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Evolution of CSR - YouTube
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[Music]
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welcome back to the MOOC course titled
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corporate social responsibility my name
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is aradhna malik and i'm helping you
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with this course and we have just
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started with a discussion on what
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corporate social responsibility is and
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how it's been defined and we discussed a
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few theories of corporate social
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responsibility now I'll take you through
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a brief history of corporate social
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responsibility how the concept evolved
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to be what it is today
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from a purely Western purely American
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perspective because the maximum amount
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of literature or the maximum amount of
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documentation has come from there and I
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will elaborate more on this as we go
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along and we will discuss more about how
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csr has evolved in the Indian context
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and and in the context of other
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countries but it's been documented the
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most in the United States of America and
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that is where this literature is coming
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from and today's discussion deals with a
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paper that was written by Professor
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Archie B Carol and you know he has
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described how this whole concept of CSR
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has evolved so I'm taking all the
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material that I'm using for these slides
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in this in the lecture on evolution of
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CSR from professor Carroll's paper now
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let's see what it is here okay in 1953
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Howard Bao and who's now considered the
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father of CSR or who professor Kerry
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likes to call the father of CSR came up
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with a book called social
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responsibilities of the businessman and
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in this book he described or he proposed
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that several hundred largest businesses
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were vital centers of power and
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decision-making and the actions of these
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firms touched the lives of citizens at
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many points and then he raised a
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question and the question was what
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responsibilities to society may
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businessmen reasonably be expected to
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assume so since they are connected in in
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such a significant manner with the
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society what can we reasonably expect
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them to give back to society then he
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said that the social responsibilities of
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businessmen refer to the obligations of
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businessmen to pursue those policies to
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make those decisions or to follow those
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lines of action which are desirable in
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terms of the objectives and values of
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our society so he said that these
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businessmen are connected to the society
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in such a large way in such a
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significant manner so they are there
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they have a responsibility to the
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society and their responsibilities refer
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to the to their obligation to their
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obligation to follow those to make those
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decisions to pursue those policies to
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follow those lines of action which are
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desirable in terms of the objectives and
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values of our society which are in line
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with the objectives and values of our
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society which are connected to the
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objectives and values of the society
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that they function in and we have been
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talking about the legitimacy theory
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legitimacy theory comes from these
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principles in 1960 Keith Davis proposed
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the iron law of responsibility which is
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something that we have dealt with
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earlier also and he said that social
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responsibilities of businessmen need to
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be commensurate with their social power
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so the more powered businessmen have
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over the society the more responsible
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they are to the society through their
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actions and as a result of this
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responsibility the avoidance of social
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responsibility leads to the gradual
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erosion of social power so if they have
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the power but they are not responsible
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for their actions for the decisions they
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make to the society that they function
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in the society will gradually reduce the
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power or the system
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in the society will gradually reduce the
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dependence they have on these businesses
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and slowly the power will erode away if
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these businessmen do not look after the
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society that they function in in 1963
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Joseph McGuire wrote a book called
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business and society in which he
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proposed that the idea of social
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responsibilities supposes that the
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corporation has not only economic and
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legal obligations but also certain
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responsibilities to society which extend
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beyond these obligations so it's not
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only important to generate profits and
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follow the law it is also important to
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go above and beyond these these
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responsibilities that we have in terms
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of profits in terms of following the law
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in terms of following the regulations of
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the society of the country of the state
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that we function in and do something
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more so slowly as you can see the
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awareness was coming in regarding the
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responsibility of businesses to the
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society they functioned in in 1967
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Clarence
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C Walton wrote a book called corporate
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social responsibilities in which he
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proposed that the new concept of
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corporate social responsibility
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recognizes the intimacy of the
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relationships between corporation and
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society and realizes that such
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relationships must be kept in mind by
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top managers as the corporation and
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related groups pursue their respective
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goals so we are a unit we are a part of
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the society that we are in and then at
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that time it was noon you know this new
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concept of corporate social
