The Catholic University of East Africa
The Graduate School of Business
Unit: CMM 610 – Corporate Governance and Social
Responsibility
Student Name: Hatim Aliasgher Rampurwala
Student Registration Number: 1040106
Lecturer: Dr. Susan Wasike
Topic: Assignment 1
Date of Submission: 11/02/2021
Purpose of an Organization in relation to CSR
Introduction
Carrol (2006) states “It appears that the corporate social responsibility concept has a
bright future because, at its core, it addresses and captures the most important concerns of the
public regarding business and society relationships”. Corporate Social Responsibility (CSR)
is now a firm and irreversible part of the corporate management system. If managed properly,
it can confer significant benefits to the organization and add tremendous value, both
internally and externally. This paper defines the meaning of CSR from various authors,
explains the purpose of CSR and its relation with an organization, and then explains how
CSR adds value to the organization.
Meaning of CSR
Clearly a company has a responsibility to make a profit, grow and develop. It is also
obliged to follow and obey the laws of the country, its environment. The idea of a business to
have an obligation to cultivate social upliftment took root in the 19th century (Gamble &
Arthur A. Thompson, 2011). Corporate social responsibility was conceptualized by Carroll
(1979) as “the social responsibility of business [which] encompasses the economic, legal,
ethical, and discretionary expectations that society has of organizations at a given point in
time”. It is defined further by Gamble and Thompson (2011) as they explain that “The
essence of CSR is that a company should strive for balance between its economic
responsibility to reward shareholders with profits, its legal responsibility to comply within
the laws of countries where it operates, the ethical responsibility to abide by society’s norms
of what is moral and just, and a philanthropic responsibility to contribute to the
noneconomic need of society (Gamble & Arthur A. Thompson, 2011).”
Furthermore, Cadbury (2002) states that “the broadest way of defining social
responsibility is to say that the continued existence of companies is based on an implied
agreement between business and society and that the essence of the contract between society
and business is that companies shall not pursue their immediate profit objectives at the
expense of the longer term interests of the community.” Pearce and Robinson (2009), define
CSR as “the idea that business has a duty to serve society in general as well as the financial
interest of stockholders”
According to these meanings it is understood that every organization is obligated to
carry this ethical philanthropic responsibility towards the society in return for its prosperity
and growth. Today, there are many common practices and initiatives that organizations
devote both time and economical resources to partake in this social beneficial drive, which
are:

Actions to protect the environment and to minimize or, preferably, eliminate impact
on the environment deriving from the company’s own activities. From a social
perspective there are not only compelled to follow the laws but act as representatives
of the environment.

Actions to create a work environment that enhances the quality of life for employees.
An example for this action can be taken from Apple Inc. Apple Park, the
headquarters of Apple Inc. is an exemplary office space which enhance the quality of
life for its employees. 80% of the area is dedicated to the nature, also, it includes a
wellness center, a healthcare clinic and program, Cafes in which meals are free of
charge, and many more amenities which boosts focus, innovation and creativity as
well as morale within the workforce.

Actions to build a diverse workforce, with respect to gender, race, and nationality.
Organizations must put an extra effort to ensure that their offices attract ethnic
minorities.
Purpose of CSR in an Organization
Tantram (2019) explains the purpose of CSR in an organization as important as
sustainability. In his book, ‘Sustainable Business Management’, the term “sustainability”
refers to a “balanced management of environmental and social risks and impact (Tantram &
Tantram, 2019)” which uses CSR, corporate sustainability, and corporate citizenship as
alternative terms. Another term which can be substituted is ‘Environmental and Social
Governance’.
Both authors view CSR and sustainability from a quite different perspective. They
emphasis on five principles for a sustainable business practice and management. Which are:

Focus on core business.

Address fundamental business dependencies, for example, resources, energy,
and supply chain.

Performance targets for the company as a whole.

Be capable of verification by independent third parties.

