Proponents of both of these models argue that executives should be social and moral leaders in the community and that corporations should be addressing major issues like poverty and global health. Many theorists like John Rawls argue that the basis for this standard is ethical while others argue for a religious basis. Yet others such as Gewirth argue that the basis for such a standard is grounded metaphysically, in aspects of human nature. What sort of responsibilities do these theorists advocate?
There is a belief that organisations should have some corporate social responsibility. The belief means that there may be a difference between how the world is now and how it should be. An introduction to the subject can be found here. This page looks at some of the theories concerning defining CSR and the different attitudes firms can have towards it.
True CSR requires satisfying all four parts consecutively. From this, Carroll offers the following definition of CSR: Employees want safe and fairly paid jobs. Customers demand quality at a fair price.
Legal responsibility The law is a base line for operating within society. It is an accepted rule book for company operations. Ethical responsibility This relates to doing what is right, just and fair. Actions taken in this area provide a Csr carrolls 4 part model of social legitimacy.
This is naturally beyond the previous two levels. Philanthropic responsibility Relates to discretionary behaviour to improve the lives of others.
Charitable donations and recreational facilities. Sponsoring the arts and sports events. Is an artificial person in law.
It has the same rights and responsibilities as human beings. Is notionally owned by shareholders but exists independently of them.
The shareholder has a right to vote and be paid a dividend but the company owns its assets. Managers have a fiduciary right to protect shareholder investment. Milton Friedman argued that, in relation to this definition, a corporation has no responsibility outside of making profit for shareholders: Only human beings have moral responsibility for their actions.
It is the managers' duty to act solely in the interest of shareholders - this is a point of law. Any other action is shareholder betrayal. Social issue are the province of the state and not corporations.
The argument against this viewpoint needs to provide the organisation with an alternative view that leads to the same outcome of profit. Enlightened self-interest Corporations perceived as ethically sound are rewarded with extra customers.
Corporations which are ethically unsound are boycotted. Employees are more attracted to work for, and are more committed to, socially responsible companies. Voluntarily committing to social actions and programmes may forestall legislation and promote independence from government.
Positive contribution to society may be a long-term investment in a safer, better educated and more equitable community creating a more stable context in which to do business. Social responsiveness Carroll This refers to the capacity of the corporation to respond to social pressure, and the manner in which it does so.
Carroll suggests four possible strategies: Reaction The corporation denies any responsibility for social issues. Defence The corporation admits responsibility but fights it, doing the very least that seems to be required. Accommodation The corporation accepts responsibility and does what is demanded of it by relevant groups.
Proaction The corporation seeks to go beyond industry norms. Gray, Owens and Adams Gray, Owens and Adams provide seven positions on social responsibility as alternative views on this difference.
Proponents of social contract: The extent of ethics and CSR varies according to culture. For example, the four responsibilities have different connotations in a European context as opposed to a US context.
The European context focuses on ethics and philanthropic actions being enforced legally The US system tends to focus on the discretionary actions of companies and individuals economic factors. Impact of CSR on corporate governance A key area of impact is in relation to the increased need for, and existence of, social accounting.
There are various forms of social accounting produced for inclusion in the Business Review as part of annual accounting reports.Carroll's model synthesizes a range of theories and models summarized in four kinds of social obligations that together constitute CSR: • Economic responsibilities are fundamental.
Without the foundation of profitability, none of the other responsibilities are feasible or deliverable. Carroll Model 1. Carroll’s Pyramid of Social Responsibility Source: A Carroll () The pyramid of corporate social responsibility, Business Horizons, July-August, pp Compare with the Reidenbach and Robin Model.
Carroll's CSR Pyramid is a simple framework that helps argue how and why organisations should meet their social responsibilities. The video below provides a quick overview of Carroll's CSR Pyramid and there are some further study notes underneath.
Overview of Carroll's CSR Pyramid The key features. Carroll’s () CSR model states that four kinds of social responsibilities constitute total CSR: economic, legal, ethical, and philanthropic (Carroll, , ). The basis of what we consider to be the modern definition of CSR is rooted in Archie Carroll’s “Pyramid of Corporate Social Responsibility.” In this Pyramid a corporation has four types of responsibilities.
The first and most . Sethi’s CSR Model Back in , ph-vs.comh Sethi, a management researcher and author, developed a model articulated in three stages; from less to more gear toward ph-vs.com’s model was a major advancement in corporate social responsibility thinking.