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responsibility people had just started
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talking about it people had become aware
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of the fact that they were responsible
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to society now one must also realize
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that this had come after two world wars
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so after two world wars the world was
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stabilizing people
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prophets people were coming back they
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were coming back on their feet and they
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had money to spare we we discussed why
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people give back to society only when
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they have a little bit of surplus and
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plus these Wars left an aftermath off of
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economic problems of physical
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devastation in this society so people
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realize that okay we have something to
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spare maybe time maybe money maybe
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resources let us support the society
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that has made all this possible all this
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profit possible for us 1971 a socially
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responsible firm is one whose managerial
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staff balances a multiplicity of
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interests instead of striving only for
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larger profits for its stakeholders a
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responsible enterprise also takes into
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account employees suppliers dealers
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local communities and the nation so
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Harrell Johnson was trying to get more
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and more specific now instead of saying
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society at large the the elements in
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society the beneficiaries of these
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efforts in the society were slowly being
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identified and he said that social
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responsibility states that businesses
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carry out social programs to add profits
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to their organization so he said that we
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must identify who is helping us and then
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benefit them in turn so that our profits
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can also be increased and after that
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there's a lot of literature that proves
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that not only proves that demonstrates
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that higher profits and higher corporate
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social responsibility efforts and
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activities are very closely linked this
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continued Harold Johnson's propositions
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continued and he talked about two things
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one was utility maximization according
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to which the enterprise seeks multiple
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goals rather than only maximum profits
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and these multiple goals could include
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relation better relationship with the
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society
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you know better product development a
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lot of things I mean not only maximum
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profits but also additional goals that
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could be pursued with the same resources
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and that is the principle of utility
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maximization the second thing that he
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proposed was the lexicographic view of
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social responsibility which according to
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which strongly profit motivated firms
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may engage in socially responsible
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behavior once they are 10 their profit
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targets they act as a social
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responsibility were an important goal
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even though it isn't even though it
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wasn't to start with we were talking
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about decoupling in the previous lecture
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so even though it isn't they will act as
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if socially responsible behavior is
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important why because they have achieved
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the targets they had set for themselves
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of course there is no dearth to how much
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profit one can make how much profit one
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wants to make but after a point they
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feel satisfied with their progress they
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are happy they are not so worried about
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the money
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the additional profits that are coming
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in so they say okay
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we would like to give back to society
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and they they project as if it is an
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important goal even if even though it
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may not be okay in 1971 again the based
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on all of this discussion the Committee
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for Economic Development then came up
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with a report called social
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responsibilities of Business
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Corporations and in this they proposed
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that business functions by public
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consent and its basic purpose is to
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serve constructively the needs of
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society to the satisfaction of the
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society so they said what we've been
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talking about till now the legitimacy
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function business is their business is
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stable in society because the public has
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allowed it to be their businesses
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function in society because the public
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has permitted them to be there because
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the public the general public is
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supporting them to be there so it's
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basic purpose is to serve constructively
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the needs of society to the satisfaction
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of society not only to identify the
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needs but also to satisfy those needs so
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that these society whose needs they are
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is also happy with the way with the
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efforts that are being put in and I keep
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harping on this and I will continue to
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repeat this we have money we want to
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give back to society we must find out
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what they need we must find out what
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they can use we must find out how they
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can utilize our additional resources we
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must not go out and do things on our own
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we must find out what is going to be
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useful for them with the resources or
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how our resources are going to be of
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most benefit to them and only then
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should we go ahead with that and you
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know with investing that money only then
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will it be considered a proper or a an
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appropriate way of helping the society
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and that is exactly what this report by
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the committee of for Economic
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Development said they said that Business
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Corporations have a responsibility to
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society they are in society because the
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public has permitted them to be there so
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what they do must be of use to the
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community that they function in it must
