Page 344 - DMGT408DMGT203_Marketing Management

Unit 15: Sustainable Marketing

15.2 Social Responsibility Notes

According to Keith Davis and William C. Frederick, the society in which businesses exist,
expects businesses to act as socially responsible members of the social community, besides
producing products and services efficiently. Social responsibility of business refers to the
obligation of a business to make deliberate efforts to maximise its positive contributions and
minimise the negative impact on society as a whole and on various groups of individuals within
the society. Social responsibility is a broader concept than ethics in marketing. The focus of
ethics is on doing the right things in making business decisions by individuals and groups, and
the social responsibility requires fulfilling the obligation to achieving a balance for all
stakeholders within or outside the business.
When one considers the major aspects of corporate social responsibility, the issues generally
relate to economic, legal, ethical, and philanthropic concerns. The business responsibility of
contributing to the economic growth and doing business within the given legal boundaries has
long been acknowledged. In more recent times, philanthropic and ethical dimensions have
acquired considerable recognition. Margaret A. Stroup and Ralph L. Newbert report that socially
responsible companies try to learn and foresee society’s expectations and determine actions that
will be perceived as socially responsible, and accordingly allocate resources to accomplish
objectives in this area and measure up to expectations.
Figure 15.2: Pyramid of Corporate Social Responsibility

Philanthropic
(be a good
corporate citizen)
Contribute to improve
the quality of
community life
Ethical Conduct
(do the right thing, avoid harm)
Obligation to do what is right,
just, and fair, and avoid harm

Legal
(obey the laws)
Play by the rules of game

Economic
(earn profits)
Make profitable use of resources

It is necessary for a company’s success to determine and regularly monitor any changes that
customers, employees, government regulations, competitors – what the society in general
expects – in terms of social responsibility. According to Margaret Stroup, and Ralph L. Newbert,
there is increasing recognition that for a company’s survival and gaining competitive advantage,
the long-term value of conducting business in a socially responsible manner outweighs short-
term costs. The awareness of corporate social responsibility issues is far more in developed
countries than developing countries. A survey of 1000 households reported that nearly 90 per
cent respondents said that when quality, service, and price are similar among competitors, they
are more inclined to buy from a company that enjoys a sterling reputation for social responsibility.

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