SOCIAL RESPONSIBILITY
Introduction
The words "Corporate Social Responsibility" may have entered the
Philippine consciousness only in the past 10 years, but the concept and
practices of making profit and reaching out communities has been far
and longer than that.
As early as 1900s, companies have gone out of their way to make
sure their employees and families are well taken care of. But realizing
they have greater responsibilities to help those in need, these private
firms eventually expanded their reach to include communities outside their
gates. Their trends started in a big way in 1950s when rising companies
involved themselves heavily in the welfare of communities in which
they operated. There was no real on carefully crafted strategy behind
community involvement. Companies, big or small, were simply driven
to share their gains with their neighbors, a reflection of deepily ingrained
Filipino values like "Bayanihan" (cooperation). Their help was largely in
the nature of philantrophy, mainly regular donations or dale outs when
called for assistance. And this went on well into the 1960s, those handing
community relations were removed from the core activities of enterprise.
What stir community relation to a whole new direction were the massive
demonstration that erupted in 1970s following the composition of Martial
Law and the adverse of the oil shock that pushed more Filipino Families
into poverty.
establishments
Today, it has become even more essential for business
activities into their
to integrate Corporate Social Responsibility (CSR)
these trying times.
business strategies should they wish to survive in
to learm
This chapter is designed to provide readers an opportunity the
the various theories of social responsibility and the right of
and apply
and business ethics.
concerns, job orientation,
Objectives
to the entrepreneur social responsibility to his
explain fellow businessmen,
Customers, suppliers, stockholders,
and to his employees
government, to the community,
measured by fairnessS,
discuss such business relationship
honesty, and justice
creation of jobs, and
of consumers,
explain the rights
busineSs ethicss
166
Social Responsibility Explained
The concept of social
responsibility
individuais. For instance, to has various
meanings
money even to the
a banker, his
social responsibility
is TO
E
lend
poor producers, and not
manufacturers, their social responsibility is toonly to the rich
ones.
create quality products,
o
and not to polute the
environment. To the rich, their social responsibility
is to share their excess
wealth with the less fortunate.
What then is the best
social responsibility of
it as "the obligations entrepreneurs
Professor Howard Bowen defines
to pursue their of businessmen
of
policies, to make those
decisions, or to follow those lines
actions which are desirable in terms of the objectives and
society." Such definition is rather broad values or
and philosophical. Let us define
social responsibility in more
isthe social responsibility ofspecific and practical terms. What
the entrepreneur or businessmanexacuyto his
customer, suppliers, stockholders, fellow
the community, and to his businessman, government, o
measured by fairness, honesty,employees? Such business relationship are
and justice.
The entrepreneur must sell
also be fair with his suppliers
quality products at fair price. He must
He must give reasonable
by paying them on time as agreed upon.
He must
profits to stockholders for their investment.
pay the correct amount of taxes to the
government.
promote the welfare of his employees. Equally important must
is the social
He
responsibility of the entrepreneur to his community in terms of job creation
and environmental conservation.
Historical development of Social Responsibility
During the ancient times, the Greeks despised trade and commerce.
Only the slaves and low-class citizens were engaged in business. The
Romans had the same negative attitude towards business. They
to be soldiers or farmers. Those who became businessmen were
preferred
guided
by their personal ethics and moral judgment. Such values of businessmen
were greatly influenced by their religious beliefs and the
prevailing
laws or rules of conduct. In fact, the Holy Scriptures prohibit the use of
false weights and measures. Usurious practices of money lenders were
condemned. Also, the Code of Hammurabi regulated commercial activity.
One law of the Code says, "If a man hires a field laborer, he shall pay
him 8 GUR of grain per
year
During the medieval times, which started after the fall of the Roman
Empire in 746 A.D., business activitles were influenced by Christian
doctrines. The Church, then, was a very powerful institution. The most
famous Christian doctrine was the compensatory justice of St. Thomas
Aquinas. It is composed of just wage and just price. According to this
doctrine, the businessman should pay falr wage to his workers. He should
likewise charge reasonable price for his products and services.
