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First part
Lecture materials
Lecture on the subject: Ethic and CSR

Lecturer: dr hab. Agnieszka Sokołowska-Durkalec, prof. UEW

Remote classes - MSTeams

Topic: Corporate Social Responsibility

The lecture consists of the following elements:
1. Introduction
2. What is social responsibility?
3. Social responsibility management
-- identifying areas and entities of social responsibility;

Ad.1. Introduction
• Enterprises operate in a society that adheres to specific principles and legal and customary norms,
representing a specific level of ethics. Thus, society is entitled to formulate requirements regarding the
ethical behavior of enterprises. Participants in market processes can confront the attitudes of companies
with their expectations and make consumer decisions on this basis and influence the shaping of the
conditions of functioning of enterprises. Business depends on social acceptance.
• The growing importance of many socio-economic entities in conducting business activity results in
increased interest of entrepreneurs in the expectations, scope of power and influence of stakeholders,
who are increasingly recognized and treated seriously.
• It turns out that social responsibility can become a new instrument of competitive struggle and be the
response of enterprises to such challenges as: sustainable development, growing importance of
intellectual and social capital, ethics and ecological problems in management, diverse cultural,
international and global dimensions of business activity.

Ad.2. What is social responsibility?

• As a result of the analysis of a wide range of definitions and approaches to social responsibility
functioning in the literature, one of the comprehensive ways of understanding it was adopted:

social responsibility can be understood as the economic, legal, ethical and philanthropic obligation
of an enterprise towards internal and external social groups (and individuals), moreover, it can
be the subject of purposeful, rational and institutionalized action, which can become a source of
competitive advantage.

Types of definitions of social responsibility (table 1):

• Classical definitions of social responsibility stemming from the ethical trend

and are based on the fundamental principles of social responsibility: charity/mercy and stewardship.
Representatives include: Carnegie, Kang, Wood, Freeman, Zbiegień-Maciąg, Evan, Freeman,
Donaldson, Preston, Phillips, Des Jardins, McCall, Kung, Kaku, Alford, Naughton, Mele, etc.

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• Definitions concerning the social response of the enterprise from the perspective of the benefits of
society and other stakeholders. Principal researchers: Bowen, Carroll, Frederick, McGuire, Davis,
Blomstrom, Sethi, Ackerman, Jones, Vogel, Wartick, Mahon, Davis, Donaldson, Dunke, Andriof,
McIntosh, Wood, Matten, Crane, Chapple, Preston, Post, etc.
• Definitions touching on the relationship between enterprise and society, including the conditions for
disclosing socially responsible activities. Principal researchers include: Walton, Manne, Davis, Drucker,
etc.
• Definitions emphasizing the subjective and objective scope of social responsibility. Representatives:
Johnson, Eilbert, Parket, Kang, Wood, Zbiegień – Maciąg, Adamczyk, Rok, Agle, Michtell, Rowley,
Friedman, Porter, Kramer, Hart, Litz, Prahalad, Hammond, Christensen, Frooman, Griffin, Mahon, Key,
Popkin, Roman, Hayibor, Agle, S.A. Waddock, Graves, Griffin, Rowley, Berman, etc.
• Capacious, extensive and integrated definitions of a normative nature,
definitions. The authors of the definitions include: the European Commission, Adamczyk, Rojek-
Nowosielska, Sokołowska, etc.

