Unit 3: Social Responsibility of Entrepreneurs

Lesson 3.5
Social Responsibility Frameworks and Practices
Contents
Introduction 1

Learning Objectives 2

Quick Look 3

Learn the Basics 4

Caroll’s Pyramid Model 5
Economic Responsibility 5
Legal Responsibility 5
Ethical Responsibility 6
Philanthropic Responsibility 6
The Intersecting Circles Model 7
The Concentric Circles Model 8
Framework for Assessing CSR 10

Keep in Mind 12

Try This 13

Practice Your Skills 14

Challenge Yourself 16

Photo Credits 17

Bibliography 17
Unit 3: Social Responsibility of Entrepreneurs

Lesson 3.5

Social Responsibility Frameworks

and Practices

Introduction

Everyone is expected to be socially responsible, that is, to act in a manner that benefits
society. However, each individual understands and expresses social responsibility in their
own way. Some people demonstrate it by obeying the authorities and following the law.
Others believe it is fulfilled by being economically productive. There are those who
understand social responsibility as helping those in need.

Similar to individuals, businesses may have varying views of social responsibility.

Nevertheless, there is a consensus that companies and entrepreneurs must perform certain
obligations to society beyond just doing their business. In this lesson, you will learn the
different frameworks in practicing corporate social responsibility. You will understand why
social responsibility is a highly debatable topic among consumers and businesses.

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Unit 3: Social Responsibility of Entrepreneurs

Learning Objectives DepEd Competency

In this lesson, you should be able to do the Cite examples of companies that practice social
following: responsibility in the conduct of their business
(ABM_ESR12-IVi-l-3.4.).
● Explain corporate social responsibility
and its elements.
● Compare the different models of
corporate social responsibility.
● Analyze the corporate social
responsibility programs of Philippine
companies.

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Quick Look

Weighing the Cost and Benefits

There have been debates on whether business and social responsibility blend well together.
For some people, the challenge is to strike a balance between these two. For others, they
simply can not be made to agree with each other. Consider the following questions and
discuss your views with your classmates.

Question 1: Should companies be expected to donate to charitable institutions and

causes? Are there better ways to use their profits?
Question 2: Is corporate social responsibility a genuine or frontal act of companies?

Questions to Ponder
1. What have you learned about people's views on corporate social responsibility?
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2. After the activity, what are your personal insights about these issues on corporate
social responsibility?
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3. If you were given a chance to propose a CSR activity, what kind of CSR program
would you present? Why?
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Unit 3: Social Responsibility of Entrepreneurs

Learn the Basics

Business means putting economic resources and labor together to produce society's needs.
Due to business activities, a long list of products and services were produced that
significantly improved people's lives. Thus, one can say that society directly benefits from
the business sector's core activities. But the question is, do their responsibilities end with
this? Does gaining profit go well with social responsibility?

In seeking a conclusion to these questions, several frameworks and models were developed
to guide businesses in understanding their role in society. The concept of corporate social
responsibility (CSR) was introduced to refer to a business's more extensive obligations to
society. These obligations often include legal responsibility, ethical practice, economic
objectives, and philanthropic expectations.

For instance, the World Business Council for Sustainable Development (WBCSD) defined CSR
as "the continuing commitment by businesses to behave ethically and contribute to
economic development while improving the quality of life of the workforce and their
families as well as of the local community and society at large.”

The definition of CSR has three main conceptual structures: Caroll's pyramid, intersecting
circles, and concentric circles. Each model depicts the relations among the different
elements that make up CSR.

Essential Questions

Do social responsibilities have hierarchies? Is one more important or more

fundamental than the others?

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Unit 3: Social Responsibility of Entrepreneurs

Caroll’s Pyramid Model

Archie Carroll graphically presented society’s expectations using a pyramid with four levels.
Caroll’s Pyramid Model shows the different responsibilities arranged hierarchically. Each
level represents a component of social responsibility. The way they are arranged from
bottom to top indicates the base and apex of a business’s total responsibility. Caroll’s
Pyramid of corporate social responsibility is shown in Figure 1.

Figure 1. Caroll’s Pyramid of CSR

Economic Responsibility
At the base of the pyramid is economic responsibility. It indicates that the business’s
performance and profit are the foundation of its social responsibility. Without profit, the
business would not exist. Thus, economic responsibility is required in every business. It
affects the production of goods and services needed by society, dividend policies, and the
capacity to pay employees’ salaries and wages, among others.

Legal Responsibility
The second level of CSR is the responsibility to obey the law and adhere to all regulations.
Similar to economic responsibility, legal responsibility is required of every business by
society. These responsibilities include employment laws, tax regulations, quality assurance
guidelines, the rights and safety of workers, and other government regulations. Performing
economic and legal responsibilities are the bare minimum expectations of society.

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Ethical Responsibility
The third level represents the expectation of society that businesses will do what is right,
just, and fair. It is not enough to be profitable and to obey the law; companies should avoid
questionable practices. The ethical business practice goes beyond the bare minimum.
Examples of ethically responsible actions are: treating customers, suppliers, and employees
properly, being environmentally friendly, and practicing fair business.

