Role of CSR in Community Development

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VSRD
-
IJBMR,

Vol. 1 (9
), 2011,
1
-
5


____________________________

1
Research Scholar
,
MBA Department
,

Acharya Nagarjuna University, Kothagudem
,
Andhra
Pradesh
, INDIA
.
*Correspondence :
swapnaram77@gmail.com

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Role of CSR in Community Development

1
P. Swapna
*

ABSTRACT

Over the years the social involvement of corporate has been increasing. Earlier corporate entities were mainly
focused on their economic objectives


profitability, cost of production, margins etc. However, these days’
corporate entities are posed with the challenge pertaining to the social responsibility of business. Earlier social
responsibility was mainly the co
ncern of universities, non
-
government organizations, non
-
profit organizations,
charitable trusts, churches, etc. As such the idea of social responsibility of business is not new. Prominent
business houses such as Tatas, Birlas, and the Bajaj group, had ing
rained contribution to society as a separate
mission in their philosophy of business.

Business depends on the society for the needed inputs like money, men and skills for existence, substance and
encouragement Once society ceases to have any use for busine
ss, it has no place and reason to live. Being so
much dependent, business has definite responsibility towards community development.

Keywords:

***

1.

INTRODUCTION

1.1.

Role of CSR in Community Development

1.1.1.

Meaning of Community Development

First of all community is

generally defined as a group of people sharing a common purpose, who are
interdependent for the fulfillment of certain needs, who live in close proximity and interact on a regular basis.
There are shared expectations for all members of the group and respo
nsibility taken from those expectations.
The group is respectful and considerate of the individuality of other persons within the community. In a
community there is a sense of community which is defined as the feelings of cooperation, of commitment to the
group welfare, of willingness to communicate openly, and of responsibility to and for others as well as to one’s
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self. Most important there exists community leaders who are responsible for the success of any community
event, depending on the needs of the c
ommunity, and the individual’s own feelings. The community leaders are
individuals who strive to influence others to take responsibility for their actions, their achievements, and the
community welfare.

CD is the process of developing active and sustainabl
e communities based on social justice and mutual respect.
It is about influencing power structures to remove the barriers that prevent people .participating in the issues that
affect their lives. Community workers facilitate the participation of people
i
n
this process. They enable linkages
to be made between communities and with the development of wider policies and programs. CD expresses
values of fairness, equality, accountability, opportunity, choice, Participation, mutuality, reciprocity and
continuous
learning. Educating, enabling and empowering are at the core of CD (Federation of Community
Development Learning, 2009).

Another term closely related to CD is community work, which is about the active involvement of people in the
issues that affect their l
ives and focuses on the relation between individuals and groups and the institutions
which shape their everyday experience. It is a developmental process that is both a collective and individual
experience. It is based on a commitment to equal partnership
between all those involved to enable a sharing of
skills, awareness, knowledge and experience in order to bring about change.

It takes place in both neighborhoods and communities of interest, whenever people come together to identify
what is relevant to th
em and act on issues of common concern.

The key purpose is to work with communities experiencing disadvantage, to enable them to collectively identify
needs and rights, clarify objectives and take action to meet these within a democratic framework which re
spects
the needs and rights of others. Community work recognizes the need to celebrate diversity and appreciate
differences among ethnic and social groups in the community.

2.

ROLE OF CSR IN COMMUNITY DEVELOPMENT

The issue of corporate social responsibility
(CSR) has been debated since the 1950s. Latest analyses by Secchi
(2007) and Lee (2008) reported that the definition of CSR has been changing its meaning and practice. The
classical view of CSR was narrowly limited to philanthropy and then shifted to, the
emphasis on business
-
society relations particularly referring to the contribution that a corporation or firm provided for solving social
problems. In the early twentieth century, social performance was tied up with market performance. The pioneer
of this v
iew, Oliver Sheldon (1923, cited in Bichta, 2003), however, encouraged management to take the
initiative in raising both ethical standards and justice in society through the ethic of economizing, i.e. economize
the use of resources under the name of effici
ent resource mobilization and usage. By doing so, business creates
wealth in society and provides better standards of living.

