SOCIAL

RESPONSIBILITY AND
BUSINESS ETHICS
UNIT 5
Dr Sendhil Kumar
 SOCIAL RESPONSIBILITY AND
BUSINESS ETHICS
What is a Business Model, Social
Entrepreneurship and Sustainable Business
Models, Corporate Social Responsibility
(CSR) and Entrepreneurship, Blue Ocean
Strategy, Ethical Decision- Making in
Business Strategy. Ethical and Legal
Challenges in Entrepreneurship, Legal and
Ethical issues in the digital economy.
SOCIAL RESPONSIBILITY AND
BUSINESS ETHICS
What is a Business Model?
• Definition: A business model describes how a company
creates, delivers, and captures value in the marketplace.
Components:
o Value Proposition: What value the business provides to customers.
o Customer Segments: Target audiences.
o Revenue Streams: How the business makes money.
o Key Resources: Assets that enable the business to function.
o Channels: How the business reaches customers.
Examples:
o B2B (e.g., IBM’s enterprise services)
o B2C (e.g., Amazon’s e-commerce)
Types of Business Models

• Subscription (e.g., Netflix): Customers pay a recurring

fee to access a product or service.
• Freemium (e.g., Spotify): Basic services are provided
for free, while advanced features require payment.
• Marketplace (e.g., Airbnb): A platform that connects
buyers and sellers, earning revenue through
commissions.
• Franchise (e.g., McDonald’s): A business model where
individuals can operate a branch of a larger company.
• Direct Sales (e.g., Avon): Products are sold directly to
consumers, often through personal relationships.
• Subscription Model – Zomato Gold
Zomato Gold offers a subscription service that provides users with exclusive
dining and delivery benefits at partner restaurants. This model creates a
recurring revenue stream while increasing customer loyalty.
• Freemium Model – Byju’s
Byju’s uses a freemium model, where basic educational content is available
for free, but users can pay for premium, personalized learning experiences.
This helps them attract a large user base, then convert a portion to paid
subscribers.
• Marketplace Model – Flipkart
Flipkart operates as an online marketplace, connecting sellers and buyers
across India. By providing the platform, logistics, and payments infrastructure,
Flipkart generates revenue through commissions on sales and advertisements.
• Franchise Model – Vadilal Ice Cream
Vadilal uses a franchise business model, allowing entrepreneurs to operate
under the Vadilal brand, ensuring consistent quality and expanding their reach
across India through localized outlets.
• Direct Sales Model – Amway India
Amway India follows a direct sales model, where independent distributors
sell Amway products directly to consumers. This model creates a personalized
sales approach and incentivizes distributors through commissions.
 Social Entrepreneurship

Definition: Social entrepreneurship refers

to the pursuit of business strategies that
generate social value while operating in a
market-driven environment.
• Key Features: Ria Sharma, born in New Delhi, is a social activist who
graduated from Leeds College of Art, UK. She is the
• Solves social, cultural, or environmental founder of world's first rehabilitation center for acid attack
issues. survivors.

• Focus on both impact and profit. Shaheen is the founder of the Akanksha
• Combines business innovation with a Foundation that pays special attention to
educating the unprivileged sections of
mission for good.
society. For two decades, Akanksha
• Examples: Foundation that initially started with just
one center and 15 children is now assisting
• Grameen Bank (Microfinance for the poor) over 3,500 children in 58 centers and six
• TOMS Shoes (Buy-one-give-one model) schools. Shaheen has the belief and vision
to remove illiteracy from the basic level in
India.
Social Entrepreneurship

• Araku Coffee
• Explanation: Araku Coffee is a social enterprise that supports
tribal farmers in Andhra Pradesh by helping them cultivate high-
quality organic coffee. It ensures fair trade, enhances
community development, and protects the environment through
sustainable farming techniques.
• Amul (Cooperative Model)
• Explanation: Amul operates as a cooperative that empowers
millions of dairy farmers across India. The model promotes
sustainable livelihoods, offers fair prices to farmers, and
generates significant social value through community-based
enterprise.
Characteristics of Social
Entrepreneurs
1. Mission-Driven
• Explanation: Social entrepreneurs prioritize solving societal problems over
personal profits.
• Example: Anshu Gupta, founder of Goonj, is dedicated to addressing poverty
and waste management by distributing urban surplus to rural communities.
2. Innovation
• Explanation: They develop innovative solutions to longstanding social issues.
• Example: Harish Hande, founder of SELCO India, brought affordable solar
power to remote areas, innovating around access to clean energy.
3. Sustainability
• Explanation: Focus on creating lasting impact through self-sustaining business
models.
• Example: Verghese Kurien, known as the “Father of the White Revolution,”
ensured that Amul's cooperative model remains economically sustainable for
farmers.
Characteristics of Social
Entrepreneurs
4. Accountability
• Explanation: Transparent about the social, environmental, and financial outcomes of
their ventures.
• Example: Vineet Rai, founder of Aavishkaar, emphasizes measuring both financial
returns and the social impact of investments.
5. Risk-Takers
• Explanation: Willing to take significant personal and financial risks to drive social
change.
• Example: Chetna Sinha, founder of Mann Deshi Mahila Bank, risked her resources to
create a bank for rural women, offering financial independence to underserved
populations.
6. Empowerment-Focused
o Explanation: Focus on empowering marginalized communities rather than providing
one-off aid.
• Example: Bunker Roy, founder of Barefoot College, empowers rural women by
training them in solar engineering, enabling them to bring electricity to their villages.
Sustainable Business Models

