The Conception Of Corporate Social Responsbility

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The present day conception of Corporate Social Responsibility (CSR) implies that companies voluntarily integrate social and environmental concerns in their operations and interaction with stakeholders. The World Business Council for Sustainable Development defines it as "the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life." (World Summit, 2002) It is related to complex issues such as environmental protection, human resources management, health and safety at work, relations with local communities, relations with suppliers and consumers. From a business perspective, companies which embed a social behaviour in their organisational structures and processes will be seen to have a competitive edge as they will be going beyond compliance Collier and Esteban (2007).

2.1.1 The Corporate Social Responsibility Concept

The concept of Corporate Social Responsibility is one of moral and ethical concerns which surrounds corporate decision making. It some cases, it also influences corporate behaviour. The fundamental aspect is to determine whether an organisation should indulge in certain activities or to abstain from doing so, because such can prove to be of benefit, or unfavourable towards society. Social matters deserve considerations of their own and should guide decision makers to consider the impacts of corporate activities on the society. Regardless of any environmental pressures, actions which pave to concerns, such as biodiversity or natural resources preservation are humanely praiseworthy.

However, some argue that the contribution of concepts such as CSR is just a reminder that the search for profit should be constrained by social considerations (Valor, 2005).

Increasingly, CSR is analysed as a marketing tool, hence competitive advantage, and not as an end in itself. In effect, the concept of CSR has evolved from being regarded as detrimental to a company's profitability; to being considered as somehow benefiting the company as a whole, at least in the long run (Porter and Kramer, 2002).

Hence, from a moral perspective, the focal point questioned is whether CSR and Marketing can be an integrated for the mutual benefit of businesses and society.

2.1.2 Marketing Perspectives

'Marketing is a pervasive societal activity that goes considerably beyond the selling of toothpaste, soap and steel. Political contests remind us that candidates are marketed as well as soap; student recruitment in colleges reminds us that higher education is marketed; and fund-raising reminds us that causes are marketed... Yet no attempt is made to examine whether the principles of 'good' marketing in traditional product areas are transferable to the marketing of services, persons and ideas.'(Kotler and Levy, 1969).

Hence, the integration of both CSR and marketing is not reasonable a new approach, taking into consideration the interpretation of these two scholars, as well as the below table, illustrating the broadening concept of marketing.

Time

Conception of Marketing

Emphasis

1900's

Concerned with the distribution of products

Physical distribution, economic and legal aspects of transactions

1920's

As the economics of distributive enterprise

Distributive institutions and their relationships

1950's

As the management of the distributive process

As distributive managerial decision process

As a social process

Management of the "4 P's" - Product, Price, Place and Promotion

Integrated decision-making - quantitative models

Behavioural inputs - consumer behaviour, system interaction, social responsibility

1960's

As a societal process

Marketing as one part of the social system - mutual interdependence

1970's

As a generic function applicable to both business and non-business institutions

Marketing is universal to all organisations

Table 1.1 The Broadening Conception of Marketing

Source: The Identity of Crisis in Marketing, Journal of Marketing,October 1974

The Chartered Institute of Marketing (CIM) as even proposed that the present definition of marketing be re-evaluated the meaning has unquestionably changed in the last 30 years (CIM, 2007). Furthermore, the present definition as per the American Marketing Association considers the community segment in its explanation, "Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large." (AMA, 2007)

Businesses which are market-oriented therefore attempt to include economical, legal, ethical and philanthropic responsibilities into their activities (Carroll, 1999) in the form of CSR.

CSR has conceptualised in a number of different ways which are related clearly to differing views regarding the role of business in society (Lantos, 2001). These views are often presented within the stakeholder-shareholder theories. The stakeholder perspective depicts that besides shareholders, the environment is affected by a company's activities and has to be considered in decision making, most probably, equally to shareholders (Freeman, 1998), In contrast to this idea, the school of thought which underlies the shareholder perspective is that the only responsibility of managers is to maximise the shareholders' wealth in the best possible way, using corporate resources to increase profit (Friedman, 1998).