The present
-
day CSR (also called corporate responsibility, corporate citizenship, responsible business and
corporate social opport
unity) is a concept whereby business organizations consider the interest of society by
taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders,
communities and other stakeholders as well as their environmen
t. This obligation shows that the organizations
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have to comply with legislation and voluntarily take initiatives to improve the well
-
being

of employees and their
families as well as for the local community and society at large.

3.

SKILLS NEEDED BY CSR MANAGER
S IN COMMUNITY DEVELOPMENT

The success of CSR is determined by both internal and external factors. Internal factors are economic
considerations, culture of the firm including the CEO and employees, and ethical influences; while external
factors are complia
nce with legal requirements and technological influences as well as national culture (Bichta,
2003). Skills possessed by CSR managers are among the internal factors determining the success of CSR
practices especially in helping community. Because CSR profe
ssion is so new, transferable skills and
knowledge from other related specialization such as environmental management, business ethics, community
development, and human resource development are valuable.

Specific skills for CSR managers are very hard to cl
arify due to the diverse roles and range of disciplines
involved. However, based on the UK’s experience in CSR (Career Service, 2009), three main areas of skills are
relevant. They are business skills, people skills and technical skills. Business skills in
clude building insight,
communication skills, decision making, commercial awareness, information technology, innovation, strategic
awareness, leadership and problem solving. People skills cover adaptability and empathy, developing others in
the community,
influencing without power, integrity, political awareness, altruism, volunteerism, and adult
learning. Finally, technical skills include technical expertise, understanding evaluation and impacts, stakeholder
dialogue, human rights and understanding sustain
ability. Based on the above skills grouping, CSR managers
should have six core competencies. They are understanding community and community development, building
capacity, questioning business beyond profit making, stakeholder relations, strategic business

and community
partnership, and harnessing diversity. Hence, CSR managers have a wide range of career options such as in
marketing, human resources, health and safety, environmental management, ethical investment, public relations,
ethical science, communi
ty resource development and social research.

4.

AREAS OF
CORPORATE SOCIAL RESPONSIBILITY

CSR simply refers to strategies corporations or firms conduct their business in a way that is ethical and society
friendly. CSR can involve a range of activities such as
working in partnership with local communities, socially
sensitive investment, developing relationships with employees, customers and their families, and involving in
activities for environmental conservation and sustainability.

Managers should pay particul
ar attention to their social responsibility that can be grouped under eight headings
as fallows:

1)

Ecology and environment quality

i)

To maintain pollution


free environment.

ii)

To ensure dispersion or spread of industries.

iii)

To ensure beautification and proper
land use.

2)

Consumption

i)

To provide true and fair business dealings.

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ii)

To provide product warranty and service.

iii)

To ensure control of harmful products.

iv)

Adequate information about product.

3)

Community needs

i)

to provide expert service for local problems.

ii)

To ensure he
althcare facilities and education.

4)

Government relations

i)

To encourage restriction on lobbying.

ii)

Controls of business through political action.

5)

Minorities and backward communities

i)

to provide training to the unemployed.

ii)

To provide equal employment opportunity.

iii)

To locate plants and offices in minority areas.

iv)

To encourage minority business by purchasing from them.

6)

Labor relations

i)

to maintain improved occupational health and safety.

ii)

To ensure provision of day
-
care centers.

iii)

To provide options of flexible working ho
urs.

iv)

Employee’s education and training practices.

7)

Shareholder relations

i)

to take care of shareholders interests.

ii)

To make improved financial disclosures.

8)

Corporate philanthropy

i)

To provide financial support for promotion of arts and culture.

ii)

To arrange for sp
ecial scholarships and gifts for the education industry.

iii)

To provide financial support for charities.

5.

