What are the views of Corporate Social Responsibility? Give four dimensions of corporate social responsibility.
There are two views to Corporate Social Responsibility which are the classical view and the socio economic view.
- The Classical view
It proposed that the only social responsibility of an organisation is to maximise profits. It argues that managers are the owners of the business therefore they should not be socially responsible for the costs of social responsibility. Is it the consumers in raised prices, is it the employees in lower wages or is it the shareholders in lower returns.
In most cases it is the owners who lose out therefore managers would not be socially responsible.
2.The Socio Economic view
It argues that business has an obligation towards the society that creates and supports it. If the business is socially responsible, it maximises profits in the long run as a result of a good image and acceptance by the society. Business should therefore play an activist role by supporting charitable organisations, creating employment, and protecting the environment.
There are four dimensions of corporate social responsibility which are economic, legal, ethical, and philanthropic (humanitarian / charitable).
- Economic dimension
This refers to the business’ primary function as a producer of goods and services which consumers need and want whilst making an acceptable profit. It also looks at how resources for the production services are distributed in the system.
The responsibility is said to be primary because without financial viability the other responsibilities will not be there. Some issues of concern here are economic development, technological progress, profits generation, employment, wages and benefits, pollution and maintaining competition.
2. Legal dimension
Legal dimension refers to obeying laws and regulations established by government to set minimum standards of acceptable behaviour. Laws are passed because society does not always trust business to act in societies’ best interest.
Civil laws - defines the rights of individuals and organisations. The laws are enforced by individuals generally in courts.
Criminal laws – prohibits specific actions and imposes penalty. Criminal laws are enforced by the state.
Most laws affecting businesses fall into one of the following categories.
- Laws that regulate competition g. prevention of restraint of trade...
- Laws protecting consumers g. safety of the product. The right to have information.
- Laws protecting employees – non discrimination rights of Work place safety.
- Laws protecting investors – disclosure of financial statements, financial fraud
- Laws protecting the environment – protecting air, water
3. Ethical dimension
This encompasses the more general responsibility to do what is right and avoid harm. These are behaviours and activities that are expected or prohibited by the organisation members, the community and society. These are not codified into law. They include serving stakeholder interest and addressing social concerns.
The ethical dimension interacts with the law category pushing expansion of legal responsibilities and placing expectations on business persons to function at a level above the law
4. Philanthropic Dimension (also known as Humanitarian or Charitable Dimension).
Philanthropic means intervening in the lives of others for their benefit not merely for own. The dimension involves active involvement in activities that promote human welfare and goodwill in other words it refers to business contribution to society by making the local community a better place to leave and addressing sound concerns and problems. Since this is voluntary, failure to be philanthropic is considered to be ethical.
