Corporate social responsibility (CSR) refers to strategies corporations

or firms conduct their business in a way that is ethical, society friendly

and beneficial to community in terms of development.

CSR simply refers to strategies corporations or firms conduct their

business in a way that is ethical and society friendly. CSR can involve
a range of activities such as working in partnership with local
communities, socially sensitive investment, developing relationships
with employees, customers and their families, and involving in activities
for environmental conservation and sustainability.

Key Words: Corporate social responsibility, community development,

competencies of CSR managers, multinational corporations,
corporate-society relations.

Government CSR (GCSR) : Context Aim and Perspective

Corporate Social Responsibility (CSR) aims to better integrate social and

environmental concerns into business routines on a voluntary basis. According to
European Commission (2001, 2002, 2006), CSR is “a concept whereby companies
integrate social and environmental concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis” Corporate Social Responsibility
(CSR) aims to better integrate social and environmental concerns into business routines
on a voluntary basis.

More locally, the definition is concerned with the relationship between a corporation
and the local society in which it resides and operates. Another provided understanding is
that CSR is also concerned with the relationship between a corporation and its
stakeholders. ( Crowther & Aras, 2018).

The purpose of corporate social responsibility is to give back to the community, take
part in philanthropic causes, and provide positive social value. Businesses are
increasingly turning to CSR to make a difference and build a positive brand around their
company.

The changing context within which companies operate, shaped by environmental and
globalization forces, affects the way that the role of business is perceived.

Corporate Social Responsibility As a Relational Approach

CSR simply refers to strategies corporations or firms conduct their business in a way
that is ethical and society friendly. CSR can involve a range of activities such as working
in partnership with local communities, socially sensitive investment, developing
relationships with employees, customers and their families, and involving in activities for
environmental conservation and sustainability.

Theories of Corporate Social Responsibility

As Clarkson (1998, 250) emphasises that managers do not think or act in terms of
concepts such as “responsibility” or “integration”. If corporations think of CSR, they focus
on the claims of particular stakeholders that are perceived as being powerful, legitimate,
and/or urgent (Clarkson 1998, 250; Mitchell 1998). This implies that CSR efforts emerged
neither because of legal requirements nor were they completely voluntary, but rather
because of increasing stakeholder demands and pressures.

Hence, Secchi has come up with a group of theories based on a criterion what role
the theories confer to the corporation and society. The theories are as follows: 1) The
utilitarian theory, 2) The managerial theory, and 3) The relational theory
 Table 1: Utilitarian, managerial and relational theories of CSR.

Utilitarian Theory Managerial Theory Relational Theory

Corporate social performance Business and society

Theories on social costs Social accountability, auditing Stakeholder approach
Functionalism and reporting (SAAR) Social Corporate global citizenship
responsibility for multinationals Social contract theory

Utilitarian Theory

In the utilitarian theories the corporation serves as a part of the economic system in
which the function is mechanical.This theory assumes the business has a responsibility to
incorporate CSR in their daily working business ethics. The utilitarian theories are related
to strategies for competitive advantages. The proponents of these theories are, for
instance, Porter and Cramer (2002) and Litz (1996) who viewed the theories as bases for
formulating strategies in the dynamic usage of natural resources of the corporation for
competitive advantages. The strategies also include altruistic activities that are socially
recognized as instruments for marketing.

Managerial Theory

Secchi’s (2007) analysis further stresses the logic of managerial theory that
emphasizes corporate management in which CSR are approached by the corporation
internally. This makes the difference between utilitarian and managerial perspective of
CSR. managerial theory suggests that all things outside the scope of the business be
taken into account when making decisions. This theory is connected to political theories
based on bringing out an idea, explaining and planning it mentally, Garriga and Mele
(2004), and supported by Wood and Lodgson (2002). According to Wood and Lodgson
(2002) the social responsibilities of businesses arise from the amount of social power a
corporation has and the corporation is understood as being like a citizen with certain
involvement in the community.

Relational Theory

Relational theory has a root from the complex firm-environment relationships. As the
term implies, interrelations between the two are the focus of the analysis of CSR. (Ismail
2009) Relational theory is further divided into four sub-groups of theories: 1) business and
society; 2) stakeholder approach; 3) corporate citizenship; and 4) social contract. The
focal point of this theory is between the business and the environment.

