More risk, more profit— this is an evergreen
business custom in the world, but more risk taken by
the US banking industry in the area of the housing finance sector
yielded the reverse results—that which became the root cause of the
recent financial crisis, proving that more risk does not always give back
more profits. For instance, in 2006, over 14 million new mortgage loans
were originated, and the total amount of home mortgages
outstanding crossed $10 tn, having doubled in a little over five
years. The financial crisis further deepened because
of globalization, because globalization not only facilitates
international trade but also spreads business
risks across the world. Thus, the financial crisis that originated in the
housing finance sector in US during 2007 quickly spread to Europe and
then to most parts of the world including India. The financial crisis has
left an impact on all the economic activities and all the regions of
the world—around the world stock markets have crashed,
large financial institutions have collapsed, and governments in
even the wealthiest nations have had to come up with rescue packages to
bail out their financial systems. Further, the changes happening in
the business environment during the global economic recession era
may influence the corporate policy towards its business activities in
a socially responsible manner. Therefore, the approach
of Corporate Social Responsibility (CSR) is perceived as one of
the issues relating to the global economic recession and this
article portrays the status of CSR in the world during the period just
after the global economic recession.
CSR is an approach, an outcome of various best practices
practiced by businesses. A widely quoted definition by the
World Business Council for Sustainable Development states,
"Corporate social responsibility is the
continuing commitment by a business to behave ethically and contribute to
economic development while improving the quality of life of the workforce
and their families as well as of the local community and society at
large." The concept is understood by many
other names—corporate citizenship, corporate responsibility,
corporate philanthropy, corporate giving, community relations,
community affairs, community development, global citizenship,
corporate community involvement and corporate social marketing
(Kolter and Lee, 2005- Corporate Social Responsibility: Doing the
Most Good for Your Company and Your Cause, New Jersey: John Wiley
& Sons). In such a way, corporate citizenship is defined as
"a commitment of duties and responsibilities towards
a company's stakeholders i.e., customer, shareholder, employee,
government, environment, health and safety" (Centre for Social Marketing,
2001) and similarly Corporate Social Marketing is defined as "the
social initiatives launched by a company that produce social outcomes and
may change consumer behavior to build markets and benefit the
company" (Philip Kotler & Nancy Lee,
"Best of Breed", Stanford Social
Innovation Review, Spring 2004). |
