CSR Frameworks - National & International

HISTORY EVOLUTION FRAMEWORK
OF CSR: NATIONAL AND

INTERNATIONAL
Definition and Concept of CSR
Department of Trade and Industry (DTI) (2008) working group defined CSR as
“The management of an organisation’s total impact On its immediate stakeholders and the
society within which it operates.”
■ The escalating concept of CSR goes beyond charity and requires the company to act
beyond its legal obligations and to integrate social environmental and ethical concerns
into company business process.
■ The concept of CSR advocates moving away from a ‘shareholder alone’ focus to a
‘multi- stakeholders focus.
Corporate Social Responsibility in India
■ CSR in India refers to transformation over a period in the cultural norms of ‘business’
commitment of Corporate social responsibility.
■ India has one of the oldest traditions of CSR but it’s practices are regularly not run
through or are done only to earn fame particularly by MNC’s with no cultural and
emotional attachment to India
■ The era of globalisation makes Indian Entrepreneurs alert of Social responsibility as
significant segment of their business activity.
Four Phases of CSR Development in India
■ The First Phase- Consists of charity and philanthropy as the main drivers of CSR.
Indian culture, family values, religion, tradition and industrialisation had a dominant
effect on CSR
■ The Second Phase- This phase occurred during the independence movement, there
was increasing pressure on Indian industrialists to show their commitment towards
the growth and development of the society
■ The Third Phase- Falls between 1960 - 1980. Had its relation to the element of
“mixed economy", emergence of Public Sector Undertakings and laws relating to
labour and environmental standards.
■ The Fourth Phase- From 1980 - till date. Indian companies started discarding their
traditional engagement with CSR and incorporated it into a sustainable business
strategy
Implementation of CSR in India
■ The government of India has implemented the concept of CSR in the Companies Act 2013.
On 27th February 2014, the Government on India has notified the rules for CSR spending
u/s 135 of the Companies Act 2013 along with Companies CSR policy rules, effective
from 1st April 2014
Eligibility Criteria
Company (includes foreign company with branches or projects in India ) having
■ Minimum net worth of rupees 500 crores
■ Turnover up to 1000 crores
■ Or having a by profit of at least 5 crores
During any financial year, are covered by this provision of Companies Act 2013.
Corporate Social Responsibility Around the World—An
Overview of Theoretical Framework and Evolution
Concept of Corporate Social Responsibility: Timeline
The aforementioned six phases are as follows:

