Csr

What is the business of business?

What is CSR all about?

Out of the renaissance grew the belief that people must seek the meaning of life through culture and moral pursuits among other people. The subsequent industrial revolution was to produce the tool with which mankind could develop an economy which addresses the needs of not only ruling class but the masses as well.

It was the birth of American colonization and the United States which marks modern civilization first serious attempt o industrial technology to free masses from hand to hand poverty and thus allow the ultimate uplifting of mankind.

The great challenge of developing and managing huge and profitable corporation has been met. The challenge now is to infuse in the bright green corporation bloodstream the sorely needed qualities of morality and humanness. There is a great need for profitable corporate structure, with all its tremendous strength and leadership potential, to set an example for the nation to follow. The corporation is the only institution with sufficient strength to set example for the nation to emulate.

And that is what corporate responsibility is all about.

Enterprise - the corporate citizen

An enterprise is a corporate citizen, like a citizen it is esteemed and judged by its actions in relation to the community of which it is a member, as well as by its economic performance. Management has main responsibilities today for developing the corporate enterprise which is every where replacing the family and family business as the unit of work in a technological society.

If the enterprise behaves as a good citizen and with full knowledge of the facts, the need for legislation is reduced. But in view of the growing scales of industry, some regulation by the state is evidently necessary where responsibility is not willingly assumed and translated into action by individual company. In general self regulation is preferable to legislation. But self regulation may be encouraged by legislation. Whether a particular responsibility of business shall be spelled out in legislation or secured by others means also depends upon its nature, the practicability of enforcement and the cost to the company of compliance this can only come about in the main as management is strengthened and supported in its task. Two distinct reasons for companies to be responsible

1. The values case - based on ideas of: power and responsibility; role in causing socio-environmental problems; "licence to operate";

2. The enlightened self interest case - based on ideas of: creation of a better business environment; competitive advantage; reputational capital; avoidance of risk

The two models of CSR

Traditionally in the United States, CSR has been defined much more in terms of a philanthropic model.

The European model is much more focused on operating the core business in a socially responsible way, complemented by investment in communities for solid business case reasons.

European model is more sustainable because: Social responsibility becomes an integral part of the wealth creation process - which if managed properly should enhance the competitiveness of business and maximise the value of wealth creation to society. When times get hard, there is the incentive to practice CSR more and better - if it is a philanthropic exercise which is peripheral to the main business, it will always be the first thing to go when push comes to shove.

This dilemma has led many companies to seek to be more strategic philanthropy. But here the major question is should a corporation engage in philanthropy at all? The answer is yes, an article by NYT says "Social responsibility of business is to increase its profit". We see that majority of corporate programs are diffused and unfocused. Rather than being tied to well thought out strategy, they reflect the personal beliefs and values of employees and executives.

A handful of companies have begun to use context-focused philanthropy to achieve both social and economic gains. For example Cisco Systems has invested in an education program- the Cisco networking academy- to train computer network administrators, thus alleviating a potential constraints on its growth while providing attractive jobs opportunities to high school graduates.

By focusing on social needs that effects the corporate context and utilizing its unique attributes as a corporation to address them. Cisco has begun to demonstrate that unrealized potential of corporate philanthropy. Taking this new direction however requires fundamental changes in the way companies approach their contribution fundamental changes in the way companies approach their contribution program.

Corporations needs to rethink both where to focus their philanthropy and how should they go about it.

CSR - New release or Golden oldie

CSR is in vogue nowadays. But is it a new concept?

'Business started long centuries before the dawn of history, but business as we now know it is new - new in its broadening scope, new in its social significance. Business has not learned how to handle these changes, nor does it recognise the magnitude of its responsibilities for the future of civilisation.' - Wallace B. Donham (Former Dean of Harvard Business School), from an address delivered at Northwestern University in 1929.

Back in 1622 - Disgruntled shareholders in the Dutch East India Company started issuing pamphlets complaining about management secrecy and "self enrichment".

The Dutch government responded by banning the pamphlets, but also by promising:

* Greater shareholder influence over public companies;

* Better financial information for shareholders.

CSR is not a new concept but was always there in the midst of all the issues.

Where should companies focus?

Michael E. Porter in his work titled "The competitive advantage of corporate philanthropy" has found a zone in which the organizations should operate in order to yield both social benefits for the society and economic benefits for the company. This is the zone where corporate philanthropy is truly strategic.

Companies do not function in isolation from the society around them. In fact their ability to compete depends heavily upon

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