What is CSR?
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The extent to which a business addresses the concerns and obligations to its wider stakeholders
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The actions a business takes over and above the minimum required by law in addressing societal needs and wants
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CSR is based on the idea that the needs of business and society are interdependent
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Society needs business
- Employment & wages
- Investment & innovation
- Profits & taxes
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Business needs society
- Create demand
- Public assets and infrastructure
- Legal protection
Key CSR questions
- What is the purpose of the business?
- What contribution should businesses make to society?
The Debate on Social Responsibility
- Not all business organisations behave in a socially responsible manner
- Some argue that that it is not the job of businesses to be concerned about social issues and problems
- Two schools of thought:
- Free market view: the job of business is to create wealth for shareholders
- Corporate social responsibility view: business should be concerned with social issues
The Stakeholder Concept
- Businesses do not have an unquestioned right to operate in society
- Those managing businesses should recognise that they depend on society
- Business relies on inputs from society and on socially created institutions
- There is a social contract between business and society involving mutual obligations.
Arguments for CSR
- The ethical thing to do
- Improves a businesses image and reputation
- Necessary in order to avoid excessive regulation
- Socially responsible actions can be profitable
- Improved social environment benefits business
- Helps attract investors
- Can increase employee motivation
- Helps to correct the social problems caused by business
Arguments against CSR
- The only social responsibility of the business is to create shareholder wealth
- The efficient use of resources will be reduced if businesses are restricted in how they act
- Businesses cannot decide what is in society’s interest
- Extra costs will be incurred which must be passed on to consumers
- CSR stifles innovation