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InternationalJournalofBusinessResearchandDevelopment

ISSN19290977|Vol.2No.1,pp.1827(2013)

www.sciencetarget.com

Corporate Social Responsibility: Driving Forces and Challenges

Anupam Sharma* and Ravi Kiran


Thapar University, Patiala, India

Abstract
Corporate social responsibility (CSR) is gaining more and more importance day by day. CSR is not only
drawing the corporate magnates into its circumference, but is also luring educationists, social activists,
reformists, from all over the world to delve deeper into it. Changing market scenario, globalization,
ethical consumerism all are adding heat to the CSR concept. More and more organizations are showing
their commitments towards CSR either for enhancing their corporate image or to be in competition.
Emergence of different marketing innovations demands direct linkage of corporate social responsibility
practices with the business corporate strategies. The present article reviews the CSR literature from 1975
to 2011, conveying changing developments of CSR practices.
Keywords: Globalization, ethical consumerism, competition, innovation.

Introduction
In todays changing world, Corporate Social theory or model should be followed or considered
Responsibility (CSR) is a growing area of interest for implementation of CSR practices?
for academics, practitioners and entrepreneurs, in
In order to contribute to a clarification of the
terms of both theory and practice.
importance of the contributions made by the field
Corporate Social Responsibility (CSR) is a concept of business towards society, the present paper tries
whereby companies integrate social, environmental to map the theoretical and practical perspective on
and health concerns in their business strategy CSR by studying country wide literature on CSR.
(policy) and operations and in their interactions This is done by considering various theories of
with stakeholders on a voluntary basis. The social CSR and CSR practices from the perspective of
responsibility of business encompasses the published research papers among the listed
economic, legal, ethical, and discretionary journals from year 1975 to 2011.
expectations that society has of organizations at a
CSR is defined by The Prince of Wales Inter-
given point in time (Carroll, 1979).
national Business Leaders Forum as, CSR means
As the world is shrinking due to globalization the open and transparent business practices that are
concept of Corporate Social Responsibility (CSR) based on ethical values and respect for employees,
has acquired an undeniably high degree of communities, and the environment. It is designed
relevance and scope in a large number of sectors. to deliver sustainable value to society at large, as
Many academicians and practitioners are develop- well as to shareholders (http://www.iblf.org/
ping theory and practices of this concept of social csr) According to business for Social Respon-
responsibility among entrepreneurs. Within this sibility (BSR), a U.S.-based global business
context, one frequently asked question is: What organization: CSR means operating a business
enterprise in a manner that consistently meets or

*Correspondingauthor:anupam8611@gmail.com
InternationalJournalofBusinessResearchandDevelopment|Vol.2No.1,pp.1827 19

exceeds the ethical, legal, commercial, and public money for environmental benefits, public health
expectations society has of business (http://www. care initiatives and for providing free education to
bsr.org/). In a more systematic way, Carroll (1999) the wads of employees and underprivileged.
has offered a historical sequence of the main
In this paper, the researchers highlight the
developments in how the responsibilities of
interaction between the three factors, education,
business in society have been understood.
health, and environment as represented in our
Carroll (1991) presented his CSR model as a model (Figure1). Based on education, health, and
pyramid, as shown in Figure1. He once again uses environment sectors the present study investigates
his original historical explanation for the relative the relationship or importance of these three
weighting, saying: To be sure, all these kinds of factors (2E-H corporate social responsibility
responsibilities have always existed to some model), for undertaking CSR practices as these are
extent, but it has only been in recent years that at present the most preferred sectors in
ethical and philanthropic functions have taken a organizations. With globalization change is coming
significant place (p.40). in traditional social responsibility practices, now
entrepreneurs are spending maximum money of
Earlier a few organizations focused on economic,
CSR expenditure on education, environment and
responsibility, philanthropic, and legal respon-
health sectors (Sharma and Kiran, 2012a). Based
sibilities. But nowadays with the changing market
on the literature it tries to find out the social
situation this focus is shifting and including three
responsibility practices adopted by the organi-
other factors: environmental, educational and
zations.
health responsibilities. Companies or organizations
have started spending their social responsibility

Be a good corporate citizen To improve quality of life

Be ethical Obligation to do what is right

Obey the law Play by the rules of the game right

Be profitable The foundation for all others

Figure1: The Pyramid of Corporate Social Responsibility (Carroll, 1991)

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20 SharmaandKiran2013|CorporateSocialResponsibility

Table 1
CSR Practices County wise Focus
Country Author Name Sector CSR Practices

Europe Furrer et. al. Education Business students attribute more importance
(2009) to environmental CR and less importance to
social CR than managers.

