Corporate social responsibility: let's manage it better

Citation

Yadav, S.S. and Shankar, R. (2012), "Corporate social responsibility: let's manage it better", Journal of Advances in Management Research, Vol. 9 No. 1. https://doi.org/10.1108/jamr.2012.42609aaa.001

Corporate social responsibility: let's manage it better

Article Type: Editorial From: Journal of Advances in Management Research, Volume 9, Issue 1.

Hitherto, the concept of shareholders’ wealth maximization has been the paramount goal of any corporate business entity. But things are changing now. Corporate governance is a buzzword nowadays and, it is rightly so. Unlike in the past, now the corporates are widely held business organizations. So they are answerable to a large number of shareholders. Besides, in order to make profit or to maximize their wealth, they consume natural/societal resources and draw revenue from customers. As a consequence, the term stakeholder has gradually gained currency. In other words, corporates do not have to worry only about wealth maximization of shareholders but also they have to be concerned about all other stakeholders such as employees, customers, suppliers, investors, creditors, government and society at large. Four fundamental principles of good corporate governance are fairness, transparency, accountability and responsibility.

It is expected that a company be fair in its dealings with all its stakeholders and be transparent without any hidden agenda, thus being an accountable and responsible socio-economic entity. It has been felt over a period of time, particularly in last couple of decades, that corporates have not been doing enough toward the society in which they operate. Of course, there has been a long-established tradition of Philanthropy – more of it in some countries and less in others. And, that varied from one company to another in the same country or even in the same societal setting. The term corporate social responsibility (CSR) has, thus, evolved from this perception that corporates should be doing much more and in a systematic and regular way rather than looking at the social concerns only in a sporadic fashion. Basically, CSR means conducting a business in a responsible manner for its long-term sustainability.

In order that corporates imbibe CSR in their thinking and behavior, some frameworks are being developed. One such framework is United Nations Global Compact (UNGC) program, which requires corporates to commit themselves to ten specific principles as listed below:

(A) Human rights:

Principle 1: Businesses should protect the internationally proclaimed human rights.

Principle 2: Businesses should ensure that they are not complicit in human rights abuses.

(B) Labor:

Principle 3: Businesses should uphold the freedom of association and recognize effectively the right to collective bargaining.

Principle 4: Businesses should eliminate all forms of forced and compulsory labor.

Principle 5: Businesses should effectively abolish child labor.

Principle 6: Businesses should eliminate discrimination in respect of employment and occupation;

(C) Environment:

Principle 7: Businesses should support precautionary approach to environmental challenge.

Principle 8: Businesses should undertake initiatives to promote greater environmental responsibility.

Principle 9: Business should encourage the development and diffusion of eco-friendly technologies.

(D) Anti-corruption:

Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

The UNGC program asks corporates to publicly announce their commitment to these principles. They can do so by putting it on their web sites and including in their annual/periodic reports. Several thousand organizations from more than hundred counters are signatories to the UNGC.

Another set of guidelines has been released by the Ministry of Corporate Affairs, Government of India. These are known as National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business. The nine basic principles are listed below:

Principle 1: Businesses should conduct and govern themselves with ethics, transparency and accountability.

Principle 2: Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle.

Principle 3: Businesses should promote the well-being of all employees.

Principle 4: Businesses should respect the interest of and be responsive toward all stakeholders, especially those who are disadvantaged, vulnerable and marginalized.

Principle 5: Businesses should respect and promote human rights.

Principle 6: Businesses should respect, protect and make efforts to restore the environment.

Principle 7: Businesses, when engaged in influencing public and regulating policy, should do so in a responsible manner.

Principle 8: Businesses should support inclusive growth and equitable development.

Principle 9: Businesses should engage with and provide value to their customers and consumers in a more responsible manner.

There is yet another framework known as “Global Reporting Initiative.” It is a network-based organization whose goals include encouraging a systematic disclosure by corporates on economic, social and environmental performance.

It is obvious that guidelines or parameters on CSR are evolving at different levels. However, the basic emphasis is on disclosure and transparency. No doubt, corporates are in existence to create value and they are doing that. But, how they do it and for which category of stakeholders are equally important questions. This needs to be researched and discussed a bit more. The principles enshrined in the UNGC program or GOI Guidelines state that corporates, while making profits, should work toward promoting well-being of employees, improving the quality of life of the people, protecting environment, supporting inclusive growth and conducting business in ethical manner.

There is a debate on whether corporates should be mandated to spend a certain minimum percentage of their net profit (profit after tax or PAT) on CSR activities. Such mandatory requirement can have both its advantages as well as disadvantages. Be that as it may, CSR is a concept whose time has come and it is to be seen how business community responds to this new challenges (or new opportunity!). There is a clear role, in this new emerging field, for management academics and researchers. They can develop programs for training and capacity building, design reporting systems, create measurement scales and conduct research on the impact of CSR activities. JAMR would welcome research in this direction.

This issue of JAMR contains nine papers dealing with different themes of management research. Prof Sameer Prasad and his colleagues have discussed the role of supply chain networks and social capital on sustainable small businesses in the USA during the time of recession. Dr Madhurima Deb has developed and presented a fuzzy-AHP approach to evaluate customer's mall preference. Dr Sanjay Srivastava has taken the disaster-prone areas of India as the canvass to discuss the management of indigenous and scientific knowledge. In her research paper, Dr Divya Verma Gakhar has presented a few important findings on the stakeholder's perception on web-based corporate reporting practices in India. Dr Adarsh Garg and Prof D.P. Goyal have discussed strategic alignment of IS strategy with business strategy for SMEs. Dr Shevta Singh and her co-authors have discussed their new research findings in capital budgeting decisions in India. Ms Prachi Pandey and her co-authors have presented important findings of their research on the role of HR practices in supply chains. The paper by Dr M. Birasnav and Dr S. Rangnekar presents the findings of an empirical research on the role of employees’ career management process in the context of relationship between human capital and interim leadership. Dr Appadoo and his team have developed an Economic Order Quantity model for inventory management, when certain information is uncertain.

We have observed that, in recent years, we have been receiving a larger number of research papers for our journal. This is certainly an indicator that we are closer to the main purpose for which we are publishing JAMR, i.e. dissemination of quality management research to the academia and industry. We will continue to serve this noble cause. Needless to say, we look forward to continued support from researcher as well as reviewers.

Surendra S. Yadav and Ravi ShankarDepartment of Management Studies, Indian Institute of Technology Delhi, Hauz Khas, New Delhi, India