Table 1. Selected definitions of social responsibility

Author Definition
[Link] Social responsibility is based on the principle of mercy and stewardship. The principle of mercy is a
doctrine of social responsibility that requires that the more fortunate members of society should help
the unemployed, the disabled, the sick, and the elderly. The principle of stewardship is a biblical
doctrine that requires that wealthy people, owners of capital, treat themselves solely as stewards of
the assets entrusted to them, acting for the benefit of the whole society.
M. Friedman Social responsibility is an activity that is not aimed at maximizing profits, but takes into account the
benefits of social groups that are not shareholders in the company. "There is only one social
responsibility in the business world - to use its resources and engage in activities to increase its own
profits so far as this is within the rules of the game... (and) to accept open and free competition,
without deception or fraud."
A.B. Carroll Social responsibility consists of different types of responsibility, which are affected to varying degrees
by social requirements.
[Link]. Kang, Social responsibility means the obligation of every corporation to comply with moral and social
[Link] norms at every stage of its activities.
J.A.F. Stoner, R.E. Social responsibility concerns the way an organisation interacts with the society in which it exists; it
Freeman, D.R. is when an organisation takes action to influence the society in which it exists, for example
Gilbert Jr. participating in voluntary charitable activities.
M.E. Porter, M.R. Social responsibility is treated as an element of a well-thought-out corporate strategy,
Kramer institutionalized and rationalized, which can become a new source of competitive advantage.
L. Zbiegień – Maciąg Social responsibility is the moral responsibility of a company and its obligation to account for its
activities to society; especially to internal groups – owners and employees, and external groups –
shareholders and customers; local authorities, pressure groups, ecological movements, consumer
movements, suppliers, and cooperating parties and state administration.
B. Rok Social responsibility is the moral responsibility of a company and its obligation to account for its
activities to society; especially to internal groups – owners and employees, and external groups –
shareholders and customers; local authorities, pressure groups, ecological movements, consumer
movements, suppliers, and cooperating parties and state administration.
H.G. Fitch Mianem społecznej odpowiedzialności przedsiębiorstwa można nazwać sposób rozwiązywania
problemów spowodowanych całkowicie albo częściowo przez korporację.
[Link] Social responsibility is the set of obligations of an organization to protect and strengthen the society
in which it operates.
[Link], Social responsibility means that companies bear not only economic and legal responsibility, but are
[Link] also obliged to take actions that will also contribute to the protection and increase of social well-
being..
World Business Social responsibility is the ethical behavior of a company towards society, consisting of a continuous
Council for business commitment to act ethically and contribute to economic development while improving the
Sustainable lives of employees and their families, as well as the local community and the entire company.
Development
European Social responsibility is the voluntary consideration of social and environmental issues by a company
Commission in its business activities, going beyond legal requirements and contractual obligations. “The concept
“Green Paper” that companies voluntarily consider social and environmental issues in their commercial activities
and stakeholder relations.
Source: [Sokołowska 2013, pp. 31-32]

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Ad.3. Social responsibility management

• It is difficult to find strict models of social responsibility management in the literature on the subject.
It is also in vain to look for a description of the traditional functions of managing this area of the
company's activity. But we will find models of social responsibility in it, which are the result of ongoing
work on the transition from the phase of convincing about the validity of taking socially responsible
initiatives, towards actual action.
• It turns out that the foundations for models of social responsibility management are also created by the
initiative of organizations promoting the idea of social responsibility in Poland, e.g.: the Responsible
Business Forum (national partner of CSR Europe), the Academy of Philanthropy Development in
Poland, various associations of employers and businessmen, and in other, selected countries of the
European Union: in the Netherlands - the Center for Knowledge and Information on CSR, Society and
Business, in Germany - the Forum for Sustainable Development, the German Forum for Sustainable
Investments (associating organizations and enterprises from Germany, Austria, Switzerland,
Luxembourg), in Ireland - Business in Community (Irish branch), in Great Britain - Business in
Community (British branch), in Belgium - Business & Society, etc., as well as EU institutions within
which the Green Paper and the White Paper were created. These are proposals that require continuous
improvement and practical verification.
• Therefore, it is important to search for solutions and present proposals for elements of social
responsibility management.

