reflections on some basic theories of corporate social responsibility

8/12/2019 Reflections on Some Basic Theories of Corporate Social Responsibility

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Reflections on Some Basic Theories of

Corporate Social Responsibility

Zhang Shi Yuan* Li Dan Ning**

[Abstract] Corporate social responsibility (CSR), a constant source of debate in

the research of company laws, has attracted wide attention from scholars and

increasinly intensi!e studies ha!e been made in the respect" #his paper focuses the

research on identification of the definition and characteristics of the concept of CSR,

followed by an analysis on the !alue orientation on which $CSR% e&ists and on its

theoretical basis" #he paper concludes with a tentati!e summary on the content ofCSR and its leislation in China"

['eywords] Corporate social Responsibility

#heoretical basis eislation

I Ientification an characteristics of corporate socialresponsibility

hat does corporate social responsibility (CSR) refer to* #here is so far no consensus

in the academic circles on the +uestion" owe!er, some -S scholars enerally ta.e it

that CSR refers to the fact that board directors of a company, as the trustees of !arious

interest parties, acti!ely participate in altruist acti!ities in order to perform their due

corporate roles in the society" /Some other scholars are in fa!or of the opinion of

most -S scholars that CSR means that those profit0oriented companies, when their

decision ma.in bodies become certain that some underta.ins are mostly desired by

the ma1ority of the society, should i!e up their intent of ma.in profits from the

underta.ins and try to meet the e&pectations of the ma1ority" 2 2ther scholars

belie!e, that CSR refers to the fact that companies shall not ta.e optimal0profit0ma.in for directors as the sole aim of corporate e&istence" 3nstead, all social benefits

rather than ma&imally impro!in shareholders interests should be considered as the

sole ob1ecti!e of corporate e&istence"3Still, other scholars thin. that CSR refers to

the social obliation that a company has to be liable to in the maintenance and

impro!ement of social benefits in addition to the pursuit of ma&imi4in shareholders

/56rofessor of 7orthern 3ndustrial -ni!ersity, 6resident of Research 3nstitute of 8conomic aws55ecturer, 3nstitute of 8conomic aws, 7orthern 3ndustrial -ni!ersityiu 9un ai: $Corporate Social Responsibility%, /;;; edition, 6ress of aw, p


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profits" 4#houh the description of CSR !aries, the core of it is similar, i"e" a

company should underta.e certain social responsibilities and liabilities at the same

time of ma.in profits for the company"

#o sum up the !arious opinions by different scholars, we may conclude the followinas the main characteristics of corporate social responsibility"

ICSR is a !in of responsibility of relations or positi"e responsibility>enerally spea.in, the word $responsibility% contains two folds of meanins:

responsibility of relations and method responsibility" #he former refers to the fact that

the principal of one party ta.es up certain responsibilities based on certain .inds of

relations of the principal of other parties" #his .ind of responsibility is actually an

obliation the latter refers to the neati!e conse+uence, which should be borne by the

principal who are liable to responsibility of relations (i"e" obliations) and fails toperform his responsibility of relations" BCSR is, in fact, an obliation of a company" 3t

can be said that the $responsibility in $CSR% refers to an $obliation%" 3n addition, the

1urisprudential circle ta.es an obliation as a positi!e responsibility and the neati!e

conse+uence resulted from default of obliations as neati!e responsibility" 3f to loo.

at CSR with this .ind of di!ision, then, it is ob!iously a .ind of positi!e

responsibility"

II CSR ta!es those concerne #ith non$shareholing interests as theconcerne party of obligations

Accordin to eneral understandin, the so0called $concerned parties with non0

shareholdin interests% are deemed as the consistin part of the concerned parties of

interests of the company, i"e" any non0shareholders, who are under actual, potential,

direct and indirect influence of corporate decision0ma.in and corporate beha!iors"

Specifically, they include company employees, consumers of company products,

company creditors, beneficiaries of economic and social de!elopment plannin,

resources and en!ironment, social securities and welfare facilities" Since the

concerned parties with non0shareholdin interests ha!e their respecti!e interests in the

company, the company has liabilities to maintain and secure their interests and thisliability is what is called CSR" Accordinly, the concerned parties with non0

shareholdin interests are also considered as the concerned parties of obliation of the

company"