These two theories have always been rekindled from time to time over the last two decades and have been debated considerably. "The economic crisis has revived the old debate about whether firms should focus most on their shareholders, their customers or their workers" (The Economist, 2010)

2.1.3 Stakeholder and Shareholder Theory

The shareholder perspective is one which follows the basic principles of corporate financing and aims at maximising the shareholder's wealth. The stakeholder theory challenges this same hypothesis and rejects the claim that the externalities of the organisation are voluntary players. Other views exist which try to merge both views, for instance, Asongu (2007) mentions that CSR can be a powerful marketing tool with the goal of making profit while contributing to society. He further added that the practice begins by examining the various viewpoints on the role of business in society

At present time, it can be seen that many organisations indulge in CSR by showing enthusiasm in accepting responsibility for their own action, and therefore, they nurture a sustainable reputation Stainer (2006). As a matter of fact, it is thereby recommended for companies to have a notion which is able to address this important feature, based on Freeman's stake holder view and capable of attending to both normative and instrumental aspects of CSR. The stakeholder perspective of CSR has turned to be an aspect which is unavoidable in the analysis and discussion of Corporate Social Responsibility as a Marketing Tool. Stakeholder theory is considered as "a necessary process in the operationalisation of corporate social responsibility, as a complimentary rather than conflicting body of literature" (Matten et al., 2003). It can be furthermore argued that it exists as a "stakeholder metanarrative" (Campbell et al., 2003) which underlies the CSR debate. In fact, analysis of literature reviews on social responsibility issues have shown that a consequent number of the authors who devote themselves to these areas of study have mostly drawn on stakeholder theory.

The relationship between society and business has been an evolutionary concept in CSR and in Section 2.2, the two different viewpoints, namely stakeholder and shareholder views will be discussed.

2.2 Perspectives on Corporate Social Responsibility

As mentioned above, there are two viewpoints which can be distinguished as regards to the role of business in society (Lantos, 2001). The Shareholder View, a classical outlook, based on neoclassical economic theory, and in which the role of business is in terms of purely economic profit making, focusing on the profit of the shareholders. The second view, being in contrast, is the Stakeholder View, which argues that companies have a social responsibility that requires them to consider the interests of all parties affected by their actions.

2.2.1 Shareholder View

Lantos (2001) has identified two perspectives in the Shareholder View: the "pure profit-making view"; and the "constrained profit-making view". The distinctive feature of this author's perspective is that some degree of dishonesty is acceptable because business people have a lower set of moral standards than those in the rest of society. He compared the ethics of business to those of the poker game. The lower set of moral standards permits what he calls "business bluffing" which includes things like conscious misstatements, concealment of pertinent facts, or exaggeration. A necessary component of a strategy, being deception, decision makers cannot afford to be misguided by ethics, as conceived in their private life. Hence, this denotes that an organisation can shape and mould its strategies on the mere basis of profit making so long that it stays within the legal framework.

The major advocate of the "constrained profit-making view" is Friedman (1998), who believed companies should behave honestly: that is, they do not engage in deception and fraud. The latter states that profit for shareholders should be the focal point of the company.

As per Friedman, it is argued that a company's purpose lies in making profits. The sole task of the business is to manage its resources by engaging in activities geared towards increasing its profits so long that it remains within the scope of the company. Given that managers are appointed by directors, they have are accountable and therefore, responsible to operate towards maximising the shareholder's wealth, hence making more money should be the sole objective. As per this perspective, given that the managers are using the resources belonging to the shareholders, it seems to be unethical to pursue socially responsible objectives by the use of the shareholder's capital - which will not be in favour of the shareholders. Soliciting companies to indulge in CSR activities goes against the concept of democracy, that is free-enterprise and private company system and it is argued that the social problems can be tackled by the Government.

Furthermore, though the view of Friedman is much known, his view had a conspicuous predecessor in Levitt (1958). The latter also stated that improving production and maximising profits was to be the main concern of companies. In itself, this practice can be as per the legal framework and in a proper environment, by acting honestly and in good faith and similarly, social problems were to be considered by the Government.

The classical view also has contemporary adherents. Their arguments, which can be associated with the "constrained profit-making view", have arisen mainly in debate with advocates of the stakeholder perspective.

Barry (2000) argues that companies can only engage in social responsibility activities where the markets in which they operate are less competitive, and that such engagement is a form of rent-seeking by managers. On the other hand, his argument revolves around to managers' usurpation of the political function by using companies' resources to further social goals. The difficulty in making appropriate decisions when the predominant authority of shareholders is removed and the purpose of maximizing shareholder wealth is disregarded in order to take into account a variety of interests is stressed by Barry when he argues that in such conditions decision-making in a company "would resemble that of a parliamentary assembly." The latter claims that it leads "to the politicisation of the company in that many stakeholders and a number of almost certainly competing purposes must now be considered."