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be accepted by the community that they
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function in you have an ad given you the
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example of giving computers to a village
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that doesn't even have electricity where
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people are illiterate that will not have
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so that is one of the examples ok the
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community for economic development also
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proposed the concentric circles
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definition of social responsibility and
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they said that the social responsibility
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activities social responsibility efforts
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occur in three concentric circles the
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inner circle includes the clear-cut
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basic responsibilities for the efficient
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exit
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ocean of the economic function which
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could be products jobs and economic
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growth
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so the first responsibility that we have
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is to our to sustaining ourselves if we
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are not stable any business functions on
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profits we must get out whatever we
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invest in to the organization so profit
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is number one priority we must make
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money to keep going
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so the products are top priority the
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jobs of the people are top priority
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economic growth of the organization is
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top priority and these are the clear-cut
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basic responsibilities for the efficient
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execution of the economic function of
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the organization the next circle is
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intermediate circle which encompasses
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responsibility to exercise this economic
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function with a sensitive awareness of
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changing social values and priorities
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for example fair treatment of employees
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environmental concerns etc so ok we are
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making our profits now what what next
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after we are done making our profits we
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want to ensure that our employees are
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treated fairly
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we want to make sure that we don't
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damage the physical environment that we
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are in so we are making sure that a
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status quo is maintained in the physical
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social environment at the very least we
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are making profits but not at the cost
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of the society not at the cost of the
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environment that is helping us that is
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enabling us that is facilitating our
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profit making processes the third circle
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here is the outer circle and after we
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are done looking after the very basic
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nature or basic concerns then we move
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out and we say outer circle outlines
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newly emerging and still amorphous
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responsibilities that businesses should
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assume to become more broadly involved
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actively improving the social
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environment so this includes things that
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we are likely to do this includes things
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that we should do not what we must do or
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we are not ideally we are expected to do
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so the outer circle includes the
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responsibilities that are not very
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clearly defined the still amorphous
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responsibilities that businesses assume
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or should assume to become more broadly
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involved in actively improving the
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social environment not only are we
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maintaining the status quo we are also
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looking after the environment and
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helping it improve so that is what the
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outer circle includes in 1972 man and
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wallet described or proposed that and I
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hope I am pronouncing the last name the
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name right they proposed that to qualify
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as a socially responsible action a
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business expenditure or activity must be
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one for which the marginal returns to
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the corporation are less than the
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returns available from some alternative
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expenditure must be purely voluntary and
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must be an actual corporate expenditure
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rather than a conduit for individual
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largesse
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so this must be purely voluntary
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expenditure without any expectation of
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profit as opposed to expenditure in
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response to social norms in response to
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social expectations what does the
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society expect us to do we need to do
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this no this is what we voluntarily do
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to improve the environment that we live
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in and that is really corporate social
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responsibility that is that is really
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you know responsible work that we are
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doing for the environment around us
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professor Wallach in man and wallet
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proposed in the same paper in 1972 he
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said that the elements of the exercise
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of corporate social responsibility
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include
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setting of objectives we need to know
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what we what we are going to do decision
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whether to pursue the given objectives
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and financing of these objectives
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everything boils down to whether we can
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do it financially or not we must make a
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commitment to fulfilling certain
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objectives we decide what we want to do
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then we decide which of these objectives
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we want to pursue can do we have the
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money to pursue these objectives so this
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is what the exercise of CSR activities
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rests on we will talk more about these
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when we discuss implementation of CSR
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activities but this really forms the
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very basis also in the 1970s there was
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an increasing mention of a phrase called
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corporate social performance now it's
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not only responsibility it's not only
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the idea when we talk about performance
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we are talking about outcomes so from
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being an idealistic philosophy that we
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must do we are actually getting down to
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the nuts and bolts and trying to do
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something this is where we will stop in
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this lecture thank you very much for
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listening we will continue with more
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discussion on the evolution of CSR in
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the next class thank you
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