IIICSR is an integration of legal an moral obligations of a companyeal obliation, a statutory liability ta.in state coerci!e forces as its performance

uarantee, means leal security of minimum re+uirement of morality necessary to

maintain basic social order" oral obliation is a responsibility non0leali4ed and

Du Eai Fu: $8conomics and eal Analysis on CSR%, 6ress of aw,


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!oluntarily performed by the obliors and which ta.es any other means than the state

coerci!e forces as its performin uarantee" 3t is a hiher demand of morality on

people abo!e their leal obliations" CSR, as an obliation that a company is liable to

the society, is not simply a leal obliation or a moral obliation" Rather, it is the

interation of the two"

%I&' CSR is an amenment an complement to the con"entional principle of

ma(imi)e profits for shareholers

#he con!entional companies and company laws ta.e indi!idual principals

(shareholders) as the startin point for consideration, belie!in that the hihest or the

sole ob1ecti!e of a company is to achie!e profits in order to ma&imi4e the profits for

shareholders" hereas, CSR ta.es social principals as its startin point, belie!in that

the ob1ecti!e of a company should be of two dimensions" 3n addition to reali4in the

ma&imum profits for shareholders, companies should also stri!e to maintain anduprade social benefits" 2f the two corporate ob1ecti!es of achie!in ma&imum

corporate profits and social benefits, any sinle one of the ob1ecti!es will ha!e to be

put under restriction by the other" #herefore, the ob1ecti!es of ma.in profits and of

brinin social benefits are often found in stron tension" #heir respecti!e ob1ecti!es

of ma&imi4ation are reali4ed under conditions of reciprocal interactions and a balance

in corporate ob1ecti!es has also been maintained" 2b!iously, CSR is an amendment

and complement to the con!entional principle of ma&imi4ed profits for shareholders"

And this amendment and complement does not re1ect the principle of ma&imi4in

profits for shareholders"?

IITheoretical Basis of CSRI +conomic basis of CSRA company is, first of all, an economic setup with ma.in profits as its oal and it has

the status of leal entity with independent economic interests" hen loo.in at the

social responsibilities that a company should ta.e, those scholars in the economic

circle and who are in fa!or of this opinion belie!e that corporate ob1ecti!es lie increatin ood conditions of e&istence and sound de!elopment prospect for a company"

#he manaers of a company should become concerned with the optimal lon0term

capital ains of the company in order to achie!e corporate oals if to achie!e the

optimal lon0term profits, a company will ha!e to ta.e up social responsibilities as

well as the social cost thus incurred" hen studyin on the relationship between

social responsibilities and economic performance and efficiency, the focus is i!en on

the research of the relationship between social responsibilities and economic

performance and efficiency durin the lon0term de!elopment process of a company

so that a positi!e correlation of the two has been deri!ed"

?u Eai Fu: $8conomics and eal Analysis of CSR%, 6ress of aw,


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II Sociological basis of CSRSociety is an oranic whole" Companies (enterprises) are components ma.in up the

oranic whole" #o loo. at the relationship of society and companies, companiescannot sur!i!e in isolation from a society" Social de!elopment relies on the rowth of

companies" #his interdependency decides that society and companies interplay with

each other, and at the same time they are restricted by their respecti!e de!elopment

rules what is more, companies, as a social setup, ha!e their independent interests

social benefits is of public welfares" #he de!elopment ob1ecti!es of companies lie in

ma&imi4in their corporate profits, whereas social de!elopment ob1ecti!es are for

increment of common benefits of its members in a society" Also, companies, as one

tier of a society, re+uire that corporate interests are put under constraint of social

benefits and companys ob1ecti!es should comply with those of social benefits" #hus,

it is made .nown +uite ob!iously that companies should underta.e their respecti!esocial responsibilities"

