INTRODUCTION

What does one perceived from the term business? Most commonly business is defined as an economic
activity undertaken for the purpose of making profits. No doubt, the main criterion to measure the
performance of any business is the quantum of its profits. The more the profits, the more successful the
business is perceived, so the corporate world is always engaged in the activities that leads to the
maximization of theirs profits. It is obvious that the owners of the business, who provide their funds to be
used in business, have the right to have some return on their investment and they want the return to be
maximized. But the situation becomes critical when corporate world forgets that there are some other
people also associated with the business and are affected by its activities. These people are consumers,
employees, creditors, government, and society in general who are collectively called stakeholders.
Business has some responsibilities towards these stakeholders and this responsibility of business is called
Corporate Social Responsibility (CSR).

A business unit is one of the constituents of the society. It is a unit whose activities affect the society and
its members. The society, in turn, provides the infrastructure and facilities, without which, a business unit
cannot function at all. Moreover, the business draws benefits from the society in various forms. The
inputs for production like man, material, money, land, etc. are provided by the society. Thus this is a fact
that business is amongst the constituents of the society and depends completely upon it for its survival. So
the business enterprise which makes use of resources of society and depends upon it for its functioning,
should contribute to enhance the welfare of the society. The basic idea of corporate social responsibility is
that the business and society are interwoven rather than distinct entities; therefore, society has certain
expectations for appropriate business behavior and outcomes (Wood, 1991). The development of the
society and business are thus, coextensive. The business must be carried on not only for its own sake but
also without harming public interest.
Deresky (2003) states that the impact that corporate decisions have on issues such as poverty, lack of
equal opportunities, the environment, consumer concern, employee safety and well-fare are the most
quoted in the literature regarding CSR in MNCs.

Johnson and Scholes (1999) divide CSR into internal and external activities. Internal activities include
employee welfare, such as medical care, assistance with mortgage, extended sick leave, and assistance for
dependents; working conditions, such as enhancing working surroundings, social and sport clubs, and
above minimum safety standard; as well as job design, such as enhancing job satisfaction rather than
economic efficiency. External activities include green issues, such as pollution control and energy
conservation; products, such as safe products; markets and marketing, such as withdrawal from certain
markets and advertising standards; as well as suppliers. Moreover external activities include employment,
such as positive discrimination in favor of minorities and maintaining jobs; as well as community
activities, such as sponsoring local events, and supporting local charity works.

Sen and Bhattacharya (2001) summarized CSR activities into six different categories: Community
support, diversity, employee support, environment, non domestic operation, and product. Each aspect can
involve many different ways for companies to engage in CSR. An outline of the categories is:
1) Community support:

Support of arts and health programmes, education and housing initiatives for the economically
disadvantages, and generous/innovative giving.

2) Diversity:

Gender, race, family, sexual orientation, and disability based diversity record and initiatives, with and
outside the firm.

3) Employee Support:

Concern for safety, job security, profit sharing, union relations, and employees involvement comes
under this.

4) The Environment:

Environment friendly products, hazardous waste management, no use of ozone-depleting chemicals,

avoiding animals testing, pollution control, and recycling.

5) Non-domestic Operation:

Overseas labour practices (including sweatshops), and operation in countries with human right
violations.

6) Products:

Product safety, research and development/innovation, marketing/contracting controversies, and anti-

trust disputes.

Stakeholders Responsibilities
Shareholders Fair return on investment
Steady appreciation of investment
Full information about the working of the company
Safeguard assets of the business
Employees Fair wages and salaries
Good and safe working condition
Adequate services benefits (housing, medicals, etc.)
Right to form trade unions
Opportunities for education, training, and promotion
Workers participation in decision making
Customers Availability of quality goods at reasonable prices
Regular supply at right time and right place
Prompt, adequate, and continuous service
Prompt redressal of customers grievances
True and fair information through advertisement