This section discusses the basic theory of CSR developed by famous scholar A.B. Carroll. This is followed by identification of the different CSR perspectives developed by various scholars such as Lantos (2001), Wood (1991) and Visser (2007). After describing CSR concepts, the section highlights CSR definitions in order to the uniform
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theme for the present study. Finally in this section a CSR definition, related to the study‘s objectives is developed.
CSR is a concept that encourages certain activities or social responsibilities on voluntary basis. Although such social activities are not directly related to business, there is an indirect positive impact on the business undertaking them (Ariyabandu and Hulangamuwa 2002; Justice 2002; Hopkins 2007). For example, as a result, the public may have a positive image of the company and employee morale may be boosted, which in turn may have a positive effect on the productivity of the company (Ariyabandu and Hulangamuwa 2002).
Further, CSR can be conceptualised differently by individuals (Griffin 2000). CSR is now a well-known expression for what, in the past, has been a collection of various terms such as ‗corporate philanthropy, corporate citizenship, business ethics, stake holding, community involvement, corporate responsibility, socially responsible investment, sustainability, triple bottom line, corporate accountability and CSP‘ (Silberhorn & Warren 2007, p.353). However, the meaning of these terms are differ from country-to-country (Hopkins 2004).
Carroll (1979) identified four aspects of CSR: economic, legal, ethical and discretionary. Based on these components, a socially responsible company ‗should strive to make a profit, obey the law, be ethical, and be a good corporate citizen‘ (Carroll 1979, p. 43). Many scholars have built on Carroll‘s (1979) work and developed these components further (Wood 1991; Lantos 2001). Moreover, Visser (2007) and Jamali (2008) have extended it to developing countries. Carroll (1979) revisited his four-part definition of CSR in 1991 and depicted the notion of multiple corporate social responsibilities in a pyramid construct. In this pyramid, economic responsibility forms ‗the base, while legal, ethical and philanthropic responsibilities make up the subsequent levels of the pyramid‘ (p. 42).
Building upon Carroll‘s (1991) model, Lantos (2001) proposed three types of CSR: ethical, altruistic and strategic. Ethical CSR is grounded in the concepts of ethical duties and responsibilities and is morally mandatory. ‗Ethical CSR goes beyond fulfilling a firm‘s economic and legal obligations‘ to avoiding harm and social injury, even when
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the business does not directly benefit (p. 605). Altruistic CSR is humanitarian and philanthropic; it involves ―contributing to the good of various societal stakeholders, even if this scarifies part of the business‘s profitability‘ (Lantos 2001, p. 605). Philanthropic activities include looking after society‘s welfare and helping to improve quality of life. Lantos‘ third type of CSR, strategic CSR, refers to ‗philanthropy aimed at achieving strategic business goals while also promoting societal welfare‖ (p.605). Further, Lantos (2001) stated that altruistic CSR is not mandatory for businesses. However, it is unclear whether Lantos‘ model relates to the developed or the developing world. Although the concept of CSR is widely discussed in theory and practice, a generally accepted definition of CSR is yet to be confirmed (Turker 2009).
The present study integrated three CSR definitions, which were developed by the WBCSD (2000), Business for Social Responsibility (BSR) and the European Union (EU). The WBCSD (2000) definition incorporated many of the perspectives already mentioned, defining CSR as ‗the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large‘ (p.3). The European Commission (2002) defined CSR as ―a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis‖. In addition, BSR has defined CSR as being ‗about companies achieving commercial success in ways that honour ethical values and respect people, communities and the natural environment‘ (www.bsr.org/AdvisoryServices/CSR.cfm).
The above three definitions articulate two common forms of CSR (Prayukvong and Olsen 2009). Accordingly, the organisations need to explain their investments in terms of socially responsible actions to people and environment, and they must incorporate environmental and social suggestions into their normal business practice. In this way CSR is combined into three different areas (triple bottom line), such as people (society), planet (environment) and profit (economics) (Agarwal 2008; Prayukvong and Olsen 2009). Researchers have focussed on the above three areas to identify CSR activities under dissimilar categories such as employees, customers, environmental, social, health, education and shareholders. The present study considered only six CSR relations such as employees, education, social, environmental, education and health, on its pilot study
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and the above three different areas such as people (society) planet (environment) and profit (economics) were included.
2.4.1 Definition of CSR used in this study
Hopkins (2011) criticised the CSR definitions provided by many scholars. According to Hopkins, CSR is the concept which can encourage firms to make profits while subjecting the process to responsible manner, the many more definitions use for the different CSR studies. As this study is based on the perspective of developing countries finding a suitable definition a not easy task because CSR is still in infancy stage and developing countries and there is no accepted method for CSR. Hopkins aimed that the CSR ―is to create higher and higher standards of living, while preserving the profitability of the corporation or the integrity of the institution, for peoples both within and outside these entities‖ (http://mhcinternational.com/articles/definition-of-csr). However, firms, people, living standards, also the profit are the basic terms indicate in the CSR definitions. Yet a huge amount of the literature sees this concept as characterised by evolutionary stages, dependent on disciplinary orientations, heavily critiqued from the perspective of different ‗political‘ and ethical views about the role of business in society.
As previously mentioned, it is voluntary to participate in CSR and there are no rules or regulations related to its implementation. However, as described in this chapter, different scholars and organisations have developed a number of CSR standards and principles. The CSR principles used by developed countries cannot be applied to developing world (Chapple and Moon 2005). Therefore, care and attention is needed when using the term ‗CSR,‘ especially when discussed in the context of developing nations.
New dimensions are added to the definition of CSR from time to time. For example, newer definitions consider the environmental dimension whereas previous definitions have not (Dahlsrud 2008). Environmental issues are basic problems in the developing world at present because countries have larger populations and more industries that pollute the environment than countries in the developed world. Dahlsrud (2008) stated
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that 97 per cent of CSR definitions have been shown the different CSR dimensions. Companies should use these dimensions when they define CSR.
The present study identified six dimensions in the pilot study. One of the objectives of the pilot study was to develop a CSR index for quantifying purposes. This index was then used to identify the relationship between CSR and company performance (CP) in companies in Sri Lanka, which was the main aim of this study. Therefore, the term ‗CSR‘ is defined from developing country‘s point of view, with particular reference to the Sri Lankan context. Activities are carried out by the company on a voluntary basis to satisfy the expectations of its employees, customers, environmental, communities, educational and health with a view to increasing CP. The company expects to increase its CP by investing in CSR projects to satisfy its employees and customers; by the same token the interested parties‘ expect that they will receive something from the company other than normal products and services. Although CSR is voluntary, the motivation of the company for implementing it is to increase sales, profit and popularity (Chapple and Moon 2005; Fernando, 2007: Rathnasiri 2003).