Definition: A sustainable business model integrates

environmental, social, and governance (ESG) concerns into
the core business strategy to ensure long-term success.
• Key Principles:
• Circular Economy: Recycling resources to minimize waste.
• Triple Bottom Line: People, Planet, Profit.
• Stakeholder Involvement: Balancing the needs of all
stakeholders.
• Examples:
• Patagonia: Focuses on environmental responsibility.
• Tesla: Prioritizes clean energy and sustainable innovation.
Sustainable Business Models
Why Sustainable Business Models
Matter?
• Environmental Impact: Reduces carbon footprint and
waste.
• Social Responsibility: Improves communities and
livelihoods.
• Economic Viability: Long-term financial success and
risk mitigation.
• Regulatory Compliance: Adapting to global
sustainability regulations.
Challenges in Sustainable
Business Models
• High Initial Costs: Investments in sustainable
practices can be expensive.
• Regulatory Hurdles: Changing laws and compliance
requirements.
• Consumer Education: Need to inform and engage
consumers on the benefits.
• Short-term Profit Focus: Shift from short-term gains
to long-term sustainability.
Social Entrepreneurship and
Sustainability
• Synergy: Social entrepreneurs are often at the
forefront of sustainable innovation.
• Case Study: Solar Sister – Providing solar energy to
rural areas in Africa while empowering women
entrepreneurs.
Corporate Social Responsibility
(CSR)
Introduction to Corporate Social
Responsibility (CSR)
• Definition: Corporate Social Responsibility (CSR)
refers to a company’s commitment to conducting
business in an ethical manner by contributing to
economic development, improving the quality of
life of the workforce, and benefiting the
community and society at large.
• Key Pillars:
• Environmental Responsibility
• Social Welfare
• Ethical Business Practices
• Economic Responsibility
Importance of CSR in India
• Legal Mandate: Under the Companies Act, 2013, companies
in India with a net worth of ₹500 crore or more must spend 2%
of their net profits on CSR activities.
• Benefits of CSR:
• Enhances brand reputation and trust.
• Attracts socially-conscious customers and investors.
• Improves employee morale and loyalty.
• Promotes sustainable business practices.
• Example: Tata Group – Tata Steel has contributed
significantly to rural development, healthcare, and education
as part of its CSR initiatives.
 Types of CSR Initiatives with Indian
Examples
1.Environmental Responsibility
Example: ITC Limited – ITC’s afforestation program has led to
the creation of over 8,00,000 acres of plantations, promoting
sustainability and rural development.
2.Education and Skill Development
Example: Infosys Foundation – Infosys focuses on improving
education access in rural areas by building libraries, sponsoring
scholarships, and providing educational infrastructure.
3.Healthcare Initiatives
Example: Wipro Cares – Wipro runs healthcare camps in
underserved areas and supports maternal and child healthcare
programs in rural India.
4.Community Development
Example: Hindustan Unilever – Through Project Shakti, HUL
empowers rural women by training them to become micro-
Entrepreneurship and CSR: A Synergistic
Approach
CSR and Entrepreneurship: Entrepreneurs can drive social
change through business innovation and responsible practices.
CSR, in turn, can support entrepreneurial ventures that align with
a company’s values.
Benefits of Entrepreneurial CSR:
• Fosters innovation in solving social problems.
• Builds stronger community relationships.
• Encourages sustainable practices within new ventures.
Example: Godrej Good & Green – Godrej partners with social
enterprises to create sustainable products, promote employability,
and reduce environmental impact through innovation.
CSR in Indian Startups and Social
Enterprises
1. Social Entrepreneurs with CSR Focus:
Example: Eco-Adventure Tourism by Social Alpha – A
startup working with CSR programs to develop ecotourism
ventures that promote sustainable livelihoods while
preserving the environment.
2. Startup CSR Initiatives:
Example: Zomato Feeding India – A Zomato initiative,
Feeding India works to reduce food wastage by
redistributing excess food to underprivileged communities,
supporting both social welfare and environmental
sustainability.
Blue Ocean Strategy
Blue Ocean Strategy is a business approach
that emphasizes creating new, uncontested
market spaces—termed "blue oceans"—
rather than competing in overcrowded
markets, known as "red oceans." The strategy
aims to make competition irrelevant by
innovating and offering unique value
propositions that attract new customers. This
concept was popularized by W. Chan Kim and
Renée Mauborgne in their book Blue Ocean
Uber
Uber revolutionized transportation by developing an app that connects riders with drivers
without directly competing with traditional taxi services. By focusing on convenience and user
experience, Uber created a blue ocean in the ride-sharing market, appealing to customers who
desired quick and reliable transportation options without the hassles associated with
conventional taxis.

