ISSN 0798 1015

Vol. 38 (Nº 33) Año 2017. Pág. 33

On the origin and development of the social responsibility concept

Sobre el origen y desarrollo del concepto de responsabilidad social

Svetlana Valentinovna IUDINA 1; Svetlana Anatolyevna KARIMOVA 2

Received: 05/06/2017 • Approved: 15/06/2017

Content

1. Introduction

2. Methods and Methodology

3. Problem Definition

4. Research Results

5. Discussion

6. Conclusion

References

1. Introduction

The problem of corporate social responsibility (CSR) of business is burning. The relations of business and society in the world passed a long evolutionary way of transformation. In Russia, these relations underwent revolutionary changes. The negative attitude in the Russian public consciousness results both from misunderstanding of the sources of social and economic development and from the features of the privatization of the 1990s and its consequences (Carroll 1979; Friedman 1970; Bowen 1953).

2. Methods and Methodology

This research should be referred to the category of theoretical; therefore, the main method of cognition used by the authors is an axiomatic method based on the application of certain basic statements taken on trust, but at the same time the logical development of these statements leads to the removal of other provisions of the theory.

In particular, the analysis of the latest studies and publications in which the aspects of CSR are considered and on which the authors are based allowed accepting as axiomatic proof statements the following:

• Investigating various approaches formed in different countries, it is possible to reveal those which are the closest and suitable for the formation of the Russian national CSR model (Baksha & Danilyuk 2012).
• Pointing out national (continental) models, it is possible to define the logic of their development (Iudina  & Karimova 2015).
• Introducing and applying various mechanisms of the relations regulation between business and society, each country in its own way seeks to emphasize the main priorities of all interested parties (The Problems of Modern Economy, n.d).
• Having defined the main interests of stakeholders, it is possible to reveal the sources of contradictions in them (Stakeholders and Their Interests Towards the Company, 2010).

Decisively, these provisions are still discussed, but a certain amount of abstracting, admissible in such cases, enables the authors to insist on their verity.

Among the practical methods used in the research, a comparative-historical method, methods of classification and generalization should be noted.

3. Problem Definition

Is it possible to use the experience of other countries when forming the Russian national model of corporate social responsibility? What part of business responsible behavior has to self-regulate and what part has to measure up strictly to the norms regulated by the state? How timely for the moment is socially-focused work of corporations? The research of special literature is able to answer these and other questions. In the course of the research, it was necessary to consider the main concepts and evolution stages of social responsibility; the models reflecting the main specifics and history of the countries.

4. Research Results

CSR is understood in the research as the voluntary desire of the company to help society not so much from the point of view of its interests, as from the point of view of all parties interested in the corporation’s activity (Social Responsibility of Business, n.d.; Social Responsibility of Business, n.d.; Zaretskiy & Ivanova 2013). As a part of the study, the authors made an attempt to sum up the main concepts formed in the theory and to estimate their "working" character in the conditions of modern Russia. As of today, it is possible to highlight the most noticeable views:

1. The concept of the "classical approach" which characterizes CSR as responsibility of modern managers (who are experts in the management sphere) to those who are the owners of companies (employer-investor) for receiving and effective use of the invested financial resources.

2. The concept of "reasonable egoism" which considers CSR as responsibility of the company for doing business with using its potential in the market, that is, the improvement of its image, building relations in team, the involvement of new clients, and the increase in sales.

3. The concept of "corporate altruism" which considers CSR as responsibility of the company for making strong contribution to the improvement of the quality of life in the country, as follows: spending money for social programs, the companies reduce their current profits, but thereby increase the activity and stability of their stream in the long view.

4. The theory of the "integrated approach" which treats CSR as the responsibility of the company which is taking part in charity (social activity), and focuses the efforts connected with the main areas of organization’s activity around any certain area. The main task consists in the mitigation of contradictions between the interests of the company and society.

Today, CSR is presented by national models reflecting this or that civilization of the country. They are presented in Table 1.

