What is Corporate Social Responsibilty?

responsibilities to society than ever before and to serve a wider range of human values. Business enterprises, in effect, are behind asked to contribute more to the quality of American life than just supplying quantities of goods and services.”

 

Since then, the topic of CSR is one that has been widely discussed. There are those, such as Milton Friedman (1962), who are opposed to the underlying premise of CSR and feel that sole responsibility of business is profit maximization. On the other hard, William C. Frederick (1960) who feels that the resources available to businesses should be “utilized for broad social ends and not simply for the narrowly circumscribed interests of private persons and firms”.

 

Also, in 1991, R. Edward Freeman and Jeanne Liedtka presented seven reasons why the concept of social responsibility is often abandoned. One of the reasons given was:

Corporate social responsibility promotes incompetence by leading managers to involve themselves in areas beyond their expertise – that is, repairing society’s ills.

 

We address the issue of whether companies are capable of addressing society’s ills by evaluating the managerial decisions and implications of an organization that has received a great deal of publicity for its alleged social responsibility.

 

Approaches

One school of though focuses on “micro level” analysis, how individual companies could be made more responsible towards society. Robert Ackerman, in his model suggests that responsiveness should be the goal of corporate social endeavor. He described three phases: 1) at the levels of Top management; 2) Staff specialists and 3) Divisional management, through which companies commonly tend to pass for developing a response to social issues (Stoner et al., 1995).

 

Carroll, in his four part model through the length of its bars suggests that the primary responsibilities of a company are economic and legal. It must produce the goods and/or services that society wants and in a lawful manner and must sell them at a profit. But still it has ethical as well as discretionary bindings. Carroll opines that to the extent firms fail to acknowledge discretionary or ethical responsibilities, society will assert and bring them under legal framework (Carroll and Buchholtz, 2003). Before that happens, it is advisable that corporations understand and perform social activities voluntarily.

 

Researchers belonging to other school of thought concern themselves with the “macro level” of analysis. They favor that the Government, not individual companies, should establish and achieve a country’s social goals. Friedman based his arguments on two principal contentions, one economic and other legal. From the economic perspective, he asserted that if managers spend corporate funds on projects not intended to maximize profits, the efficiency of the market mechanism will be undermined and resources will be misallocated within the economy. On the legal side, Friedman contended that because managers are legal agents of stockholders, their sole duty is to maximize the financial return to them.

 

Hence, if they spend corporate funds for social purposes, they are essentially stealing from the stockholders (Friedman, 1962). Levitt argued against CSR, fearing that business might come to dominate society. He believed that business as an institution would become the twentieth-century equivalent of the medieval church- the all-embracing institution in the society (Levitt, 1958).

 

Both approaches have been explained above are quite prevalent in global as well as in Malaysian industrial scenario. The next chapter will give a detail regarding the current scenario which is the attitude of the government and Malaysia companies towards CSR.

 

Attitude Towards CSR–Current Scenario

 

Government Attitudes towards CSR

In recent years, CSR has been of major concern in Malaysia. Several non-governmental organizations (see Table 1 for detail) have raised issues relating to CSR. These issues have raised the attention of the government and legislation has been introduced to prevent the problems.

 

Non-Governmental  Organizations

Raised CSR Issues

Consumers Association of Penang (CAP)

 

Federation of Malaysian Consumers Association

 

“Sahabat Alam Malaysia”

Environmental Quality Act was instituted to enforce legislation against problems of environmental safety and pollution.

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