BECG.L-5_Cor Res.ppt

7/29/2019 BECG.L-5_Cor Res.ppt

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Corporate SocialResponsibilityLecture- 5 (BECG)

Prof. C. Anand

Faculty IBS, Hyderabad


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Contents

I. Introduction to Corporate Social Responsibility(CSR)

II. Historical Perspective

III. The Changing Face of CSR: Responsibility Towards Employees

Responsibility Towards Customers

Responsibility Towards Intermediaries

Responsibility Towards Shareholders Responsibility Towards Society

Responsibility Towards Government


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I. Introduction to Corporate Social

Responsibility (CSR)

Def. of CSR: CSR refers to the business

mans decisions and actions taken for

reasons at least partially beyond the

firms direct economic or technical

interestKieth Davis.

CSR of business is understood from two

different angles of business obligations,i.e. Socio-economic obligation, and Socio-

human obligation.


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CSR (Contd..)

CSR is the sense of obligation on the partof the companies to build certain socialcriteria and manage the business

activities by taking strategic decisions.Socially responsible companies shouldconsider various issues, from theorganization of the firm to build

relationship with the community. Theissue of CSR has come into focus throughindustrial revolution.


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II. Historical Perspective

Industrial Revolution (IR) introduced changes and

influenced the relations between individuals and

groups. The persistent influence of IR on various

communities, over a period of time, changed themeaning of CSR. As the world of business

environment is changing, the requirements for

success and competitiveness are also changing. As

a result, large corporations are emphasizing the

strategic relationships with different sections of thesociety. In this process, CSR is gaining importance


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Historical Perspective (contd.)

IR was a period of change and transformation fromhand-made items to machine made items and

mass-produced goods. This change brought both

positive (productivity, employment to both men

and women, etc.) and negative (pollution,

congestion, deterioration in working conditions,etc.) effects in general life. The government, art,

literature, music, architecture and mans way of

looking at life changed during this period. Two

industrial revolutions that took place resulted inboth productive and dire consequences.


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The First IR (1750-1850): Englands economy in early1700s was based on its cottage industry, owned andmanaged by one or more people who maintainedclose relations with workers. In 1750, IR had begunintroducing many changes, which were initially

restricted to Textile Industry between 1712-1830(Spg. Jenny, Power loom, and Spg. Mule), whichhelped increase of production of cotton goods.Steam Engine was introduced in the next phasebetween 1830-1875, which produced power.

The Second IR (1875-1905): It utilized electricity andimproved technology and social life. During thisperiod, chemicals were produced andcommunications improved with telephone/telegraph.


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During the second half of 18th century, Britain

experienced a sudden growth of technical and

economic development. There was shift from

agrarian to technology-based economy, which

transferred the political power from the land ownersto the industrial capitalists. According to Mathias,

Britain saw the development of changes in

relationships between individuals and groups (1740-

80). There was large migration from countries tocities, from one work place to another and resulted

in change in social values, which had lasted for

centuries, resulting in recognition of characteristics.


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Dark Satanic Mills: The shift from agrarian economy toindustrial economy had many ill effects. The workingconditions deteriorated and pollution increased.

Between 1760 and 1815, 7 million acres of land wascaptured by Parliamentary Enclose Awards. Locals weredeprived of the enclosed common lands share, which wasknown as enclosure. This led to growth of big cities likeBirmingham, Bradford, Cardiff and Manchester.

In these cities, labor mobility, shifts in ownership patterns,and population pressure reduced the sense ofresponsibility for others and the rapport betweenindividual and community was broken. This resulted in theconcentration of power in a few hands.

British Monarchs introduced legislations against traditionalenclosures. In 18th and 19th centuries the focus ofgovernment changed and governments committed toimprovements.