Table 1. Characteristics and main features of the formed models:

Many researchers believe that at the moment it is Europe, but not America, that has become the leader both on usage scales and by efficiency of CSR. The Russian model of CSR is at the active development stage. The various interpretations of CSR are observed in the studies.

There are points of view considering CSR, on the one hand, as a certain contrast, antagonism to the business nature, on the other hand, – as a condition of the controversy mitigation between labor and capital, small business owners and large corporations and so forth. However, there is incomprehension of the value of the social responsibility concept in Russia.

Apart from the most popular modern renderings, widespread in scientific literature, it is necessary to analyze so-called "academic" definitions of this concept. They are presented in the works of famous Russian and foreign scientists who have made an essential contribution to the ideas and fundamental principles of social responsibility.

• G. Bowen considered (Bowen 1953) that the rich had to subsidize the poor through charity considering themselves not as owners but as money managers working for public welfare. In his opinion, the social responsibility of a businessman lies in the "realization of that policy, adoption of such decisions or following such behavior pattern which would be desirable from the viewpoints of objectives and values of society". The categoricalness of this definition sometimes mines the foundations of market system as it suggests business to refuse entrepreneurship and work for charitable causes. It can be "fashionable" for the" left-wing" politicians, but it is hardly related to external reality.
• M. Friedman thought (Friedman 1970) that social responsibility was limited to an increase in profits and the salary, and taxes payment, but a fight against poverty belongs only to the sphere of the state’s responsibility. He also considered that "there is one and only one social responsibility of business: use of its resources for participation in the activity directed to increase in its profits in that measure in which it corresponds to the rules of the game providing open and free competition without deception and fraud". In his definition, the fact was put in place that responsibility and upcharge for adoption of CSR is inadmissible for the company, that it excludes corruption and shadow business. Sometimes it is possible to agree with such definition, seeing that, where there are costs for CSR, there are also certain "off-the-book" wages for some people.
• American scientist A.  Carroll offered (Carroll 1979) an interpretation of CSR which meant "compliance to the economic, legal, ethical, and discretionary expectations put in by society to the organization at the present moment". This approach, on the basis of which later the corresponding model was developed, is one of the main for modern studies on CSR problems. According to this model, CSR represents multilevel responsibility which is expedient to present in the form of pyramid. This definition looks the most suitable in the context of the research. Carroll emphasizes economic responsibility as a basic obligation of the organization to perform its functions in the market on provision of services/goods to society and profit-making. Both the grouping and hierarchy assignment of the directions of the responsible behavior look logical and reasonable. The most important purpose of the reporting on sustainable development (or non-financial reporting) is informing all interested parties on various projects (social and others). But not each company can afford it, especially, in Russia.

As social responsibility appeared in the midst of the 19th -20thcenturies and is connected with the development of social programs in various activities stipulating one or another responsibility before the parties, the development duration in this direction shows, more than likely, that this phenomenon has fundamental principles. The formation and adoption of CSR in real terms now becomes more and more burning, and many (top) companies at present do not imagine other principles of relationship building with the stakeholders. But Russia is just in prospect of making the way of understanding and adoption of these principles, at the same time, undoubtedly, adapting them to national culture, system of economic relations, etc.

