Unit 3: Social Responsibility of Entrepreneurs

Lesson 3.6
Social Responsibility as Good Business Sense
Contents
Introduction 1

Learning Objectives 2

Quick Look 3

Learn the Basics 4

Giving Back to Society 5
Corporate Philanthropy 6
Corporate Citizenship 7
Corporate Social Responsibility 10
Impact of CSR on Business 11
Shareholders’ Orientation 11
Employees’ Motivation 11
Brand Recognition and Reputation 12
Relationship with the Government 13
Social Value 13

Keep in Mind 14

Try This 15

Practice Your Skills 16

Challenge Yourself 17

Photo Credits 18

Bibliography 19

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Unit 3: Social Responsibility of Entrepreneurs

Lesson 3.6

Social Responsibility as Good

Business Sense

Introduction

Imagine yourself as the CEO of a rising corporation. The business has been consistently
gaining profit year-on-year. Investors are highly interested in putting their money into the
company. Your market share is increasing and you are about to outperform your main
competitor. The shareholders are expecting that all resources—financial and human capital,
time, and effort—will be used to grow and expand the business. Your employees are
expecting a significant salary increase or benefit for their job well done. How will you
convince these stakeholders that a significant amount of company resources will be used
for corporate giving programs?

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Unit 3: Social Responsibility of Entrepreneurs

Although most businesses accept the idea that their businesses should have broader
purposes beyond profit, many are still hesitant on spending their resources for corporate
social responsibility programs. Some agree to do it but through very limited budget and
effort. Needless to say, corporate social responsibility programs incur additional costs, and
for most organizations, the returns can not be determined.

In this lesson, you will learn the benefits of corporate social responsibility and why it is a
good business sense, that is, it is profitable and beneficial to the business organization.

Learning Objectives DepEd Competency

At the end of this lesson, you should be able to Provide evidence that ethical/social
do the following: responsibility is profitable, i.e., makes good
business sense (ABM_ESR12-IVi-l-3.5).
● Compare the various forms of business
giving.
● Demonstrate how social responsibility
practices make good business sense.
● Recommend social responsibility
practices that are beneficial to business
and society.

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Quick Look

Impressions on Social Responsibility

Observe the businesses operating in your locality. Identify how they practice social
responsibility. What are your impressions of their practices, activities, or programs? What
are the opinions of other people regarding it? Write a summary using the table below and
answer the questions that follow.

Table. Our impression on social responsibility practices

Business My impression and the

Social Responsibility Practices
Establishment opinions of other people

Questions to Ponder
1. Are your impressions and the opinions of other people positive or negative? Explain
your answer.
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

2. What do you think are the kind of social responsibility activities that make a good
impression on ordinary people in the community?
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

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3. Why is corporate social responsibility necessary to the business establishment?

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

Learn the Basics

The hesitation of many businesses in conducting corporate social responsibility programs

usually comes from a particular concern, whether CSR activities are good or bad for
business. In a simple sense, something is good for business when it helps increase profit,
expand market share, and establish strong customer relationships.

It is not uncommon for some businesses to fulfill their social responsibility because of
consumer pressure and government regulations. Some perform CSR activities as part of
their public relations stint, believing that not having a CSR program can harm the company's
reputation and affect its profits. Given the option, these companies would choose to focus
their resources on maximizing their profits and increasing shareholders' equity, especially
amidst the intense competition. However, some businesses take a broader perspective on
CSR, believing that these activities will bring good economic benefits in the long run.

Essential Question

Should businesses measure the benefits of social responsibility through

profits, sales, and revenues?

Companies who commit to corporate social responsibility believe that the benefits they give
society will eventually lead to business growth and success. They take the perspective that
enterprises are both social and economic organizations. Therefore, it is damaging to
characterize an enterprise as merely a profit-seeking financial organization. Over the past
years, companies have gradually realized the magnitude of their social responsibility and
are willing to spend more to fulfill these.

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Figure 1. Ensuring that the products’ packaging is environmentally-friendly

is an example of performing social responsibility.

According to Edward Freeman's Stakeholder Theory, businesses have obligations to their

stakeholders. These stakeholders are internal and external players, including investors,
managers, employees, customers, suppliers, government agencies, neighborhoods, etc.
Business stakeholders, directly and indirectly, contribute to business performance and
success. They can also increase or decrease the risks faced by the business. Therefore,
companies must ensure the continuous development of society.