Drive responses which are sufficient and compatible with the scale of the
environmental and social issues in respect to the company.
They further explain that CSR has often focused on employee engagement and philanthropy,
however, it sometimes does not meet the five principles stated above. Doing so, does not
bring sustainability nor responsibility to the organization in terms of efficiency, cost
reduction, and leaving an environmental foot print, hence, it is highly doubtful that it will
bring any social value to the organization. An organization must first look and focus on what
it controls, for example, products and services, and secondly what the organization depends
on, for example, resources, energy, and suppliers. Thirdly, it includes what and who the
organization is able to influence through its relationships and innovations.
Furthermore, the book discusses that while most leading companies acknowledge the
importance of sustainability, they still struggle to weigh environmental and social issues
against economic ones. The core of CSR should be about the ability of CSR practitioners to
make the business case for sustainability as a driver to change business practice and strategy.
Many companies have established programs of CSR, but they ran parallel to the development
of the general business strategy, not influencing company direction or decision making.
Supporting claims stated above, Pearce and Robison (2009) explain that it is crucial
for businesses to find the right balance, “Philanthropy without active management [for
example] cash donations has been criticized as narrow, self-serving, and often motivated to
improve the corporation’s reputation and keep nongovernmental organizations and other
naysayers at bay (Pearce II & Robinson , 2009)”. On the other hand, the redirection of the
company towards socially responsible missions can leave the management and its employees
unfocused on the core mission of the organization.
Adding value internally
According to Gamble and Thompson (2011), CSR generates great benefits within the
organizations in term of employee recruitment and retention, as well as training costs.
Organizations with good reputations for their contribution to the betterment of the society
attract and retain motivated employees because of the ethical and moral cause of joining an
organization which plays an important role uplifting the society. Work productivity of these
employees automatically increase by a mere belief that they are being part of something
which benefits the society. Training costs are decreased as employee retention are increased,
due to lack of replacing employees for certain tasks which require training.
Also, corporations that offer part-time and adjustable work schedules have realized that
this can lead to reduced absenteeism, greater productivity, and increased morale. For
example, DuPont1 opted for more flexible schedules for its employees after a survey revealed
50% of women and 25% of men considered working for another employer with more
flexibility for family concerns.
Sharma (2013) emphasizes that employees are a company's most valued asset, meaning
treating employees with respect and offering fair working conditions. It also means
establishing fair hiring practices and promoting a non-discriminatory workplace. This
improves morale within the workplace and encourages teamwork. Furthermore, she discusses
that one of the greatest benefits of promoting social responsibility in the workplace is the
positive environment the organization builds for their employees. When employees and
management feel that they are working for a company that has a true conscience, they will
likely be more enthusiastic and engaged in their jobs. This can build a sense of community
and teamwork which leads to more productive employees.
Productive employees more than often lead to positive numbers in sales and profit;
hence they directly increase the value of the organization as its numbers increase.
Additionally, the intangible value of the organization increases as happier and satisfied
employees send a positive cognitive message to the society in favor of the organization.
Adding Value Externally
Every smart firm or organization targets long-run profitability, by accounting all costs
and benefits, however some costs and benefits may not be claimed. CSR is one of these
factors which contributes to the costs and benefits of the organization but are not easily
quantifiable when accounted for. Therefore, some organizations risk subordinating social
consequences to other quantifiable performance results. Cost-benefit analysis of CSR have
not been very successful due to several factors. Some SCR activities incur no dollar cost by
accepting and encouraging donations and tax breaks. Additionally, philanthropic activities of
a corporation are also undertaken at a discounted cost as they are often tax deductible. On the