iTunes
Apple's iTunes created a blue ocean in digital music distribution by offering legal downloads of
individual songs at affordable prices. Prior to iTunes, consumers had to purchase entire albums
for just one or two songs. This innovation not only attracted music lovers but also addressed
piracy issues by providing a legitimate alternative for music consumption.

Marvel Entertainment
Marvel successfully transitioned from a struggling comic book company to a leader in the
entertainment industry by creating an expansive cinematic universe. By integrating characters
from various comic series into interconnected films, Marvel tapped into a new audience and
generated significant box office revenue, effectively creating a blue ocean in the film industry
Ethical Decision-Making in Business

• Definition: Ethical decision-making involves evaluating

choices based on moral principles and values.
• Importance: Establishes trust, builds reputation, and
fosters a sustainable business environment.
• Example: Tata Group's commitment to ethical practices
has strengthened its brand image in India.
Ethical Decision-Making Process
1. Define the problem
2. Seek relevant assistance
3. Identify alternatives
4. Evaluate alternatives
5. Make the decision
6. Implement the decision
7. Evaluate the decision
Example: Infosys uses a structured decision-making
model to ensure compliance with ethical standards.
 Ethical Decision-Making Process
Step 1: Define the Problem
•Identify the ethical dilemma clearly.
•Example: Tata Group faced a dilemma when expanding into new markets while maintaining its
commitment to ethical practices.
Step 2: Seek Relevant Assistance
•Consult stakeholders or experts for guidance.
•Example: Infosys regularly engages with legal and compliance teams to ensure decisions align with
ethical standards.
Step 3: Identify Alternatives
•Generate possible courses of action.
•Example: Wipro considered multiple strategies for sustainable sourcing to minimize environmental
impact.
Step 4: Evaluate Alternatives
Assess each alternative using ethical filters (e.g., legality, company values).
Example: Zomato evaluated its delivery practices against customer privacy concerns before
implementing new features.
Step 5: Make the Decision
Choose the alternative that best aligns with ethical principles.
Example: Mahindra Group decided to invest in renewable energy projects, prioritizing sustainability
over short-term profits.
Step 6: Implement the Decision
Put the chosen alternative into action.
Example: After deciding on a new hiring policy, HDFC Bank trained its staff to adhere to the updated
 Legal Challenges in Entrepreneurship
1. Intellectual Property Rights (IPR) Challenges
India has a complex IPR landscape, making it difficult for companies to
protect their innovations.
Example: Bharat Biotech faced challenges in patenting its COVID-19
vaccine due to lengthy approval processes and regulatory hurdles.
2. Compliance with Labor Laws
Startups often struggle with navigating India's labor laws, which can be
intricate and vary by state.
Example: Ola encountered legal challenges regarding employee contracts
and labor rights during its rapid expansion.
3. Consumer Protection Regulations
Adhering to consumer protection laws is critical but can be challenging
for new businesses.
Example: Snapdeal faced legal scrutiny over misleading advertisements,
highlighting the need for compliance with consumer laws.
4. Taxation Issues
Entrepreneurs often grapple with complex tax regulations, including GST
compliance.
Example: Flipkart has had to navigate various tax disputes, affecting its
operational costs and profitability.

5. Data Privacy and Cybersecurity Laws

With increasing digitalization, compliance with data protection
regulations is becoming essential.
Example: Zomato faced scrutiny over data breaches, emphasizing the
importance of robust cybersecurity measures.

