“To make what is good for the country good for the
enterprise requires hard work, great management skill,
high standards of responsibility, and broad vision.”
─Peter F. Drucker, The Practice of Management (1954)
The social responsibility of any organization is a century-old concept, claimed by Peter Drucker. The early sixties demonstrated a revolutionary change in its meaning. First, the business leader’s ethical responsibility to the individual and the organization, (sometimes resorting privately to unethical behavior) for the good of his organization. Second, under the leader’s power and wealth is his responsibility towards his employees. Third, the leader’s responsibility to the community or society, such as supporting the arts, the museums, or other philanthropic activities. This early concept centered on the business leader and not the organization (Drucker, 1974).
Today, social responsibility, popularly known as corporate social responsibility (CSR), centers on the organization. CSR refers to the organization’s ethical responsibility to help solve societal problems, like homelessness or poverty. CSR also includes the organization’s philanthropic activities through giving money and voluntary involvement in the community through board memberships or other civic causes. The increasing demand for CSR covers for-profit and nonprofit organizations alike. The impacts of the organization’s activities on individuals and its business environment should be of a paramount concern for all organizations or institutions, as they are responsible for their by-products (Drucker, 1974).
Corporate social responsibility is the organization’s involvement in social initiatives or activities that do not directly translate into economic rewards or interest, involving four basic social responsibilities, namely (Dyer et al., 2018):
Economic responsibility─refers to a profitable and sustainable organization’s contribution to the community’s well-being.
Legal responsibility─refers to the business leader’s compliance with the governing laws and regulations of the community in which they operate.
Ethical responsibilities─refers to the business leader’s adherence to unwritten ethical standards, norms, or values that form the foundation of social life. Kelly and Williams refer to the sets of beliefs about right or wrong (2019).
On the side of ethical business practices, companies that strongly adhere to doing the right thing and implementing sound business practices, although missing the direct financial rewards in terms of the bottom line, are more likely to avoid committing fraudulent business activities or legal problems with the governing authorities. Additionally, ethical organizations enjoy a positive image, branding, or goodwill with whom customers desire to do business and support.