The present stage of social responsibility concept development is inseparably associated with the standardization of requirements to corporations in the field of social policy and standardization. SA 8000 "Social Accountability" standard developed in 2007 on the basis of the International Labor Organization’s recommendations is applied to the certification in the field of social responsibility. It specifies requirements as to respect for the rights of personnel to work and requirements for labor protection, without concerning other parties of CSR. It contains requirements to the management in the field of social responsibility. In 2007, the Russian Organization for Quality put in force the ROQ-CSA-2007 standard "Corporate Social Responsibility", on the basis of which, the national organizations for quality of Russia, Ukraine, Kazakhstan and Serbia accepted in 2008 the international CSR-2008 standard. It introduced the requirements to the organization’s activities in the field of rights to work and labor protection, social guarantees for personnel, production (services, works) of appropriate quality, environmental protection, resource-saving, participation in social actions, and support of local community initiatives, as well as to social management. All these requirements were consolidated in 7 modules, and modules "A" and "G" are harmonized with the SA 8000 standard. The standard did not establish the requirement to sound business practice and financial transparency because observance of these requirements is controlled by the state. The CSR-2008 standard included the requirements which could be subjected to objective examination by declaring or certificating according to the rules existing in the countries, the national organizations on quality of which joined that standard. In 2010, ISO 26000:2010 Guidance on Social Responsibility was accepted. It "represents the guide on the principles which are the basis of social responsibility, on the main subjects and problems concerning social responsibility, and on ways of socially responsible behavior integration into the strategies, systems, practices and processes of the organization". The standard can be applied by any organization. The present standard can also serve as the handbook for the organizations, experts and the involved external experts when carrying out an activity in the field of social responsibility, declaring and certificating of this activity. The standard is developed taking into account the provisions of the United Nations Global Compact on the actions in the field of CSR recommendations of the International Labor Organization, as well as the international ISO26000 and SA8000 standards and other international documents. The national organizations for quality can apply this standard taking into account features of the legislation existing in their countries.

The consideration of the CSR nature is impossible without emphasizing the main contradictions (obvious and hidden) between the acting groups-interested parties (stakeholders) in interaction of the organization with external and internal environments. As for review of the emerging relations and interests, they are always not only different, but all too often opposite. Their analysis is obligatory as, having reached certain compromise, it is possible to simplify and increase the overall performance of all interested parties.

It is necessary to define each category of the groups-interested parties to have a clear notion of their interests and focuses (Table 2). 

Table 2. Stakeholders’ characteristics

The characteristic of the groups – interested parties gives a clear idea of how far, and at times contradictory, their interests are. The interests of stakeholders can conflict with each other, and together they can be considered as a consistent contradiction (whole), interests’ resultant of parts of which will define the direction (vector) of evolution of the organization.

Having considered some characteristics of the stakeholders, the contradictions of the interests of interested parties’ primary groups with the companies’ interests were revealed (Table 3). 

Table 3. The peculiarities of the contradictions between various groups – interested parties

That is, oftentimes the interests of the company and stakeholders contradict one another as the wish of managing directors is more autonomy, and the wish of shareholders is in greater control whereas the wish of personnel is in the larger salary, and the wish of clients – in fair prices and safety, etc.

All the companies holding leading position in the world market (for example, OAO "Norilsk Nickel", OAO "Severstal", OAO "Tatneft", OAO "Surgutneftegas", OAO "Rostelecom", and others) consider the interests of various groups – interested parties (various incentives are created for employees allowing to prompt workers to the interest in success of the company) as it is this that creates a real basis for social responsibility, promoting the success of the company and general development. It should be also noted that the achievement of such equilibrium (or balance) of various groups’ interests allows to expect the positive net result provided by the strategy of the company.

5. Discussion

The essence of the considered contradictions of all interests reveals itself through two possible sides:

• motivating which is shown through the resolution of the revealed conflicts by means of improvement of various relations (social, economic) and is followed by activity improvement of the subjects of the company’s interests which is a driving force of progress.
• destructive, shown through non-consent of contradictions, becoming a barrier to the growth of the enterprise efficiency and impeding the satisfaction of subjects’ needs.

Therefore, considering an essence of the emergence of the reasons of contradictions between various groups’ interests, it is important to put that the realization of certain interests can impede the realization of others. Therefore, it is important to create such a mechanism for coordinating and promoting the satisfaction of the main interests of all interested groups. It is believed that resolution of all occurred conflicts comes down to wayfinding of the compromises based on a diversity and divergence of the interests and possible help from the state creating certain conditions for balance and congruence of the parties’ interests.

