Corporate Social Responsibility

1. Corporate Social Responsibility LECTURE 13 Corporate Social Responsibility MGT 610

2. Corporate Social Responsibility Chapter 4Roles of Various Institutions in CSR

3. Corporate Social Responsibility LEARNING OBJECTIVES • Understand that CSR is integral to the development process • Understand the role of the major institutions of the civil society in CSR • Create awareness of certain institutional initiatives in progress and the need for further contribution in the field

4. Corporate Social Responsibility • The concept of virtue of the market has faded when we are faced with consequences of progress • Question is WHY HAS THE MARKET FAILED TO DELIVER? • All human are basically good and believe in collectivist living • Question is WHY THE DIVIDE BETWEEN THE RICH AND THE POOOR IS INCREASING • Have our own mechanism failed us by creating unethical negative emotions like greed, hatred and jealousy • The answer may be found when we analyze the different markets in which business operates • The three major markets are • Capital markets • Labor markets • Consumer markets

5. Corporate Social Responsibility • Capital markets • Provides basic necessities for production i.e. land, finances, technology, raw material • While participating in this markets are the firms operating with CSR? • Reason • Search for cheaper, quicker sources rather than ethical sources • Quality of inputs is compromised • CSR Vs productivity • Short term Vs long term • Firms may use CSR to keep government regulations away

6. Corporate Social Responsibility • Labour markets • It is believed that education creates responsible, trustworthy dependable people. Also the need for highly specialized world of today • As we specialize the depth of knowledge increases but the width of knowledge decreases • This means we are more interdependent and for that one needs trust • If ask a class to identify their favorite company • It would relate back to pay package • And not about how responsible the company was or is • Therefore the company that offers the highest package gets the best brains • Our system of education sharpens the intellect more than the emotions, the labour markets also participates in exploitive behavior • Example Harvard Business School

7. Corporate Social Responsibility • Consumer markets • Not driven by CSR • Consumer not driven to bear the extra cost of CSR • Driven by advertising and not whether the company has been operating ethically • Companies say that since CSR does not sell we do not highlight it • Though business say that customer is the king but what powers does the king have • Veto power • Veto power can operate when there is equal sharing and transparency • Monopolies and oligopoly limit free choice of consumers thus limiting the virtue of the markets • Consumer at the mercy of the producers • Consumers have to come together collective bargaining power to ensure responsible behaviors

8. Corporate Social Responsibility • Looking at the above concerns it is important for the government to play a proactive roles to ensure that CSR is promoted • Limit to corporation efforts hence support is needed by government • Responsibility of the government to create safe environment for business investment, provide basic infrastructure, reasonable regulatory processes and public policies • Create a level playing field • Obstacles • MNCs may increase the standards of living but other factors nullify CSR • Vested interest of corporations may lead to unfair policies • Promote products behind the façade of CSR • Government engineering policies that may cater to party funds

9. Corporate Social Responsibility • Role of the government is to seek balance between authority and responsibility • Ensure that social responsibility is incorporated in their role, relationship and influence • Governance is • Enforcing laws with the objective of ensuring justice, peace • Proactive actions that reduces gaps between have and have not's • Ensure welfare of people • Government justify behavior based on utilitarianism • Problem is moderate benefits to large and severe discomfort to smaller groups • This discomfort may fester in to activities like terrorism and fundamentalist movements • Eat in the process of development

10. Corporate Social Responsibility • Government has to ensure distributive justice • It has to based on the absence of specific information • Advantage or disadvantaged based on social class and fortune • Government should ensure • Markets remain competitive • Equal opportunity • Resources are utilized efficiently • Outcome of business is distributed • Social capital has to be enhanced by developing human capital • Corruption has to be rooted out to ensure true competitiveness • The role of the government is to provide guidance to business about CSR • Unethical activities thrives best in Chaos • Expectations regarding welfare have to be clear with a proper chain of accountability laid out for monitoring