Philanthropic Responsibility
At the top of the pyramid is philanthropic responsibility, which is discretionary and
voluntary. After fulfilling the fundamental and expected responsibilities, the company can
maximize its profit by giving back to society. Since philanthropy is not required by nature
and law, it represents the company’s goodwill to society. It goes beyond the bare minimum
and carefully considers the business’s impact on the environment and people. Philanthropy
is more active in helping those in need through feeding programs, housing projects,
scholarship programs, and other humanitarian activities.

Figure 2. To fulfill their philanthropic responsibility, businesses donate to charitable

organizations that help address social problems.

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Closer Look

Establishing a Philanthropic Foundation

Many successful companies establish foundations where a portion of their
business’s profit goes to philanthropic activities. Some of these activities
include funding research to treat certain illnesses, advocating a hunger-free
community, providing scholarships for children, and establishing shelters
for older persons, among others.

Check Your Progress

Do you think businesses should use their profit to fund CSR programs, or
would it be more beneficial if they focus on improving their products and
services?
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The Intersecting Circles Model

Unlike the pyramid model, the Intersecting Circles Model of CSR by Schwartz and Caroll
presents the interconnection among the four domains of social responsibility. The model
rejects the hierarchical level of the components. Instead, it uses a Venn diagram to illustrate
the domains' connections.

The intersecting circles model of CSR, as shown in Figure 2, illustrates the possibility of a
social responsibility program to fall under two or more domains. Therefore, companies can
target

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Figure 3. The Intersecting Circles Model of CSR

The main goal of this model is to cater to multiple domains simultaneously. However,
according to Jensen (1991), it is difficult and almost impossible to develop a specific CSR
program that satisfies all four domains, stating that having multiple objectives is having no
objective. Some domains, such as economic and ethical responsibility, have competing
aspects which can not be catered equally.

Check Your Progress

What is the main difference between the pyramid and intersecting circles
models?
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The Concentric Circles Model

The Concentric Circle Model shares similarities with the pyramid and intersecting circles
model. Like the pyramid model, the Concentric Circles Model views economic responsibility
as the core social responsibility. However, the various components of CSR are

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interconnected with each other.

According to Kaman (2015), “the concentric circle represents the system of inclusion rather
than the system of mutually exclusive domains. Thus, every member in the inner circle is
part of the wider circle.”

The Concentric Circle Model of CSR focuses on the core responsibility: economic
responsibility. This model shows that the efficient execution of social responsibility starts by
focusing on economic functions such as production, distribution, and consumption, which
leads to profit. Profit allows the company to gain a stable economic status and perform its
social responsibilities.

Figure 4. The Concentric Circle Model of CSR

The model also shows that corporate social responsibility is not a system of mutually
exclusive elements. Instead, it is a system of inclusion where the noneconomic
responsibilities, such as legal, ethical, and philanthropic responsibilities, embraces the
importance of economic responsibility.

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Closer Look

A CSR Program Following the Concentric Circle Model

One of the major companies in the Philippines exercises corporate social
responsibility. Their CSR program focuses on empowering communities and
reaching out to underprivileged sectors of society.

They included in their market research the areas where business

operations would be profitable but at the same time beneficial to nearby
communities. They start by establishing their base of operations, hiring and
training local workers. They generate jobs and increase the income of
community members. They earn profit from the company’s production
following the guidelines and regulations of the government.

They launched a program aimed at preserving the environment and

advocating the responsible use of natural resources from the profit they
earned. Part of the project is providing residents with one million coconut,
coffee, and cacao seedlings. They also have education, health and nutrition
programs, housing, and rehabilitation.

Check Your Progress

Compare and contrast the pyramid model and the concentric circles model.
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Framework for Assessing CSR

Other CSR frameworks deviate from the four elements that constitute CSR. The Social
Benefit-Cost Framework, for instance, weighs the benefits and cost of a CSR program to
the business owner and the society. Table 1 shows how the framework can be used to
assess the effectiveness of a program.

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Table 1. Social Benefit - Cost Framework

To the business To the society

Benefits
Creation of the market value Social benefits
(Opportunities)

Cost (Risks) Environmental and social costs

As shown in the framework, the only owner's benefit to a CSR program is it can increase the
company's market value. Society will support the company that is doing corporate social
responsibilities. Moreover, there are no concrete risks that CSR brings to the company apart
from expenses of implementing the program.

On the other hand, society will also benefit from implementing CSR. The people in the
community are the ones who maximize the use of CSR. For example, the beneficiaries of the
feeding programs, scholarship programs, housing projects, and other philanthropic
activities will be the people in the community. But, there are environmental and social costs
to society. These risks are congestion, air and water pollution, and other environmental
crises. And the people will be greatly affected by these crises.

Closer Look

Costs and Benefits of CSR Programs

Last May 2020, one national agency responsible for Covid-19 aids
received a bio-molecular laboratory and PPEs to be used for Covid-19
efforts as donated by tobacco companies. These donations are beneficial
in fighting against the virus.