Apart from obvious corporate contradictions, traditionally the hidden conflicts of groups are customarily pointed out. A.S. Semenov and Yu.S. Sizov (Alekseev, Bobryshev and Bokhanova 2002), having analyzed the essence, contents and hidden purposes of the corporate conflicts of the past years, point out the following types of contradictions:

• Contempt of legislation.
•  Acquisitions.
• The conflicts concerning dividends.
• The conflicts with managers. The conflicts between participants of corporation and managers of corporation as for effective management of the company and integrity of managers’ actions.
• Competition.
• Corporate blackmail.

The authors believe that all hidden contradictions are based on the lack of the feeling of "social justice" at this or that party of the relations.

It is supposed that the hidden contradictions in corporations are not limited by the above-provided list therefore it is suggested to expand this list by means of even more inexplicit relations that have a conflict nature.

1. Depending on the nature of demonstration in the relations between various groups:

• these are the contradictions connected with the lack of opportunities for realization by workers of their potential because of either pursued corporate policy in corporation or (that is more critical) the lack of necessity for these or those competences at corporation;
• these are the contradictions appearing in a question of "fair" results distribution of corporation’s activity;
• these are the contradictions in redistribution of financial results of corporations occurring between society and those who are the third party of the relations (the state, local community): for example, the state is interested in budget replenishment at the expense of tax revenues from the corporations, conflicting to corporate investment programs whereas the local community is interested in social infrastructure financing;
• these are the contradictions which are escalating at adoption of politically motivated laws and norms to the detriment of social and economic interests of society;

clients:

• these are the contradictions associated with "unofficial” deals between the people making decisions on the conclusion of the contract and acceptance of the performed works;
• these are the contradictions which are generally connected with impairment of the rights of minority shareholders who actually have no management tools and appear to be "weaker" than operating managers;
• these are the contradictions occurring in virtue of imperfection of any legislation in the field of consumer rights protection.

2. Depending on their horizon period:

• constantly existing (there is no resolution mechanism at present or contradictions have no critical character);
•  quickly resolvable, providing their removal in the operational mode.

3. Depending on their form of occurring the hidden contradictions can be:

• artificially created;
• natural.

4. Depending on the constructiveness degree:

• constructive when their resolution leads to development (improvement) of the relations or system in general;
• destructive at which demonstration the system either suffers losses or loses the possibility of development (worsens activity).

5. Depending on the involvement of objects (subjects) of the external environment:

• internal, i.e. contradictions between members (groups) in corporation;
• external, occurring between all interested parties.

6. Depending on the degree of their legitimacy:

• legitimate, for which legal measures of their resolution are provided;
• illegitimate, resolution (mitigation) of which is possible only on the basis of verbal agreements.

Today, the questions of corruption in state authorities and in corporations are the most discussed in society at multiple levels. Corporate corruption represents danger to society in general as it is the one that not only thwarts progress of the companies, but also forms stable culture of opportunistic behavior which becomes norm. In the context of research, it is important to reveal those hidden conflicts of interests which have ability "to accumulate" and turn into a "snowball". The main contradiction in this case consists in making inefficient decisions by the corrupted managers. If the system doesn't fight with them, an "outgrowth" is formed around the corporation, consisting of the firms, affiliated with managers, which raises extension costs.

It should be assumed that corporate corruption is a global problem (i.e. not purely national); therefore, its emergence and development are connected with the following features:

•  firstly, corporate corruption is more shown in public sector, as for private business the profit acts as the purpose and the main interest, but all responsibility (including, social) for the results of work is assigned to owners or hired managing directors. Here there is a corruption in the smallest way and it is stopped by instant dismissal whereas for public authorities or for the manager of the state corporation "appointed" from above any form of corruption (for example, a bribe, fraud and things) is a certain stimulation form, as the responsibility for further results will not affect the company’s existence in any way and even if affects, its role will be insignificant. The consequences of the existing corruption affect in the worst way the development of both economy (inefficient decisions, lack of strategic vision), and society in general (feeling of social injustice, low motivation), which leads to the negative attitude to those who leave this contradiction without resolution, and at times provides further existence of such system.
• secondly, a serious factor of corporate corruption are national and geographical features, since in many countries this phenomenon has roots of "tradition" (for example, Russia and Italy), and for some it is inadmissible (for example, Finland, Denmark, Sweden, New Zealand fighting for the first place among least corrupt economies);
• thirdly, supposedly, the mentality defines largely not only the nature of subjects, but also their relations, (for example, the production aimed at quality in Germany taking the 13th place among least corrupt ones) while in other countries the mentality is not capable to resist to corruption, but also supports it. From these positions the research by L. Harrison is interesting (Harrison 2014) which is devoted to interrelation estimating of cultural and economic aspects.

