Corporate

Social
Responsibility
1)A
Historical
Perspective
from Industrial Revolution
to Social Activism
2)Moral Arguments for CSR

Historical Perspective of CSR

From Industrial Revolution
to Social Activism
WHAT IS CORPORATE SOCIAL RESPONSIBILITY
[CSR]:
Corporate Social Responsibility [CSR] refers
to
the
responsibility
that
business
organisations [mainly companies] take upon
themselves to do good for the society. This
responsibility requires the companies to
invest time and money in social projects that
benefit society and people. This responsible
act by companies is of great importance in
developing and under developed countries.
Some countries have made CSR mandatory for
companies through legal provisions.

Historical Perspective of CSR

From Industrial Revolution
to Social Activism
CSR means different things to different
people. While some look at it as pure
philanthropic
or
charitable
work
by
companies, others view it as compliance with
laws to survive in business. A third view of
CSR could be the discharge of contractual
obligations towards employees, customers,
suppliers, etc.
I would define CSR as a set of functions
discharged by companies, either voluntarily
or in compliance with the law, to provide
benefits to that section of society which
needs it the most.

Historical Perspective of CSR From

Industrial Revolution to Social Activism
THE ORIGIN OF CSR:
The First Industrial Revolution took place between
1760 to 1840 where the significant transformation
was the movement from manual production to
mechanised production. The factory system also
came into existence. Since organised production
started with the factory system, it can be said that
the earliest time when businesses would have
started socially responsible work would be around
that time. The First Industrial Revolution evolved
into the Second one between 1840 to 1870. During
the Second Industrial Revolution, technological and
economic progress took the centre-stage.

Historical Perspective of CSR From

Industrial Revolution to Social Activism
Morrell Heald in his book, The Social
Responsibilities of Business, stated that the
practice of Corporate Social Responsibility
(CSR) was alive and growing from the 19th
century itself. Business giving and business
involvement in community issues were very
much prevalent at that time. Big companies
used to get involved in these community
activities,
as
they
were
given
the
responsibility of fulfilling public goals and
public interest objectives.
Thus, the origin of CSR seems to be rooted in
the period between 1820 to 1870 (First &

Historical Perspective of CSR From

Industrial Revolution to Social Activism
PRE-WORLD WAR II ERA:
Heald notes that the trusteeship concept of
business leadership and responsibility was
enunciated nearly 25 years before World War
II (around 1915). Andrew Carnegie offered an
even earlier statement of the trustee concept
in June 1889 in his North American Review
article
titled
Wealth.
In 1906,
Yale
University President, Arthur Hadley, advised
business leaders to remember that they are
also trustees of the public interest and to
align their sense of ethics and obligation
accordingly.

Historical Perspective of CSR From

Industrial Revolution to Social Activism
In the 1920s, the trusteeship concept emerged boldly in
the words and practices of Owen D. Young and Gerard
Swope, Chairman and President, respectively, of the
General Electric Company. In their eyes, shareholders were
only one constituency to whom business leaders were
responsible, and as Young put it in 1926, the public and
employees ranked ahead of shareholders. Young and
Swope envisioned and sought to bring about cooperation
between business, labour, government and community
not open hostilities.
Thus, well before World War II, the practices of giving
(philanthropy) and of community involvement were well
established in community chest drives of the 1920s
although certainly not embraced by all business leaders.

Historical Perspective of CSR From

Industrial Revolution to Social Activism
THE POST-WORLD WAR II YEARS:
CSR activities grew in scope and intensity after the end of
the Second World War in 1945. Europe and America emerged
from the War and modern businesses took wings. As the
1950s unfolded, Heald describes business leaders moving
beyond philanthropy to substantive cooperation and
outright leadership on a range of community initiatives. He
developed extensive profiles of business initiatives with
higher education, and business support for the arts and
community living.
Archie B. Carroll has provided the most comprehensive
overview of the evolving definition of CSR in the post World
War II period. Carroll has examined and compared all the
main contributions from scholars from 1950 through the
mid-1990s.