Europe Steurer (2010) The role of CSR started out as a neo-liberal concept that
governments in helped to downscale government
CSR regulations, but that it has in turn matured
characterizing into a more progressive approach of societal
public policies co-regulation.

Indonesia Arli and Consumers Consumers are often unaware and


Lasmono (2010) perception of unsupportive towards CSR. But When
CSR consumers have to buy similar products
with the same price and quality, CSR could
be the determining factor. Eg. ITC
notebooks.

Chinese Ramasamy, and Consumers Economic responsibilities are most


Yeung, (2009) Perception important while philanthropic
responsibilities are of least importance.
of CSR

Mexico Muller, and Kolk, Auto industry Local companies do engage in the type of
(2009), CSR activities commonly associated with
CSR in developed countries.

Germany and UK Silberhorn, D. CSR view from German companies could benefit more from
and Warren, R.C., big companies demonstrating a broad, business-driven
(2007) understanding of CSR.

Finland Kapoor, and Compares CSR The local corporate social responsibility
Sandhu (2010) practices of should be in balance with global corporate
forest company, social responsibility. Companies have still
a cooperative much work to do for good corporation
bank, and a retail citizenship.
cooperative

Japan Fukukawa and Multinational Japanese business is not keeping up with


Teramoto (2009) companies corporate social responsibility practices, and
it needs to achieve a more global mode of
transparency and accountability.

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InternationalJournalofBusinessResearchandDevelopment|Vol.2No.1,pp.1827 21

Table 1 (contd)
Country Author Name Sector CSR Practices

United States, Hill (2007) Company stock European countries and United States
Europe, and Asia market valuation represented in this study are best
characterized by horizontal individualism.
Thus, their possible impact on socially
responsible investing may be very different
than Asian investors.

India Murthy (2008) Top Software Corporate social disclosure practices of the
Firms top 16 software firms in India. firms had
different motives/reasons for reporting the
different attributes of CSR.

India Chaudhri et. al. Information IT companies in India are lagging behind in
(2007) technology (IT) creative and effective CSR communication
companies on their Web sites. Multinational
corporations would do well to proactively
present CSR information on country-
specific sites as an expression of their
commitment to local communities.

Asia Chapple and CSR Web Site Multinational companies are more likely to
Moon, (2005), Reporting adopt CSR than those operating solely in
their home country.

India Kapoor and Impact of Bi-dimensional model


Sandhu (2010) Corporate Social
Responsibility
on Financial
Performance

India Kiran and Sharma Education Introduce CSR into course-work of


(2011a) management curriculum.

India Kiran and Sharma Health, Investment in CSR initiatives vary


(2011b) Education & according to the firm size.
Environment

India Kiran and Sharma Health, Need of the hour is for the development of
(2011b) Education & CSR
Environment
framework