■ 1950–1960s—Period of Introduction of CSR in the academic arena and corporate
philanthropy as CSR
■ 1970s—Period of rapid growth in the concept of CSR
■ 1980s—Period of Stakeholder Theory and Business Ethics
■ 1990s—Period of CSR Practicing by Corporate
■ 2000 onwards—Period of empirical works to investigate the determinants and
consequences of CSR on corporate strategy
Corporate Social Responsibility in—1950s
■ Bowen’s (1953) work proceeded from the belief that the several hundred largest
businesses at the time were vital centers of power and decision making and that the
actions of these firms touched the lives of citizens in many ways as observed by Carroll
(2006).
■ Frederick (1950) points out three core ideas of trusteeship and corporate philanthropy:
1. Corporate managers as public trustees,
2. Balance of competing claims to corporate resources and,
3. The acceptance of philanthropy as a manifestation of business support of
good causes.
Corporate Social Responsibility as Philanthropy in
1960s
■ Davis (1960) defined corporate social responsibility as: “Businessmen’s decisions and
actions taken for reasons at least partially beyond the firm’s direct economic or technical
interest”
■ Walton (1967) has also addressed many facets of CSR, and proposed a new concept of
social responsibility recognizing the interaction between the corporation and society. He
has further emphasized that these interactions need to be considered by all the
stakeholders while pursuing their respective goals
■ Friedman (1962) conceptualized CSR as a social responsibility of business to use its
resources and engage in activities designed to increase its profits so long as it stays
within the rules of the game, which is particularly to engage in open and free
competition without deception or fraud
Period of Rapid Growth in the Concept of CSR During
1970s
■ Friedman (1970) argued that the social responsibility of business is to increase its profits
meeting the shareholder value maximization approach which is referred to as capitalism
■ Johnson (1971) describes CSR as conventional wisdom where “a socially responsible
firm is one whose managerial staffs balance a multiplicity of interests. Instead of striving
only for larger profits for its stockholders, a responsible enterprise also takes into
account employees, suppliers, dealers, local communities, and the nation”
■ Sethi (1975) distinguishes between CSP, CSR and corporate behaviors by
conceptualizing the ‘dimensions of corporate social performance’, ‘social obligation’,
‘social responsibility’, and ‘social responsiveness’ respectively. He further argues that
the social responsibility implies synchronizing the corporate behaviour with prevailing
social norms, values, and expectations of performance
■ Parket and Eilbirt (1975) found that company size is positively related to the social
responsibility efforts and the usual activities undertaken by most of the firms were
related to contribution to education and arts. The corporations involved in activities
which they consider socially responsible, were interested in making these activities
widely known as well.
■ Hay and Gray (1974) conceptually divided the notion of social responsibility into three
historical phases—“Phase I, the profit maximizer style; Phase II, the trusteeship style;
and Phase III, the quality of life style. Phase III values will become more accepted by
business managers of the future”
■ Carroll (1979) made a landmark contribution in the development of CSR concept as he
proposed a four-part definition of corporate social responsibility which was embedded in
a conceptual model of corporate social performance (CSP). The definition of CSR as
proposed by Carroll can be stated as: “the social responsibility of business encompasses
the economic, legal, ethical, and discretionary expectations that society has of
organizations at a given point in time”
- The four part framework of CSR as proposed by Carroll (1979) was widely accepted
during this period and fully addresses the entire range of obligations business has to society:
economic, legal, ethical, and discretionary. These four basic expectations categorize the
social responsibilities of businesses in a more exhaustive manner. He further emphasizes
each responsibility is one part of the total social responsibility of business, giving a
definition that completely reflects the societal expectation from the business.
Stakeholder Theory and Business Ethics as CSR in 1980s
■ In the 1980s, the focus on developing new or refined definitions of CSR dominated the
academic research on CSR. The concepts and themes such as corporate social
responsiveness, corporate social performance, public policy, business ethics, and
stakeholder theory and management were brought into recast the core concern of the
CSR
■ Jones (1980) argued that it is very difficult to reach consensus as to what constitutes
socially responsible behavior and therefore CSR ought to be seen as a process but not as
a set of outcomes
■ Tuzzolino and Armandi (1981) proposed a micro analytic foundation for organizational
analysis, using a paradigm taken from need theory. They presented a taxonomic
construct to assess corporate performance proposing a yardstick to monitor its social
responsibility. They further argued that the CSR can be easily motivated and
operationalized in the context of an organizational-need hierarchy.
CSR in Business Practice During 1990s
■ During the late 1980s and into the 1990s, corporate philanthropy expanded considerably
starting from the pyramid model depicted by Carroll (1991) which further inspires some
new novel models, such as Triple Bottom Line, Value Creation Model of CSR and The
Model of Consumer Driven Corporate Responsibility. Muirhead (1999) characterized
this period of corporate contributions as ‘diversification and globalization’
■ Elkington (1998) formulated a concept of “triple bottom line” (TBL) using stakeholder
theory to measure and manage the impact of CSR that reflects economic, social and
environmental performance. More global companies appeared in the world economy,
and management positions dedicated to corporate giving began proliferating on the
organization charts of major companies and corporate social performance emerged as
more encompassing measure of performance. Most of the research in 1990s evolved
around the themes of: CSP, stakeholder theory, business ethics, sustainability and
corporate citizenship.
Research on CSR in 21st Century
■ The theories and concepts until the 21st century can be integrated as Sustainable
Development theory which further augmented the existing concepts of CSR and TBL.
■ For example, Aras and Crowther (2009) integrated the concept of Stewardship Theory
into Triple Bottom Line to develop sustainable development model demonstrating the
synergy and stewardship of financial, social and environmental resources to ensure
sustainability.
■ More specifically, the authors focus on internal and external interests of a company by
asserting four aspects of CSR as follows:
- Economic aspect, to be the reason of the company’s existence;
- Social aspect, to eradicate poverty and safeguard human rights;
- Environment, to preserve the nature for future generations;
- Organizational culture, to align the corporate and social values with individual
values.
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HISTORY EVOLUTION FRAMEWORK

OF CSR: NATIONAL AND

The aforementioned six phases are as follows:

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