6. Environmental Regulations
Companies must comply with environmental laws, which can be
stringent and subject to change.
Example: Tata Steel has faced legal challenges related to environmental
clearances for its manufacturing plants, impacting project timelines.
Ethical Dilemmas in Business Strategy

• Stakeholder Interests: Balancing the needs of employees,

customers, and investors.
• Example: Mahindra Group's approach to sustainable
development reflects their commitment to stakeholder
interests while maintaining profitability.
Case Studies of Ethical Decision-Making

• Tata Group: Known for its ethical leadership and

community-focused initiatives.
• Infosys: Implements transparency and accountability in
its operations.
• Wipro: Focuses on sustainability and ethical sourcing in
its supply chain.
 Case Study: Tata Group's Ethical Leadership and
Community-Focused Initiatives
Introduction
The Tata Group, one of India's largest conglomerates, has
a long-standing reputation for ethical leadership and
corporate social responsibility. Founded by Jamsetji Tata in
1868, the group has consistently prioritized integrity,
responsibility, and community welfare as core tenets of
its business philosophy.
Ethical Framework
•Tata Code of Conduct: Established as a guiding
document, the Tata Code of Conduct outlines the ethical
standards and values expected from all employees. It
emphasizes integrity, fairness, transparency, and
accountability in all business dealings1. This code serves
Community-Focused Initiatives

•Tata Trusts: The Tata Group's philanthropic arm, Tata Trusts, plays a crucial role in
community development. It focuses on education, healthcare, and rural livelihoods.
For instance, the Trusts have invested significantly in healthcare initiatives that have
improved access to medical services in underserved regions.

•Sustainable Development: The group integrates environmental and social principles

into its business operations. Tata Steel has been recognized for its efforts in
sustainable mining practices and reducing carbon emissions. This commitment not
only benefits the environment but also enhances community welfare by ensuring
that local populations are not adversely affected by industrial activities.
Leadership during Crises

•Mumbai Terror Attacks (2008): Ratan Tata's leadership during the 2008 Mumbai
terror attacks showcased his commitment to his employees and the community.
When the Taj Mahal Palace Hotel was attacked, Tata personally oversaw rescue
operations and provided support to affected families. His actions exemplified ethical
leadership in times of crisis, reinforcing the group's commitment to its people
Challenges and Ethical Dilemmas

•Navigating Corruption: Operating in an emerging market like

India poses challenges regarding corruption and ethical dilemmas.
The Tata Group has maintained a stance against bribery and
political favoritism, which is often prevalent in the industry. This
principled approach has sometimes led to difficult decisions but
has ultimately strengthened their brand reputation.

Conclusion

The Tata Group's commitment to ethical leadership and

community-focused initiatives sets a benchmark for corporate
behavior in India. By adhering to its core values and actively
engaging in social responsibility, the group not only fosters trust
among stakeholders but also contributes significantly to societal
development. This case study illustrates how ethical leadership
can drive sustainable business success while positively
Legal and Ethical issues in the digital
economy.

The digital economy presents a complex

landscape of legal and ethical challenges that
impact businesses, consumers, and society at
large.
As digital technologies proliferate,
understanding these issues becomes essential
for responsible innovation and governance.​
Legal Issues
1.Data Privacy and Protection
Laws such as the General Data Protection Regulation (GDPR) enforce
strict guidelines on how personal data is collected, stored, and used. Non-
compliance can result in significant fines and reputational damage to
organizations.
2. Intellectual Property Rights
The digital economy often leads to conflicts over intellectual property
(IP), particularly concerning copyright infringement and patent disputes.
Companies must navigate these legal waters carefully to protect their
innovations while respecting others' rights.
3. Cybersecurity Regulations
Organizations are legally obligated to implement measures to protect
sensitive data from breaches. Failure to do so can result in legal penalties
and loss of customer trust.
4. Liability Issues in AI
The rise of artificial intelligence raises questions about liability for
Ethical Issues
• Consent and Transparency
• Ethical concerns arise regarding user consent for data collection and the transparency of
algorithms used in decision-making processes. Users often lack clear understanding of how
their data is utilized, leading to potential exploitation

• Bias and Fairness

• Algorithms can perpetuate biases present in training data, leading to unfair treatment of
certain groups. This raises ethical questions about fairness and equality in automated systems,
especially in sectors like hiring or law enforcement

• Digital Divide
• The digital economy can exacerbate inequalities, as access to technology varies significantly
across different demographics. Ethical considerations must address how to ensure equitable
access to digital resources and opportunities

• Impact on Employment
• Automation and AI threaten traditional jobs, raising ethical dilemmas about the future of work
and the responsibility of companies to their employees. Businesses face moral obligations to
retrain workers affected by technological advancements