Page 236 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Strategic Management

Notes 12.5 Social Responsibility and Strategic Management

Corporate social responsibility (CSR) consists of “actions that appear to further some social
good, beyond the interests of the firm” It includes such topics as environmental ‘green’ issues,

treatment of employees and suppliers, charitable work and other matters related to the
community. A brief idea of the areas included in CSR is given in figure.

Observe ethical principles

Promote Corporate Make charitable contributions;

workforce Social community service activities;
diversity Responsibility improve quality of work life

Employee well-being: Protect environment;

healthy and minimize adverse

safework environment effects on environment.

It is important to note that CSR requires firms to go beyond what the law requires – just doing

the minimum required by the law is not sufficient. “Corporate social responsibility is concerned

with the ways in which an organisation exceeds the minimum obligations to the stakeholders”

(Johnson and Sholes, 2002).

Corporate Social Responsibility is therefore a company’s duty to operate its business by means

that avoid harm to other stakeholders and the environment, and also to consider overall betterment of
society in its decisions and actions. The essence of socially responsible behaviour is that a company

should strive to balance its actions to benefit its shareholders without any adverse impact on
other stakeholders like employees, suppliers, customers, local communities and society at large,
and, further, to proactively mitigate any harmful effects on the environment its actions and
business may have.
12.5.1 Responsibilities of Business
A business organisation has four responsibilities:
1. Economic responsibilities: are the most basic responsibilities of a business firm. This
involves the essential responsibility of business to provide goods and services to society
at a reasonable cost. In discharging that economic responsibility, the company provides
productive jobs to its workforce, pays taxes to central, state and local governments.
2. Legal responsibilities: reflect the firm’s obligation to comply with the laws that regulate
business activities, especially in the areas of consumer safety and pollution control.
3. Ethical responsibilities: reflect the company’s notion of right or proper business behaviour.
Ethical responsibilities go beyond legal requirements. Firms are expected, though not
legally bound, to behave ethically.
4. Discretionary responsibilities: are those that are voluntarily assumed by business
organisations that adopt the citizenship approach. They support ongoing charities, public-

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