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The research paper has focused on reviewing and 2002). More specifically, the European Union
linking the literature in three domains: CSR (EU) also has been contributing to the universal
practice, theory and country wise perspective. debate on CSR, providing an analysis of CSR: a
Finally the study focuses on developing a concept whereby companies/ business firms decide
framework of CSR practices implementation. In voluntarily to contribute to the betterment of the
this paper the literature covering most relevant social world and uplifting of society and a cleaner
theories and practices on CSR will be presented to environment(European Commission, 2001). This
see whether they are focusing on one of the above social responsibility affects employees and more
mentioned aspects- education, health and generally all the stakeholders under one corporate
environment. At the same time, an attempt will be umbrella. CSR means that organizations should
made to situate these theories and approaches integrate economic, social, health and environ-
within a general framework based on country wise mental concerns into their business strategies, their
contribution to the concept of CSR describing the management tools and other activities. However, in
current panorama regarding the role of business in the beginning the focus was on large companies
society. characterized by a progressively new range of
activities. The public was becoming wary that
corporate power was expanding much too rapidly.
CSR Practice The CSR concept evolved despite usual
uncertainty (Friedman, 1962). Throughout this
Corporate Social Responsibility is an uncertain and period, most of the studies attempted to define
complex term of assorted meaning (Matten and unique features and rules of CSR (Manne and
Moon, 2005). Social responsibility is used Wallich, 1972). Some of the theories (Ackerman,
interchangeably with terms such as corporate 1975; Preston and Post, 1975) centred on the
responsibility and corporate sustainability relationship between companies and their social
(Waddock and Bodwell, 2007). Much of the context: society interacts with business at large,
literature on CSR to date has engaged in mitigating lending it legitimacy and prestige.
in economic/ philanthropic terms the various
activities connected with CSR (Basu and Palazzo,
2008; Margolis and Walsh, 2003). Before moving CSR Framework
ahead, it is essential to study the country wise CSR
From the extensive literature review it has been
perspective as shown in Table 1.
determined that need of the hour is the
Although country specific studies focus on one development of CSR framework. So that
aspect or other of CSR from the above analysis a companies can effectively channelize the available
transition in the concept of CSR is clearly visible. resources for social responsibility practices. Inputs
It can be stated that now CSR is a wider concept for the development of CSR framework has been
and has traversed from being focussed on social taken from the literature as study by Carroll (1991)
issues and collectivism to being involved with helped us in determining the major contributors
transparency, accountability and corporate required for the development of CSR framework.
citizenship. CSR is not only undertaken as a profit According to Carrolls CSR pyramid (1999),
initiative or tax saving opportunity but business should embrace economic, legal, ethical
continuously associated with consumer satisfaction and philanthropic responsibilities. Study by
in general and societal benefits in particular. Sharma and Kiran (2012b) showed the importance
of case studies for the development of framework.
Study by Maon et al. (2009) suggests need for
CSR Scenario: A Theoretical Discussion integrative framework of Corporate Social
The concept of CSR has evolved from two parallel Responsibility design and implementation.
developments. The first one comprises the efforts The literature provides a variety of views of
of policy makers and organizations to spread the researchers regarding CSR definitions and
idea of SRB and CSR practices at every level of underlying dimensions (McWilliamset et al. 2006).
the firm, by means of frequent initiatives, formal Till now, there is no universally accepted
definitions and so on (Tencati et al., 2004; Zadek, definition, measurement scale, and a universal

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InternationalJournalofBusinessResearchandDevelopment|Vol.2No.1,pp.1827 23

framework for the CSR concept, though some Discussion


agreement exists on the potential positive impact
(Branco and Rodrigues 2006; McWilliams et al. This paper examined the evolution of policy
2006; Smith 2003). What is needed is that firms framework parameters and found that, rather than
evidence of a single form of CSR practices, the
must build their corporate values to create an
organizations have to diversify, for example
organizational culture that is receptive to change
previously the shift was from philanthropic
and can sustain a corporate social responsibility
practices to Carrolls social responsibility
strategy over the long run (Maon et al., 2009).
practices. Similarly with the changing world these
Studies by Lewis (2003), Lichtentein et al. (2004), social responsibility practices have to change
and Nielsen et al. (2009) suggested that society according to the needs of the economy. The
values, new business opportunities, reduced present study exhibits that both implicit and
regulatory interventions, customer satisfaction, explicit CSR factors should be considered for a
firms reputation, and better stakeholder holistic approach as shown in the Figure1
relationship are acting as different driving forces Combination of four of Carrolls responsibilities,
that are motivating business firms for the including education, health, and environment will
implementation of CSR initiatives. On the basis of help in the formulation and implementation of
above discussed literature survey, the CSR social responsibility practices.
framework has been developed as shown in
Figures 2 and 3.

