Forms and Dimensions of Corporate Social Responsibility (CSR)

Forms and Dimensions of Corporate Social Responsibility (CSR)!

38.1.
According
to Carroll, CSR is a multi-layer concept consisting of four inter-related aspects of
responsibilities, namely, economic, legal, ethical, and philanthropic. He presents
these different responsibilities as consecutive layers within a pyramid.
Hence, he offers the definition of CSR in these words: Corporate social
responsibility encompasses the economic, legal, ethical, and philanthropic
expectations placed on organizations by society at a given point in time.
Let us discuss, in brief, each of these four responsibilities in turn.
i. Economic Responsibility:
A corporation has to meet its economic responsibilities in terms of reasonable return
to investors, fair compensation to employees, goods at fair prices to customers, etc.

Thus, meeting economic responsibility is the first-layer of responsibility and also the
basis for the subsequent responsibilities. The fact remains that meeting economic
responsibility is must for all corporations to survive in the time.
ii. Legal Responsibility:
The legal responsibility of business corporations demands that businesses abide by
the law of land and play by the rule of the game. Laws are the codification of dos
and donts dos in the society.
Abiding by laws is the prerequisite for any corporation to be socially responsible.
Corporate history is replete with instances where violation of laws disallowed
corporations to run any longer. Enron, Union Carbide, Global Trust Bank, etc. are
some of such illustrative corporate cases of social rejection and boycott.
iii. Ethical Responsibility:
These responsibilities refer to obligations which are right, just, and fair to be met by
corporations. Just abiding by law, procedure, and rule and regulations does not
make business conduct always as ethical or good. The conduct of corporations that
go beyond law and contribute to social well being is called ethical.
Hence, corporations have an ethical responsibility to do, even going beyond law and
rule and regulations, what proves good for the society. In other words, ethical
responsibilities consist of what is generally expected by society from corporations
over and above economic and legal expectations.
iv. Philanthropic Responsibility:
The Greek word philanthropy means literally the love of the fellow human. The
use of this idea in business context incorporates activities that are, of course, within
the corporations discretion to improve the quality of life of employees, local
communities, and ultimately society at large.
Making donations to charitable institutions, building of recreational facilities for
employees and their families, support for educational institutions, supporting art
and support activities, etc. are the examples of philanthropic responsibilities
discharged by the corporations. It is important to note that the philanthropic
activities are desires of corporations, not expected by the society.
Dimensions of CSR:
The facets and dimensions of corporate social responsibility include the obligations
a business has to its interest groups also called stakeholders. The stakeholders in a
business include shareholders / owners, consumers, employees, government,
society, etc.
These are depicted in the following diagram:

Shareholders:
It is the primary responsibility of every business to see that the owners or
shareholders get a fair rate of dividend or fair return on capital invested. This is a
legitimate expectation of owners from business. Naturally the expectations have to
be reasonable and consistent with the risks associated with the investment. Owners
also expect economic and political security of the capital invested. If such security is
not ensured, the inevitable consequence is withdrawal of capital and search for
alternative channels other than business.
Employees:
As regards responsibility towards employees, the major issues governing the
employer-employee relationship pertain to wages and salaries, superiorsubordinate relations and employee welfare. It is the responsibility of management
to provide for fair wages to workers based on the principal of adequacy, equity and
human dignity.
Maintaining a harmonious relationship between superiors and subordinates and
providing for welfare amenities for employees are also the responsibilities of
management. There are specific laws in India governing factory employment tinder
which provision of satisfactory working conditions for safety, health and hygiene,
medical facilities, canteen, leave and retirement benefits are obligations on the part
of employer.
There are other laws as well providing for the security of workers against the
contingencies of sickness, maternity, employment injury and death, provident fund
and pension for employees.
However, employee welfare cannot be viewed within the narrow limits of legal
requirement. Employee welfare is best secured if the management accepts the
obligation to secure and maintain a contented work force, and the employees have
the opportunity of developing their potential abilities through training and
education.
Consumer interests are generally expected to be taken care of in a competitive
market through forces of demand and supply. However, perfect competition does

not actually prevail in all product markets. Consumers are also victims of unfair
trade practices and unethical conduct of business. Consumer protection has, thus,
been sought through legislation, and non-government organizations (NGOs) have
enlarged their activities for upholding consumer interests.
These compulsions are avoidable if management assumes the responsibility of
satisfying consumer needs and desists from hoarding, profiteering, creating artificial
scarcity, as also false, misleading and exaggerated advertisements. Besides, it
would be in the long-run interest of business if goods of appropriate standard and
quality are available to consumers in adequate quantities and at reasonable prices.
Government:
Social responsibility of business towards government requires that:
(i) the business will conduct its affairs as a law-abiding unit, and pay all taxes and
other dues honestly,
(ii) management will desist from corrupting public servants or the democratic
process for selfish ends, and no attempt will be made to secure political support by
money or patronage.
Community:
Arising out of their social responsibility towards the community and public at large,
businessmen are expected to maintain a balance between the needs of business
and the requirements of society. In general, business should be so managed as to
make the public good become the private good of the enterprise rather than the old
doctrine that what is good for the business is good for the society.
The social responsibility of business firms should be reflected in their policies with
respect to environmental protection, pollution control, conservation of natural
resources, rural development, setting up industrial units in the backward regions,
employment of the socially handicapped and weaker sections of the community,
and providing relief to victims of natural calamities.