In the latter part of 1700s, the Industrial Revolution emerged. This
further bolstered the growth of capitalism, which had become strong
the influence of the Church faded
during the early 1600s. At this time, led
away. The State adopted the laissez-faire policy. These are French words
ds,
which mean the absence of government interference in business activities
es.
Such environment encouraged the capitalists to exploit their workere
customers, and suppliers. Children and old individuals worked up to 1
hours a day, and they were underpaid. Prices were high, yet quality of
products were very low. The abuses of businessmen produced great social
philosophers and reformers, like Robert Owen and Karl Marx.
Theory of Karl Marx
Marx, a German Philosopher, stressed the social importance of labor
He said that workers are the real producers of goods. Yet, he claimed that
the benefits of production go to the capitalists and not to the workers.
Marx developed his theory of Scientific Social Evolution. He
Karl
stated that in the beginning, when society was still primitive, there was
social equilibrium. However, when new ideas and new tools of doing
things were introduced, the old system was disturbed. As a result, man
became greedy for power and wealth. Man became greatly concerned
with material wealth. This led to a class struggle between the workers
and the capitalists. The latter wanted to amass wealth at the expense of
the workers.
In the class struggle between the workers and the capitalists, Max
predicted the downfall of capitalism due to its inherent shortcomings. of
course, such prediction did not come true. There have been no revolutions
in industrial economies, like United States, Canada, and Japan, which are
more prosperous than communist countries. In fact, communism as an
economic system, as well as a political system, had collapsed. Communist
countries, except Cuba, are now gradually moving towards capitalism.
However, the ideas of Karl Marx are not without significance. His treats
to the capitalism greatly contributed to the welfare of the working class.
Workers have organized their labor unions for their own interest and
protection against the abuses of their employers. On the other hand, some
capitalist have improved their policies towards their workers. However, in
many parts of the world, particularly in poor countries, most employers
still exploit thefr employees. Poor people are forced to accept low wages
just to be able to feed their hungry families.
A Russian economics professor appears to echo the views of Kar
Marx. Professor Khvostov claimed that under the capitalism, the fruits o
production belong to the ruling class of capitalist, who own the factors
of production and marketing. They do not contribute their labor to the
production process. On the other hand, the workers are producei
themselves, but they do not own the factors of production, except labol
They are forced by unemployment, inflation, and crises to sell the
labor at a very low price to the capitalists, who take advantage of the
miserable conditions, as Khvostov further explained. He likewise observt
that the capitalists lie on incomes they never earned, but derived Dy
exploitation.
Robert Owen, the Social Utopian
Robert Owen was a product of the University of
Experience. He started making a living at the age of
10 as a shop boy. At 18, he was already managing
his own small spinning mill. At 20, he was the head
a large Manchester cotton mill. And at 29, he was
the director and co-owner of a large textile factory in
New Lanark, Scotland. As managing director of the
said cotton mills, he abolished child labor. Instead,
he organized infant schools. He reduced working hours to 11. He built
houses for the workers and replaced all liquor stores with provision stores
selling quality goods at cost to the workers. In the community, Owen
sponsored beautification, health, and sanitation projects. As a result,
New Lanark became a model manufacturing village in Great Britain.
Robert Owen, being a social reformer, believed that society must be
completely restructured on the basis of common ownership, equal rights,
and collective labor. He contrasted his social system to that of capitalism,
which is a system of competition and exploitation. He linked the worsening
conditions of the working class to the introduction of machines during
the Industrial Revolution.
In 1820, Owen strived to propagate the cooperative association of
Workers. Some years later, he took active part in the cooperative and
labor movement. In addition, he preached the ideas of socialism for 40
years. In gratitude, succeeding generations honored him as the "Father
of socialism and cooperatives."
The influence of Labor Unions
Before the 1930s, businessmen enjoyed too much freedom.
