Literature Review: A Brief Story
The concept of CSR is existing in history but it got attention and recognition only in the last decade. In the 18th century, employers understood the importance of an efficient human resource in an organization and that a lack of proper food, medical facility, and housing will hamper the productivity of the workforce which will ultimately impact organizational growth. In recent times, medical, housing, and subsidized food facility is seen as a philanthropic effort, but in the past it was due to the self-interest of manufacturers (Carroll & Shabana, 2010).
Bernard Dempsey in 1949 in his article, “The Roots of Business Responsibility,” published in Harvard Business Review, suggested a guideline for responsible business practices. He suggested four concepts in terms of justice: Exchange Justice - the trust lying in the exchanges in the market; Distributive Justice - the trust between government and people; General Justice - acceptance of legal framework along with ethical obligations; and lastly, Social Justice - the responsibility to contribute in the well-being and growth of individual and community.
Two months after Dempsey’s article, Donald K. David argued upon business houses to contribute to public well-being and think beyond immediate business activities. Dempsey and David both asserted the reason behind the social obligation. (1) If there will be no man, then no business will even exist. (2) A well functional society will contribute in the excellence of the operations of the business. (3) The business houses have a control on resources and they have the capability to improve the status of society.
Bowen (1953 defined CSR as an obligation, decision, course of action, repercussions or policies which lead to the desirable objective and values for the society.
Heald (1971) expressed in his article which was actually a comprehensive history from 1900 to 1960, whose topic was “The social responsibilities of business: Company and Community 1900-1960.” He mainly focused on the practices of social responsibility carried by business leaders.
The Committee of Economic Development (CED, 1971) explained CSR as a business house that functions with the public approval and with a basic purpose of serving the society and satisfying their needs.
Eilbert and Parket (1973) explained CSR as to think it like a camaraderie. The concept is expressed in two ways: the first one is to avoid doing anything that will spoil the relationship and the second one is to be committed to help solve the problems of others or the commitment in general to play an active role in the alleviation of social problems.
Sethi (1975) distinguished the terms like “social obligation,” “social responsibility,” and “social responsiveness.” He explained social responsibility as an activity that implies elevating corporate behavior up to that level where it is identical with the prevailing social practices, values, and expectations.
Carroll (2016) propounded a CSR model. This model categorizes the CSR into four different responsibilities, that is, economic, legal, ethical, and philanthropic responsibilities. The economic responsibility suggests the organization to be profitable as all other activities depend on it. Legal responsibility suggests to obey the incorporated legal framework, that is, law. Ethical responsibility suggests doing fair and right practices in the business and avoiding harming the society. The philanthropic responsibility emphasizes being a good corporate citizen.
Jones (1980 cited in Carroll 1999) explained CSR as an activity which is broader in sense, that is, it is not confined to shareholders only but it comprises a society that includes customers, employees, stakeholders, and community. The CSR is a self- driven initiative and not influenced by the law.
Arlow and Gannon (1982) in their research found that high CSR performance leads to higher company performance, and all else being equal. CSR reveals the personal traits of the top management of an organization (Hambrick & Mason, 1984), so the top management engaged in CSR discloses values, preferences, and inclination which actually reduce information asymmetry between the company and society (Bitektine, 2011).
Frederick (1986) expressed that CSR should be connected with business ethics. He emphasized that morally correct business activities will lead to CSR that is, Corporate Social Responsibility.
The World Business Council for Sustainable Development (WBCSD, 1998) defined CSR as a continuous obligation of business houses to act ethically and come up with economic development and improving the living standard of the workforce along with their family and society at large.
Williams and Siegel (2001) defined CSR as an engagement in CSR activities that is beyond government regulations and by doing this an organization can differentiate itself within a group.
Margolis and Walsh (2003) expressed that financial aspects of CSR performance have been extensively researched, but very few studies have been conducted about the other effects of CSR. Wood (2010) and Margolis and Walsh (2003) closely studied the CSR performance and asserted that it is the time to divert the focus from how CSR affects the firm toward how the firm can impact stakeholders and society as a whole.
Mari Kooskora (2005) propounded CSR is how the companies carry their business process to have an overall positive influence on the society.
The International Labour Organization (ILO, 2007) stated that CSR is a strong belief in the principles and values of an organization which considers the impact of business activities on society. It is a self-driven activity carried out to exceed the compliance with the law.
CSR activities have a positive correlation with earnings forecasts (Lee, 2017) and thus open information sharing or communication (Jo & Kim, 2008).
Socially responsible organization attracts more investors (Day, 2001) and thus enables to enhance firm reputation (Jeong et al. 2018).
Blowfield and Murray (2008) asserted that many researches have been done on the impact of CSR on business and its benefits for business but only a few about how CSR affects the major social issues it tried to tackle.
According to Bitektine (2011, p. 160), “the sets of dimensions that from [sic] reputation & legitimacy are often overlapping, and so the same dimensions can be used to make legitimacy and reputation judgments.”
Michael Hopkins (2014) defined CSR as a combination of three components: (1) corporate, (2) stakeholders and (3) ethical behavior. Corporate means group of people working together in an organization for profit. Stakeholders comprise customers, employees, suppliers, shareholders, and the local community. Ethical behavior comprises values, code of conduct, and corporate governance.