Two-layered structure of the concept of social responsibility

• The concept of social responsibility has as many supporters as opponents, and views on it are spread
in the background of the discourse between liberalism and neoliberalism and the humanistic and ethical
approach.
• The concept of social responsibility can function both in the sphere of ideas/doctrine, within which
arguments are formulated confirming the validity of dealing with these issues, views, attitudes, main
assumptions, principles, but also in the sphere of real activities of enterprises in this area and in the
sphere of formulating, researching and establishing patterns of enterprise reactions to social problems
(Figure 1).
• The above-mentioned spheres are related to the levels of maturity of the enterprise in adapting the
principles of social responsibility. Purposeful influence on areas and entities of social responsibility
means managing them. The social responsibility of the enterprise is created by its manifestations (static,
passive dimension) and its management (dynamic, active dimension).

Management that permeates all functions and processes in the enterprise consists of sequential
actions based on:
- identifying areas and entities of social responsibility;
- planning social responsibility;
- organizing social responsibility;
- shaping social responsibility;
- controlling social responsibility.

Managers' awareness of the importance of social responsibility in enterprise management

1. knowledge of managers in the field of:
• contemporary competitiveness factors;
• factors determining success in the industry, market in which the surveyed company operates;
• individual and organizational responsibility and the consequences of bearing it or not reacting in this
area;
• sources of knowledge about social responsibility;

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• the essence of the concept of social responsibility, its manifestations in the enterprise; components;
areas; entities; the management process and its elements;
• benefits or costs associated with it, conditions;
• the need to implement elements of the knowledge management process in order to eliminate knowledge
asymmetry (acquiring, creating, sharing knowledge, developing knowledge about social responsibility).

Identifying areas and entities of social responsibility

• Within this element, areas and entities of social responsibility are identified, taking into account their
complementarity. In order to increase the effectiveness of stakeholder identification and further classify
them into key and secondary (first or second degree) from the point of view of the "addressees" of
socially responsible actions, it is important to determine their expected goals, value carriers expected by
them, main expectations, type of power and significant aspects of relations with stakeholders (table 2).

1. recognizing stakeholders (internal and external) (whether, how, which ones?);

2. determining expected goals (what goals?), value carriers (what carriers, what values?), main
expectations (what expectations?) and type of stakeholder power (what power?) (whether? how? how
often?);
3. identifying significant aspects of relations with stakeholders (what aspects?); • 4. classification of
stakeholders into key and secondary (or other classification);
5. dominance/balancing of stakeholder groups (whether, which ones?);
6. identification of the state of social responsibility within the adopted aggregation (internal, external;
economic, legal, ethical, philanthropic; at the level: individual, team, organizational, institutional);

Table 2. Types of social responsibility and resulting areas, sources, undertaking and subject of
responsibility
Area of Source of responsibility Taking Subject of responsibility
responsibility responsibility
Economic [Link] norms; required The obligation of a company to maximize value by
(the basis is optimally utilizing resources and undertaking
economic [Link] entrepreneur's decision activities to increase profits in accordance with the
responsibility) to conduct business activity, principles of a market economy and competition.
along with the
consequences;

[Link]' and shareholders'

rights

Legal 1. legal norms; required The obligation of an enterprise to meet the

conditions for conducting business activity specified
(legal 2. national and international by law.
responsibility is the law provisions
basis)

Ethical [Link] norms required The obligation of a company to recognize the

consequences of its actions and take responsibility
(the basis is ethical for them, and to be guided by respect for the good of
responsibility) society within the framework of generally accepted
[Link] obligation
norms.

Philanthropic [Link] norms desired The transfer of some resources by a company to

society in order to provide specific assistance,
(philanthropic [Link] responsibility voluntary improve living conditions, or solve social problems.
responsibility is the
basis)

Source: prepared based on [Carroll 1993, p. 35; Whetten, Rands, Godfrey 2001, p. 389]

