Corporate Social Responsibility LECTURE 1: Corporate Social Responsibility MGT 610

Corporate Social Responsibility Course Objectives: Capture the urgent and immediate need of social responsibility at all levels Increase manifestation of CSR practices through increased awareness and motivation How organizations can use CSR to become globally competitive and locally effective.

Corporate Social Responsibility Course Policy Course Description: Understanding Corporate Social Responsibility (CSR) Evolution of company and CSR Stakeholders theory Role of various institutions in CSR Creating CSR framework Framework for rating CSR Sustainability and its challenges Global CSR The road ahead

Corporate Social Responsibility Course Policy (Contd.) Marks Distribution: Marks Assignments : 10% Quiz : 10% GDB : 5% Midterm Exam : 25% Internal Marks : 50 5. Final Examination : 50 Total : 100 Passing Marks 60 %

Corporate Social Responsibility Course Policy (Contd.) Text Book: Corporate Social Responsibility Oxford Higher Education Madhumita Chatterji Reference Text: Globalization and Corporate Social Responsbility Compiled by Gustavo Guzman Jon Synott Archie B. Carrol Ann K. Buchholtz

Corporate Social Responsibility Chapter 1: Understanding Corporate Social Responsibility

Corporate Social Responsibility After studying this chapter you should be able to: understand organizations as living systems and assess their purpose Get an overview of the concept of modern business Get a glimpse of CSR Define CSR as a concept Analyze the different dimensions of CSR

Corporate Social Responsibility The word organization is a combination of two words Organic Ization Both words combined – bringing a process to life Organizations are living systems that interact internally and externally Organizations are made up of Human aspect Technical aspect The technical aspect if also driven by the human aspect The human aspect defines the purpose of the organizations and means of achieving it through the technical aspect 8

Corporate Social Responsibility Purpose of the business Achieving the purpose requires processes which are called functional areas of business Market research Finance Production and operation Source raw material Design Produce Distribute Sales and marketing HR to take care of employees While achieving the purpose, socio economic as well as political structure of the nation gets affected 9

Corporate Social Responsibility Globalization has further increased the impact of businesses The entire process requires human intervention and in each step moral questions are to be answered Only human are gifted with the power of discriminating between moral and immoral New management jargon such as ambitious , survival of the fittest have glorified unethical activities Corporate sins are justified as long as profits are earned Ethics VS Profits (market driven economy) Ethics versus Progress (creating new wants and needs and complementary products ) 10

Corporate Social Responsibility LECTURE 2: Corporate Social Responsibility MGT 610

Corporate Social Responsibility Chapter 1: Understanding Corporate Social Responsibility

Corporate Social Responsibility After studying this chapter you should be able to: understand organizations as living systems and assess their purpose Get an overview of the concept of modern business Get a glimpse of CSR Define CSR as a concept Analyze the different dimensions of CSR

Corporate Social Responsibility What is business Activity related to buying, selling and trade Create utility Command a price for utility Demand has to be more than the supply Gap results in manipulation by corporations to earn profits Four types of utilities Form utility Converting the input in to output Place utility Transported to a destinations and value is added as a consequence Time utility Value added as a result of time factor Knowledge utility Development in the field of advance learning 14

Corporate Social Responsibility Development of business Ancient market places at borders of settlement Barter system Trade was the foundation for countries like England, Spain, Portugal and France Business enterprise Sole proprietor Partnership firms Joint stock companies Company can be defined as an association of persons coming together voluntarily to pursue a certain economic activity with the motive to make profit Entity apart from the owner Capable of rights and duties of its own Company is a legal device for the attainment of any social or economic end and to large extent this is done publicly and by being socially responsible Company is a combined political, social, economic and legal institution. 15

Corporate Social Responsibility Corporations derive wealth from society, create wealth for society and earn profit by dealing with the wealth of society 16

Corporate Social Responsibility Society gives permission to the business to operate and earn money Share the wealth that it earns from society Corporate behavior encompass those activities of the corporation that ensures just and responsible behavior Four dimensions to corporate behavior Setting boundaries to learning, accountability and responsiveness Building activities that form basis of learning Creating measures that validate and make knowledge effective – form basis of decision making Institutionalizing trust in ways that creates a virtuous circle of practice and further engagement with stakeholders 17

Corporate Social Responsibility Values are essential to organizational function and dynamics Organizations are nothing but the collective consciousness of all the members contributing to its activities Human aspect is more important than the objective as the objective is achieved through the efforts of the human Question Is the human for industry-technology or vice versa CSR – WHICH IS ABOUT THE BUSINESS TAKING IN TO ACCOUNT THEIR TOTAL IMPACT ON SOCIETY AND THE NATURAL ENVIRONMENT 18

Corporate Social Responsibility Businesses have ability to bring economic prosperity to communities The corporate community universal influence makes it very unlikely that society can wish it away The need is to transform instead trying to constraint, tame or offer general solutions The above aspect is relevant today because of the modern economy which has the following features: Speed of change Increased importance of knowledge, innovation and communication Importance of intangible assets Diversity To mage the modern economy it is important to establish values, leading to trust and integrity among physically dispersed staff 19

Corporate Social Responsibility Relationship between businesses and society be based upon trust Survive only if everyone can operate with self esteem If trust is lost then we will not have an organization but only automation Democratization of politics there should be democratization of economics Product of the people, by the people and for the people This is where the responsibility of corporate world becomes pronounced CSR provides the framework of boundary for the free market to operate responsibly 20

Corporate Social Responsibility CSR, most misunderstood concept – lack relationship with the internal concepts No formal structure Defined vaguely Ad hoc management policies Definitions of CSR Idea of legal responsibility Social responsible behavior in an ethical eay Charitable contribution 21

Corporate Social Responsibility The World Business Council for Sustainable Development definition of CSR The continuing commitment of business to behave ethically and contribute to economic development while improving the quality of life of their workforce and their families as well as the local community and society at large President of WBCSD said “there is no universal definition of CSR because the concept is always being redefined it is up to the companies to find their magnetic north’ The values and principals are the companies internal compass that help the company to stay on the ethical path. 22

Corporate Social Responsibility Milton Friedman said “there is one and only one social responsibility of business – to use resources and engage in activities designed to create profit so long as it stays within the rule of the game which is to say engage in open and free competition without deception and fraud’ Shortcomings Lack of morals among the practitioners of business Well ordered civil society in which business operate Less importance to production and distribution as compared to exchange and free economy concept is violated which says free entry and free exit and equal sharing of information 23

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