Economic Legal
Responsibility Responsibility

Philanthropy

Legend
ER: Educational responsibility
HR: Health Responsibility
ER: Environment Responsibility

Ethical
Responsibility

Figure 2: CSR model

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24 SharmaandKiran2013|CorporateSocialResponsibility

Figure 3: An extended CSR Framework

Extensive literature review revealed that support to say that organizations social responsible
from authorities will lead to formulation of CSR practices can be explained only through the notion
practices in the organizations. Figure 2 summarizes of above mentioned social responsibility factors
our findings on the relationships between explicit but the combination of these perspectives must be
and implicit CSR, indicating the importance and considered, along with Carols model of social
requirement of different factors as co-existing responsibility.
within the framework. Table 1 helps in
understanding the different counties focus upon
social responsibility practices and the most Limitations
preferred sectors. Business ethics and corporate The finding that education, environment and health
responsibility have been more and more considered sectors are more focused in comparison to other
by both academics and practitioners in recent factors is not at all surprising if a pragmatic view is
decades (Schwartz and Carroll, 2008; Vogel, taken. Theoretically, a socially responsible
1991). organization is more attractive to potential staff
The present paper proposes a distinction between and, therefore, it is less expensive to recruit in a
theoretical approaches for implementation of the talent competitive market (Phillips, 2008). It is also
CSR practices by proposing a framework for social somewhat rewarded by customers and shareholders
responsibility practices. Flow chart of twenty first making it simpler to manage stakeholders and
centurys perspective helps a lot in understanding obtain further market share (Hammann et al.,
the changing nature of CSR strategies. This is not 2009; Blumenfield, 2008). If organizations will

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InternationalJournalofBusinessResearchandDevelopment|Vol.2No.1,pp.1827 25

shift their focus from philanthropic and economic the type of organization, a bank in this case,
responsibilities to education, environment and because the results of the present research are not
health responsibility, this will help them in the according to any particular organization. These are
development of healthy staff and a better social review based findings. Therefore, additional
image in the eyes of customers and shareholders. research is needed to determine whether these
This will also result in different organizational findings are situational rather than generalizable.
outcomes for businesses and social causes- These findings could be tested by additional
companies definitely want the best of both the research method such as the use of quantitative
worlds. questionnaires alongside qualitative data.
Organizations interested in implementing social
responsibility practices should, therefore, be
Suggestions for Further Research
cognizant of the diversity of skills of their leaders
and may need to encourage different and new The current research does indicate an interesting
styles in order to be successful. Therefore, further path for the future research. Firstly, we could
research should examine whether the combination complement the results found here with a more
of these systems need to be mediated through some quantitative approach. These could be achieved
other variable such as another style of social through the use of questionnaires and a regression-
responsibility. Combination of Carrolls model based analysis of the factors that align with
with these three perspectives may lead to better economic, ethical, philanthropic, and legal respon-
implementation of social responsibility practices. It sibilities along with educational, environmental
may be better to go for transformational leadership, and health perspectives. Secondly, further research
which although not authentic, is an effective means could examine the effects of this framework on
of dealing with the conflict between the two types some external measure of CSR success. Carrolls
of CSR practices. Shift in the nature of CSR model of social responsibility practices is
strategies or practices is clear from the above renowned; therefore, researchers suggest
explained flow chart 1. Transformational examining the effects of educational, environ-
leadership approach may be the key to stirring mental and health responsibility on the organi-
debate and innovation, thereby, providing the zations social responsibility practices, budget and
innovation needed to produce solutions for their social image. Finally, this will encourage
enhanced sustainable corporate practices. researchers to examine whether the effect found
here is an organizational lifecycle phenomenon
Finally, it is important to recognize the limitations
that may disappear as organizations include
of this research. The most substantial limitation is
corporate social responsibility practices in their
that it is based on the literature review of published
culture.
renowned journals. It may be that these findings
are not transferable or applicable to some
organizations in total or that they are dependent on

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