Corporate Social Responsibility


From Prof. N. R. Sheth
Former Director, IIM, Ahmedabad

A corporate enterprise has been recognized as a "person" in law. It should also be recognized as a person in society. A corporate takes birth and grows in response to needs and labours of various stakeholders- entrepreneurs, managers, workers, local community, larger society, buyers, suppliers and of course, the state. Healthy survival and development depend on adequate nurturing by all these stakeholders. The concept of social responsibility should therefore include the whole spectrum of stakeholders. Responsibility should be clearly perceived and projected as responsibility and therefore be kept away from ideas of philanthropy, charity, generosity and the like. A corporate, as a citizen, should understand that its own well-being is inextricably linked with the well-being of all stakeholders. Its financial management as well as human resources should notionally cover all stakeholders. One pragmatic way of defining social responsibility is to allocate resources for material and human investment BEYOND LEGAL OBLIGATIONS. How far and how should one contribute to the short-and long-term welfare of employees, clients, suppliers, people in the hinterland (especially those who supply human capital) and the wider population? What can be done to build bridges of understanding and mutuality with various categories of stakeholders? How does one demonstrate a mindset which emphasizes interest in other beyond the realm of self-interest?

One should perhaps begin by mapping the territory of stakeholders and identifying areas of development or well-being that could be effectively addressed in a given timespan within the constraints of available resources. In each category of stakeholders, competing, temptations and pressure are likely to arise between immediate needs and long-term development. It is not uncommon for a corporate to encounter pressure from stakeholders for immediate benefits-physical comforts, privileges, concessions. While these are important, one needs to pay sufficient attention to long-term collective well-being with reference to rise in human capability, dignity and freedom of spirit. A corporate, as a citizen, should clearly feel concerned about these long-term issues of human development.

A specific portion of corporate resources including its human capital should be committed in relation to each segment of its stakeholders. The task of raising the quality of life of life of a given community should be spelt out in the context of its socio-economic profile. There should be adequate understanding about short term and long-term needs. Immediately pressing may be issues of water, nutrition, health, education and ecology. In a longer perspective, population control, preventive health management, purposive education (beyond literacy) and character-building among the youth may be the most consequential areas of community welfare. A prudent mix of areas at a point of time is essential for fulfillment of the overall mission of corporate social responsibility.

Obviously, all tasks relating to corporate social responsibility would need to be designed and pursued within the frame work of corresponding efforts made by existing government agencies and NGOs. Ideas and acts of collaboration with GOs and NGOs should be guided by the logic of relevance from the programmer point of view. A goal and corresponding action should be first planned on the 'zero-base' principle. Collaboration or assistance should be sought or offered in relation to one's judgement of best option. Other factors such as the reputation or past performance of a government or voluntary organization should be secondary value.

There are some areas of human governance in contemporary world which have already attained mind boggling dimensions. Among these are : growing pressure of population, growing complexities of the man-nature equations and growing human greed and selfishness. It may be useful for every healthy and able corporate to explore what it can contribute to building knowledge, awareness and sensitivity of people of the global scenario around them. A part of one's resources needs to be spent in the spirit of blind investment.