Corporate Social Responsibility Report: Theories and Principles

This report provides a comprehensive overview of Corporate Social Responsibility (CSR), defining it as the legal, economic, discretionary, and moral responsibilities of businesses toward society. It explores various approaches to CSR, including ethical and economic responsibilities, and corporate citizenship. The report delves into key theories such as corporate social performance, shareholder value theory, and stakeholder theory, analyzing their strengths and weaknesses. It further examines the principles of CSR, including sustainability, accountability, and transparency, highlighting their importance in business operations. The report also identifies the driving forces behind CSR, such as shareholders, managers, and consumers. Overall, the report emphasizes the critical role of CSR in fostering a positive relationship between businesses and society, ensuring long-term sustainability and ethical practices. The report highlights the importance of CSR for businesses operating within society and offers insights into how companies can align their actions with societal expectations, contributing to a more sustainable and responsible business environment.

MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
..........................................................................................................................................................9

INTRODUCTION
Businesses use to start their operations after determining their vision and mission.
Besides deciding its vision, mission and objectives of company, the firms also use to make some
plans that can provide some advantages to the society where they are operating. Though the
business organisations use to serve the society through employment generation, providing goods
and services and so on. The expectations of society is more which induces the business entities to
originate a concept of Corporate Social Responsibility (CSR) (Cláudio and et.al., 2010.). The
concept of CSR has taken a form according to which it has become necessary for all types of
business enterprises to frame CSR of their company. The CSR concept shows that the specific
organisation is fulfilling its responsibility towards the society in appropriate way, hence it is
eligible to achieve the license to operate in society. The present report is based on the same
concept along with various theories attached with CSR.
The term corporate social responsibility can be defined as legal, economic, discretionary
and moral responsibilities of business organisations towards society. This concept implies a give
and take relationship between business and society. As any company set up at any place uses the
place of society, hire employees and make profits from society hence it is necessary that it gives
something in return to society as well (Du, Bhattacharya and Sen, 2010). There is no such
accurate measure that can define the extent of responsibilities that should be fulfilled by firms as
different people have different perspectives. But according to some experts they have a common
feature which includes society and humans hence on this basis three key approaches to CSR have
been introduced which are as follows: Ethical responsibility approach: The ethical conceptualisation framework suggests the
duty of care towards all stakeholders through introduction of policies that are beneficial
for them. Economic responsibility approach: This approach considers the capital market which is
build on the basis of morals of business.
 Corporate citizenship: This concept shows the responsibility towards productions that are
done for society for their benefits (Scherer and Palazzo, 2011).
Besides all these approaches, some theories have also been given by some of the experts
who have covered different groups of society and have connected them with CSR. The groups
related to this concept are enlisted below:
1

 Corporate social performance: The corporate social performance lays main emphasis
on responsibility of business towards society even if there is non legal body to demand
for it. The organisation establish their businesses so that they can earn profits but they
are responsible towards society as well so they should not make any profit by exploiting
the interest of society (Zhan and et.al., 2010). This is also true that any firm cannot fulfil
the expectations of every person in society so companies should frame their CSR policies
after considering their status within social groups. The corporate social performance is
like a bridge between corporate and society which is essential to keep a healthy relation
between both. Therefore, it is necessary that every business firm should execute their
tasks in a manner that can be less harmful for society. Further, the business organisations
use to perform their roles in positive way along with fulfilling needs and demands of its
customers. Thus, they contribute by providing all of their services in appropriate way
which can give benefits to both parties. If firms are not able to fulfil their responsibilities
towards the society, sometimes people can consider it, but if the harm is more that has
great impact on masses than the specific organisation may go out and cease to exist in
that society (Anticevic and et.al., 2014). The weakness that results due to good links
between morality and business functions, this may result in major weakness of
organisation. Moreover, it is essential for every company to fulfil their all societal
responsibilities besides of their any weaknesses.
 Shareholder value theory: The shareholder value theory implies the same concept of
maximising the wealth of its all shareholders. But the other side shows that it is not
sufficient to fulfil the wealth needs of shareholders as it may result in controversial
situation. It is apparent that the present situation for business organisations is difficult as
it is suffering from recession conditions so struggle has become more sharp to survive
(Prabhu, 2013). In this situation, the experts suggest that to survive successfully, it is
necessary to make efficient use of available resources by following the honest rule of
society. This will help in managing the activities of company so that responsibilities
towards society can be fulfilled. The shareholder's wealth can be maximise in such
situation by complying with legal and ethical rules. Thus, the company will be able to run
its work smoothly as it will not be opposed by society. There is a tremendous effort by
experts because of which their finding concludes that a business organisation should be
2