Government protection and promotion of the welfare of the consumers
and workers were minimal. It was still a laissez-faire situation.
By today's standard, working conditions were not favorable. People
worked more than 60 hours and there was no minimum wage law.
Benefits, like paid vacations, medical insurance, and overtime pay were
not given by almost all enterprise (in fact, until now in the Philippines,
most businessmen do not grant such incentives), and work areas were
crowded and unsafe. There were also many industrial accidents.
Due to such abuses, workers formed their labor unions. They
demanded for better working conditions and security of tenure. However
the government was even more supportive on the side of the employers.
This is true even in many poor countries. Labor organizations have been
branded as tools of the communists.
Theories on Social Responsibility
1. Economic Model. This is based on the traditional concept of
business. That is, the primary objective of business is to earn
reasonable profit, as well as to offer quality good and servics
and to provide employment. Such model claims that socieces,
will benefit most from business if eft alone in its
operation
Business has done its social responsibility to the needs
the consumers, by creating job and by paying taxes
to th
government. Such taxes are being used by the governmen
for social services. nt
2. Socio-economic Model. It believes that businessmen have their
responsibility to stockholders, as well as to their emplovees
customers, suppliers, and the general public. It stresses not
only profit, but also the implications of business
society. It is argued that since an enterprise is adecisions on
creation of
a societY, and that it
conducts its business in the
the enterprise has a social responsibility to sharecommunity,
its earned
resources with the needs of society.
Colgate-Palmolive, for
instance, has stated that a firm must return to the
what it has taken. community
3. Classical Model. Anenterprise is socially responsible if it
stresses to use, efficiently as possible, the resources at its
as
disposal, in producing the goods and the services that society
needs, at a price consumers are willing to pay. Milton freidman,
a noted monetary
economist, is a follower of the classical view.
He said that there is only social
responsibility of business- to
use resources and engage in activities
design for profit, so
long as it stays within the rules of the game.
Arguments for Social Responsibility
1. Business cannot and should not ignore social problems because
it is a part of society.
2. Business has resources, like financial, technical, and
managerial, that are required for solving social problems.
3. Business can earn more profits in the long run by helping
eliminate or reduce social problems.
Business can expect less government intervention if it performs
its social responsibility.
Arguments Against Social Responsibility
1. Business managers are primarily responsible to stockholders
Thus, their job is to earn profit for their investors.
2 The resources of the enterprise time, money, and talen
should be used to maximize profit, not to solve the problem
of society.
3. The effects of social problems on society is very generd
Dusiness should not be expected to solve social problems. This
is their fundamental responsibility to the voters.
Social Responsibility to Consumers
If there human rights, there are also consumer rights. However,
are
consumers are not strong in protecting their rights against capitalist
exploitations. Although there are now several organizations of consumers,
their power is hardly felt. It was President John Kennedy who introduced
the four basic rights of consumers. These are:
1. The right to safety. This means products are safe for their
intended use, contain clear and complete instructions for their
proper use, and have been tested by the manufacturers for
quality and reliability. It is rather very unfortunate that some
industrial countries use the consumers in poor countries, like
the Philippines, as their testing laboratory, whose products are
soid in our country.
2 The right to be informed. This refers to the availability of
complete and correct information about the use of the products.
For
example, food items must contain detailed information
on their ingredients. Loans must provide the true terms of
payment and interest rates. Likewise, products must contain
warnings on their potential dangers, if there are any. Such as
in the case of wines, cigarettes, and drugs.
3 The right to choose. It is the policy of the government to
encourage competition among sellers or producers, so that
consumers can choose the best products in the market. This
is good because through competition, goods and services have
better quality and lower prices. If there is only one producer,
the tendency is for the consumers to be abused. For this
reason, progressive governments are against monopolies.
4. The right to be heard. This is based on the concept that "the
customer is always right." Sellers should listen to their buyers
and act immediately on their complaints. Good business
enterprises have their customer relations department. The job
of this office is to please their customers.
