1. Theories of CSR, Generations of CSR
Lecture 4

2. Stockholder Theory
Milton Friedman : The Purpose of Business is to make money for the owner or stockholders.
“The Social Responsibility of Business is to increase its profits”
The Underlying Ethical principle: Manager has Fiduciary Responsibility to Owners
The Purpose of Business in not to: ----
provide employment, eliminate discrimination, avoid pollution
help the community, make life better for workers

3. PR or Charity?
If Companies give money to good causes because it gives them good Public Relations, then count it as advertising and don’t pretend it is done for the sake of charity. The Window dressing/cloak of social-responsibility is a lie and a sham which undermines free society.

4. Business Responsibilities vs Personal Social Responsibilities
social responsibilities of the executive:
Family, conscience, feelings of charity, church, clubs, city, country
Fiduciary responsibility: To make money for stockholders

5. Andrew Carnegie’s Theory
Legendary steel tycoon
- Advocates benevolent, paternalistic leadership
Enunciated
Charity principle &
Stewardship principle-the business of benevolence"
He believed in the "Gospel of Wealth," which meant that wealthy people were morally obligated to give their money back to others in society.

6. Trusteeship Theory
Gandhi's theory of trusteeship is based on two basic premises—
A) The rich cannot accumulate wealth without the cooperation of the poor.
B) Western socialism and communism are not the last words on the question of mass poverty.

7. Trusteeship
The theory of trusteeship as an alternative to capitalism and scientific socialism. He was opposed to the western capitalism, which necessarily leads to oppression, exploitation, concentration of wealth and inequality.
At the same time, he was against an increase in the power of the state which, in his opinion, is essentially based on violence.
Gandhi, wanted to provide the institution of trusteeship as a compromise between private enterprise and state controlled enterprise.

8. Keith Davis- Enlightened Self Interest
It is in organisation’s interest to act in
ways that society considers responsible.
- Iron law of responsibility
Those who do not exercise power
responsibly will tend to loose it

9. Tom Cannon Business provides Products & services
Direct & indirect employment
Income generation
Society provides
Means of exchange
Trained manpower
Legal & banking system
Social & physical infra-structure

10. Cannon’s views
With the advent of the Joint Stock Company, society or state provides to business, two special rights –
Potential immortality
Limited Liability
Business does have social responsibility to fulfill in return for these privileges.

11. Stakeholder’s Theory
To create value for stakeholders, executives must understand that business is fully situated in the realm of humanity. Businesses are human institutions populated by real live complex human beings.

12. Stages in Evolution of CSR
The only social responsibility of businesses is to make money for owners and stockholders and obey the law.
Businesses must also be “ethical” in the ways they make money and not engage in bribery, fraud or corruption.
Businesses must also protect the environment and biodiversity.
Businesses must also protect and promote human rights, labour rights, and sustainable development. (“triple bottom line”)
Businesses must adhere to a global standard for CSR enforced by law. (future?)

13. What is CSR
CSR means operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that the society has of business”. (BSR 2003)

14. Corporate social responsibility (CSR) is about how businesses align their values and behaviour with the expectations and needs of stakeholders - not just customers and investors, but also employees, suppliers, communities, regulators, special interest groups and society as a whole. CSR describes a company's commitment to be accountable to its stakeholders.
Source:

15. Present Drivers for CSR
Stakeholder management
Corporate Environment Management
Consumer Pressure
Risk Management & Sustainability
Business Ethics
Attracting Employees
Personal Values

16. How Does CSR benefit Business
Reputation
Less Law Suits
Loyal Employees
& Customers
Less Media Harassment
Access to Capital Improves
Improves Productivity
Community Goodwill
Better Environment