Henderson (2005) is another of the modern critics of CSR. Whereby Friedman centralised his concern in managers adopting misguided objectives, Henderson's concern is on outside interferences with efficient resource allocation. Henderson argues that CSR adversely affects a company's performance. However, his argument against CSR rests primarily on the contention that it impairs the performance of business enterprises in their primary role, and would make people in general poorer. He is an resolute opponent of over-regulation, and views increased legislation in this matter to be harmful, and lead to decreased business activity. CSR is seen as leading to ineffective markets, reduced wealth generation and increased social inequity and poverty. He does not attribute any social responsibility related function to companies.

Other contemporary authors advocate the shareholder's wealth maximization as the one objective function to all companies but are not necessarily against the social responsibility objectives by companies. Basically these authors argue that having more than one objective creates difficulties for managers and some confusion in their decision making. On the other hand, having shareholder's wealth maximization as focus is believed to lead managers to decisions that enhance outcomes for multiple stakeholders. Jensen (2001), for example, considers that "200 years' worth of work in economics and finance indicate that social welfare is maximized when all companies in an economy maximize total company value." However, their basic point is that value seeking should be a company's only objective function and having as only objective making money for shareholders implies that managers should not be allowed to pursue moral goals at the expense of profitability.

The classical view is reasonable mainly on the basis of neoclassical economic theory arguments using perspectives such as the economic efficiency, free-enterprise and wealth maximisation. This viewpoint might be grounded in three different, but complementary ways:

Managers have no right to act on their own choices, to make discretionary decisions or to use the shareholders' resources - who are the owners of the company, to achieve social goals which cannot be directly linked to profits;

The companies' objectives to produce wealth, and pursue socially responsible objectives may impair their performance in that role interfering with efficient resource allocation;

Other groups exist to deal with the kind of function requested by socially responsible actions, such as government, and private companies are not equipped to be on such an arena.

Nevertheless, some authors like Podnar and Golob (2007) think that CSR is often useful in generating long-term shareholder value and it can be a balance of all policies and responsibilities which meet or exceed expectations, values and norms of stakeholders and society at large. Recently, the arguments that have been presented against CSR arise, at least in part, from the classical idea, that the sole objective of business is to maximise shareholder wealth and that CSR is a worrying development and that this "doctrine rests on mistaken presumptions about recent economic developments and their implications for the role and conduct of enterprises, while putting it into effect would make the world poorer and more over-regulated." Henderson (2010).

2.2.2 Stakeholder View

Stakeholder View is established on the idea that beyond shareholders, there are several stakeholders with an interest in the actions and decisions of companies. Stakeholders are "groups and individuals who benefit from or are harmed by, and whose rights are violated or respected by, corporate actions." (Freeman, 1998) In addition to shareholders, stakeholders include suppliers, employees, creditors, customers, and the society at large. Stakeholder theory implies that companies have a social responsibility that requires them to consider the interests of all parties affected by their actions and inactions. Managers should not only consider its shareholders in the decision making process, but also anyone who is affected by decisions of the company. In contrast to the classical view, the stakeholder view holds that "the goal of any company is or should be the flourishing of the company and all its principal stakeholders." (Freeman, 1999) It is important to stress that shareholders are stakeholders and that dividing the world into the concerns of the two is "the logical equivalent of contrasting 'apples' with 'fruit'." (Freeman et al., 2004)

Many fascinating types of stakeholders have been brought forward. Clarkson's thought of stakeholders is the most widely cited and accepted. Clarkson (1995) distinguishes primary and secondary stakeholders. Primary stakeholders are those "without whose continuing participation the corporation cannot survive as a going concern". The primary stakeholders may include shareholders, employees, potential or existing investors, customers and suppliers, and also authorities and the governments, not to say the society "that provide infrastructures and markets, whose laws and regulations must be obeyed, and to whom taxes and other obligations may be due", whereas secondary stakeholders are "those who influence or affect, or are influenced or affected by, the corporation, but they are not engaged in transactions with the organisation and are not essential for its survival."

Some limitations of this theory are more positioned in the difficulty of considering "mute" stakeholders (the natural environment) and "absent" stakeholders (such as future generations or potential victims) (Capron, 2003). The difficulty of considering the natural environment as a stakeholder is real because the majority of the definitions of stakeholders usually treat them as groups or individuals, thereby excluding the natural environment as a matter of definition because it is not a human group or community as are, for example, employees or consumers (Buchholz, 2004). Phillips and Reichart (2000) argue that only humans can be considered as stakeholders and criticize attempts to give the natural environment a status of stakeholder.