Social Responsibility to the Community
The price of the economic growth is destruction of the environment
through poliution of the air, land, and water. Such pollution has adversely
affected the lives of both human and animal lives, as well as those of the
piant kingdom. As a result, the incomes of farmers and fishermen have
decined. These are the evils created by industrial enterprises.
The areas of the world are filled with 20 billion tons of garbage
uding soda cans, radioactive waste, exotic chemicals, heavy metals,
did human waste. In Czechoslovakia, pollution from coal-fired factories
has damaged over two million acres of forests. The red tides areals
linked to water pollution.
also
Red tide comes from the clustering of billions of tiny one-celled
brownish-red protozoan flagellates, which are microscopic plantliv
animals. These micro organisms produce a reddish color. water pollution
greatly accelerates the production of such organisms. They secrete a
very toxic substance, which poisons shellfishes such as tahong, talaba
alimasa9, and alamang. Fishes can also be victims of red tide poisonina
tides are found in the waters of Africa, Asia, South America, Californi
Red coast.
Texas, Florida, Gulf of Mexico, and the Portuguese
In the case of air pollution, it can also destroy the atmosphere
the Earth from the
particularly the ozone layer. This layer protects
Its increase incidence of
depletion can skin
damaging
cancer
rays of the sun.
and blindness, and can also harm crop harvests and aquatic
resources.
Man-made chemicals and volcanic gases contribute to the rapid
destruction of the ozone layer. Countries mostly affected by the depletion
of the layer are Northern Europe, Russia, Canada, Chile, Southern
Chemicals emitted by air conditioners,
Argentina, and the South Pole. destruction to the
and aerosols cause massive ozone
refrigerators,
layer
Other Social Responsibilities
should adopt the policy
1. Employment. Business enterprises
means there are no
of "equal opportunity employment." This
discriminations against race, sex, and religion.
In economic
are at a disadvantage in
countries, women and colored people
countries recruit
employment. On the other hand, progressive do
their employees regardless of age and sex. In fact, they
not give much importance to the diploma.
What they need are
competence and experience.
the
2. Education and training. Business organizations, particularly
their resources to
big and successful ones, should contribute in
the education and training of the poor and disabled persons to
assets
the community. Such human resources are potential
the community and to the business organizations. A business
and
enterprise cannot be stable if it is surrounded by poverty
other social problems. Japan is a very wise nation. It has DE
helping its poor neighboring countries build their roads
increase its sales of cars and motorcycles. Asia is a very D
market for Japanese products.
3 Community development. The business organization is ve
much a part of a community. Thus, it is its social responsip will
to help to the development of the community, so that It udes
be a better place to live in. Community developmentinci
health and sanitation, livelihood projects, and cultural ana
sports development. Many giant corporations, like the Ayalaa
in communitY
and Soriano Groups, are actively involved
Hacienda Luisita in Tarlac and Canlubang
projects.
evelopment
Estate in Calamba have generous community development
programs for their workers and the poor in the community.
Business Ethics
is the study of right or wrong. It is a moral choice by
an
Ethics
individual. In business, it is the application of moral standards on
businesS decisions and actions. Business ethics involves relationships
with employees, investors, customers, creditors, and competitors. There
with the
are many businessmen who arenot fair and honest in dealing
said groups. For instance, they exploit their workers, and they do not pay
their creditors ontime. They cheat their buyers by selling poor quality
products or use wrong weights and measures.
Conference
1977 General Assembly, the Bishop-Businessmen Business.
In the
for Human Development drafted the Code of Ethics for Philippine
Ethics states that
Among other things, the Preamble of the Code of
man has a dignity that must be respected, and
that all the resources of
And the
the earth have been created for his growth and development.
the development
rationale of business is to build an enterprise oriented to
of man.
