CORPORATE SOCIAL RESPONSIBILITY: THEORY AND PRACTICE

1. Dr. SiarheiLiabetski - Lukin, Chair and Professor, International Management Department, Belarus State University lukin@bsu.by siarhei.lukin@stthomas.edu CORPORATE SOCIAL RESPONSIBILITY: THEORY AND PRACTICE

2. “In the long term, an honest and fair approach to doing business will always be the most profitable.” Robert Bosch CSR

3. “The business, which brings nothing but money is a poor business.” Henry Ford

4. “No man can become rich without himself enriching others” Andrew Carnegie MEANING AND SCOPE OF SOCIAL RESPONSIBILITY (CSR)

5. Andrew Carnegie

6. Andrew Carnegie, the founder of US Steel Corporation, views corporations’ social responsibilities on two main principles: The Charity Principle and The Stewardship Principle. 1. The charity principle require the more fortunate members of society to assist its less fortunate members, including the unemployed, the handicapped, the sick and the elderly. MEANING AND SCOPE OF SOCIAL RESPONSIBILITY

7. The stewardship principle required businesses and wealthy individuals to view themselves as the stewards, or caretakers, of their property. Carnegie holds the idea that the rich hold their money “in trust” for the rest of society and can use it for any purpose that society deems legitimate. MEANING AND SCOPE OF SOCIAL RESPONSIBILITY

8. Friedman is of the view that the social responsibility of business is to increase profit within the requirements of the law. If a business person acts “responsibly” by cutting the price of the firm’s produce to prevent inflation, by making expenditures to reduce pollution, or by hiring the hard-core unemployed, that person is spending the shareholders’ money for a general interest. MEANING AND SCOPE OF SOCIAL RESPONSIBILITY

9. Archie Carroll is of the view that managers of business organisation have four responsibilities: economic, legal, ethical, and discretionary. MEANING AND SCOPE OF SOCIAL RESPONSIBILITY

10. Economic responsibilities are to produce goods and services of value to society so that the firm can repay its creditors and stockholders. Legal responsibilities are defined by government in laws that are expected to be obeyed MEANING AND SCOPE OF SOCIAL RESPONSIBILITY

11. Ethical responsibilities are to follow the generally held beliefs about how one should act in society. Discretionary responsibilities are the purely voluntary obligations a corporation assumes, i.e. philanthropic contributions. The difference between ethical and discretionary responsibilities is that few people expect an organisations to fulfil ethical ones. MEANING AND SCOPE OF SOCIAL RESPONSIBILITY

12. 1970-1980 years, a new approach - corporate social responsibility The concept of "stakeholders" "Business, if it aspires to be a success, being interdependent on society is vitally interested in establishing friendly relations with its external (customers, partners, creditors, local community, and others.) And internal (employees, managers, shareholders) stakeholders' . R.Freeman "Strategic Management: stakeholder’s approach" 1984. MEANING AND SCOPE OF SOCIAL RESPONSIBILITY

13. By R.Freeman attributed stakeholders and future generations, hence - the environmental dimension of CSR The concept of "corporate citizenship" - "Typically, companies add added values into society unconsciously, and if it deliberately go on, it is the corporate citizenship"      Crail Smith, mid-1980s MEANING AND SCOPE OF SOCIAL RESPONSIBILITY

14. Davos, February 2011. New UN project for the leading companies in the field of CSR - Global Compact LEAD At present, more and more often uses the term "sustainable development" MEANING AND SCOPE OF SOCIAL RESPONSIBILITY

15. Helen J. Alford, O.P. & Michael J. Naughton, Managing As If Faith Mattered: Christian Social Principles in The Modern Organization, Notre. Dame, IN: University of Notre Dame Press, 2001. 336 pp. Corporate Responsibility: The American Experience. Carroll, Archie B., Kenneth J. Lipartito, James E. Post, Patricia H. Werhane, and Kenneth E. Goodpaster, executive editor. Cambridge: Cambridge University Press, 2012. SOURCES

16. Social responsibility of business is to implement the policy, decision-making or follow a course of conduct which would be desirable from the perspective of the goals and values of society Howard Bowen "Corporate Social Responsibility", 1953 DEFINITIONS OF CORPORATE SOCIAL RESPONSIBILITY ( CSR)

17. HowardRothmannBowen (1908 –1989)

18. Corporate social responsibility may be defined in this course as: “ A business strategy which involves a business identifying its stakeholder groups, and going beyond its legal obligations to incorporate their needs and values into the day-to-day decisions and activities of the organisation”. DEFINITION OF CSR (CON’T)

19. McWilliams and Siegel (2001) define CSR as: “actions that appear to further some social good beyond the interest of the firm and which are required by law.” DEFINITION OF CSR (CON’T)

20. Forstater et al. (2002) define CSR as: “ a company’s actions that contributes to sustainable development through the company’s core business activities, social investment and public policy debate.” DEFINITIONS OF CORPORATE SOCIAL RESPONSIBILITY ( CSR)

21. Corporate social responsibility means the conduct of business, which corresponds to the ethical, legal standards and public expectations or even exceed them      (European Commission) DEFINITIONS OF CORPORATE SOCIAL RESPONSIBILITY ( CSR)

22. Howard Bowen's opponent - Milton Friedman "There is only one and only one social responsibility of the business world to use its resources and engage in activities aimed at increasing profits, while respecting the rules of the game, ie, to engage in open and free competition without deception or fraud” "Social responsibility of business is to increase its profits", 1970 CSR

23. Effects of organisations’ activities on society As a result of these effects, three principles form the justification for CSR engagements by firms: 1. Sustainability 2. Accountability 3. Transparency THE PRICNCIPLES OF CSR

