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Question

Refer to the following information to answer the next 4 questions (Q 11 to Q 14) The Companies Act 2013 had introduced several new provisions which changed the face of Indian corporate business. One of such new provisions was the Corporate Social Responsibility (CSR). The concept of CSR rests on the ideology of give and take. Companies take resources in the form of raw materials, human resources etc. from the society. By performing the task of CSR activities, the companies are giving something back to the society.  CSR is the integration of socially beneficial programs and practices into a corporation's business model and culture. India is one of the first countries in the world to make CSR mandatory for companies following an amendment to the Companies Act, 2013 in 2014. Under the Companies Act, businesses can invest their profits in areas such as promoting rural development in terms of healthcare, sanitation, education including skill development, environmental sustainability, etc.

The concept of Corporate Social Responsibility (CSR) is based on which of the following theory?

A Conservative Theory Correct Answer Incorrect Answer
B Stakeholder Theory Correct Answer Incorrect Answer
C Triple Profit Theory Correct Answer Incorrect Answer
D Human Rights Theory Correct Answer Incorrect Answer
E Philanthropy Theory Correct Answer Incorrect Answer

Solution

Edward Freeman defines, ‘a stakeholder in an organization is any group or individual who can affect or is affected by the achievement of the organization’s objectives.’ Thus, the term stakeholder includes (apart from shareholders), but not limited to, customers, employees, suppliers, community, environment and society at large. These and a host of other such ideas have given rise to the concept of Corporate Social Responsibility (CSR). The concept of CSR goes beyond charity or philanthropy and requires the company to act beyond its legal obligations and to integrate social, environmental and ethical concerns into its business process.  

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