able to change the problems of society into opportunities and humans ability into efficient
job opportunities (Russo and Perrini, 2010). Thus, the relation between society and
corporate firms will be improved.
 Stakeholder theory: Stakeholders are the group of persons who get affected by the
decisions of company and may also affect the decisions of a firm. There are various
stakeholders for a business which includes customers, employees, suppliers, investors,
government and all of them belong to the society. So, if a business enterprise is able to
satisfy the needs of all these stakeholders, it is possible that there will be a less chance of
disputes among all of them. There is no any exact key measure that can indicate about
wealth creation for stakeholders, but by providing satisfaction to society can present the
idea of this aspect (Visser, 2011). To express this concept in right manner, some
researchers have given a golden rule that can be applied by all corroborate firms. This
rule says that never exploit others rights just to fulfil you own rights. The stakeholder
theory is considered to be the best one as it takes into account all the groups of society
individually. While on other hand it has some disadvantages as well like managers can
give more favour to those stakeholders who can give many benefits to business than other
groups.
The various theories mentioned above have some benefits and several drawbacks as well
which should be considered while applying (Babiak and Trendafilova, 2011). So it is necessary
to take into account various sides of all the theories according to practical situation. There are
some basic principles of CSR on the basis of which its different activities are based. Some major
principles of CSR activities of business are based is explained below: Sustainability: The sustainability refers to the use of resources and products whose
optimum utilisation is necessary so that they can be used till future without any problem.
So, the concept of sustainability suggests the efficient utilisation of available resources so
that there can be abundant quantity of limited resources for present and futures needs
(Domingues and et.al., 2011). Most of the natural resources that are not available in
abundant quantity like coal, petroleum, oil and so on are non renewable sources that take
a many years to form again. Thus, it is the responsibility of its suppliers that they provide
all these resources with great care and without wasting it. On other hand, society is also
responsible that they use it in limited way and take care of its conservation. Once all
3

these resources extinct from society, it will cost heavy to all the persons. For instance, in
case of fishing, it is necessary to take care by its supplier that they consider the balance
between fish taken and their regeneration in sea. This will help in maintaining the number
of fishes that can be made available for all present and future generation (Lee and Shin,
2010). So in nutshell, for taking into account the concept of sustainability, the business
organisations should measure it by rate of consumption of resources with respect to its
regeneration. Therefore, those products that are limited and non renewable should be
given enough time to regenerate by keeping control on their consumption.
 Accountability: Accountability refers to matters taken into consideration by corporate
firms to measure the effects that are exerted upon society due to their actions and
decisions. This necessitates to measure the effects of decisions on all stakeholders that
exist internally or externally. So companies can have the prior discussion with all
stakeholders about the effects that may be exercised on them as a result of their specific
decision (Venkatesh, Murthy and Murthy, 2010). Thus, the concept of accountability
have a crucial importance as it takes into account both, the stakeholders and the entire
society as well. Further, it puts the stakeholders at a powerful position as they are able to
impact the decision of corporates. So, it is the responsibility of society as well to consider
and justify their actions to support the business firms. For reporting their actions, the cost
is borne by corporations, so it is necessary that they try to keep this cost lower which will
be beneficial for company. In addition, this accountability reporting should be grounded
on the basis of certain features that can imply the relevance of accountability with
information provided and its understanding (Harjoto and Jo, 2011). Hence, if the
corporate firms will be accountable to affect society from their decisions in a positive
manner, it will result in a strong relationship between both parties.
 Transparency: Transparency features the clear vision of all the activities undertaken by
companies internally. This makes it necessary for the organisations to make and update
their report timely about the effects and actions taken by them along with its possible
outcomes that can impact the society. This is the important aspect for every firm that is
operating within society. Hence, the companies use to apply the information sharing
system through which it can give access to important information to all its stakeholders
(Cláudio and et.al., 2010). The transparency should be adopted by organisations so that
4

the stakeholders can have knowledge about the internal proceedings. This will make them
aware about decisions that can impact them along with building a trustworthy
relationship between both parties.
There are a number of driving forces that induces the corporate firms to make some
measures so that CSR policies can be made as mandatory. The major drivers who play a major
role in CSR activities of business organisations are:
 Shareholders and managers: The managers are the chief persons in any company wjo
uise to frame policies and implement them (Scherer and Palazzo, 2011). Managers are
entrusted to fulfil various responsibilities of company. They always try to work and
mange their actions in the best interest of shareholders. Therefore, they are the right
medium to implement the CSR policies which can give long term benefits to society and
internal parties. The managers use to share all information and their activities with
shareholders so that they can know the importance of every investment and its returns. In
many cases, the managers do not act in a responsible manner because of some contracts
that make them bounded to act and take decisions that are oriented towards value
generation (Zhan and et.al., 2010). In this situation, shareholders are responsible to make
them aware of their responsibilities and involving them in such acts. Therefore, it is a
crucial part of business that there is a good coordination between shareholders and
society.
 Consumers: Customers play a vital role in affecting the decisions of an organisation.
Consumers do not want only the products and services from their sellers, they want some
more in return which relates with corporate social responsibility. According to a survey
conducted on about 25000 customers from different countries prefer to punish the
business organisations who do not fulfil social responsibility by ignoring their product to
buy. While, those business firms who are socially responsible will be rewarded by doing
frequent purchasing from them (Anticevic and et.al., 2014). So, this survey clearly shows
the importance of consumers in CSR activities.
 Government and civil society: Government is the main body that has influenced for the
implementation of corporate social responsibility. The government has made many
legislations as well that forces the companies to leave some room for CSR activities in
their major policies. Government plays a major role in welfare of society and hence it is
5

