Question

• Google the terms CSR, mandatory, and voluntary. What is your reaction to how this debate is unfolding in the business world? Where do you think most firms would like the balance between coercion and incentives to fall?

For Business Management Class. Write in your own word.

Answer 1

ANSWER
The corporate social responsibility is the same with economic and legal obligations , the corporate should ethical by carrying the community with its need and expectations so as to make corporate good for citizen also the corporate should be dicretionary by voluntary .

VOLUNTARY CSR APPROACH
*The voluntary CSR approach implies that CSR practice is a discretionary act that goes beyond what is prescribed bb the law ,guided by ethical values or by the company's self interest and in which governments have a minimal role.

*It also implies that corporations may or may not apply CSR prctices in their activities as result of a lack of enforceability of CSR standardswhich , in turn implies that corporations have a high degree of flexibility in the way they wish to conduct their business .

PROS
* When companies communicate their CSR contributions , they could gain legitimacy ,obtain higher financial performance and enhance their image also they can operate more efficiently and reduce compliance costs.
* It has also been upheld that companies will implemnt environmentally responsible practicews in their activities as they know their livelihood depends on the well functioning of the ecosystem.
*Integrative theories believe that corporate management ' should take into account social demands and integrate them in such a way that business operates in accordance with social values whereas the ethical theory believes that business are part of societyand must contribute to the common good by efficiently providing goods and services.

CONS
*Many have abandoned the idea that CSR should be voluntary .The voluntary approach has been widely criticized for the impossibility of sanctioning harmful practices and the lack of transparency and credibility of CSR reports.
*The voluntary CSr approach results outdated regarding the current MNCs behaviour just few companies are responsible to contribute in social welfare most are focused in obtaining profits .
*Friedman said that the only responsibility of businesses is to increase their profits.
* The governance gaps in the regulatory ,judicial, economic , and political system have paved the way to implement new ninitiatives to hold MNcs liable for their wrongful behaviour. the most urgent situation beingds the human right compliance by MNCs and their subsidiaries.

MANDATORY CSR APPROACH
The mandatory CSR appproach aims at making CSr enforceable and legally binding through guidelines that require a high level of formalization .The mandtaory CSR approach involves the establishment of precise rules that corporations will have to comply along with robust sanctions in case of disobidience.

PROS
* Defenders of the mandatory approach claim that mandatory CSR can raise awareness ,give CSR policy priority and ease the establishment of regulated CSR indicators .
* Businesses have started to contribute in ways that go beyond philantrophy towards direct engagement in the development of disadvnatged communities .
* If we take a example of India the statistics shows that mandatory CSR may effectively boost the country's development and addresses urgent issues . Currently around 94%of the companies in india have aCSR policy and , 97% have a CSR committee in place .there is general support for the introduction of mandatory CSR expenditure from mostly all types of companies in India.
CONS
*Lets again take an example of India there the main concern in implementing mandtory CSR standrds in developing countries is that it can deter foreign investment.Throgh governmental deregulation ,meager labor rights, mediocre safety standards ,uneven welfare distribution ,and neglectfully environmental behaviour.
*Another disadvantage of of the mandatory approach is that the business will implement CSr because they are compelled to dos o, and then managers could have a reactive approach instead of a proactive approach.

THE BALANCE BETWEEN COERCION AND INCENTIVES
* The doctrinal regarding voluntary vs mandatory is no longer relevant , and other issues start to become more important , the question to be ask is rather : which CSR issues are to be regulated and by which sort of regulation?
* It is more relevant to have alook into modern CSR practices and developments that can give direction for future legislation or inspire private actors in framing CSR in their businesses.
* CSR is not "one single room" but several rooms that cover a wide variety of issues.
* Despite the stenous debate , it has been shoen that mandatory and voluntary CSr approaches can complement each other. They are now interwined and the role hat pulbic authorities are playing is essential to the development of modern CSR practices.