Historical Perspective of CSR From

Industrial Revolution to Social Activism
Carroll credits Howard R. Bowen, author of the book
Social Responsibilities of the Businessman (1953), as
the Father of corporate Social Responsibility because his
book
dealt
directly
with
the
concept
of
social
responsibility. Bowen asserted that social responsibility
refers to the obligations of businessmen to pursue those
policies, to make those decisions, or to follow those lines
of action which are desirable in terms of the objectives
and values of our society.
The past 70 post-World War II years (1945 to 2015) have
been notable for the increasing attention given to the
concept of CSR, for its continuing evolution, and for the
lack of consensus on what it means and even whether it
is legitimate.

Historical Perspective of CSR From

Industrial Revolution to Social Activism
At one extreme, Carroll notes Milton Friedmans often
cited 1970 New York Times Magazine article arguing
that CSR, as a matter of principle, is fundamentally
subversive of the true responsibilities of business,
which are enhancing profitability and shareholder
value. This point of view arises from the economic
theory, articulated first by Adam Smith, that a free
market and pursuit of self-interest (later shareholder
value) will result in the greatest benefit for society
overall. Other scholars have debated whether basic
economic and legal obligations fall within the concept
of CSR or whether the domain for CSR is over and
beyond economic and legal obligations. In effect,
what is the scope and boundary of such responsibility?

Historical Perspective of CSR From

Industrial Revolution to Social Activism

At the other extreme, Carroll noted that

business leaders themselves, under the
auspices of the Committee for Economic
Development (CED) in 1971, articulated a
definition, perhaps emerging in part from
the political, social and urban turmoil of
the late 1960s. The essential ingredient of
the definition is that business functions
by public consent and its basic purpose is
to serve constructively the needs of
society to the satisfaction of society.

Historical Perspective of CSR From

Industrial Revolution to Social Activism
Carrolls own definition of CSR embraced a full
range of responsibilities: economic, legal,
ethical
and
discretionary.
In
Carrolls
framework, economic functions are at the
heart of the corporate social responsibilities
of business. He later changed discretionary to
philanthropic,
but
in
either
case

discretionary
or
philanthropic

these
responsibilities were seen as voluntary. Carroll
did not see these responsibility categories as
mutually exclusive but rather as something of
a continuum, often pursued simultaneously.

Historical Perspective of CSR From

Industrial Revolution to Social Activism
SUMMARY OF THE EVOLUTION OF CSR GLOBALLY:
We have seen the origin of the concept of CSR from the
mid-19th century. The concept has grown, both
academically and in practice, throughout the 20th century
and more so in the last 30 to 40 years.
While scholars from the 1970s into the 1990s wrestled
with CSR concepts and developed stakeholder theory,
numerous business leaders had independently articulated
similar views on the purpose of business. Throughout this
period scholars attempted to define, redefine, and clarify
the concept of corporate social responsibility that they
saw being assumed by, imposed upon, and played out by
business.

Historical Perspective of CSR From

Industrial Revolution to Social Activism
As noted earlier, there are many examples of 20th century
business leaders who shaped their companies business
practices accordingly.
A noteworthy example is J. Irwin Miller, Chairman and CEO
of Cummins Engine Company, who laid out a comprehensive
view of CSR in a 1975 interview in Organizational Dynamics.
Although the interview was conducted in 1975, he began
putting his philosophy of business into practice in the
1930s.
The Dayton Family, founders in 1906 and leaders well into
the 1990s of the company that today is the Target
Corporation, provides another example of a business
philosophy intimately connecting business success with
service to society.

Historical Perspective of CSR From

Industrial Revolution to Social Activism
THE INDIAN SCENARIO
The concept of CSR in India has grown parallel to Indias
historical and economic development. The history of CSR in
India has four distinct phases, which may have overlapping
features.
Phase 1 In this phase, charity and philanthropy were the
main drivers of CSR. Culture, religion and family values
influenced the philanthropic activities of business groups. In
the pre-industrialisation period, which lasted till 1850, wealthy
merchants donated their wealth for temple-building and
handling famines and epidemics. From 1850 onwards, with the
arrival of British Rule in India, the approach to CSR changed.
Industrial families like the Tatas, Birlas, Modis, Bajajs, etc. had
social and economic considerations for taking CSR initiatives.