This CSR can be assessed using Social Benefit-Cost Framework (look at

the framework in Table 1). Tobacco companies' market value will increase
once they know about their overwhelming donations to help the
Philippines fight Covid-19. Meanwhile, society will also benefit from these

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Unit 3: Social Responsibility of Entrepreneurs

donations, especially those who need the donated materials. But, there is
a troubling concern in accepting these donations from the tobacco
companies.

While tobacco companies help the Philippines alleviate the effects of

Covid-19, they continue producing toxic products that, according to some
research, tobacco can contribute to severe Covid-19 outcomes and death.
This issue concerns the health risk of the community.

Keep in Mind

● Businesses are expected to act in a manner that benefits society. Aside from their
natural economic functions, they are required by society to perform their social
responsibilities.
● Corporate social responsibility (CSR) refers to a business’s more extensive obligations
to society. These obligations are economic objectives, legal responsibility, ethical
practice, and philanthropic expectations.
● Various models of corporate social responsibility differ in understanding the
importance and interconnectedness of the four elements of CSR.

● The effectiveness of CSR programs can be assessed by weighing the costs and benefits
it brings to the company and the society.

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Unit 3: Social Responsibility of Entrepreneurs

Try This

A. Matching Type. Match the statements in column A with the concepts in column B.

Column A Column B

_____________ 1. “Improve the lives of a. Corporate social

others.” responsibility

_____________ 2. “Be fair to all.” b. Economic responsibility

_____________ 3. “Make a profit.” c. Ethical responsibility

_____________ 4. “Follow the regulations.” d. Legal responsibility

_____________ 5. “Perform your e. Philanthropic responsibility

obligations to society.”

B. Choose the correct word from the box and write the correct answer on the blank
before each number.

Intersecting Circles
Caroll’s Pyramid Model Concentric Circle Model
Model

________________ 1. This model arranges the four elements of CSR in a hierarchical

order.

________________ 2. This model does not support the idea that there is a core
responsibility. Instead, a CSR program can perform two or more
components of social responsibility.

________________ 3. This model is a system of inclusion where noneconomic

responsibilities embrace the core economic responsibility of
businesses.

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________________ 4. This model establishes the apex and base of corporate social
responsibility.

________________ 5. This model’s main goal is to cater to multiple domains

simultaneously.

Practice Your Skills

Analyzing a Company’s CSR

Search the internet for Philippine companies and their corporate social responsibility
programs. Analyze how the company’s program fulfills the four social responsibilities of
businesses. Answer the questions that follow.

Name of Company: _____________________________________________________________________________

Corporate Social Responsibility Program: ______________________________________________________
Reference: ______________________________________________________________________________________

Economic

Legal

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Ethical

Philanthropic

1. Do you think that the company follows a specific CSR Model? Explain your answer.
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2. What are the costs and benefits of the company’s CSR program? Place your answer in
the following table.

To the business To society

Benefits

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Cost

Challenge Yourself

Answer the following questions.

1. If you are going to design a CSR program, which of the different models of CSR would
you use? Explain your answer.
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2. Compare and contrast the different models of CSR.

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3. As a customer, what is your insight about a business that is not practicing corporate
social responsibility?
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Unit 3: Social Responsibility of Entrepreneurs

Photo Credits

Man and woman holding hands, by Remi Walle is free to use under the Unsplash
license via Unsplash.

File:Khamla Panyasouk of Big Brother Mouse reads to children.jpg, by Blue Plover is

licensed under CC BY-SA via Wikimedia Commons.

Bibliography
Aviva Geva, “Three Models of Corporate Social Responsibility: Interrelationships between
Theory, Research, and Practice”, (February 28, 2008),
https://onlinelibrary.wiley.com/doi/full/10.1111/j.1467-8594.2008.00311.x#:~:text=A
ccording%20to%20the%20model%20(Figure,a%20good%20corporate%20citizen%E2
%80%9D) , last accessed on December 1, 2021.

Henry Thacker, “Understanding the Four Levels of CSR”, (November 12, 2019),
https://thecsrjournal.in/understanding-the-four-levels-of-csr/ , last accessed on
December 1, 2021.

Serafin Talisayon, “Corporate Social Responsibility and Emergent Models in Management of

Stakeholders Capital in Philippine Conglomerate”, Journal of Asian Business Volume
4, Numbers 1 & 2, pp. 67-68, University of Michigan, 2010

Stella, M. (2019). 352791041 corporate social responsibility of top 10 corporations in the

Philippines - corporate. StuDocu. Retrieved January 13, 2022, from
https://www.studocu.com/en-gb/document/bath-spa-university/governance-ethics-r
isk-management/352791041-corporate-social-responsibility-of-top-10-corporations-i
n-the-philippines/5989543.

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Walia, A. and Chetty, P. (2020), Review of different CSR models and their advantages.
[online] Project Guru. Available at:
https://www.projectguru.in/corporate-social-responsibility-models/ last
accessed on December 1, 2021.

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