GERARD ANTHONY F.

SALAS - BSA IV July 3, 2018

Management 3

 Key Drivers of Corporate Social Responsibility

The Five Driving Forces of CSR:

1. Increased Affluence: CSR becomes more relevant as economies grow and stabilize. Therefore, the greatest
attention to CSR is found in developed countries. Stable work and security provide the luxury of choice and socially
responsible activism.
2. Ecological Sustainability: Perhaps the most obvious and most talked about of the drivers, concerns over pollution,
waste, natural resource depletion, climate change and the like continue to fuel the CSR discussion and heighten
expectations for proactive corporate action. After all, it is in the best interest of firms to protect for the sustainable
future the long-term availability of the resources on which they depend.
3. Globalization: Globalization has had considerable impacts. First, the increased wealth and power of multinational
corporations has led to questions on the decreased authority of the nation-state, especially in developing areas.
Further, cultural differences have added to the complexity of CSR as expectations of acceptable behavior vary
regionally. With increased power comes increased responsibility and globalization has fueled the need to filter all
strategic decisions through a CSR lens to ensure optimal outcomes for diverse stakeholders.
4. Free Flow of Information: Yes, blame the bloggers, but through the Internet and other electronic mediums the
flow of information has shifted back to the stakeholders, especially in the case of three important groups:
consumers, NGOs and the general media. Easily accessible and affordable communication technologies have
permanently changed the game and only truly authentic and transparent companies will profit in the long term.
5. The Power of the Brand: Brands are today the focal point of corporate success and much of the health of the
brand depends on public perception of the corporation. In other words, reputation is key and honest CSR is a way
to protect that reputation and therefore the brand.

 Main components of Corporate Social Responsibility.

Practice Economic Social Responsibility . Economic social responsibility begins with being profitable.
Before a business can give back, it must be sustainable. Sustainability includes making a profit for shareholders,
paying its employees an appropriate wage, paying business taxes and meeting other financial obligations.
Corporations can show economic social responsibility by being transparent with all stakeholders regarding the
financial status of their business.
Practice Legal Social Responsibility. Consumers are more likely to buy products and utilize services from
companies they trust. A part of building that trust is abiding by the laws that regulate your business. Paying the
required taxes, adhering to labor laws and allowing inspections are all examples of legal social responsibility. It
may sound basic, but not being attentive to your legal obligations can lead to your business being sued and can hurt
the business’ reputation – and your reputation is vital to your success.
Practice Ethical Social Responsibility. Economic and legal corporate responsibility lay the groundwork for
corporations to move into ethical social responsibility, which means doing the right thing at all levels of your
business. This ranges from paying employees a living wage to ensuring that the companies you work with and buy
materials from are abiding by all labor laws. In addition to ensuring ethical workplace practices, you should also
look at the environmental impact your business makes.
Practice Discretionary Social Responsibility . Discretionary social responsibility means using your
company’s time and resources to contribute to the community at large in whatever way is meaningful for you and
your brand. This may include providing your employees with opportunities to volunteer; donating money, services
or products to charitable organizations; or initiating your own charitable organization that ties into your company’s
mission and goals. You may want to support multiple organizations or simply focus your efforts on one or two
meaningful ones.
 Implications of CSR.

Importance of Stability. A small business owner initially may not view organizational stability as an important
goal. He strives for growth, to create a dynamic, rapidly evolving organization that becomes a recognized force in
its industry. Stability may sound like a company that is standing still. Nevertheless, his long-term goals of revenue
growth and increased profits can be served by maintaining stability with certain aspects of his company.
Customer Retention. Consumers may choose to not do business with companies that have a reputation for being
socially irresponsible. Conversely, businesses that show a commitment to the community and the environment can
attract customers who share these values. The good the company does is part of the perceived value of its products
and services and can result in higher customer satisfaction. These satisfied customers are likely to continue to do
business with the company. Thus, a stable, loyal customer base is a valuable asset.
Access to Funding. Capital often is needed to launch a company, and several capital infusions may be needed later
to fund expansion plans. Capital can be viewed as a mechanism to ensure organizational stability in the sense that
it helps the business owner make continued progress toward achieving his long-range growth objectives. Investors
look at the ethical and social standards exhibited by a business when deciding whether to commit capital to the
company. Some investors focus exclusively on companies that have a demonstrable track record of social
responsibility.
Employee Recruitment. A small company must create a stable workforce by retaining its top talent and not losing
these individuals to competitors. The company also must compete to acquire the best talent. Younger members of
the workforce have grown up in an era of heightened awareness of environmental protection, and a company’s
commitment to the environment and to society can be a significant, even determining, factor in whether they elect
to join an organization.
Positive Image. Companies that have ethical lapses such as ignoring environmental regulations or standards for
how employees should be treated can suffer damage to their reputation when these lapses come to light in traditional
or social media. A company’s image affects its relationship with all of its stakeholders and remaking a company’s
troubled image into one of stability -- sometimes referred to as damage control -- can take time and draw managerial
resources from the important tasks of building the company. Customers who leave because they do not approve of
the company’s image can be difficult to win back.
Stable Cash Flow. Fines and penalties assessed by the government for lack of regulatory compliance and lawsuits
from customers due to product defects or from employees due to unsafe working conditions can be costly to a small
business. Cash flow is the lifeblood of a company, allowing it to meet its obligations such as payroll and to fund
marketing and business development programs. Ethical, socially responsible companies can avoid the cost of
litigation and other problems that could have a negative effect on the company’s cash position. Maintaining a stable
cash flow keeps the company on its growth track.

