Corporate Social Responsibility

Corporate Social Responsibility: Perspectives

"The modern large industrial corporation is in many respects a public institution....it holds power in trust for the whole community". The quotation epitomizes the awesome power, influence and resources that the present day business corporation possesses, and the extent to which they can contribute to the society of which they are part of.

There are three emerging perspectives that inform corporate social responsibility:

Reputation Capital

This perspective recognizes the importance of reputation capital for capturing and sustains markets. Seen thus, corporate social responsibility is basically a new business strategy to reduce investment risks and maximize profits by taking all the key stakeholders into confidence. The proponents of perspective often include corporate social responsibility in their advertising and social marketing initiatives.

Eco-Social Perspective

The proponents of this perspective are the new generation of corporations and the new economy entrepreneurs who created a tremendous amount of wealth in a relatively short span of time. They recognize the fact that social and environmental stability and sustainability are two important prerequisites for the sustainability of the market in the long run. They also recognize the fact that increasing poverty can lead to social and environmental instability. Such social and political instability can, in turn detrimental to business. Seen from this perspective, corporate social responsibility is both a value and strategy to ensuring the sustainability of business. It is a value because it stresses the fact that business and markets are essentially aimed at the wellbeing of society. It is a strategy because it helps to reduce social tensions.

For the new generation of corporate leaders, optimization of profits is the key, rather than maximization of profit. Hence, there is a shift from accountability to shareholders to stakeholders. There is a growing realization that long term business success can only achieved by companies that recognize that the economy is an open subsystem of the earths ecosystem.

Rights based perspective

The third perspective stresses that consumers, employees, local communities, govt. agencies, regulators, suppliers and shareholders have a right to know about corporations and their businesses. Corporation is definitely a private initiative, but increasingly a public institution whose survival depends on all these fore mentioned stakeholders. This perspective highlights accountability, transparency and social and environmental investment as key aspects of corporate responsibility.

Corporate Social Responsibility: the typology

* Traditional Corporate Philanthropy

* Corporate Social Responsibility that focus on sustainable development and

attending to stakeholders' priorities.

Traditional Corporate Philanthropy

* Concern for the welfare of the immediate members of the corporate body: the staff, employees and their families.

* Innovative contributions by visionary business leaders in quest of personal satisfaction

* The desire to establish strategic relationship with state and society.

* To establish trusts and foundations for tax benefits.

Corporate Social Responsibility

It is qualitatively different from traditional concept of corporate philanthropy. It acknowledges the debt that the corporation owes to the community with in which it operates, as a stakeholder in corporate activity. It also defines the business corporation's partnership with social groups in providing financial and other resources to support development plans especially among disadvantaged communities.

THE word 'globalization' defies a precise meaning primarily because it is so enmeshed with ideological considerations - both of the left and right. Enemies of globalization view it as a legitimizing of insatiable capitalist appetite preying on the world's poor and hungry vulnerable population, while its proponents see it primarily as an agent of bringing prosperity to all (including the hitherto dispossessed) through the agency of the market. Quite apart from partisanship of this sort, it cannot be doubted that globalization has acquired an intellectual presence which is much larger than the politics of the left or the right. It is now a social phenomenon, and not just an ideological label for populist banter.

What makes globalization rise above the din of political wrangle is the fact that there has been a qualitative difference in the way people are beginning to relate to one another. This transition has occurred slowly, and even un-selfconsciously. Yet, what cannot be denied is that the emphasis has shifted, more noticeably in developing countries, from producerism to consumerism. Consumerism should not be understood here in a negative fashion, as it usually is in most popular renditions of the term. Instead, it should be seen as an expression of a demotic sentiment that arises among consumers who demand higher standards at all levels - from the commodity they buy, to the ways they are produced, right down to the producer's commitment towards being a corporate citizen.

It is in this context that industries today consider, or should consider, the question of Corporate Social Responsibility. It is not enough to be philanthropic and not think in terms of consumers and other relevant stakeholders. It is not enough to be law abiding and leave matters at that, for a business rival round the corner can raise the stakes by introducing commodities and services, as well as conditions of production that are much higher than those required by law. Consumers today are alive to these changes and react to them in a fashion that tells on the bottom line of a firm. Therefore, the fact of corporate social responsibility (CSR) has to be carefully devised keeping in mind the specifics of the organization and the kinds of demands that can be made upon it as a corporate citizen by all its relevant stakeholders.

At the same time, no company can afford to let its profits fall. In fact, if that were to happen then it would be letting down its stockholders