Giving Back to Society

In a general sense, businesses take from society—its human, natural, technological, and
cultural resources—to make goods, services, and profits. It only makes sense that they
should give so that they could continuously take, create, and grow.

Giving back to society is suitable for business. In a practical sense, it helps build connections
with customers and potential customers. It strengthens the company's relationship with its
collaborators, such as distributors or suppliers. It helps in positioning the brand: citizens
would want to support a company with whom they share the same values. Moreover, it

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promotes employee engagement and builds their commitment to the company's mission.
Based on prevalent practices, businesses have varying ways of giving back to society. These
are in the form of corporate philanthropy, corporate citizenship, and corporate social
responsibility.

Corporate Philanthropy
Corporate philanthropy is also called "business giving." It usually involves the voluntary
giving of money and other resources by businesses to their communities. In its basic
definition, philanthropy refers to voluntary giving from the desire to help humankind. Thus,
business philanthropy may be defined as private initiatives supporting the quality of life and
public welfare. Some philanthropic practices include giving financial support to causes,
funding development organizations, and supporting community development projects.

Closer Look

Business Giving in Times of Calamities

DBZ mini-mart is a grocery located in a relatively high place in Metro
Manila. When a super typhoon caused heavy flooding in the city, many
residents had no access to food and safe drinking water.

Having been spared from the devastating effect of the natural calamity,
DBZ mini-mart decided to conduct an emergency relief mission. Its staff
gave away some grocery items to the families affected by floods in the
nearby communities.

Giving is generally welcomed by communities as a positive act. However, some business

philanthropy practices can negatively impact the business. It may also trigger some issues
and contradict some existing organizations in the area. Some examples are as follows:
● Giving something to the community they do not need or has no specific purpose
creates an impression that the company is merely promoting its brand but not
helping the community.
● Funding projects which are not entirely accepted by the community: such as
introducing a technology that will impact the livelihood of the locals or go against

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their traditions and cultures

Thus, businesses that conduct philanthropic activities should commit to extensive research
to identify the community's needs and prevent misunderstandings.

Check Your Progress

Give an example of business philanthropy activities.

_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________

Corporate Citizenship
Corporate citizenship is how businesses fulfill their ethical, legal, and economic
obligations. Business citizenship focuses on supporting a higher standard of living in society
while maintaining profitability.

It differs from business giving because the latter is ideally done out of altruistic intentions.
Corporate citizenship balances the needs of the shareholders and those of the community
to which the enterprise belongs.

In general, companies that practice corporate citizenship believe that giving back to the
community will generate favorable results for the company. On the other hand, the extent
to which they can give back also depends on the growing success of the enterprise.

Companies generally go through different stages of developing business citizenship. They

climb to the higher phases as they improve their business performance, awareness of
community issues, and dedication to integrating corporate citizenship into their business
culture and structure. Figure 2 shows the development stages of corporate citizenship.

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Figure 2. Corporate citizenship develops depending on business performance, awareness,

and commitment.

In the elementary stage, businesses follow the essential health, safety, and environmental
regulations but do not fully have the time and assets to advance their social involvement.
Many small companies that are still at the stage of building their bottom line are generally in
this stage. For instance, a small grocery store might perform corporate citizenship by
fulfilling its essential legal and ethical obligations. However, it may not have enough funds to
conduct philanthropic or community development activities.

In the engagement stage, businesses go beyond their primary obligations and start
developing policies that improve their employees' conditions and welfare. For instance,
aside from the basic salary and benefits given to employees, a company might start to fund
engagement activities or provide additional benefits that are not required.

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Figure 3. Improving the employees’ economic and social conditions, going beyond the bare
minimum, is an example of an engagement stage in corporate citizenship.

The innovative stage is characterized by extending beyond the internal stakeholders and
holding activities that serve the community while at the same time maintaining profitability.
The integrated phase blends social activities fluidly into the business's operations. A
company might start to monitor these activities more closely and allot more time and
resources to improve these activities.

The transforming stage is reached when a company fully embraces the principle that
corporate citizenship plays a strategic part in increasing sales and spreading to new
markets. Economic and social involvement is a normal part of a company's daily operations
in this stage.

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Closer Look

Feeding Programs and Teaching about Nutrition

Company ABC is a business operating in the City of Manila. It is the largest
supplier of vegetables and other farm products. They administer
corporate social responsibility programs in poor communities around
Metro Manila.