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Economic area of social responsibility
• It means the obligation of the company to maximize value through the optimal use of resources and
undertaking activities in order to increase profits in accordance with the principles of the market
economy and competition.
• The company is created and operates in order to be profitable and - if possible - not to incur losses. In
this case, the manifestations of responsibility are: profitability, maximization of revenues, minimization
of costs, effective strategies, etc.
• According to the resource theory of the company, the economic area of social responsibility is related
to the responsible combination of resources, creating new and improving existing competences and
skillful balancing of tangible and intangible assets together with their legally and ethically conditioned
"treatment". In this context, economic responsibility refers to individual entities.
• The primary manifestation of social economic responsibility is maximizing value for the owner and
shareholders.
• In relation to employees, the company is tasked with maximizing value through timely and fair
remuneration, as well as ensuring safe working conditions and development opportunities.
• Customers should be provided with timeliness and reliability in order fulfillment, professional service,
as well as offering products (goods and services) of the highest quality.
• Suppliers should create long-term and timely and in accordance with the arrangements payment of
receivables, and competitors should be provided with opportunities for cooperation based on mutual
benefits.
• Within the framework of economic economic responsibility, it is also important to regulate public and
legal obligations towards local government and the state, provide jobs in the local community, or
allocate funds for environmentally friendly technologies.
• The economic area of responsibility coexists with the legal aspects of the company's activity.

Legal area of social responsibility

• It is related to the fact that a company striving for profit must act in accordance with the law, it
concerns, among others: compliance with the law in the scope of: conducting business activity,
environmental protection, consumer protection, labor law, business obligations, etc.
• Art. 18 of the Act on Freedom of Economic Activity states that an entrepreneur is obliged to meet the
conditions of conducting business activity specified by law, in particular regarding protection against
threats to life, human health and public morality, as well as environmental protection [Act on Freedom
of Activity, Journal of Laws 2004 No. 173 item 1807]. In this context, social responsibility is a set of
norms that define the manner of action of an entrepreneur towards its internal and external entities. The
addressee of these norms is the entrepreneur as an entity conducting business activity on its own behalf.
Situations in which an entity is legally liable are determined by a given legal system. In the simplest
situation, an entity is liable for its own actions. However, the law may define situations in which entities
are liable for the actions of others, and even for events unrelated to human activity (e.g. the actions of
natural forces).

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• The concept of general legal liability is the subject of disputes in the theory of law and is rarely used
in legal literature. Much more often, we talk about individual forms of legal liability, used in various
branches of law (e.g. civil liability, criminal liability, or constitutional liability) [Sykuna 2007, p. 215].
• A specific type of legal liability also results from the adopted organizational and legal forms of
conducting business activity. The adoption of a specific form is also related to economic responsibility
- the method and requirements of conducting business activity (and further indirectly ethical and
philanthropic).
• An entrepreneur within the meaning of the Act is a natural person, a legal person and an organizational
unit that is not a legal person, to which a separate act grants legal capacity - conducting business activity
on its own behalf. This way of understanding is different from the terminology and its interpretation in
economic sciences, especially in management sciences.

Ethical area of social responsibility

• It means perceiving the effects of one's own decisions and taking responsibility for them, as well as
being guided by respect for the good of society within the framework of generally accepted norms.
Adapting social responsibility by an enterprise results in accepting a moral/ethical obligation resulting
from moral norms and moral duty.
• Due to the fact that an enterprise is a special subject of moral obligation (a combination of individual
"moralities") resulting from universal responsibility, it is necessary for the enterprise to adopt and
implement a system of values and norms of conduct. Such a system should have two basic features: it
should contribute to expanding the sense of shared responsibility of the management staff and other
employees of the enterprise and enable joint resolution of moral dilemmas [cf. Klimczak 1996, p. 76].
• Thus, capturing and consolidating manifestations of ethical actions most often means institutionalizing
ethics in the form of various codes, norms and standards, most often visible in the mission, vision,
strategy, manifestations of organizational culture as a determinant of organizational norms and values,
and the so-called ethical tools, e.g. codes of ethics. Ethical behavior of a company is not only manifested
in honest profit making, but also in behavior towards various entities.
• For example, employees can count on being treated with respect, observing the principles of the
psychological contract in employment, or conducting an equal opportunities policy towards them in the
company.
• A determinant of ethical behavior is the fair treatment of customers, through, among others, the use of
fair pricing strategies, informing in due time and in the appropriate form about changes in the terms of
the contract, fair sales policy.
• Suppliers can expect trust-based terms of cooperation, and competitors can expect support for fair
competition and compliance with the principle of equal opportunities in trade or other forms of activity.
• Supporting social values is important for the local community, and promoting the need to protect the
environment affects the entire society and future generations. Awareness of the need to act not only for
one's own good, but for the good of all, has its consequences in making decisions about helping those
in need.