24. Sustainability Sustainability implies that society must at all times use no more of its resources than can be generated. It is concerned with how the actions of the present have recurring effects upon the opportunities of the future. PRINCIPLES OF CSR

25. Accountability Here an organisation must recognise that its actions generally affect the external environment and therefore assume responsibility for the effects of its actions. PRINCIPLES OF CSR (CON’T)

26. Transparency Transparency, in principle, means that all acts are obvious or communicated to all concerned. As a principle of CSR, transparency indicates that organisations make clear all reports of their actions and that those reports, whether in facts or figures, give accurate and detailed information of the relevant information. PRINCIPLES OF CSR

27. Friedman (1962) argues that the only social responsibility of business is to make profit within the law. Some arguments against CSR are based on the following issues: “The business of business is business.” Useless PR exercise The idea of theft Lack of Regulation of CSR CRITICISMS /ARGUMENTS AGAINST CSR

28. Imposes unequal cost to organisations CRITICISMS/ARGUMENTS AGAINST CSR

29. Arguments in favour of firm CSR engagements are based on: Interdependence of firm and society Stakeholder interest may transcend financial benefits Benefits of CSR- (1)Helps attract qualified staff (2) Minimizes government intervention CRITICISMS/ARGUMENTS FOR CSR

30. Improves Corporate Image – Goodwill Leads to improved financial performance ARGUMENTS FOR CSR

31. It Works CSR

32. Concept of socially responsible business Business Case for CSR Deontological approach The theory of social contract Religious concept CSR

33. Business Case for CSR In its primitive form the business case defines CSR in the spirit of the famous Friedman’s phrase : "Social responsibility of business is to increase its profitability.“ In a more advanced version (we hear it more often), "enlightened" the pursuit of his interest is the sacrifice of a part of today's profits to get more profit in the future. Profit is obtained by the good reputation of the firm. CSR

34. Deontological approach It became the basis for the CSR ethics of duty instead of the ethics of results.It uses the Kantian principle of "respect for the individual", the second imperative of Kant: man is always seen as a goal, but never as a means. Socially responsible company respects the rights of stakeholders are taken into account and harmonizing their interests. CSR

35. E. Freeman's and D. Gilbert’s idea, of their work Corporate Strategy and the Search for Ethics (1988) - "the realization of personal projects strategy."Based on the concept of the person possessing rights and freedoms and realizing your own personal project, they come to the conclusion that corporations exist to serve the realization of personal projects of their members. CSR

36. The theory of social contract CSR is presented as a kind of contract between society that needs in business for economic and social development, and the business that needs a society to ensure the environment and infrastructure for their activities (legal system, the market system, transport infrastructure, etc.). CSR

37. Religious concept Socially responsible business as a service to God. Everyone is called to serve with their talent received from God CSR

38. On the one hand, as an individual, each of us has a need and is full of desires; On the other hand, as individuals, we are ready to reach out to others and share with them what we can offer: our creativity, our thoughts and ideas, our ability to love and to give ourselves to others. Helen Alford OP CSR

39. The Catholic doctrine of socially responsible business is largely based on the teachings of St. Thomas Aquinas on the priority for the Christian common good before the private good. CSR

40. According to the author of "Summa Theologica", "common good many pleases the Lord more than the benefit of the individual." He also thought the man was wrong in wanting a particular good, if he does not see the common good as the ultimate goal. CSR

41. Thomas Aquinas says that, firstly, the benefit of the individual is impossible without the common good of the family, the community and the country as a whole. He quotes the Roman philosopher Valerius Maximus that is better to be poor in a rich country than to be rich in a poor country. CSR

42. In - the second, according to Thomas Aquinas, since man is a part of the family and the community he must consider what is best for as a derivative of the good of the many. Favorable conditions are often dependent on their relationship to the whole. In support of this argument, Thomas cites Blessed. Augustine that any part that is not harmonized with the whole disgusting. CSR

43. Private organizations and companies, according to Catholic doctrine, must also be part of the social security system. Private company harmonized as part of a whole, not only as a subject for the society which produces goods and services but also as a socially responsible entity CSR

44. . Most liability arises in relation to the "neighbors" of the organization - customers, suppliers, shareholders, the local community and engaged in it. CSR

45. Helen J. Alford, O.P. & Michael J. Naughton, Managing As If Faith Mattered: Christian Social Principles in The Modern Organization, Notre. Dame, IN: University of Notre Dame Press, 2001. 336 pp Corporate Responsibility: The American Experience. Carroll, Archie B., Kenneth J. Lipartito, James E. Post, Patricia H. Werhane, and Kenneth E. Goodpaster, executive editor. Cambridge: Cambridge University Press, 2012. CSR

46. Modern Orthodox concept of CSR is set out in Basic Social Concept of the Russian Orthodox Church (VI-VII) Code of moral principles and rules of economic management CSR

47. Responsibility for the spiritual, intellectual and physical development of employees (including management) Participation in programs of social and pension insurance of employees Partnership Program, to attract workers to the management of enterprises in accordance with their professional level and education CSR

48. Business does not have to be on at the destruction of public morality. Moreover, it does not need to involve workers Environmental responsibility. Production and all other entities should not cause irreversible damage to nature, which is the heritage not only of all living on the Earth, but also of future generations. CSR

49. Socially responsible behavior is fair competition and, in particular refraining from the use of advertising, destroying the morality of the people. CSR

50. Areas of Social Responsibility Concerns: Concern for Consumers Are products safe and well designed? Are products priced fairly? Are advertisements clear and not deceptive? Are credit terms clear? Is adequate product information available? Are customers treated fairly by salespeople? FORMS OF CSR ISSUES