Company ABC's program consists mainly of feeding programs. It also

conducts training for parents on how to ensure their children's nutrition
despite limited finances. For example, they teach about affordable
sources of iron, calcium, and other nutrients. Occasionally, they conduct
medical missions to help community members assess their nutritional
needs.

The company is received positively by the community. Customers are

encouraged to support the company because they feel they are also
helping these communities.

Corporate Social Responsibility

As mentioned in the previous lesson, corporate social responsibility (CSR) refers to a
business's extensive and overall obligations to society. Companies adopt the comprehensive
framework to contribute meaningfully to socioeconomic development and go beyond
achieving profitability and growth.

CSR aims to better society by promoting economic development and social progress.
Internally, CSR requires companies to practice self-regulation, fairness, accountability, and
stewardship.

CSR covers a wide range of activities included in business operations—protecting the

environment, doing philanthropic work, improving the labor conditions of employees, and
helping the local community. It is the overall framework for corporate philanthropy and
corporate citizenship.

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Check Your Progress

Describe the relationship between CSR, corporate philanthropy, and

corporate citizenship.
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________

Impact of CSR on Business

Companies have different motivations for practicing CSR. Some enterprises may argue that
they do it for purely altruistic intentions. In contrast, others may admit that they do it for
practical reasons—to comply with the law, raise revenue, promote brand recognition, and
enhance customer relationships.

The debate is long regarding the true intentions of businesses in performing CSR. However,
regardless of each enterprise's motivation, the positive impact of CSR is encouraging. CSR
makes good business sense regarding its effects on shareholders, employees, society, social
media, and the government.

Shareholders’ Orientation
Businesses who perform CSR effectively adjust their shareholders' orientation—from being
shareholders of the company to becoming shareholders of the broader community. It
reduces the pressure from shareholders who typically demand higher investment returns.
Conscientious corporations make their shareholders realize that to take more, they also
need to give more to the community. Shareholders can develop a sense of pride from the
successes and contributions of their company. They are not just investors in businesses but
investors in socioeconomic development.

Employees’ Motivation
CSR improves a company's public image. In business, good public relations is an intangible
asset. It elevates the company's reputation and attracts customers and employees—two
critical factors in business success.

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The top talents of the current generation of professionals seek employers with good
reputations. They tend to choose companies with clear and active CSR strategies because
the reputation of their companies must match their achievements.

Figure 4. Socially-responsible companies attract talent.

Also, employees tend to be more devoted and loyal to their companies with meaningful CSR
programs. They feel fulfilled that the community benefits from the intellect, strength, effort,
and time they devote to the business. Moreover, companies that fulfill their corporate social
responsibility tend to provide more salaries and benefits to their employees, encouraging
them to become more productive and develop a sense of ownership.

Brand Recognition and Reputation

In the age of digital technology and social media, news about corporate practices can
quickly spread and become viral. Good social responsibility practices boost brand
awareness and recognition. People with the same values as the company tend to support
the company and its products or services. There are times when highly-satisfied customers
make an extra effort to promote the brand.

On the other hand, once the public discovers unfair business practices, it can quickly bring
down even the most successful companies. Recovering from a damaged reputation and bad
sales can be costly and significantly impact business performance.

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Relationship with the Government

The government encourages CSR initiatives of companies. Most political frameworks view
the market forces as partners in fulfilling their social contract with the people. As a state
force, the government has the power to affect business operations and
performance—positively and negatively.

A clean record with the government (i.e., no labor violations, occupational safety,
environmental, taxation laws, etc.) can help businesses avoid sanctions and costly litigation
processes. On the other hand, too many violations can lead to fines, penalties, and, worse,
closure orders from the government.

Social Value
Businesses that conduct effective CSR campaigns are regarded by society as highly
significant institutions. Their brand will continue to resonate with consumers, resulting in a
strengthened positioning in the market.

Consumers are part of society. They purchase goods and services because they perceive
these offerings' value and want to consume their benefits. If they start to perceive the value
of a product beyond what they directly consume and see the overall value it provides to
society, the company's brand will be more preferred over the competitors' products. Such
positioning will result in a larger market share, sales, and revenues.

