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The term altruism means renunciation of the self and an exclusive concern and care for the welfare of others. Therefore altruistic CSR is a form of corporate social responsibility (CSR) that goes beyond ethical behavior to voluntarily donate time and/or money towards certain groups of stakeholders, even if the time or money commitment sacrifices part of the business profitability.
CSR as a Concept
CSR is the internal obligation of each business entity to account for the way its activities impact the economic, social, and environmental dimensions of its environs and to ensure that this impact generates equitable and sustainable benefits and there is no harm to all the stakeholders involved.
The CSR concept developed from two sources at different times but converged as a business norm after the millennium. One source was CSR as business ethics, and the other was CSR as part of sustainable development programs promoted by the United Nations (United Nations 1992). The idea that a company should be responsive towards the society rather than simply achieve economic goals was raised through discussions on business ethics since the 1950s (Carroll 1999). CSR as part of sustainable development programs started in the early 1990s, shortly prior to the Earth Summit held by the United Nations. The conference called for cooperation to reduce environmental damages and to pursue business goals while considering environmental impacts (United Nations 1992).
Evolution Phase of Corporate Social Responsibility
If we study the evolution phase of corporate social responsibility globally, we would come across certain distinct time periods, and each of such time periods had added to or enriched the concept of CSR through the valuable researches carried on by various eminent researchers.
The first time period of 1920–1950s concentrated on the social responsibilities of businessmen which was quite evident from some of the works worth noting like Chester Barnard’s The Functions of the Executive (1938), J. M. Clark’s Social Control of Business (1939), and Theodore Kreps’s Measurement of the Social Performance of Business (1940), to point out just a few. In the second time period of the 1950s, corporate social responsibility as a concept started taking shape. Most scholars point to Howard Bowen’s Social Responsibilities of the Businessman (1953) as the first attempt to theorize the relationship between companies and society (Carroll 1999; Preston and Post 1975; Wartick and Cochran 1985). According to Bowen, CSR “refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society” (Bowen 1953). The decade of the 1960s “marked a significant growth in attempts to formalize or more accurately, state what corporate social responsibility means” (Carroll 1999). He suggested that some of the most prominent writers during that time were Keith Davis, Joseph W. McGuire, William C. Frederick, and Clarence C. Walton. The notion of business ethics to corporate social responsibility was introduced during this era. The time period of the 1970s was an era of enlightened self-interest. A breakthrough in conceptual development was observed during this period when a new study on corporate social responsibility was commissioned by the Committee for Economic Development. The Committee described corporate social responsibility as being “related to products, jobs and economic growth; related to societal expectations; and related to activities aimed at improving the social environment of the firm” (US Committee for Economic Development in Wheeler et al. 2003). There was enthusiasm and research in the field of corporate social responsibility in the 1970s (Ackerman 1973; Fitch 1976; Murray 1976). The era of the 1980s paved way for the development of complementary themes to CSR. A prominent development in terms of corporate social responsibility was the global debate on sustainable development that emerged in this decade (Tilbury and Wortman 2004; World Commission on Environment and Development 1987). The era of the 1990s was that of imbibing the concept of CSR in the field of strategic management. CSP, stakeholder theory, business ethics theory, and corporate citizenship were the major themes that took center stage in the 1990s (Carroll 1999). Corporate social responsibility advanced with more practical applications in mind by strategic management scholars such as Philip Kotler, Nancy Lee, Michael Porter, Rosabeth Moss Kanter, and Stuart Hart. In the twenty-first-century expansions, the theoretical contributions to the concept and meaning of CSR had given way to empirical research on the topic and a splintering of interests away from CSR into related topics such as stakeholder theory, business ethics, sustainability, and corporate citizenship. The most optimistic perspective during this era was depicted well by D. Lydenberg (2005) in his book Corporations and the Public Interest: Guiding the Invisible Hand. Lydenberg saw CSR as “a major secular development, driven by a long-term reevaluation of the role of corporations in society.”
Three Forms of CSR
Ethical CSR is morally mandatory and goes beyond fulfilling a firm’s economic and legal obligations, to its ethical responsibilities to avoid harms or social injuries, even if the business might not appear to benefit from this. Hence, a corporation is morally responsible to any individuals or groups where it might inflict actual or potential injury (physical, mental, economic, spiritual, and emotional) from a particular course of action (Lantos 2001). Although economic and legal responsibilities embody ethical norms about fairness and justice, ethical responsibilities embrace those activities and practices that are expected or prohibited by societal members even though they are not codified into law. Ethical responsibilities embody those standards, norms, or expectations that reflect a concern for what consumers, employees, shareholders, and the community regard as fair, just, or in keeping with the respect or protection of stakeholders’ moral rights. In one sense, ethics or values precede the establishment of law because they become the driving force behind the very creation of laws or regulations.
Fulfillment of an organization’s philanthropic responsibilities, going beyond preventing possible harms (ethical CSR) to helping alleviate public welfare deficiencies, regardless of whether or not this will benefit the business itself is what altruistic CSR is all about. Altruistic CSR is equivalent to Carroll’s (2000) philanthropic responsibilities and involves contributing to the good of various societal stakeholders, even if this sacrifices part of the business’ profitability. The justification lies in the fact that the corporation has been entrusted with massive economic and human resources and has the power to affect many parties beyond the shareholders. Thus, there is a social contract between business and society. Philanthropic responsibilities encompass those corporate actions that are in response to society’s expectation that businesses be good corporate citizens. This includes actively engaging in acts or programs to promote human welfare or goodwill. The distinguishing feature between philanthropy and ethical responsibilities is that the former is more discretionary or voluntary on the part of businesses even though there is always the societal expectation that business provides it whereas ethical responsibilities are morally mandatory.
Strategic CSR involves being responsive to societal needs that in turn would accomplish strategic business goals. Strategic CSR is central to the firm’s value creating activities. By taking a strategic approach, companies can choose activities that will strengthen their competitive advantage. If CSR becomes a part of a company’s overall plan, then organizations can ensure that nothing affects the need to behave ethically with their stakeholders. Strategic CSR helps companies to balance economic value with that of societal value, manage their stakeholder relationships, identify and respond to threats and opportunities facing their stakeholders, and develop sustainable business practices. It is here that the opportunities for shared value truly lie. The success of the company and the success of the community become mutually reinforcing. If a social issue is closely connected to the company’s business, then the opportunity to leverage the firm’s resources and capabilities and benefit society is greater.
Altruistic CSR according to many authors (Lantos 2001) is not a legitimate corporate activity. Corporations do not have the obligation to engage in altruistic activities, but it is their responsibility to ensure that society is not harmed by their actions. One of the main challenges for business is to establish an effective CSR framework that combines both the aspects of profitability and responsibility towards the stakeholders and environment. Corporations are not altruistic, and they cannot be altruistic in a competitive environment. Hence, declaring philanthropy as CSR gives an imperfect picture of the business as well as its relationship with the society. The philanthropic approach to CSR which wants a corporation to take responsibility beyond their core business activities is problematic. Thus we need to emphasize more on strategic CSR which benefits both companies and the society.
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