Social Responsibility and

Good Governance

Chapter 8
Ethics and Corporate Social
Responsibility
Chapter 8.
□ Objectives:
■ evaluate the arguments – pros and cons
of CSR
■ Examine the distinction between ethics in
business and CSR
■ Justify the long-term effect of CSR to the
stakeholders of the business
■ Appreciate the history of the development of
CSR
The concept of CSR
□ Extending beyond the business’
compliance with laws and other legal
requirements.

□ Fulfilling the moral obligations of the

business by involving itself with
commitment and activities that
contribute to and help improve the
condition of the society, the community
and the environment.
CSR from historical perspective
□ The ancient and medieval period
■ People believed that wealthy people and
businessmen should do business as part of public or
social service
■ Greeks & Romans treated businessmen next to slaves
■ The elite condemned businessmen in the belief that
they are using their money for profit instead of
service to the community
■ Business was criticize as evil
■ Catholic church didn’t trust the business system
■ St. Thomas Aquinas justified that business could
exist as long as it was used for the good of the
community
□ The period of Mercantilism
■ Politico-economic philosophy
■ European government actively participated in the business
activities & established monopolies
■ Acquisition of gold & silver through trade is the source of
power & prestige
■ Colonization of territories become rampant as source of raw
materials & cheap if not free labor
■ Galleon Trade or Kalakalang galyon
■ Mercantilism showed several violations of social
responsibility
■ Colonies were exploited
■ slavery
□ The industrial revolution
■ Time when machines were introduced
■ Change in businessmen’s attitude and values towards
■ Businessmen regarded wealth as symbol of moral
excellence
■ The concept of absolute free enterprise became an
argument
■ The concept of CSR was rejected
■ Promotion of individualist philosophies that the government
must not interfere w/ the activities of business
■ Businessmen reasoned that the government should
encourage the growth of unregulated business
■ The capitalist of England benefited more from this idea
■ Workers including children and elderly were exploited and
forced to work with low wages
■ 6 hours rest and sleep
■ Capitalist abused unrestrained business activities by
cheating & selling their poor quality products at very high
price
■ Karl Marx & Robert Owen fought against the capitalist
exposing abuses. “social reformist”
■ The emergence of big corporations also happened in this
period
■ CSR was totally absent since big corporations acted above
the law
■ Big corporations created their own law
□ After the period of depression (1930s to
present)
■ Protected the welfare of the public against the abuses of
businesses
■ Business viewed CSR as adherence to rules & regulations &
compliance w/ administrative & legal standards
■ Ethics in business & CSR are now given serious attention by
more & more companies
■ Businesses started to realized that success lies in earning
the confidence and respect of the society
■ Businesses became morally responsible, emphasizes both
legal & ethical behavior
■ CSR has become business pursuit, started integrating CSR
as part of their corporate structure & processes
Historical phases of CSR
Phase 1. Profit Maximizing
Management (1800s-1900s)

Phase 2. trusteeship Management

(early1900s)

Phase 3. Quality of Life Management

(1930s)
□ Phase 1
■ Management must maximize profit
■ Individual drive for profit maximization would ultimately
create wealth for the nation
■ Business systems as profit maximers & tools to eliminate
economic scarcity
■ Ignored unsafe working condition, paid starvation wages,
child labor in order maximize profit
■ Cultural minorities, unsafe products, unfair advertising,
urban poor problems were given little attention
■ Abuses of capitalism were rampant and tolerated by the
government
□ Phase 2
■ Management was considered both as an instrument
of stockholders & as a trustee for all groups who
contribute to the business enterprise.
■ Management, aside from profit maximization are also
concerned on maintaining fair balance in the
interests of the stakeholders
□ Phase 3
■ Security of basic goods & services are no longer principal
problem
■ Concept of CSR was expanded through social & economic
growth
■ Society demanded management’s participation in solving
social and environmental problems
■ Business is expected to contribute to the improvement of
quality of life.
■ Society is unstable if quality of life of people is poor.
Business contribute to good quality of life and society
■ A prosperous society is the best venue for business to
thrive. Business will benefit from its own investment
Assessment on the practice of
CSR
□ Argument in support of CSR
■ Long-run self interest. Business in the long run will benefit
from its own investment
■ Business resources. Use the resources in the improvement
of societal & environmental conditions
■ Viability of business. Must contribute to the society
economic & services wise.
■ Public image. Charitable, civic & socio-economic projects
are some of the activities where business take part.
■ Profit from social problem. Turn problems into profit by
being creative.
□ Argument against the practice of CSR
■ Profit maximization. CEOs & managers are responsible to
investors & stockholders, profit wise of the business, but
not in the concerns of society
■ Lack of social skills. Businessmen lack the approve skills in
solving social concerns. But this should be the
government’s concern
■ Lack of social accountability. Solution to social needs &
problems should not depend on businessmen.
■ Higher product cost. Participation to civic, social works &
charitable activities, adds to the company’s expenses.
The four corporate
responsibilties
□ Philanthropic Responsibilities – DESIRED of
business by society
□ Ethical responsibilities – EXPECTED of
business by society
□ Legal Responsibilities – REQUIRED of
business by society
□ Economic Responsibilities – REQUIRED of
business by society
□ Social responsibility towards consumers
■ Companies should fulfill & be conscientious
of their social responsibility towards the
customers
■ do not cheat, exploit & abuse the consumers
□ SR towards the community and the
environment
■ Business benefits so much from the environment
■ Business should be responsible in preserving the &
maintaining the balance of nature to avoid depletion
of resources.
Activities related to CSR
□ Establishment of certifying bodies to develop standards,
programs & to train and certify employees (e.g. ISO,
TQM, 5S of good housekeeping, OHS, health, safety &
environmental accreditation
□ Customer care, people skills, CRM training. Training for
continuous development of employee
□ Improvement of compensation & benefits package
□ Establishment of programs for protection & preservation
of environment
□ Active participation in socio-civic & charitable activities
□ Development of customer complaint desks or hotlines
Activities related to CSR
□ Hiring of competent & technical employees to ensure
manufacturing of high quality standards
□ Training quality people that will handle all aspects of
business processes
□ Application of good manufacturing practices & advance
quality assurance standards for safe & good quality
products including handling & packaging
□ Strengthening of ties with agencies & creating organizing
bodies that promote, monitor & recognize companies
that adhere to their moral obligation
 CSR Programs of Selected Private
Hospitals in Cavite
□ Most of the beneficiaries belonged to age
bracket 25-31, majority were female and most
of them are married and college graduates
□ Budget allocation – P1,000 – 25,000
□ Health care is the most implemented program
because it enhanced the hospitals’ corporate
reputation and good will.
□ Inadequacy of sponsor is the most common
problem encountered in the implementation of
the program
□ Research study of Cabante, A. I., Panganiban, CD. D. & Yu, JA. P.