What is CSR?

  • The extent to which a business addresses the concerns and obligations to its wider stakeholders

  • The actions a business takes over and above the minimum required by law in addressing societal needs and wants

  • CSR is based on the idea that the needs of business and society are interdependent

  • Society needs business

    • Employment & wages
    • Investment & innovation
    • Profits & taxes
  • Business needs society

    • Create demand
    • Public assets and infrastructure
    • Legal protection

Key CSR questions

  • What is the purpose of the business?
  • What contribution should businesses make to society?

The Debate on Social Responsibility

  • Not all business organisations behave in a socially responsible manner
  • Some argue that that it is not the job of businesses to be concerned about social issues and problems
  • Two schools of thought:
    • Free market view: the job of business is to create wealth for shareholders
    • Corporate social responsibility view: business should be concerned with social issues

The Stakeholder Concept

  • Businesses do not have an unquestioned right to operate in society
  • Those managing businesses should recognise that they depend on society
  • Business relies on inputs from society and on socially created institutions
  • There is a social contract between business and society involving mutual obligations.

Arguments for CSR

  • The ethical thing to do
  • Improves a businesses image and reputation
  • Necessary in order to avoid excessive regulation
  • Socially responsible actions can be profitable
  • Improved social environment benefits business
  • Helps attract investors
  • Can increase employee motivation
  • Helps to correct the social problems caused by business

Arguments against CSR

  • The only social responsibility of the business is to create shareholder wealth
  • The efficient use of resources will be reduced if businesses are restricted in how they act
  • Businesses cannot decide what is in society’s interest
  • Extra costs will be incurred which must be passed on to consumers
  • CSR stifles innovation