Furthermore, Donaldson and Preston (1995) argue that the stakeholder theory can be used in three different ways:

Normative. When it is used to deduce the moral or philosophical guidelines for the operations and management of companies.

Instrumental. When establishing a framework to identify the connections, or lack of connections, that is the ceteris paribus assumption, between the stakeholder management and the achievement of various corporate performance objectives.

Descriptive / Empirical. The company is viewed as a constellation of cooperative and competitive interests possessing intrinsic values. The theory therefore describes and explains the specific corporate characteristics such as the nature of the firm, the way it is being managed and about interests.

The Instrumental and Descriptive Theories are inextricably interrelated. It also brings about a complexity in relating to the Descriptive and Normative approach. Whilst the previous is descriptive by nature and attempts to assess the way things exist, the latter is prescriptive, and prescribes how things ought to be. The Normative and Instrumental Stakeholder Theories involve two conflicting approaches. The Normative approach views stakeholders as the "end". The Instrumental approach is more related towards the "means", that is how the stakeholders can enhance financial performance and efficiency of the companies.

Moreover, the Instrumental approach is more interested towards the factors to be taken into consideration and managed while the company is focused in the maximisation of shareholder's wealth. The basic, being that the interest of the stakeholders are considered as means for higher level goals, for instances, company growth and survival, not to mention maximisation of profit.

However, the main issue lies in the identification of the stakeholders, which managers view as most significant. Some writers mention that managers respond to the most powerful stakeholder issues, power being a stakeholder attribute. Other authors also mention about prioritising in terms of legitimacy.

Having established the importance of stakeholder management, a question that remains is which stakeholders managers view as most significant. Power is a stakeholder attribute that has been used to identify and prioritize stakeholders, with some authors suggesting that companies respond to the most powerful stakeholder issues.

Another perspective which is shared with the concept that companies are dutiable towards all other stakeholders beyond shareholders is the social activist perspective. Hence, companies should be managed in a way to engage in activities of social interests, even when same is not a demand from society. Companies should be involved actively "in programs which can ameliorate various social ills, such as by providing employment opportunities for everyone, improving the environment, and promoting worldwide justice, even if it costs the shareholders money." (Lantos, 2001)

2.3 Evolution of the Corporate Social Responsibility Concept

Frederick (1994) referred to the distinction between social responsibility and social responsiveness when he identified two stages of development in the thinking about Corporate Social Responsibility. The first stage, which he labelled CSR1, focused on CSR as an examination of companies' obligation to work for social betterment. In the 1970's, there was a shift towards the social responsiveness, which was labelled as CSR2, encompassing the capacity of companies to respond to social pressures. Frederick (1986) further extended his views by adding a third threshold, known as CSR3, which revolved around the social righteousness and same included "the notion of moral correctness in actions taken and policies formulated". In future works, Frederick (1998) refers to CSR4, whereby the need to enter a new stage "enriched by natural sciences insights" was being brought about.

In this section, the distinction between social responsibility and social responsiveness is of interest and will be developed.

The term "Social Responsibility" has been challenged as early as the 1970's. Sethi (1975) distinguishes between social obligation, social responsibility, and social responsiveness. The latter states that, like all other social groups, companies are an integral part of the community and must depend on acceptance of their role and activities for their existence, continuity and growth. When there is a difference in such a performance, between both corporate and social expectations, a legitimacy gap is said to exist. The essential issues in the CSR Concept are the search for legitimacy by companies and the doubts by critics about the legitimacy of companies' actions. Social Obligation can be defined as the corporate actions in response to marketing forces or legal constraints - and therefore, proscriptive. As for Social Responsibility, same denotes the congruence of corporate actions with prevailing social norms, values of expectations of performance - hence, prescriptive. Social Responsiveness suggests that the essence lies in the long term role of a company in a dynamic social system and now how the company responds to social pressures. The notion is that business orientation in any social dimension must be anticipatory and preventive.

Although Sethi's implication of social responsiveness could be noticed as a surrogate for social responsibility, other writers reject this viewpoint. For instance, Carroll (1979) argues that social responsiveness is not an alternative to social responsibility but rather "the action phase of management responding in the social sphere."

The concepts of social responsiveness and of corporate social performance can be seen as the Evolution of the Corporate Social Responsibility Concept.

