Philosophies behind CSR (Corporate Social Responsibilities)

There are four schools of thoughts that will help the reader understand why firms often get engaged into CSR activities. As per the instrumental theory of corporate social responsibility, CSR is only perceived as the instrument to achieve business’s monetary objective. So, CSR initiatives are taken only for fulfilling the long-term benefit of the business; any CSR activity that does not help the firm in achieving its long-term goal is readily dropped from the equation. CSR activities are often undertaken in order to sell the products out of the mainstream markets; a number of disruptive innovations eventually bear fruits since CSR initiatives have made the lower income population ready to use the low-cost version of a standard product. The instrumental theory of CSR tries to interpret CSR motivations as social investments or the attempt to build firm-level capabilities (initiatives from where future value can be tapped by the business). Even if CSR investment fails to build up firm level capabilities, this initiative can be framed as cause-related marketing. 

As per the political theory of corporate social responsibility, CSR activity has been termed as the expression of power that a business house posses. In today’s world every big business is interlinked with the society in so many bits and through so many parts and they hold huge power. It is expected that more powerful businesses will become more responsible to the social causes. It is postulated under the political theory that business and society are not quite separate and business influences the society through exerting the power and society in reimbursement punishes or rewards the firms for being either socially irresponsible or being responsive. There is an implicit social contract between a business and the society and the firm must act prudently in order to become a citizen of the society. Otherwise, if other competitors observe a vacuum they will grab the seat by becoming more responsive to the social causes.

As per the integrative theory of corporate social responsibility, it has been assumed that a business must integrate the social issues, society demands and expectations into its business model. There are a number of stakeholder groups whose interest are linked with the business objectives. A business must be aware of what the stakeholders want from the business and how the business will be able to fulfill these objectives. All the stakeholder groups are not equally important and that is why a business must understand which stakeholder groups the business should serve and how it can serve properly. In order to become a legitimate business, corporate social responsibility fulfillment is also key; many a times in order to extract business opportunities and in order to remain safe from the negativity in the environment, a business must understand its stakeholder’s perspectives and address them formally through the CSR charter.

Finally, as per the ethical theory of corporate social responsibility, it has been postulated that a business does possess a fiduciary relationship with the society and it should always do what is good for the society. At times, a firm tries to ensure sustainable development; at times a firm tries to ensure that the universal rights (clean water, proper wages and good food) are not violated at their end. Not every business would be ready to fulfill its economic, legal, ethical and most importantly its philanthropic responsibilities. They may avoid it, take defensive actions against these activisms, or they may become proactive to their social roles as well.

Blog Writer: Hussain Ahmed Enamul Huda

Date: 21 August, 2017