Chapter 4 – Social Responsibilities of
Entrepreneurs
For a business to survive, it must exhibit social
responsibility.
1. Your Responsibility to Customers
 Do not mislead customers.
 Give complete information regarding proper
use.
 Label unsafe products as such.
 Offer the best quality products at the lowest
prices.
2. Your Responsibility to the Environment
Environmental protection agency an
independent federal agency established to
coordinate programs and enforce regulations
aimed at reducing pollution and protecting the
environment
3. Contributing to the Community
Many small businesses have found ways to be generous
to the community, including:
 donating their products and services
 involving employees in philanthropy
 joining with other companies to promote social
responsibility
4. Being a Socially Responsible Employer
As a small business owner, you have a responsibility to
treat your employees fairly.
You can offer flextime, health care, telecommuting, on-
site child care, and assistance to employees with
impairments.
5. Being a Socially Responsible Employee
Personal responsibility is the basis of social
responsibility.
Responsible employees maintain high ethical standards
when dealing with coworkers, management, and
customers.
Corporate Social Responsibility
It is a self-regulating business model that helps a
company to be socially accountable to itself, its
stakeholders and the public.
A concept whereby companies integrate social and
environmental concerns in their business operations
and in their interaction with their stakeholders on a
voluntary basis.
CRS is the continuing commitment by business to
behave ethically and contribute to economic
development while improving the quality of life of the
workforce & their families, local communities and
society at large.
Stages of CSR
 Defensive
- Company faced with pain, criticism, reacts
defensively
 Compliance
- Cost of doing business, do just as much as
need to
 Managerial
- Moves CSR to core business managers &
functions
 Strategic
- Realigns strategy to use CSR as competitive
advantage
 Civil
- Need to involve all in sector, collective
action
Implementing CSR
 Make business case (relevance)
 Engage stakeholders (internal & external)
Map potential vulnerabilities/ risks Develop
CSR strategy
 Align with organizational culture/ change
Monitor, measure, report
 Communicate to ALL stakeholder groups.
Designing a CSR Structure: Big Picture
  Build Senior Vision & Support Dimensions of CSR
 Examine Current CSR Systems & Activities
 Design a CSR Structure CSR agenda can be broadly divided into its
 Implement CSR Management Systems
1. Internal dimensions of CSR:
 Human Resource Management
Designing a CSR Structure: Nine Steps
 Health and Safety at Work
 Understand Drivers (internal & external)  Adaptation to Change
Identify Key CSR Issues  Management of Environmental impact and
 Identify & Evaluate Stakeholders Natural Resources
 Identify Current Functions Supporting CSR
2. External dimensions of CSR:
 Analyze Current CSR Systems, Culture Design
CSR Structure  Local Community
 Develop Effective Staffing Plan  Business partners, suppliers and consumers
 Create Cross-Functional System Match Budget  Human rights
to Best Framework  Global environmental concerns.

Pyramid of CSR Role of Government in promoting CSR

 Guiding the business world

 Facilitating

 Incentivizing

 Certifying /Endorsing the Company

 Participating directly in CSR activities

 Auditing / Monitoring

 Exercising Control

Benefits of CSR Activities Role of market forces in CSR

• Better brand recognition.  Marketing Benefits

• Positive business reputation.  Business Partnership

• Increased sales and customer loyalty.  Cost Saving

• Operational costs savings.  Improvement in Productivity

• Better financial performance.  Other Linkages

• Greater ability to attract talent and retain staff.

• Organizational growth.

• Higher Customer satisfaction and loyalty

• Easier access to capital

Criticism of CSR
 Imposing CSR can lead to imposing
inappropriate standards.
 Imposing CSR on SMEs is going to severely
affect their viability as they are struggling for
survival.
 CSR initiatives by small business will be
minuscule compared to initiatives taken by
large corporate bodies.
Avoiding Criticism of CSR
 CSR programmes must be based on legitimate
standards established by civil society.
 Should be backed up by well-established
processes for measurement and reporting.
 Should be built on strong business case so that
it becomes easy to economically justify the
adoption of CSR.
 Must be flexible and based on their unique
situations.
Chapter 4 – Business Beyond Profit
Three indicators reflect the economic and
entrepreneurial dimensions of
Social Enterprises:
 A continuous activity producing goods and/or
selling services
 A significant level of economic risk
 A minimum amount of paid work
 Three indicators encapsulate the social
dimensions of such enterprises:
 An explicit aim to benefit the community
 An initiative launched by a group of citizens or
civil society organizations
 A limited profit distribution
Finally, three indicators reflect the participatory
governance of such enterprises:
 A high degree of autonomy
 A decision-making power not based on capital
ownership
o A participatory nature, which involves
various parties affected by the activity
Types of Social Enterprise
Trading Enterprises
Worker/employee owned trading enterprises, co-
operatives and collectives. These vary from very large
enterprises such as John Lewis Partnership in the UK
and the Mondragon Co-operatives in Spain, to medium-
sized enterprises owned by their staff with traditional
management hierarchies and pay differentials, to quite
small worker co-operatives with only a few
director/employees who work in less hierarchical ways
and practice wage parity. Within the Trading Enterprises
there are employee owned enterprises and
membership owned enterprises.
Financial Institutions
Saving and Loans organisations such as credit unions,
micro credit organisations, co-operative banks and
revolving loan funds are membership owned social
enterprises.
Community Organizations
These are membership organisations that usually exist
for a specific purpose and trade commercially. All
operate to re-invest profits into the community. They
have large memberships who are customers or
supporters of the organisation's key purpose.
Non-Government Organisation (NGOs) and Charities
There are many NGOs and charities that operate a
commercial consultancy and training enterprise, or
subsidiary trading enterprises. The profits are used to
provide salaries for people who provide free services to
specific groups of people or to further the social or
environmental aims of the organisation.