other hand, the benefits are also enormous, as it helps establish a general perception of the
involved companies within society. Secondly, it does not come at a prohibitive cost as
1
https://careers.dupont.com/us/en accessed on 09/02/2021.
consumers will invest in the product, as they believe that they are not only buying the product
but rather investing for a betterment of the society they themselves live in. Thirdly, these
practices may create savings, hence creating more economical expenditure to invest in further
R&D as well as other investments which benefits the organization. Organizations can also
create a new line of products, from which they are able to sustain and grow in a competitive
market.
Some argue that CSR costs are more than offset in the long run by an improved
company image and increased community goodwill. These intangible assets can prove to be
valuable in times of crisis. For example, Johnson & Johnson had been affected by the Tylenol
Cyanide crisis in 19822. Because it had established a solid reputation as a socially responsible
organization, the society accepted the company’s assurance of public safety, resulting in
minimization of financial damage to Johnson & Johnson.
Another example, Werby Parker, a fashion optics shop, combines CSR with
affordable fashion. It has succeeded in selling over one million pairs of high fashion specs at
a discounted rate of $95, 80% below the average $500 price tag from another producer. Other
than providing its customers with these benefits, they have invested deeply in building a lean
manufacturing operation to minimize costs. For their role in CSR, which is at its core, for
each pair of glasses sold, they provide international nonprofit partners with a monthly
donation of glasses. These partners then provide basic eye examination and teach the
community how to manufacture and sell glasses at very low prices. By 2017, Werby Parker
had donated more than two million pairs of glasses in 35 countries which impacted in a 20%
increase in personal income and 35% increase in productivity (Gamble, Peteraf, &
Thompson, 2019).
2
https://www.ou.edu/deptcomm/dodjcc/groups/02C2/Johnson%20&%20Johnson.htm Accessed on
09/02/2021.
https://www.nytimes.com/2002/03/23/your-money/IHT-tylenol-made-a-hero-of-johnson-johnson-the-recallthatstarted.html#:~:text=It%20has%20been%20almost%20two,tragic%20reality%20for%20Johnson%20%26%20Jo
hnson.&text=29%2C%201982%2C%20seven%20people%20died,the%20drugmaker's%20best%2Dselling%20pr
oduct. Accessed on 09/02/2021
Conclusion
“CSR is an idea whose time has come”3
CSR concerns the ways in which companies manage their relations with the society, it
is simultaneously an idea or a societal expectation. Either way every organization is now
urged one way or another to contribute to the society through CSR. This idea is now held
globally and rather viewed as a necessity rather than a strategy for a business. Additionally, it
adds value to the organization, internally and externally, as well as helps it reach
sustainability and develop long term growth.
3
Martin Wolf, Chief Financial Commentator, Financial Times (2002).
Works Cited
Carroll, A. (1979). A Three-dimensional Conceptual Model of Corporate Social
Perfermonce. Academic of Management Review, 4.
Carrol, A. (2006). Corporate Social Responibility: A Historical Perspective. In M. Epstein, &
K. Handson, The Accountable Corporation . Westport, CA: Prager Publishers .
Cadbury, S. A. (2002). Corporate Governance and Chairmanship: A Personal View. Oxford:
Oxford University Press.
Mallin, C. A. (2010). Corporate Governance (Vol. 3). New York, USA: Oxford University
Press.
Gamble, J. E., & Arthur A. Thompson, J. (2011). Essentials of Strategic Management. Irwin:
McGraw Hill.
Tantram, J., & Tantram, D. D. (2019). Sustainable Business Management. London:
Terrafiniti.
Pearce II, J., & Robinson , R. (2009). Strategic Management: Formulation, Implementation,
and Control (11th Edition, International Edition ed.). New York: McGraw Hill.
Sharma, M. Y. (2013, September). Role of Corporate Social Responsibility in Organization.
Journal of Business and Management, 13(4), 1-8.
Gamble, J., Peteraf, M., & Thompson, A. (2019). Essential of Strategic Management: The
Quest for Competitive Advantage. New York: McGraw Hill Education .
Moon, J. (2014). Corporate Social Responsibility . Oxford, UK: Oxford University Press.
https://careers.dupont.com/us/en accessed on 09/02/2021.
https://www.ou.edu/deptcomm/dodjcc/groups/02C2/Johnson%20&%20Johnson.htm
Accessed on 09/02/2021.
https://www.nytimes.com/2002/03/23/your-money/IHT-tylenol-made-a-hero-ofjohnson-johnson-the-recall-thatstarted.html#:~:text=It%20has%20been%20almost%20two,tragic%20reality%20for%
20Johnson%20%26%20Johnson.&text=29%2C%201982%2C%20seven%20people%
20died,the%20drugmaker's%20best%2Dselling%20product. Accessed on 09/02/2021