Peter Drucker, an internationally famous management
consultant,
at a profit...Business
said: "The first responsibility to society is to operate
is the wealth-creating and wealth-producing organ
of society.But what
realizes that is must consider thee
is most important is that management
business action upon society. It has
impact of every business policy and
to promote the public good, to
to consider whether the action is likely
contribute to its stability, strength
advance the basic beliefs of society, to
of management, to itself, to
and harmony.. the ultimate responsibility
our society, and to our way of life."
the enterprise, to our heritage, to
A Code of Ethics For Business
over the years has increasingly felt the need
Philippine business
in the conduct of its business. This need
for a Code of Ethics to guide it
leaders during conventions and forums
has been expressed often by its
around problems and issues affecting
where discussions are centered
business and industry.
businessmen recognize profit as a legitimate
While respectable
for growth, more and more have come
stimulus and a prerequisite businessmen have
is not an end in itself. Today's
to realize that profit
businesS. They see business as a service,
as
added a new dimension to
true fulfillment of
a vehicle for social change,
and as a means for the
use of available
resources.
human development, and the proper
The he Assembly, for Human Development,
in
ppine
977 General Bishop-Businessn
called Conference
inessmen for the formulation of a Code of nen
Ethicin the
for
Philippine business that would gulde tthe nct
e
committed businessme
could quest
they coula
which they
dnagement of their businesses,
businesses, and against
which
question
dndmeasure
na measure eir du operationsand
within their irm
their policies. decisions,
and
n a the
larger
larger society.
A code committee was organized. The committee sted with
was entrust
ho
the task of researchi with the latest thinking on
of busin searching
business, existi
sOcialresponsibilitie onsibilities
other countries, and businese
s , existing codes of ethics in sectors of the Philippina
philosophies expressed by the enlightened
business and industry, and formulating a proposed code based on on thie
nilippine
researe
this
research.
n structuring the Code, the committee focused attention on
IX areas of business responsibilities: Employees,Customers,
cal Shareholders,
CSuppliers, and other Providers of Capital, Local, and
A section was also
onal Government, and Society in General.
developed in dealing with principles for the professional managers.
The initial draft of the Code was subjected to a series of consultants
and workshops. Participating were representatives of numerous business
enterprises and formal sectors of the economy. The Code of Ethics was
finally adopted by the Bishop-Businessmen Conference.
Preamble
This Code of Ethics has been formulated impelled by the belief that
man has a dignity that must be respected, and that all the resources of
the earth have been created for his growth and development.
As here presented, this Code is considered a major step in the
on-going and changing process ot understanding the growing role
business activity in the developing of man, as such, is open to further
improvement.
This code seeks to express systematically and coherently the
principles of business practices accepted and professed by Philippine
business at its best, and seeks to apply these to current and changing
needs.
It is hope that this Code will serve as a General Stimulus to rene
and develop oramend existing standards and that individual entitieswi
expand and adopt it to the specific needs of their own organizations.
It is a general Code intended
to be influential rather than
an coercive coercive
It is hope that individual entities will consciously
adopt and ee m b r a c e
as a statement of principles and, having done so. will be unwilling to
incur the sanction or aaverse public opinion through failure to live upt o
the code.
Finally, it is a Code for all peoples,
formulates on the premise
that
the modern manager must be a strategist for velopment, ana
human development,o
to the
that the rationale of business is to build an enterprise oriented
development of man."
The Concepts
Business, which embraces commerce and industry, is not an
accidental human activity, but an integral element of the social order. Its
primary purpose is to meet society's human needs by providing goods
in business should,
and services as efficiently as possible. Those engaged
therefore, recognize the following basic concepts:
All business is essentially an expression of human relationship,
also with
not only with those who work in the enterprise, but
those who own and provide financial resources, with those wno
who buy its
supply it with materials and services, with those
with the wider
products or services with the government, and The
public whose lives are affected by the business activity.
interest of all those members of society must be taken into
in
account in formulatingbusiness policy. These interests,
While conflict and
themselves legitimate, will at times conflict.the aim of business
tension can of themselves be constructive,
or
must always be to reconcile opposing interests in a balance
justice and mutual concern.