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Victorian Philanthropy (Robert Owen): Duringthe late 18th century, the British GovernmentsSalvation Army tried to solve the problems ofthe dispossessed. Industrialists formedphilosophical societies like Manchester Literary.The issues were relating to parliamentaryreforms, education, health, and scientificdevelopment. The societies expressed a sense

of responsibility towards the community.English civic universities were also started inManchester, Liverpool, New Castle andBirmingham.


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The Non-Conformist Challenge in Britain:

In Britain, parliamentary reforms were in full swing toeradicate abuses in the factories, mines and homes. TheNonconformists and Utilitarians created opportunities forself-employment and tried to bring changes in personal

behavior. As a result, Sunday Schools, SubscriptionLibraries, Mechanics Institutes, the new civic universitiesand engineering institutions were started. As a CSR, poorwere given guidelines to improve. In early 19th century, self-help was replaced by a no. of movements for political,economic and social reforms.

Robert Owen showed that production could be efficient andresponsible (Levers and Cadburys). He was engaged insocial welfare activities such as public health, educationand prohibition of liquor. He advocated rational principles toeconomic and social systems to develop the millennium.


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Progressives in North America: During the early partof 19th century, CSR in North America varied fromthat of Europe. The perspective of individual,entrepreneurial and corporate responsibility in North

America was centered on education. It was animportant means to personal advancement. Therewas close relationship between the earlyentrepreneurs and educational institutions (Harvard,Yale, Cornell, Princeton, Duke, Columbia) have

immensely benefited from these emergingentrepreneurs. At the same time, theseentrepreneurs continued their investments in socialwelfare activities (housing, health).


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Responses in 1930s: After the great depression in 1930, theRoosevelt government in US intervened to solve social andeconomic problems. Following this, the Scottish Council fordevelopment and industry took up the changedresponsibilities, which aimed at:-

- Streamlining existing resources that support indl.development and job creation in Scotland

- Supporting government and other remedial action

- Encouraging firms to locate in Scotland

- Creating a climate for growth and prosperity

- Removing myths and misinformation about Scotland and itseconomic prospects.

Similar initiatives were implemented in Britain. In Europe andNorth America, employees depended on philanthropicemployers.

Historical Perspective

(contd.)


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Post-War Statism: The end of World War IInecessitated re-examination of relationshipbetween industry, the state and community.

In Britain, Europe and Japan, many CSRprograms were taken up for waging warsagainst poverty, unemployment and socialinjustice. As a result of such programs, the

US economy experienced strong economicgrowth in the post war period registeringtremendous growth in GDP and so on.


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Of late, it has been identified that CSR is notmerely a charity, but much beyond that and is atool to contribute directly or indirectly to thecompanys bottom line and also ensure its longterm sustainability.

CSRs responsibility towards Internal Customers/Employees:

Treating the employees as Assets/Resources

Developing Super-Ordinate Goals (making it

possible to match individual goals along withorganizations goals)

Better Job Design

Employee Welfare

III. The Changing Face of CSR:

Responsibility Towards Employees


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Responsibility Towards Customers:

Better Product Quality

Better Service Quality

Creation of Awareness Charging Fair Price


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Responsibility Towards Intermediaries:

Assured Returns

Sharing the Risk

Support and Facilitation

Supply Chain Management


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Responsibility Towards Shareholders:

Better Financial Disclosures

Adequate Information

Protection of Interests Ensuring Return on Investment (ROI)


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Responsibility Towards Society:

Clean Environment

Employment Opportunities

Mobilizing Society towards Socially RelevantCauses.

Promoting Entrepreneurship


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Responsibility Towards Government:

Zero Tax Evasion

Legal Compliance

Higher Exports Creation and Maintenance of infrastructure


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Examples of some come Corporates in

Indiataking ideal CSR initiatives:

Dr. Reddys Labs (Livelihood Advancement

Business School for under-privileged youngsters)

TVS

HLL Wipro

Agro-tech Foods Ltd (Sun-drops contribution to

heart patient children)

Infosys Technologies


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The End

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