 Models of CSR.

Friedman model. As per Friedman model 1962-1973, businessmen should perform his duty well as he is
performing a social as well as moral duty. His model follows that businesses do not have to perform social
responsibilities to any other but his shareholders and stockholders. Milton Friedman’s point is that spending
shareholders money for social interest makes no sense and thus was against the concept.
Environmental integrity and community health model. (Redman’s Model) is very famous amount US
corporations. It focuses more on environmental integrity and human health.
Ackerman Model 1967. Focuses more on internal policy goals and their relation to these responsibilities.
According to this model, to adopt CSR one can follow six strategies: rejection strategy, adversary strategy,
resistance strategy, compliance strategy, accommodation strategy and proactive strategy. There is something called
triple bottom line It means company should focus on 3 things :(1) Economic responsibilities (profit) (2) Social
responsibilities (people) and (3) Environmental responsibilities (planet) and company shows commitment towards
society’s sustainability.
 Carroll’s model. In 1991 Dr. Archie B Carroll, a professor and business management author, came up with an idea
and wrote an article “the Pyramid of Corporate Social Responsibility”. The pyramid is a structure of 4 different
areas: Economic, Legal, Ethical and Philanthropic. He describes these as “main areas” one company should focus
its duties and responsibilities in terms of CSR. The Pyramid gives us a benchmark to measure. These areas could
be briefly described as: 1. Economic activities are “must do” responsibilities which affect shareholders, creditors,
consumers. Legal responsibilities are “have to” do responsivities such as following government’s laws and
regulations. Ethical: Oblige to do what is right and fair, avoid hurting anyone. These are “should do” responsibilities.
And Philanthropic responsibilities. These are the activities that corporates might think of doing it.
Corporate citizen model. Corporate citizenship involves the social responsibility of businesses and the
extent to which they meet legal, ethical and economic responsibilities, as established by shareholders. The
goal is to produce higher standards of living and quality of life for the communities that surround them and
still maintain profitability for stakeholders. The demand for socially responsible corporations continues to
grow, encouraging investors, consumers and employees to use their individual power to negatively affect
companies that do not share their values.
Stakeholder model. The stakeholder theory is a theory of organizational management and business
ethics that addresses morals and values in managing an organization. The stakeholder view of strategy
integrates both a resource-based view and a market-based view and adds a socio-political level. One
common version of stakeholder theory seeks to define the specific stakeholders of a company and then
examine the conditions under which managers treat these parties as stakeholders.

 Execution of CSR.

To execute the CSR properly, one must apply and follow similar principles for CSR management as with other
aspects of business: CSR is needed to be treated and managed like any other aspect of the business. It involves
setting of objectives, priorities and performance indicators, the designing of action plans and evaluation of
performance.

GUIDELINES:

The simpler, the better: A simple and clear-cut policy ensures advantages to the organization in the long run.
Clarity in such a method leaves less chances for complications and mistakes
Concentrate on the goal: The emphasis should be on the core principles of CSR instead of policies and procedures.
While sticking to the policies and procedures, the focus should be in maintaining principles set
Try and set measurable goals: The more measurable the goals, the more effective the management of the CSR is.
Target pivotal industry concerns: The main focus should lie on achieving good corporate citizenship in areas
such as the environment, employee / labor relations and corporate governance
Conduct business with honesty: In the realm of CSR, this attitude can result in addressing industry - specific
concerns. The alcohol manufacturers can make a difference in the area of discouraging people from drinking and
driving. Or, fast-food companies can help in promoting healthy eating habits and enabling fit and active lifestyles.