OBLIGATION OR RESPONSIBILITIES TOWARDS DIFFERENT GROUPS

The Responsibilities of management towards various groups are discussed below

:

i)

Business to own
ers or shareholders.

ii) Business to customers.

iii) Business to government.

iv)

Business to suppliers.

v) Business to community.

vi)

Business to employees.

5.1.

Responsibility Towards Shareholders Or Owners

(1) Responsible Dividend:
Shareholders

are a source

of funds for the company. they

expect a high rate of
dividend on the money invested by them and also the maximization of the value of their investment in the
company.

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(2) Soundness :
I
t is the duty of management to see that financial position of the compa
ny is sound and the
company always looks for growth.

(3)

Information :

I
t is the responsibility of the management to keep the shareholders well informed about the
progress and financial position of the company

(4)

Protection of Assets :
T
he assets of the
company are purchased with the funds provided by the share
holders. The management is responsible to safeguard these assets.

5.2.

Responsibility Towards Workers /Employees

Fair Wages
: every business should pay reasonable wages and salaries to its employees so t
hat they may satisfy
their needs and lead a good life.

Good working conditions
: since workers spend about eight hours on every working day at their work place,
they must be provided with good working conditions are necessary to maintain the health of the w
orkers.

Co
-
operation
: it is the responsibility of the management to win the co
-
operation of the workers by creating the
condition in which workers are willing to put forward their best efforts towards the common goals of the
business.

Opportunity for growt
h
: the

workers should be helped by training and other means to improve their skills.
Management should give the workers adequate opportunities to develop their capabilities through training,
education, and the enjoyment of freedom to the greatest possible
extent.

5.3.

Responsibilities Towards
Customers

Customer satisfaction is the ultimate aim of all economic activities. This involves more

the over of products at
the lowest possible price. adulteration of goods,
poor quality, failure to give fair measure, lack o
f service and
courtesy to the customers, misleading of dishonest advertising are some of the examples of violation by business
of its obligations towards the customers of it s products. Therefore, it is the duty of management to take care of
the following
points:

1)

Need satisfaction

2)

Regular flow of goods

3)

Courteous service

4)

Right information

5)

Fair trade practice
.

5.4.

Responsibility Tow
ards Suppliers

Management should deal with the suppliers judiciously. Their dealings with the suppliers should be based on
integrity and courtesy in the absence of which the suppliers will not supply them the goods on credit.

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6.

Responsibility Towards Society

PETER DRUCKER

suggested that the business should be so managed as to make the public good the private
good of the enterprise. Thus, every business owes an obligation to the society at large. The specific
responsibilities of business towards the society are discussed be
low:

1)

Socio
-
economic objectives

2)

Improvement of local environment

3)

Employment opportunities

4)

Welfare activities

5)

Business ethics etc.

7.

ARGUMENTS FOR SOCIAL RESPONSIBILITY

Changed public expectations of business
:
one of the most potent arguments for social responsibility is that
public expectation from business have changed. It is reasoned that the institution of business exists only because
it satisfies the valuable needs of society.

Therefore, if business wishes

to remain viable in the long run, it must respond to society’s needs and give the
society what it wants.

Better environment for business
: social responsibility creates a better environment for business. This concept
rationalizes that a better society prod
uces environmental conditions more favorable for business operations.


Public image
: another argument in favor of responsibility is that it improves public image. Each individual firm
seeks an enhanced public image so that it may gain more customers, bette
r employees, more responsive money
markets and other benefits.

A

firm which seeks better public image should support social goals.

Duty to gratitude
: business units benefits from society. On the basis of the commonly accepted principle that
one owes debts
of gratitude towards those who benefit us, the corporation has certain debts that it owes to the
society.

Hence, in this way we have few more arguments like business has the resources, balance of responsibility with
power, prevention is better than cure, m
oral responsibility, let business try.

8.

ARGUMENT
S AGAINST SOCIAL RESPONSIBILITY

1)
Profit maximization
:

the first and the most forceful argument disfavoring social responsibility is that
business has profit maximization as its main objective. Infact, the bu
siness is most socially responsible when it
attends to its interests and leaves other activities to other institutions.