III Legal Basis of CSR#he chief principle of law to follow in our country when reulatin 1ustice and

interests, and the contradictions between the relationships of !arious interests is to

ta.e into account the interests of the state, the collecti!e and the indi!idual" Achie!in

corporate profits and ta.in up social responsibilities are in fact a matter of the

contradictory relationship between the indi!idual corporate business benefits and the

collecti!e social benefits" hen dealin with the relationship of the two, the first

priority should be i!en to satisfyin the interal social benefits while pursuin

indi!idual economic benefits, which re+uires that companies should ta.e up certain

social responsibilities while see.in for optimal business benefits" Secondly, the

criterion of reulatin the !arious contradictions of relationships of interests is to

prioriti4e efficiency while i!in consideration to 1ustice, which means when

efficiency contradicts with 1ustice, efficiency o!erta.es as the dominatin factor"

Companies should o after as hih efficiency as possible in order to ac+uire the

optimal business benefits" owe!er, moral factor will ha!e to be considered at the

same time" 3f companies see. ruthlessly hih efficiency and hih profitability andtherefore damae the 1ustice and fair rules of the society, all the indi!iduals in the

society will ultimately ha!e to pay a hea!y price"

As far as ci!il law is concerned, a company, as a leal entity, is the principal of ci!il

law" #he principle of public order and ood conducts is one of the most basic

principles of modern ci!il law, which re+uires that the principals of ci!il cases shall

not !iolate the public orders and ood conducts when enaed in ci!il acti!ities,

which also re+uires companies to underta.e non0performance liabilities on any

beha!iors prohibited by law when enaed in ci!il acti!ities" Secondly, the idea of

ci!il law has transformed from the indi!idual principal pre!alent in the /; thcentury to

D


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the social principal de!eloped in the eneral 3ntroduction to Ci!il aw%, 6ress of aw, /;;B edition, p@J"LHhan Shi =uan, iu i: $2n CSR%, e&cerpt from $Classics of Chinese Commercial aw% (Molume


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company ma.es any decision, it has to ta.e into account the benefits of these people"

2therwise, it should ta.e liabilities aainst any harm or damaes thus incurred to

these people"

@" #heory of social responsibility on bein ood citi4ens

#his theory maintains that companies, as business orani4ations, should ta.e profit

ma.in as the corporate ob1ecti!es" owe!er, companies are also liable to offerin

help, i"e" companies shall ha!e the obliation to help sol!e certain social problems"

For instance, companies shall ha!e the obliation of ma.in donations to education or

charity orani4ations" ;

D" #heory of social responsibility on minimum re+uirement of morality

#his CSR theory belie!es that companies ha!e the obliation to satisfyinshareholders interests rather than causin damaes to other parties" Ny this theory, as

lon as companies ha!e a!oided causin or corrected the social harm caused due to

their beha!ior durin the process of business acti!ities, the companies are deemed to

ha!e fulfilled their social responsibilities" #he CSR theory of minimum re+uirement

of morality is rearded by some scholars as conser!ati!e idealism, or in other words

as the !oluntary compliance with the law"

II&alue theory of CSR that China shall follo##he abo!e0mentioned theories of CSR ha!e their respecti!e rational and irrational

points" owe!er, one theory, in which the ad!antaes will ha!e to outweih the

disad!antaes, has to be selected amon them as the uidin theory for the practice in

our country" As far as the theory of ma&imi4ed profits for shareholders is concerned, it

has the merits of encourain in!estment and promotin business de!elopment and

prosperity, thouh there is the suspicion of causin harm to other concerned parties of

interests" #herefore, this CSR theory should be insisted on in our country" hen

loo.in at the o!erall situation of our country, we see that the mar.et economy in our

country is still not !ery de!eloped and business acti!ities are not prosperous enouh"

#o ta.e up CSR in our country, the ob1ecti!e of ma&imi4ed profits for shareholdershas to be achie!ed before ha!in the basis of emphasi4in the protection of other

concerned principals of interests" #he ob1ecti!e ma&imi4ed profits for shareholders is

the ultimate oal of a business orani4ation and the protection of other concerned

principal of interests, thouh also one of the corporate ob1ecti!es, is in secondary

place and is subsidiary to the main ob1ecti!e" hen the main ob1ecti!e and secondary

ones are in conflict, the board of directors of the company should i!e up the

secondary one and insist on the primary one" 2therwise, the conduct of the board of

directors of the company !iolates the obliation they should ta.e up of wor.in for

the best interests of the company and the directors should bear any leal

;8dited by Hhan An in: $Company aw%, 6ress of Hhonshan -ni!ersity,


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responsibilities to the company"