Business and society is proposed to mean ‘business in society’ in which CSR

emerges as a matter of interaction between the two entities. One of the measures of CSR
is the development of economic values in a society. Another is a person’s obligation to
consider the effects of his decision and action on the whole social system

(Garriaga and Mele 2004) The stakeholder approach further considers a firm as an
interconnected web of different interests where self creation and community creation
happen interdependently; and individuals behave altruistically. It is also said as a way to
understand reality in order to manage the socially responsible behavior of a firm.
stakeholder approach is both within the integrative and ethical theories, where the former
emphasizes the integration of social demands and the latter focuses on the right thing to
achieve a good society
 Corporate citizenship of the relational theory strongly depends on the type of
community to which it is referred. It is a path that a corporation may take to behave
responsibly Corporate citizenship based on Garriga and Mele’s (2004) analysis is an
approach used under the integrative and political theories.

Finally, the Social Contract theory of the relational group refers to the fundamental
issue of justifying the morality of economic activities in order to have a theoretical basis for
analyzing social relations between corporation and society.

Business environment cannot operate in isolation from the rest of society. The two
are interdependent. As engine of social progress, social responsibility helps compaies
become responsible global citizens and local neighbours in a rapidly changing world. Over
time, companies have begun to turn their attention also towards CSR and today their
number is growing, as they are supported by strategies, programs and responsible pract
ices are increasingly associated with commun ity development, environ mental we ll-being
and practices in the sphere of influence.

CSR Framework: Beyond Voluntary Compliance Vs. Legislation

Government provides vital information to the private sectors through initiatives that
include websites that inform companies of CSR and its role in business and society. The
government is also involved in standard-setting through the provision of policy frameworks,
which encourage companies to improve their performance beyond minimum legal
standards. When it comes to legislation and regulation, there is sometimes an overlap
concerning requirements for CSR and those for corporate governance.

Voluntary compliance is seen as an alternative to the state-imposed regulations on a

company's behavior. Proponents of voluntary compliance argue that it is in a company's
own interest to behave in a socially responsible manner and that in pursuit of good public
image, the company will refrain from actions which could damage its perception by the
public. Thus there is no need for state regulations.
 CSR is a subject that has links with many areas of law, including international law and
European law, corporate law and corporate governance, tort law and contract law, procedural law,
labour and environmental law, and criminal law

Corporate social responsibility comes in many forms. Some of the most common
examples of CSR include:

 Reducing carbon footprints

 Improving labor policies
 Participating in fairtrade
 Charitable giving
 Volunteering in the community
 Corporate policies that benefit the environment
 Socially and environmentally conscious investments

Government Action In The Field Of CSR: Comparative Evaluation

 Conclusions about the three groups of CSR theories are as follows: Utilitarian is simplified in
its views by the individuals and mechanical from the corporation perspective, managerial is very
organizational oriented and measurable; and relational is values-based as well as interdependent
between the corporation and society. The allocation of responsibility according to the order of
the theories is economic system, the corporation and the type of the relationship. This
conclusion is further strengthened by another not-so-distant conceptualization about CSR in that
the theories are grouped into instrumental, political, integrative and value based. Instrumental
theory is focusing on achieving economic objectives through social activities; political focusing on
a responsible use of business power in the political arena; integrative concentrating on drawing
together management issues, public responsibility, stakeholder management and corporate
social performance; and ethical theory is emphasizing strategies to achieve a good society. The
following section discusses the meaning of community development and the roles of CSR in
community development based on various contexts around the globe. The role of CSR is
essentially towards understanding what does the community gain from the various CSR
initiatives.

Good governance is not only important for corporations, it’s important for society. To begin
with, good corporate governance improves the public’s faith and confidence in its corporate
leaders. Legislative processes were designed to protect societies from known threats and to keep
problems from occurring or reoccurring. Recent corporate scandals shed light on the effect that
corporations have on social responsibility. The new focus on corporate social responsibility
increases corporations’ responsibility and accountability to their stakeholders. As a result, we’re
seeing corporations increasingly place pressure on themselves to improve best practices for
corporate governance with the goal of enhancing their relationships with stakeholders. The
largest attraction for corporations to direct some of their attention on sustainability is that it
ultimately improves corporations’ ability to thrive and prosper.

Good governance ultimately fosters sustainability, creates sustainable values and helps
companies achieve their values. Companies also realize long-term benefits, including reducing
risks, attracting new investors and shareholders, and increasing the company’s equity.

Stakeholder:

- Those groups without whose support the organization would cease to

exist.
 - Any group or individual who can affect or is affected by the
achievement of the organization’s objective.

The most common groups who we consider to be stakeholders include:

 Managers

 Employees

 Customers

 Investors

 Shareholders

 Suppliers

Then there are some more genetic groups who are often included:

 Government

 Society at large

 The local community