2
) Society has to the cost
;

another argument is that the costs of social responsibility will be passed on to the
society and it is the s
ociety which must bear them. Can the society afford these additional costs?

3
) lack of accountability
;

another point of view is that the businessman have no

direct accountability to the
people, therefore, it is unwise to give businessmen responsibility for

areas where they are not accountable.
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Accountability should always go with responsibility, and it is poor social
Control any aother kind of
arrangement
.

4)
Social overhead cost
:
cost on social responsibility is considered to be a social cost, which will
not
immediately benefit the business. Why spend money on an object, the benefits of which will be realized only in
the future? It is the heavy social overhe
a
d cost which is one of the reasons for the miserable performance of
some of our government undertak
ings.

5
) Lack of social skills
: business managers are best at managing matters relating to business. They are not
equally good at solving social problems. Their outlook is primarly eco
nomic and that there skillsare
the same.
They really do not feel at home
in social
.
.
matters. Corporate like the
L
albhais,
M
afatlals and
S
horffs have
already

attempted to bring in management profestionals into the social responsibility area.

Thus, if we can overcome these arguments against social responsibility then we can achi
eve proper community
development.

9.

COMMON ROLES OF CSR IN COMMUNITY DEVELOPMENT

From the above meaning of CSR, it is undeniable that CSR has implications on community and CD in many
ways. Based on the report of Towers Perrin (2009) CSR is the third most imp
ortant driver of employee
engagement overall. For companies in the U.S. for instance, an organization's stature in the community is the
second most important driver of employee engagement, and a company's reputation for social responsibility is
also among
the top 10 drivers.

The role of CSR in CD used in this paper is any direct and indirect benefits received by the community as
results of social commitment of corporations to the overall community and social system.

The common roles of CSR in CD are discuss
ed as follows:

1.
To share the negative consequences as a result of industrialization.

2.
Closer ties between corporations and community.

3.
Helping to get talents.

4.
Role in transfer of technology (TOT)

5.
CSR helps to protect environment.

6.
CSR is for human right corporate sustainability.

7.
Interdependency between a corporation and community.

8.
A CSR program can be seen as an aid to alleviate poverty.

9.
A CSR program helps in data gathering for other public organization function

10.
for

corporate sustainability goals.

10.

CONCLUSION AND FUTURE SCOPE


It is also concluded that skills needed by CSR managers do vary due to the diverse disciplines involved and also
the complexity of the roles and responsibilities of a CSR initiative. There are
no specific qualifications required
for this field. Because the field is new, transferable skills and knowledge from other related specializations such
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as environmental management, business ethics, transfer of technology, human resource management and
comm
unity development, are valued. In short, the skills required by CSR managers are classified as business
skills, people skills and technical skills; and the specific skills required are further determined by the mission
and vision of the organizations where

the CSR managers serve.

As such, this analysis suggests that comparative studies should be conducted on the differences between
strategies adopted by the two firms in terms of emphases and orientations in CSR, the specific roles of CSR
programs to communi
ty and society at large, and specific business, people as well as technical skills that the
CSR managers should possess.

CSR organizations in many developing countries including Malaysia consist of local and international firms. It
is also suggested that s
tudies on how CSR firms

Strive during the present economic crisis are worthwhile to embark on; however, they should be aware of the
fact that moving towards achieving firms’ economic goals should be without jeopardizing the social goals.

11.

REFERENCES

[1]

Barton,

J. H. (2007). New Trends in Technology Transfer: Implications for National and International
Policy, Issue Paper No. 18.

[2]

Geneva: International centre for Trade and Sustainable Development (ICTSD).

[3]

Bichta, C. (2003). Corporate socially responsible industry

(CSR) practices in the context of Greek. Social
Responsibility and

Environmental Management, 10, 12
-
24.

[4]

Career Service (2009). Corporate Social Responsibility and Ethical Careers. Available at:
http://www.careers.ed.ac.uk, accessed on 12 Dec. 2008.

[5]

Hrm
.Thakur publication .pgno.264