 Enhancing credibility 7.3 Communicating 23