In 1991, Carroll's "Three-dimensional Conceptual Model" was the initial model of corporate social performance. It was composed of an integration of three aspects:

a definition of social responsibility;

an identification of the social issues to which these responsibilities are tied, such as consumerism, environment, employment discrimination, product safety, occupational safety and health;

and the philosophy of responsiveness, that is the management's strategies responses to social responsibility and social issues.

Carroll (1991) presented CSR as a concept encompassing four categories of social responsibilities: economic, legal, ethical, and philanthropic.

Figure 2.2: Carroll's "Three-dimensional Conceptual Model"

Source: The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders, Business Horizons, July-August 1991.

Economic responsibilities revealed the thought that companies have a role to produce goods and services that consumers need and want, and to be profitable in the process. Legal responsibilities indicate that companies are expected to pursue economic manoeuvres within the legal framework. Ethical and philanthropic responsibilities cover the more general responsibilities to do what is right and avoid harm. For instance, ethical responsibilities embody those unwritten standards, norms or expectations that are not codified into law, but rather a reflection for what employees, shareholders, consumers and the community at large, derived from society. The companies' philanthropic responsibilities represent voluntary engagement in promoting human welfare and goodwill. Some examples can be summarised as contribution to education, or the community. This responsibility is more discretionary from a society's expectations and is not as clear-cut as in the ethical responsibilities.

As per Carroll, the economic responsibilities are the bases upon which all other three responsibilities are built and without which they cannot be achieved. However, companies are called upon to accomplish the four responsibilities at the same time. In contrast to the common belief that economic responsibility is related to what the companies do for their own stakes, and the other responsibilities are related to what they do for others, "economic viability is something business does for society as well."

As emphasized by Matten et al. (2003), the ethical behaviours and philanthropic responsibilities should be of an important consideration due to the demarcation they allow to establish between voluntary corporate behaviour and mere compliance.

Extrapolating from the "Three-dimensional Conceptual Model", an important update was offered by Carroll himself in Schwartz and Carroll (2003). These authors presented a three-domain approach in which the three core responsibilities of economic, legal and ethical are depicted in a Venn model framework. For main reason for such a proposal was due to the fact that the philanthropic domain was difficult to be distinguished from the ethical activities on both practical and theoretically levels, not to mention that philanthropic activities seldom have underlying economic interest. Hence, philanthropic responsibilities were subsumed under the ethical and/or economic domains. Schwartz and Carroll (2003) also argued that as the company can promote philanthropic or discretionary activities for economic or ethical reasons, or a combination of both responsibilities. In other words, when there is enhanced public image, or employee morale and increased turnovers, this does not imply a distinct philanthropic obligation, but can rather be classified under the economic motives.

Wood (1991) believes that the basic idea of CSR "is that business and society are interwoven rather than distinct entities; therefore, society has certain expectations for appropriate business behaviour and outcomes." She built upon the "Three-dimensional Conceptual Model" and stated to the principles of legitimacy, social responsibility and managerial discretion, with an understanding that the first can be referred as domains within which the latter are performed. The legitimacy principle is based on a company's overall responsibilities to the society in which it operates, mentioning about the expectations from companies. It functions on an institutional level and is proscriptive, that is, implying the community has existing penalties which can be applied when these obligations are not met. The principle of social responsibility operates at the organisation level. It relates to the fact that companies are accountable in the working out of problems which they have caused, and they are responsible in assisting to solve issues and social matters related to their operations and business interest. Finally, the principle which occurs on an individual level is managerial discretion. It depicts that managers' have a responsibility to behave morally and to proceed with decision making, taking into account activities designed to initiate socially responsible outcomes.

2.3.1 Corporate Social and Financial Performance

Corporate Social Performance can be referred to as the ability of a company to meet or exceed stakeholder expectations regarding social issues. From the stakeholder theory perspective, it can therefore be appraised in terms of the company to meet the demands of its diverse stakeholders, and seeking to satisfy their demands as an inescapable internal cost of doing business.

Clarkson (1995) argues that a stakeholder management framework is more useful to the analysis and evaluation of corporate social performance than models and methodologies based on concepts of social responsibilities and responsiveness. He states that it is essential to differentiate "between stakeholder issues and social issues because corporations and their managers manage relationships with their stakeholders and not with society."

