POM Chapter 7

CORPORATE SOCIAL RESPONSIBILITY
1.1 Meaning of Social responsibility

▪ The goal of CSR is to embrace
responsibility for the company's actions Course Contents
and encourage a positive impact through
its activities on the environment,
1.1 Meaning of social
consumers, employees, communities,
responsibility
stakeholders and all other members of the
public sphere 1.2 Corporate social responsibility
OR Stakeholder
▪ Corporate social responsibility offers
manifold benefits both internally and 1.3 Business ethics
externally to the companies involved in - Importance
various projects. Externally, it creates a
positive image amongst the people for its
company and earns a special respect
amongst its peers. Internally, it cultivates
a sense of loyalty and trust amongst the
employees in the organizational ethics.
▪ The spectrum of CSR includes a number of
areas as human rights, safety at work,
consumer protection, climate protection
and caring for the environment, and
sustainable management of natural
resources.
▪ From the perspective of employees, CSR activities include providing health and
safety measures, preserving employee rights and discouraging discrimination
at workplace.
▪ Nearly all leading corporate in India are involved in corporate social
responsibility (CSR) programmes in areas like education, health, livelihood
creation, skill development, and empowerment of weaker sections of the
society. Notable efforts have come from the Tata Group, Infosys, Bharti
Enterprises, ITC Welcome group, Indian Oil Corporation among others.
For example, FORD Motor - “we endeavor to become a leading contributor to

a more sustainable world”…”The Ford Motor Company Fund supports many
local and national programs to affect change, provide for those in need, and
improve quality of life.”
1.2 Corporate Social Responsibility to Different sections OR

Stakeholder
A stakeholder is any individual or organization that is affected by the activities of a

business. They may have a direct or indirect interest in the business, and may be in
contact with the business on a daily basis, or may just occasionally. Business
enterprises are primarily accountable to eight major interest groups.
Shareholder
Local
Community
Employees
Social
Responsibility
Of Business
Government
Consumers
Society
1. To employees
The success of an organization depends to a very large extent on the morale

of the employees. It is possible only when the business is fulfilling social
responsibility towards employees such as:
▪ The payment of fair wages

▪ The provision of the best possible working condition
▪ To provide Social security
▪ The establishment of fair work standards and norms
▪ An opportunity for participating in managerial decisions
2. To consumers
The consumer is the foundation of a business and keeps it in existence. It

has been widely recognized that customer satisfaction shall be the key to
satisfying the organizational goals. Important responsibilities of the business
to the customers are:
▪ Ensure access to essential products and services.

▪ To charge the reasonable price
▪ Ensure the right to information.
▪ To avoid misleading the customers by improper advertisements
3. To shareholders
The responsibility of a company to its shareholders, who are the owners, is

needed a primary one. The fact that the shareholders have taken a great risk
in making investment in the business should be adequately recognized.
▪ To protect the interests of the shareholders

▪ To safeguard the capital of the shareholders
▪ To provide a reasonable dividend
▪ To ensure that its public image is such that the shareholders can
feel proud of their company.
4. To community/Society
The business has a lot of responsibility to the community around its location
and to the society at large. These responsibilities include;
▪ Taking appropriate steps to prevent environmental pollution
▪ Help in overall development of the society.
▪ Development of backward area.
▪ Promotion of small scale industries
5. To government
Government provides protection to business. Hence the business is

required to fulfill its social responsibility towards the government such as:
▪ Regular and full payment of all types of tax in time

▪ To follow trade practice
Stakeholders Examples of interests

Government taxation, VAT, low unemployment, truthful reporting.
Employees rates of pay, job security, compensation, respect, truthful

communication.
Customers value, quality, customer care, ethical products.
Suppliers providers of products and services used in the end

product for the customer,
Creditors credit score, new contracts, liquidity.
Community jobs, involvement, environmental protection, shares,

truthful communication.
Trade Unions quality, Staff protection
Owner have interest of the success of his/her business.

1.3 Business ethics
Business ethics are moral principles that guide the way a business behaves. The
same principles that determine an individual’s actions also apply to business
Acting in an ethical way involves distinguishing between “right” and “wrong” and
then making the “right” choice. It is relatively easy to identify unethical business
practices. For example, companies should not use child labour. They should not
unlawfully use copyrighted materials and processes. They should not engage in
bribery.
However, it is not always easy to create similar hard-and-fast definitions of good

ethical practice. A company must make a competitive return for its shareholders
and treat its employees fairly. A company also has wider responsibilities. It should
minimise any harm to the environment and work in ways that do not damage the
communities in which it operates. This is known as corporate social responsibility.
Note that many people react that business ethics, with its continuing attention to
"doing the right thing," only asserts the obvious ("be good," "don't lie," etc.), and
so these people don't take business ethics seriously. For many of us, these
principles of the obvious can go right out the door during times of stress.
Consequently, business ethics can be strong preventative medicine.
▪ The Importance of Ethics in Organizations
Ethics are the principles and values an individual uses to govern his activities and
decisions. In an organization, a code of ethics is a set of principles that guide the
organization in its programs, policies and decisions for the business. The ethical
philosophy an organization uses to conduct business can affect the reputation,
productivity and bottom line of the business.
1. Leadership Ethics
The ethics that leaders in an organization use to manage employees may have an
effect on the morale and loyalty of workers. The code of ethics leaders use
determines discipline procedures and the acceptable behavior for all workers in an
organization. When leaders have high ethical standards, it encourages workers in
the organization to meet that same level. Ethical leadership also enhances the
company’s reputation in the financial market and community. A solid reputation
for ethics and integrity in the community may improve the company’s business.
2. Employee Ethics
Ethical behavior among workers in an organization ensures that employees
complete work with honesty and integrity. Employees who use ethics to guide
their behavior adhere to employee policies and rules while striving to meet the
goals of the organization. Ethical employees also meet standards for quality in
their work, which can enhance the company’s reputation for quality products and
service.
3. Ethical Organizational Culture
Leaders and employees adhering to a code of ethics create an ethical
organizational culture. The leaders of a business may create an ethical culture by
exhibiting the type of behavior they'd like to see in employees. The organization
can reinforce ethical behavior by rewarding employees who exhibit the values and
integrity that coincides with the company code of ethics and disciplining those
who make the wrong choices.
4. Benefits to the Organization
A positive and healthy corporate culture improves the morale among workers in
the organization, which may increase productivity and employee retention; this,
in turn, has financial benefits for the organization. Higher levels of productivity
improve the efficiency in the company, while increasing employee retention
reduces the cost of replacing employees.

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CORPORATE SOCIAL RESPONSIBILITY

1.1 Meaning of Social responsibility

For example, FORD Motor - “we endeavor to become a leading contributor to

1.2 Corporate Social Responsibility to Different sections OR

A stakeholder is any individual or organization that is affected by the activities of a

The success of an organization depends to a very large extent on the morale

▪ The payment of fair wages

The consumer is the foundation of a business and keeps it in existence. It

▪ Ensure access to essential products and services.

The responsibility of a company to its shareholders, who are the owners, is

▪ To protect the interests of the shareholders

Government provides protection to business. Hence the business is

▪ Regular and full payment of all types of tax in time

Stakeholders Examples of interests

Employees rates of pay, job security, compensation, respect, truthful

Customers value, quality, customer care, ethical products.

Suppliers providers of products and services used in the end

Creditors credit score, new contracts, liquidity.

Community jobs, involvement, environmental protection, shares,

Trade Unions quality, Staff protection

Owner have interest of the success of his/her business.

However, it is not always easy to create similar hard-and-fast definitions of good

▪ The Importance of Ethics in Organizations

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