In terms of the prevalence of corruption in public sector calculated by Transparency International methodology, Russia ranks one of the leading places in the world (by estimates of 2011, the 143rd place among 182 countries). The research of the Ernst & Young audit company which has interviewed 2 365 employees from 25 European countries has shown that the most part of the companies deals tolerantly with improper conduct of the employees at all organizational levels, and not a few specialists of the large companies consider bribery admissible for getting profitable contracts, assume a possibility of misstatement in financial statements.

The second problem existing in different cultures (first of all, in Asian, Arab, and Latin American) and worsening in the Russian realities is associated with the "clan" nature of career and low (if not to say, zero) opportunity for promotion for highly-qualified professionals having quite frequently unique competences, but forced to be content, at best, with "supporting role". The worker's demotivation occurring in this case leads not only to decrease in the efficiency of activity, but also to the growth of social strain.

6. Conclusion

Thus, the conducted research shows that on a global scale the formation of socially responsible business behavior was a natural reaction of companies and states to contradictions intensification in the interests of the parties, more or less interested in the decisions made at the corporate level. From here, the understanding of the importance of the CSR concept in general derives, though in different countries the regulation of responsible business behavior happens in different ways. The mechanism and the corresponding algorithms are needed that will make it possible to effectively and reasonably eliminate the emerging contradictions in Russian companies, to resolve them taking into account the interests of each party. It will allow building a national model of CSR that is effective and corresponding to the realities of modern Russia, considering the specific features of the present moment of the corporate relations development in the country.

References

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Baksha, N.V., & Danilyuk, A.A. (2012). Korporativnaya sotsialnaya otvetstvennost. Uchebnoe posobie [Corporate Social Responsibility. Study Guide]. Tyumen: Publishing House of Tyumen State University.

Bowen, H. (1953). Social Responsibilities of the Businessman. New York.: Harper & Row.

Carroll, A.B. (1979). A Three-Dimensional Conceptual Model of Corporate Performance. Academy of Management Review, 4(4), 500.

Friedman, M. (1970, September 13). The Social Responsibility of Business Is to Increase Its Profits. New York Times Magazine.

Harrison, L. (2014). Evrei, konfutsiantsy i protestanty. Kulturnyi kapital i konets multikulturalizma [Jews, Confucians and Protestants: Cultural Capital and the End of Multiculturalism]. Moscow: Mysl.

Iudina, S.V., & Karimova, S.A. (2015). K voprosu ob opredelenii i metodike otsenki urovnya sotsial'noi otvetstvennosti kompanii [To the Study of Definition and Method of the Estimation of the Social Responsibility Level of a Company]. Vektor nauki TGU. Seriya: Ekonomka i upravlenie, 3(22).

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Zaretskiy, A.D., & Ivanova, T.E. (2013). Korporativnaya sotsialnaya otvetstvennost: mirovaya i otechestvennaya praktika [Corporate Social Responsibility: The World’s and Domestic Practice] (2nd ed., revised and enlarged). Krasnodar: Prosveshchenie-Yug.

1. Kazan National Research Technical University named after A.N. Tupolev – KAI, Almetyevsk branch, 423457 Almatyevsk, Stroiteley Av., 9B

2. Almetyevsk State Oil Institute, 423457, Almatyevsk, Lenina St., 2