Check Your Progress

How will you assess the advantages and disadvantages of CSR for
businesses?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________

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Keep in Mind

● Practicing social responsibility incurs costs to businesses. They must allocate

significant financial, human, and material resources to fulfill their ethical, legal,
economic, and social obligations. Thus, many companies consider how much they
intend to give back to society.
● Business giving can take many forms. Among these are corporate philanthropy,
corporate citizenship, and corporate social responsibility.
● Practicing social responsibility makes good business sense. It is not always true that
CSR is expenses without benefits. An effective CSR program can shift the
shareholder’s orientation, increase employee motivation, support brand recognition
and reputation, strengthen the relationship with the government, and create social
value.

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Try This

True or False. Write true if the statement is correct. Otherwise, write false.

________________ 1. Corporate social responsibility makes good business sense

because it creates the business's social value.

________________ 2. People's perception of CSR activities is always positive.

________________ 3. All businesses perform social responsibility out of altruistic

intentions.

________________ 4. Corporate citizenship helps businesses build connections with

customers.

________________ 5. Businesses can impose their ethical standards on local

communities.

________________ 6. Companies proceed to higher stages of corporate citizenship

based on their wealth and power.

________________ 7. Businesses with effective corporate social responsibility

programs tend to attract top professionals.

________________ 8. Corporate social responsibility is giving back to society.

________________ 9. CSR activities are all cost and no return or benefit for the
business.

________________ 10. The highest form of corporate citizenship is the innovative

stage.

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Practice Your Skills

Benefits of Performing Social Responsibility

Read the following scenarios. Recall how CSR impacts the various aspects of a business.
Explain how the social responsibility demonstrated in each scenario makes good business
sense, that is, how it would help the enterprise succeed. Discuss your answer.

1. Ben is an owner of a small restaurant in your neighborhood. Ben decided to give

away food from his restaurant as part of a social responsibility program.
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

2. Alfred's business provides hairstyle services. He wants his business to promote

inclusivity and accessibility. Thus, he ensures that all facilities are accessible to
persons using wheelchairs and that people, regardless of their gender expressions,
can come and get a hairstyle they prefer.
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

3. Mang Ramon's business is a big-size grocery in Marikina. The business tells its
customers that 10% of its profit will go to disaster risk reduction and mitigation
programs.
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

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Unit 3: Social Responsibility of Entrepreneurs

4. Arlene owns a medium-sized piggery in the barrio. She ensured their facilities had
enough water supply and a proper sewerage system. Their business regularly
conducts an environmental assessment to evaluate the impact of their operations on
the natural environment and the community's life.
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

5. John owns a small factory with 50 workers. He ensures that the working environment
is safe for the workers. He provides them with all government-mandated benefits
and gives them above-average wages.
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

Challenge Yourself
Answer the following questions.

1. Suppose you are the owner of a bakery shop in your community. What kind of
business philanthropy would be suitable for your business? Explain your answer.
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________

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2. Suppose you have a dress shop business. What kind of social responsibility program
would you conduct? How will the community and the business benefit from it?
Explain your answer.
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________

3. Suppose you are a business owner in the travel, leisure, and wellness industry. What
actions will you take using your social media platform to improve people's lifestyles?
Discuss your answer.
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________

Photo Credits
Empty conference room, by Damir Kopezhanov is free to use under the Unsplash license
via Unsplash.

Person holding white and brown coffee cup, by Toa Heftiba is free to use under the
Unsplash license via Unsplash.

Woman standing on the roof of a city, by Jack Simpson is free to use under the Unsplash
license via Unsplash.

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Unit 3: Social Responsibility of Entrepreneurs

Bibliography

Bowie, Norman, 2013. Business Ethics in 21st Century, (1st ed), Netherlands: Springer

Chandler, Robert C. 2014. Business Corporate Integrity: sustaining organizational

compliance, ethics, and trust, (vol 1), Sta Barbara, California: Praeger

Lim, Chong-Ming. 2019. Effectiveness and Ecumenicity, Singapore: Nanyang Technological

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Ohreen, D. E. and Petry, R. A. 2011. Imperfect Duties & Corporate Philanthropy. Canada:
Springer Science Business Media B.V,
https://link.springer.com/article/10.1007%2Fs10551-011-1002-y, last accessed on Nov 27,
2020

Wong Gary, 2020. Positive Impact of Corporate Social Responsibility, hugillandip,

https://www.hugillandip.com/2020/02/the-positive-impact-of-corporate-social-respon
sibility/,last accessed on Nov 22, 2020.
Zhang Yiping, 2019. “The Implementation of Corporate Social Responsibility,” Impakter,
https://impakter.com/corporate-social-responsibility/, last accessed on Nov 23, 2020.

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