Philanthropic area of social responsibility

• It concerns the transfer of some resources by a company to society in order to provide specific
assistance, improve living conditions, or solve social problems. Activity in this area is voluntary, but

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also desirable. Philanthropy is the activity of individuals or organizations, consisting in the selfless
provision of financial or material assistance to those in need.
• Unfortunately, philanthropy is quite often misunderstood and is carried out more as a charity, which
is closer to sponsorship than to actions from the "need of the heart". Helping others often becomes a
commercial label created for use as a marketing tool (as part of public relations). Although there is a
material social benefit in philanthropy and an intangible benefit for the giver in the form of well-being,
increased morale, or gratitude of the recipients, the helper can also gain a tangible benefit, which is
information disseminated by the recipients, which gains supporters among employees, customers,
suppliers, etc.
• The results of philanthropic activities are long-term results and must be waited for. Hence the probably
existing abuses and unauthorized calling philanthropy something that is not really philanthropy.
• A company can be active in the philanthropic area not only in terms of helping those in need outside
the organization by supporting health, science, education, art, sports, implementing programs for local
communities, but also in terms of helping its employees.
• In this field, it can offer financial and material assistance to employees in difficult life situations, or a
specific organization of working time and scope of duties for an employee in difficult life situations.
• Externally, the company can also help customers and suppliers by organizing free training on the
product, financial and material assistance to regular customers and suppliers who are in difficult life
situations. The scope of this assistance depends on the effectiveness of the company in the economic
area, acting in accordance with the law and the possibility of disclosing ethical behavior.

Social responsibility entities - stakeholders

The social responsibility entities are stakeholders, who are most often divided into internal (entities and
interest groups in the enterprise):
- owners (entrepreneurs, shareholders, stockholders);
- management staff (including top management - management board, supervisory board; middle and
lower-level managers) of course does not apply to small enterprises;
- other employee groups;
- trade unions;
and external (entities and interest groups operating in the closer and more distant environment of the
enterprise):
- customers (individual and institutional);
- suppliers and other cooperators (retailers, wholesalers);
- competitors (general, substitutes, new bidders);
- creditors;
- financial institutions (including lenders);
- investors;
In the social responsibility model based on stakeholder theory, the types of stakeholders and thus the
types of social responsibility were also defined. The model also made it easier to define the entities of
social responsibility.
• E. Freeman distinguishes first- and second-degree stakeholders (key and secondary). First-degree (key)
stakeholders are persons (natural or legal) who enter into formal contracts and agreements with the
company. Without their involvement, it is difficult for the company to survive and develop. Most often,
they include: shareholders, employees, customers and the public sector: government and local
communities. Second-degree stakeholders are persons or groups of persons who can both influence the
company or remain under its influence, without conducting any transactions with it, and therefore are

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not necessary for its functioning. The media and interest groups can be mentioned here [Rybak 2004,
pp. 43-44].
• A division into internal and external stakeholders is also used. Internal stakeholders are those who
control the company's activities, either by virtue of ownership or by virtue of the position held in the
company. External stakeholders include partners of the enterprise who are in its environment and are
interested in its activities. The classification of social responsibility into internal and external
corresponds to this division.
• Stakeholder theory has a significant contribution to the development of the concept of social
responsibility, but it does not replace it, but enriches and supplements it. Thanks to the application of
stakeholder theory, the reaction and response of the enterprise to social problems is possible mainly
thanks to the identification of those to whom the company is responsible. The scope of this responsibility
is attempted to be determined by models of socially responsible action.