Islamic Banking gif
showing concern for the environment and sustainable development; adopting fair practices in employee recruitment; discouraging child labour; not engaging in misleading advertising, and showing concern for Third World debt. • The discretionary responsibility is the desired social expectation that the firm will assume social roles over and above those aforementioned. It will act as a good corporate citizen by caring for and investing in the society it operates in. This may take the form of corporate philanthropy, which is considered the highest level of responsibility desired by society, assumed after the economic, legal and ethical responsibilities have been respectively met. Corporate phi- lanthropy may include monetary contri- butions to charitable causes, support- ing educational institutions and NGOs, offering managerial expertise and tech- nological resources for causes the insti- tution supports, providing staff welfare, and sponsoring community events. Discretionary responsibility is said to be connoted with social roles which are adopted purely on a voluntary basis to help society and is not necessarily ex- pected of businesses in a moral sense.
It is noted that the core debate within CSR, as defined by Carroll, relates mainly to the voluntary corporate policies with respect to the ethical and discretionary responsibili- ties. Despite the voluntary nature of these two types of responsibilities (since they are expected and desired of corporations), it has been observed that many corporations have begun to include them as part of their busi- ness strategic objectives. Often, the concept of CSR is being defined as a “decision-mak- ing strategy” rather than as an “ethical com- mitment”.
CSR Dimensions and Markets Besides the four-part CSR definition of Car- roll, CSR may also be examined in terms of its four-part dimensions and the three markets it impacts on Figure 1. With regard to the CSR dimensions, CSR is reported to have the following spheres of influence on businesses:
• At the ‘workplace’ in terms of respon- sible business practices, good corpo- rate governance and ethics, human resource management; • At the ‘marketplace’ in terms of con- sumer responsibility, responsible be- haviour in the production and sales of goods and services; • At the ‘environmental’ level in terms of the impact of businesses on the envi- ronment through the building of sus- tainable business enterprises; • At the ‘community’ level through cor-
porate philanthropy, corporate involve- ment in community development, com- munity investment.
This integral concept of CSR is especially relevant to the European context where CSR is asserted to be growing into a mainstream management issue through its adoption as a core business strategy. The above CSR influ- ences on the strategies of businesses may alternatively be classified according to the impacts on the markets in which firms com- pete. Valor specified three markets where the social performance of firms has gained attention: product, labour and capital. Some of the CSR issues involved within each of the markets may be elaborated as follows:
• Product market – through ethical sourc- ing and purchasing, subscription to fair trade principles, promotion of ethical consumerism, abidance by socially re- sponsible marketing and advertising standards, and instilling quality man- agement procedures. • Labour market – through abidance by human rights standards, development of high standards in the area of human resource management, establishment of good working conditions, opposition to child labour and oppressive regimes. • Capital market – through socially re- sponsible investment, support for co- operative or mutual banking, develop- ment of community and social banking, financing of micro-enterprises, promo- tion of Islamic financing.
CSR Variants The literature highlights two other exten- sions to the concept of CSR. These relate to the terms ‘Corporate Social Responsive- ness’ and ‘Corporate Social Performance’. These terms were developed in the 1970s when discussions on CSR progressed from the definition of CSR issues to the need for evaluating action and eventually assessing social performance. The three facets of CSR principles, responsiveness to CSR princi- ples, and measurement of CSR outcomes have been denoted by Frederick as CSR1, CSR2 and CSP.
After the identification of socially responsi- ble issues by firms (CSR1), corporate social responsiveness (CSR2) is the second stage of the CSR philosophy which addresses the “philosophy, mode, or strategy behind business (managerial) response to social responsibility and social issues … [it] can range on a continuum from no response (do nothing) to a proactive response (do much)”. Carroll further classified this continuum of corporate behaviour in terms of Wilson’s def- inition of four possible business strategies: reactive, defensive, accommodative, and proactive (RDAP). These possible strategies
were further clarified by using the definitions of McAdam and Davis and Blomstrom. From Table 1, it is observed that a firm’s initial ‘reaction’ could be to resist a change in its behaviour, or at best, ensure that its actions are in the first instance strictly legal. Accord- ing to Sethi, a ‘reactive’ firm is motivated by the ‘search for legitimacy’. If its actions are raising social pressures and turning into an economic issue where its profitability is at stake, it can ‘defend’ these issues through public relations approaches. However, if the issue is turning into an ethical and economic concern, it can perhaps adopt the ‘accom- modative’ stance by changing its response to conform to the expectations of society. A ‘proactive’ firm progresses to ‘solve the problem’ and ‘lead the industry’ through ex- emplary behaviour.
The action-oriented variant of CSR–corpo- rate social responsiveness–is expected to yield a societal impact. The literature has, to this effect, discussed the ‘outcomes’ or ‘re- sults’ of the implementation of CSR policies and their measurement–the Corporate So- cial Performance (CSP). According to Wood, the CSP outcomes relate to
• the social impacts of corporate behav- iour, regardless of the motivation be- hind such behaviour or the process by which it occurs; • the programmes utilised by companies to implement CSR issues; • the policies put in place by companies to manage social issues and stakehold- er interests.
These important additions are said to have turned Wood’s work into a key contribution to CSP modelling in the 1990s.
CSP measurement, according to Wood, therefore embraces the three aspects of CSR1, CSR2 and CSP:
• CSR1 defines the CSR principles as classified by Carroll in terms of the eco- nomic, legal, ethical and discretionary responsibilities expected of a firm by society. This aspect focuses on obliga- tion and accountability; • CSR2 relates to corporate social respon- siveness, examining the responses of firms towards the CSR principles. This aspect focuses on action and activity; • CSP discusses the outcomes of the im- plementation of CSR policies and their measurement. This aspect focuses on outcomes and results.
PROJECTING CSR ONTO CORPORATIONS: A FIRM’S PERSPECTIVE The debate about the social responsibility of corporations in the first instance centres on their roles in society. One challenging ques-
2012 April Global Islamic Finance 45
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88