Historical Perspective of CSR From

Industrial Revolution to Social Activism
THE INDIAN SCENARIO [Continued]
Phase 2 This was the period of the Freedom
Movement (about 1885 to 1947) and the
Industrial houses were expected to show their
dedication towards nationalism and progress
of the society. This was also the time when
Mahatma Gandhi introduced the concept of
Trusteeship. Gandhiji explained the concept
by saying that the wealthy had to manage
their wealth in a manner that benefits the
common man. The industrialists responded
positively to this idea and set-up trusts to
build schools, colleges and health centres for

Historical Perspective of CSR From

Industrial Revolution to Social Activism
THE INDIAN SCENARIO [Continued]
Phase 3 This phase (1960 to 1980) coincided
with
the
rise
of
the
Public
Sector
Undertakings (PSUs) and the relative decline
of the private sector. Laws were amended to
favour the PSUs so that they could ensure
redistribution of wealth within the Indian
economy. However, this policy had limited
success and the Government of India realised
that the economy cannot grow without
promoting the private sector too. CSR
activities did not grow much in this phase
because of the excessive controls on private

Historical Perspective of CSR From

Industrial Revolution to Social Activism
THE INDIAN SCENARIO [Continued]
Phase 4 In this phase (1980 till date), CSR activities
got integrated with business strategy. As the Indian
economy was liberalised from 1991 onwards, the
private sector was unshackled. Rapid growth amongst
private companies encouraged them to contribute
generously towards social causes. Today, corporates
feel that CSR is important to build a good reputation
and increase business competitiveness. They have
specialised CSR teams that formulate policies and
strategies for their CSR initiatives. These initiatives
range from community development programs to
protection of environment and livelihood.

Historical Perspective of CSR From

Industrial Revolution to Social Activism
CONCLUSION:
We have seen that both in India and
elsewhere in the world, the concept of modern
CSR probably originated in the 19th century
during the First Industrial Revolution in
Europe and the pre-Industrialisation period in
India. While academics and business leaders
have completely different views on the utility
and legality of CSR, it has come to stay as an
important concept and tool in the interactions
between business and society at large.

Moral Arguments for CSR

CSR as a concept has its share of detractors
because the concept is seen as bordering on
illegality and something that is forced upon
business houses. In fact, we have seen the
extreme positions taken by academics and
business leaders on this issue. Nonetheless,
there are many compelling reasons for having
an environment that promotes and pushes
CSR activities. One such reason is that it is
moral on the part of corporates to share their
wealth with the needy so as to promote
standards of living. We need to know the
moral arguments in favour of CSR.

Moral Arguments for CSR

1) Responsibility
Towards
Environment

Corporates
must
invest
in
clean
technologies so as to avoid pollution. They
cannot let their business interests damage
the already deteriorating environment. It is
their moral obligation to save people from
environment-linked diseases and save the
earth itself.
2) Helping the Less Privileged Companies
must step forward to share their profits
with the less privileged sections of our
societies who struggle to have a basic
standard of living. Huge private wealth

Moral Arguments for CSR

3)

It is the Right Thing to do Business ethics and

societal values demand that corporates should
undertake activities that benefit the poor. They would
be seen to be unethical and immoral if they did not
share a part of their wealth with the deprived sections
of society. This would be a very strong argument in an
economy that is not prosperous.

4) Corporate Commitment to Manage its Roles in Society

Companies have multiple roles to play in society
producer, employer, marketer, citizen, etc. in a
balanced manner so as to positively impact lives. They
need to have a set of voluntary principles to execute
this commitment. These principles are essentially
moral and are manifested through CSR activities.