entrusted to develop acts and laws that can work in interest of society. The administrative
bodies of UK has created some diplomat portfolios that gives direction in applying CSR
activities (Prabhu, 2013). The government is aimed at encouraging such activities and
for this, they use to guide with appropriate practices and regulations. Hence, governments
should always function in the best interest of corporation and the society by forming
certain guidelines that can encourage the corporation to be accountable towards society.
This will eventually benefit government as well by increasing tax from the institutions
due to their high profit.
It is suggested by the researchers that investments should be done according to CSR
activities so that the adjustments of financial needs can be done according to systematic plan. It
is evident from various surveys, that, those companies who are earning higher profits are also
performing higher corporate social responsibilities (Russo and Perrini, 2010). The main reason
behind these increasing profits that has resulted from CSR activities is very simple. The
organisations are able to build a strong and faithful relationship with society which has increased
the purchasing of products from these stores. This also results in increased number of investors
for firms as they see the profits by investing in these business entities. Those shareholders who
are interested in achieving profits only without giving any return in something may not get
success in the market as the society will not accept them. The main thing is those companies who
cannot manage their finance to devote in CSR activities can do the same in very low cost as well.
This can be done by involving some volunteers from the society (Visser, 2011). Thus, people
will be encouraged and the networking with society will increase.
6

CONCLUSION
The present report is based on corporate social responsibility which shows the importance of
some accountabilities that every company is expected to do. These responsibilities show that
no company can survive in society if it does not fulfil its responsibilities towards society
honestly. The report has discussed various theories that suggests that coordination between
various stakeholders and company should be there so that full support of customers can be
achieved. Besides this, the companies are entrusted to perform in best interest of society.
There are different drivers existing who use to implement this rule which include managers,
customers and government. Hence, the report concludes that to become a successful
organisation, it is compulsory to frame Corporate social responsibility.
7

REFERENCES
Books and Journals
Anticevic, A. and et.al., 2014. Global resting-state functional magnetic resonance imaging
analysis identifies frontal cortex, striatal, and cerebellar dysconnectivity in obsessive-
compulsive disorder. Biological psychiatry. 75(8). pp. 595-605.
Babiak, K. and Trendafilova, S., 2011. CSR and environmental responsibility: motives and
pressures to adopt green management practices. Corporate social responsibility and
environmental management. 18(1). pp. 11-24.
Cláudio, A.F.M. and et.al., 2010. Extraction of vanillin using ionic-liquid-based aqueous two-
phase systems. Separation and Purification Technology. 75(1). pp. 39-47.
Domingues, R.M.A. and et.al., 2011. High value triterpenic compounds from the outer barks of
several Eucalyptus species cultivated in Brazil and in Portugal. Industrial Crops and
Products. 33(1). pp. 158-164.
Du, S., Bhattacharya, C.B. and Sen, S., 2010. Maximizing business returns to corporate social
responsibility (CSR): The role of CSR communication. International Journal of
Management Reviews. 12(1). pp. 8-19.
Harjoto, M.A. and Jo, H., 2011. Corporate governance and CSR nexus. Journal of Business
Ethics. 100(1). pp. 45-67.
Lee, K.H. and Shin, D., 2010. Consumers’ responses to CSR activities: The linkage between
increased awareness and purchase intention. Public Relations Review. 36(2). pp. 193-195.
Prabhu, C.S.R., 2013. E-governance: Concepts and case studies. PHI Learning Pvt. Ltd..
Russo, A. and Perrini, F., 2010. Investigating stakeholder theory and social capital: CSR in large
firms and SMEs. Journal of Business ethics. 91(2). pp. 207-221.
Scherer, A.G. and Palazzo, G., 2011. The new political role of business in a globalized world: A
review of a new perspective on CSR and its implications for the firm, governance, and
democracy. Journal of management studies. 48(4). pp. 899-931.
Venkatesh, T., Murthy, C.S.R. and Murthy, C.S.R., 2010. An analytical approach to optical
burst switched networks (Vol. 2010). New York e-: Springer.
Visser, W., 2011. The age of responsibility: CSR 2.0 and the new DNA of business. John Wiley
& Sons.
Zhan, W.L. and et.al., 2010. Progress in HIRFL-CSR. Nuclear Physics A, 834(1). pp. 694c-700c.
8

9