What are the 3 models of CSR?

Corporate Social Responsibility [CSR] has become a big factor in today world. Each and every single company wants to establish CSR. Why did it become so important now than ever before? And how do we measure it? I chose this topic because when Pyramid of CSR was discussed I wanted to know more about this model and if there are any other models out there. As I went through articles, books, library resources I found out more than expected. And the major thing was even though CSR has become the heart and soul of modern corporations there has been an argument on measurement benchmark of CSR activities. Let’s first look at what CSR is.

CSR is referred as different terms such as responsible business conducts, corporate citizenship and etc. At my current work place, Calisto Integration, term Cooperate sustainability program is used. Looking at few definitions of CSR by World Business Council, Confederation of British Industry, World Bank and many more, their terms are different but they all have basic idea.

As per World Business Council for Sustainable Development CSR is continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families, local communities and the society at large. (24 March 2004) As per Confederation of British Industry CSR encompasses the extent to which companies should promote human rights, democracy, community improvement and sustainable development objectives throughout the world. (2001) As per World Bank, CSR is the commitment of businesses to contribute to sustainable economic development working with employees, their families, the local community and society at large to improve their quality of life in ways that are both for business and good for international development. World banks definition is almost same as world business council’s definition with a broader point about developing at international levels.

Some corporates use recyclable materials whereas others contribute their profit to charity; some pays incentive to worker for working in dangerous environment whereas others establish sustainability programs. But questions remains how do we measure this?

There are many models Friedman’s model, Carroll’s model, corporate citizen model and Ackerman model. One would expect that all these models should have something related to Society, economy, community support, and quality of life for everyone and etc. However there are huge differences between these models.

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.

Redman’s model called “Environmental integrity and community health model” is very famous amount US corporations. It focuses more on environmental integrity and human health. Whereas Ackerman Model 1967, focuses more on internal policy goals and their relation to these responsibilities. He says, 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.

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”. (Anaejionu) 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. (Carroll, July August 1991)

The Pyramid gives us a benchmark to measure. (Phd, 2014) These areas could be briefly described as: 1. Economic activities are “must do” responsibilities which affect shareholders, creditors, consumers. Example: provide services which are valuable to customers and society as whole. Legal responsibilities are “have to” do responsivities such as following government’s laws and regulations. Other examples could be accountability and transparency. Ethical: Oblige to do what is right and fair, avoid hurting anyone. These are “should do” responsibilities. And final one is Philanthropic responsibilities. These are the activities that corporates might think of doing it. Example: volunteer activities like engaging in extra community programs to support.

These activities affect many stakeholders at different levels. Corporates can be responsible towards society for things as carrying business morally and ethically, taking steps to Go green and reduce environment pollutions, use suitable technology with the environment of society; Towards government for things as obey rules, not finding loopholes in laws and taking advantage of them; Towards shareholder for things as ensure their rate of return, accountability; Towards employees such as health and safety, providing fair wages and training, recognition of hard work; Towards consumers such as supply harmless and standard quality of goods, fair selling price, avoid black market strategies, and etc.

Just as warren buffet said, “It takes 20 years to build a reputation but only 5 minutes to ruin it.” Corporates have to think thoroughly on any steps they take in regards of “Social responsibilities.” When serving society one should consider the consequences. Shareholders interest issue could be arise when social responsibility activities affects oddly. It should also be morally responsible to society and environment.

I read a book suggested by my friend, Concepts in strategic management and business policy by Thoman W. This books talks about few of these models. It mentions few companies all around the world which follows these theories. Dangote Cement Plc. multi-million cement producing company and Sona Breweries Plc. even though have big bottom lines they have some to none contribution in corporate responsibility program. On other side, GM and CISCOs have spent tonnes of money on employees (salaries, support), society, and environment. In 1996 when murder rate in Hawthorne was recorded at the highest, GM spent $2.5 million and donated thousands of employee’s hours to help clean up Hawthorne. It’s headquarter was located in the cities most violent neighborhood.

I believe Carroll’s pyramid is a good benchmark to justify corporate actions to social responsibilities. As the model explains all 4 areas and ranks them as per their priority. Triple bottom line is similar to Carrol’s pyramid and hence is a good guideline for corporate to tell them where to focus. The concept of CSR is not that complicated and every company should have policies and activities that help society to grow healthy as a whole.

Works Cited

(2001). Confederation of British Industry.

(24 March 2004). World Bank.

Anaejionu, R. (n.d.). What is Corporate Social Responsibility . Retrieved 2016, from Small Business: http://smallbusiness.chron.com/corporate-social-responsibility-11605.html

Carroll, A. B. (July August 1991). The Pyramid of CSR. Business Horizons.

Phd, S. M. (2014, 09 05). Carroll's Pyramid of Corporate Social Responsibilities. Retrieved 09 27, 2016, from LinkedIn: https://www.linkedin.com/pulse/20140905115337-70750023-carroll-s-pyramid-of-corporate-social-responsibility