The owners, management, the work force, the suppliers
and subcontractors, the customers, and the government
contribute to the performance of the business enterprise, and
of their
are, therefore, entitled to receive the proper worth
contributions.
The resources employed by a business enterprise are financial,
technological, and human. The human resources have a unique
quality and should be employed in a manner consistent with
personal dignity. The individual should be given opportunity
to use and develop his faculties in his work. His contribution
to the success of the enterprise should be properly recognized
and rewarded.
Business enterprise has a public responsibility to use all his
resources efficiently. Profit, in a system of a free enterprise,
is recognized as a fundamental incentive, and is necessary
for the maintenance and growth of the enterprise, for raising
the quality of life, and for helping meet the broader needs of
society.
Competition and inventiveness are essential for the
maintenance and continuing imprOvement of the quality of
goods and services, for growth and for technological progress.
However, to guard against unfair forms of competition, a
consistent standard of business behavior must be established
and observed.
other institution or society, any right
authority enjoyed
In business, by or
as in any entrusted to business presupposand
presuppose
duties, responsibilities, and
corresponding
and is justified by,
performance.
Towards the Employees
should consider not only the
Those responsible for business policy
also the interest of those
of the owners of the business, but
interest
affected by the activities of the business.
of employees as
Business shall recognize the unique position time with
the same inherent
individuals with a vital stake in there, and at
obligations to their own families, and provide
of
pay may often be
For recognition that, although rates
determined by union, economic, and legal pressures, wages
of the employees
and salary policy should be based on the right
to a fair and improved standards of living, irrespective of race,
sex, age, and creed;
For a fair recruitment practice that affords equal opportunity
to all qualified job-seekers;
For job security, adequate compensation for employees in
cases of separation and retirement, and for opportunities for
fringe benefits;
For a safe and healthy atmosphere in the work environment
conducive to the physical and moral well-being and growth of
the employees
For conditions in which human potentials and relationships
can be developed at all levels of the work force, with a view
of providing therein a sense of purpose and achievement; and
For participatory element so that the knowledge, experience,
and creativity of all who work in the enterprise may contribute
to the decision-making process.
Towards the Customers
Business shall, in the production of goods and services:
strive after a quality that will enable them to serve their
purpose efficiently and effectively;
avoid anything that would be detrimental to the
health, safety
or growth of the proper user or beneficiary of such goods and
services; and
seek to apply or make use of the discoveries
and inventions
of science with adaptations that will improve their products O
thereby benefiting customers/users and increasing
services,
their number.
In its marketing arrangements, business shall:
and
deliver the product or service in the quality, quantity,
and avoid the
time agreed upon, and at a reasonable price,
and like
creation of artificial shortages, price manipulation,
practices;
commensurate
establish an after-sales and complaints service
the price paid;
with the kind of product or service supplied and
and
ensure that allmedia, promotional, and packaging9
mass
communications be informative and true,
and take into
account the precept of morality and
the sound cultural
for human
values of the community, and manifest respect
dignity.
Towards the Suppliers
Business shall ensure:
stated and
that the terms of all contracts be clearly
unless terminated or
unambiguous, and honored in full,
modified by mutual consent;
a smaller
that abuse of economic power in dealing with
concern be avoided, and that, in all cases, terms of payment
should
be strictly and fully observed. In general, payment
if no specific
always be made promptly at the agreed time or,
time is agreed upon, as quickly as may be reasonable, given
the circumstances; and
for
that supplier be encouraged to commit his resources
no
reasonable
apparently long-term purposes, unless there are
business
guarantees that the orders he receives from the
enterprise will not be terminated arbitrarily.
Towards the Owners and Other Providers of Capital
In the interest of the owners and other providers of capital, business
shall:
provide an adequate rate of return to those contributing
their
capital to the enterprise, and ensure the security of
investment;
use their financial resources to provide goods
and services
responsibly and efficiently;
such
furnish the owners and other providers of capital with
that
information as they may reasonably require, provided