I&Legislati"e practice an application of CSR in China#he scope of CSR in different countries and different historical periods of the same

country !aries reatly" 2!erall spea.in, CSR in peoples mind in the early staes

refers only to the moral obliation a company underta.es in participatin in charity

acti!ities or other social welfare acti!ities" ith risin influence of companies on the

society, more concerns on such social issues as safety and ecoloy and radual

impro!ement on mandatory leislation on the issues, CRS beins to ta.e in more

e&tensi!e substances"

I Content of CSR/" Responsibility to employees #he con!entional theory of company law

maintains that employees are only the laborers of the company" #hey are non0

members of the company" owe!er, the interests and the fate of the

employees are closely connected with the business operation of the company"

#hey are considered as a type of .ey party of interests" 3n order to

substantially secure and i!e full consideration to the benefits of employees,

all the countries in the modern world list the responsibility to company

employees as one of the most important content of social responsibility a

company has to underta.e"


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roup as a whole"

D" Responsibility of protection and rational utili4ation of en!ironment and

resources This is a social responsibility that a company should bear

towards the beneficiary of actual and potential en!ironment and resources"#he protection and rational utili4ation of en!ironment and resources concerns

not only the immediate interests of contemporary enerations, but also the

subsistence and de!elopment of future enerations" 3t is the precondition and

.ey for human .ind to achie!e sustainable de!elopment" For companies to

ta.e up responsibilities on protection and rational utili4ation of en!ironment

and resources, it is an embodiment of companies to ta.e up responsibilities

for the offsprin of man.ind and this responsibility is a typical CSR"

B" Responsibility of economic and social de!elopment of the local community

#his is the responsibility that a company will ta.e with the community it is

located or the residents of the community as the concerned party of interests"

#he company has inseparable contact with the located community" #he

prosperity of the company brins economic well0bein to the community,

which also ma.es the residents of the community immediate !ictims to the

damaes and pollution caused by the company" #he authorities of the

communities offer necessary securities to the company in such areas as

security and infrastructure so that the business acti!ities and operations of the

company may be e&tended normally" All these factors mean that the company

should ta.e on some special obliation towards the community"

?" Responsibility of the cause of social welfare and public interests

This responsibility of the company includes e&tensi!e contents, such as

ma.in charity donations to hospitals, old peoples homes, diseased people

and people in po!erty, employin disabled people, people with deficiency of

labor s.ills and other people with difficulties to be employed, and rantin

scholarships and other funds to educational institutions, participatin in

pre!ention of criminal acti!ities or pro!idin funds for such act" #heobliations companies underta.e towards social welfare and causes of public

benefits are deemed as traditional CSR" ;G

II+mboiment of CSR in Chinese legislation3n our country, leislation has ta.en a step ahead in theoretical research of CSR,

thouh no mature and systematic structure has been established in the respect" #he

current leislation has included some of the content of CSR into the statutory articles,

;G" u Eai Fu: $8conomics and eal Analysis of CSR%, 6ress of aw,


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which can be seen in se!eral laws"

/" 8nterprise aw

#he e&istin 8nterprise aw has been stipulated and fine0tuned with raduallydeepened economic system reform startin in /;JL, of which, the rele!ant stipulations

on CSR, such as employees ta.in part in the corporate business manaement,

stipulations on labor protection, on en!ironmental protection, on liabilities of creditors

and stipulations on buildup of spiritual ci!ili4ation and abidin by the professional

ethics can be found in the rele!ant literature on enterprise laws, includin the

8nterprise aw of State 2wned 8nterprises, Reulations on #ownship and Rural

Collecti!ely0owned 8nterprises, 3nterim 6ro!isions on 6ri!ate 8nterprises and the

Company aw"


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establish the principle of estoppel in donations of public welfare and moral obliatory

natures, and wor. as a forceful pressure to ure companies to cash in their promises

made for sponsorin public welfare underta.ins so that CSR is substantially carried

out"

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reflections on some basic theories of corporate social responsibility

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