Recent business scandals have shaken public confidence in corporate world. The Satyam scandal of falsified accounts and Lehman brothers collapse has placed such unethical behavior front and centre by the media. Such scandals may have exacerbated events such as 26/11, the economic downturn causing investors to abandon the stock market in search of investment opportunities. In the aftermath of these acts the business community should be rethinking its responsibilities to various public concerned in the operations. For Example “A new Guide from Non government Profit business for social responsibility out lies how ethical behavior should be embedded in company’s operation. Thus the Public is focused now more than ever on what firms is saying about “Corporate Social Responsibility”
CSR describes the relationship between business and society. An exact definition of CSR is difficult since beliefs and attitude regarding the nature of this association fluctuate with the relevant issues of the day. Milton Friedman contributed to the creation of General CSR theory by asking question such as “Should companies take responsibility for social issues?”He argued that business is to increase profits by legal means. Critics of this perspective argue that business exists to serve a larger community as well as direct and indirect beneficiaries of company’s operation.CSR may be in general terms be “The obligation of a firm to use its resources in ways to benefit the society through committed participation as a member of society taking into account the society at large and improving welfare of society at large independent of the company’s direct gains. Fulfilling companies ethical obligations to employees even meeting diversity needs are expressed in terms of their market place goals and objectives. The same principle can be applied to constituencies like customers, stakeholders. “What is good for General Motors is good for the country” is one of the CSR message directed toward the society.
Tomorrow’s Company, an independent, business led think tank, fears that CSR is moving in the wrong direction. In a paper entitled “Redefining CSR,” Tomorrow’s Company Director Mark Goyder worries that “CSR is at a crossroads and in danger of becoming the victim of its own success.” The paper defines two types of CSR: “compliance” CSR and “conviction” CSR. According to Goyder, “compliance” CSR is driven by external expectations and reporting pressures, and leads to a box-ticking mentality. On the other hand, “conviction” CSR is directed by the vision and values within a company; therefore, “behaviors flow naturally from the company’s purpose and values.” “Under [compliance CSR], CSR will not make a long-term impact on company performance and the society and the stakeholders companies serve. As companies take CSR more seriously something is being lost.
“CSR is too important to be left to CSR managers”.