Nevertheless, it is essential to understand that being responsive to stakeholders' demands implies the need to consider prevailing social norms and dominant views of corporate responsibilities. Stakeholders' expectations of companies are interwoven inextricably with the society's demands of business performance which over time, changes. Hence, the difference between stakeholder issues and social issues may not be as straightforward as it seems to be.

Hillman and Keim (2001) further state that to analyse the relationship between social performance and financial performance, it is practical to differentiate between two components of corporate social performance: stakeholder management and social issue participation. The two authors consider that these two components of social performance have opposing relationships to financial performance. Building good relations with the primary stakeholders is susceptible of leading to increased financial returns. Furthermore, it helps companies in developing valuable intangible assets in terms of capabilities and resources which can be a means of competitive advantage because these intangibles can demarcate a company from its competitors. In contrast, diverting from the primary stakeholders in view of accomplishing merely social goals may not bring such returns, as a matter of reasoning that indulging in social activities is something which can be easily replicated by competitors. Thus, one can deduce that social responsibility activities can pay off, as long as they are in the interest of a company's primary stakeholders. Hillman and Keim (2001) also mentioned that whereas stakeholder management can lead to shareholder wealth creation, participation in social issues does not have the same kind of result. Porter and Kramer (2006) added that the more closely a company assumes its social responsiveness, the greater is the company's opportunities to control its resources and capabilities, as well as benefitting the society at large.

2.4 Strategic Responsibilities

CSR is depicted as a two way relationship, which includes recognition on the part of the society, both as a matter of its significance and of the endeavours by companies to gain society's approval of its behaviour. Hence, it can be assumed that CSR relates to society's expectations about corporate practices and behaviours which management has to identify and comply with.

As addressed in Section 2.1, the CSR Concept is commonly used to consider the relationships between business and society, though recently, some concepts, for instance corporate sustainability and corporate citizenship have been brought forward to conceptualise these relations. Some academicians perceive these concepts as identical, whereas others consider some distinguishing aspects between them.

On the other hand, the theory of corporate social responsibilities brought forward by Lantos (2001) is deemed to be a useful development of Carroll's model, because it considered the main issue of demarcating ethical and philanthropic responsibilities that Schwartz and Carroll (2003) emphasized on, on the basis of concern with which companies engage is socially responsible activities. Based on their different natures, Lantos brought a new paradigm, involving three different responsibilities: ethical, altruistic and strategic.

As per Lantos, the ethical responsibilities refer to morally obliged ones. They imply preventive and corrective measures as regards to harm to social injuries, even if the company might not appear to have benefited from such efforts. It is crucial to understand that ethical responsibilities are required even if their accomplishment is unfavourable to the company's profitability. From this perspective, companies are imaged as "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. Even when the two parties to a transaction aren't harmed other parties (stakeholders) might be." (Lantos, 2001) Accordingly, the management does not have an obligation to maximize profits for the shareholders without regard to the means used.

Lantos (2001) further states that injuries cannot be always circumvented, but should be made to decrease in momentum, where possible. For instance, as per his arguments, the decision to relocate a plant because there has been a change in the procurement supply or there is a decreased in the sales, by virtue of changing tastes in consumer behaviour seems to be a financially sound decision. However, same involves complications for some of the employees and their community.

However, if it also implies a more efficient use of resources and therefore benefits society at large, "it is the socially responsible thing to do so long as injuries to workers are minimized as much as reasonably possible via means such as advanced notification and severance pay."

In addressing the social problems which have not been caused by the company and towards which, the company has not direct liabilities, companies play and altruistic role which functions beyond the ethical motives. It can therefore be argued that altruistic responsibilities involve the duties of casting away public deficiencies which have not been a result of the company's operations. It includes promoting social activities which are not morally mandatory, but instead, are beneficial for the company's stakeholders even at "at the possible, probable, or even definite expense of the business."

Ultimately, the strategic responsibilities denote the engagement in social responsibility activities only when there is an anticipation of benefit, for both the stakeholders and the company. In the scenario of altruistic responsibilities, the intention is not to benefit financially as a consequence of their fulfilment - although such can be an unintentionally event.

Contrasting with the strategic responsibilities, it can be said that companies contribute to their stakeholders because they consider it in their best financial interests, thereby fulfilling their duties towards stakeholders. Lantos arguments revolve around the fact that altruistic responsibilities are solely legitimate when they are strategic: that is, when they also further the objectives of the company.

Collier and Esteban (2007) however mention that effective CSR policies are a requirement for today's companies and that these policies should be delivered by corporate employees.

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