Question

Draw, label, and explain the pyramid of social responsibility. What are the requirements for a firm if it truly wants to be ethical and socially responsible?

Answer 1

Corporate Social Responsibility (CSR):

Corporate Social Responsibility is the view that a firm has to contribute and do it's part to the betterment of the society. It is philanthropic and charitable in nature. It gets the firm to engage in ethically oriented practices.

The pyramid of Social Responsibility

1. Economic Responsibilities - It is the basic responsibility of the firm to present it's investors with attractive and adequate returns on their investments. This can be done through maximizing sales and minimizing costs. Making sure the dividend policy of the firm is in the interest of the individual as well as it's investors is of utmost importance.
2. Legal Responsibilities - The legal responsibility of a firm is to adhere to the laws laid down by the authoritative government. It must comply with the existing labor laws, consumer laws, and employee laws. It must also be in compliance with contractual obligations.
3. Ethical Responsibilities - The ethical responsibility of a firm is to to what is right in the interest of its stakeholders including customers, employees, and the general public. Doing what is just and fair is the most important ethical responsibility of a firm to do.
4. Philanthropic Responsibilities - The philanthropic responsibility of a firm is to do what is right for the society. It is the responsibility of the firm to give back to the society. It can fulfill its philanthropic responsibilities by providing education and health programs to the public.

Requirements of a firm if it truly wants to be ethically and socially responsible

The requirements are:

• No cheating in Auditing and reporting. Some firms cleverly manipulate their auditing reports to get tax concessions. This must be stopped if the firm wants to truly be ethically and socially responsible.
• Recieve ethical training. To truly contribute to the society, it is necessary to bring in ethical training into the regime at some point.
• Verification by consumers and stakeholders. The stakeholders and consumers must be brought into the picture because it is in their best interest to provide social responsibility.
• Establishment of social accounting. Social accounting means the communication of the economic and social benefits of social responsibility actions to the general public.
• Stakeholder engagement. CSR is a great way to build reputation in the eyes of its stakeholders. By getting them to engage in CSR activities, it could be successful.