IIMS Journal of Management Science IndianJournals.

com
Vol. 7, No. 1, January-April, 2016, pp- 38-54 DOI: 10.5958/0976-173X.2016.00004.X

Models of Corporate Social Responsibility: A Comparative

Understanding
Repaul Kanji and Rajat Agrawal

ABSTRACT
The concept of corporate social responsibility has long remained an illusion as it has been interpreted differently
by different people at different times. Although the present era of Corporate Social Responsibility (CSR) has
been significantly assuring and outstanding, there is a vehement need to understand the primary role and need
of CSR for which it has evolved down the ages through various models. The research work compares the
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models on the basis of certain accepted indexes. Each organisation or nation, as a whole, happens to have
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followed different strategies to implement CSR activities. These strategies differ mainly due to varied perspectives
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and mindsets of whether to put social benefits or financial profits on the forefront. For optimal strategy or
model to implement a CSR initiative, it is necessary to study the models that are implemented now and have
been implemented in past and then compared on the basis of certain universally accepted parameters. Thus,
this study benefits anyone who intends to model an optimal strategy to implement CSR initiatives not only for
an organisation but also for a nation.
Keywords: Models of CSR, Comparison of CSR models, Thematic convergence of CSR, Corporate Financial
performance, Pyramid model
JEL Classification: M140
Biographical Note: Repaul Kanji is a Ph.D. Scholar, at Centre of Excellence in Disaster Mitigation and
Management, Indian Institute of Technology, Roorkee, Uttarakhand, India. He can be reached at
[email protected]
Dr. Rajat Agrawal is an Associate Professor, at the Department of Management Studies, Indian Institute of
Technology, Roorkee, Uttarakhand, India. He can be reached at [email protected]

INTRODUCTION commitment by business to contribute to economic

development while improving the quality of life of
The Stakeholder theory (Freeman, 1984) clearly
the workforce and their families as well as of the
underlines the fact that investing a firm’s time and
resources to redress issues and concerns of stakeholders community and society at large.’ CSR, in general, has
is a justifiable managerial activity, and perhaps this always been observed to have occupied the
forms the very basis of the concept of Corporate Social philanthropic space or perhaps another avenue to
Responsibility (CSR). There are many ways of defining achieve tax-deductibility. But the recent developments
CSR, but the definition that lucidly elaborates it is worldwide, rather the various governmental and inter-
the one given by the World Business Council for governmental amendments and acts, have brought
Sustainable Development (WBCSD), ‘the continuing CSR to the forefront with the disclose-or-explain

IIMS Journal of Management Science 38

 Models of Corporate Social Responsibility: A Comparative Understanding

mandate. Corporate sustainability and social corporate social responsiveness and corporate social
responsibility have long been observed as two different performance (CSP) complicate the already existing
entities, but they are actually the two faces of the same dilemma. Bowen in 1953, often regarded as the father
coin. Corporate sustainability, as stated by the of CSR, who provided the first sets of literature on
Brundtland commission, is ‘development that meets CSR, defined it as ‘obligations of businessmen to
the needs of the present without compromising the pursue those policies, to make those decisions, or to
ability of future generations to meet their own needs’, follow those lines of action which are desirable in terms
that is, if CSR is ‘what is done with the profits after of the objectives and values of our society’. Since then,
they are made’, sustainability is about how profits are there has only been evolution of the concept into two
made taking into account the social and environmental very different streams; the stockholder theory and the
impacts of conducting business. Since late, social contract theory. Following these two non-
sustainability and social responsibility have always been identical streams of theory, many models have come
dealt as two different affairs but there has been a up, and many models have been implemented
paradigm shift of merging the two into a single worldwide, and, hence, there is a need to understand
venture. Talking about India, the Companies Act if there is something common between these two
2013, which has come into effect in the fiscal year schools of thought and if there is none then which
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2014–2015, states that any company with an annual one comes outdoes the other.
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turnover of 1,000 crore INR and more, or a net worth

Thus, following the first idea obtained from the
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of 500 crore INR and more, or a net profit of 5 crore

primary objective, the research identifies the various
and more will have to get involved in activities to
models of CSR that has been proposed down the ages,
fulfil their social responsibility. The companies need
limiting the scope to only generic ones and not those
to spend at least 2% of their average profit in the
models which have been compiled to suit certain
previous 3 years on CSR activities. Thus, India
specific preferences of any industry. While at it, as India
becomes the first country to officially legislate CSR
has progressed phenomenally in this field, it came
practices.
instinctively to study the models in India as well. Thus,
Given this scenario of stepping into an era of corporate a set of accepted models were obtained.
citizenship, it becomes a necessary mandate to
The second part was to compare and synthesise
understand the various aspects of CSR through the
similarities and weigh dissimilarities of these models
various models that have been propounded by business
which required selection of parameters. Random
scholars down the years and compared their constructs;
selection of parameters would land up the study being
otherwise, this magnificent step towards building a
a sham, and, hence, efforts were made to understand
self-sustained, stable socioeconomic community
the pivotal purpose of CSR. It was sustainability in
would be lost like many others in the past.
all forms; social sustainability (good relationship with
customers, stakeholders, employees, society etc.),
METHODOLOGY
environmental sustainability (mending ways of value
Down the ages, scholars have defined, interpreted and chain and supply chain to ensure future survival and
understood CSR differently. Some has perceived it as prospects of the corporate house) and governance
a hierarchical model whereas others have illustrated it sustainability (ensuring the national and international
in the form of inclusive concentric circles. Just when regulations are followed to outcompete strategic
one feels that a closure on this context has been clusters through better performance and better
achieved, similar jargons like corporate sustainability, fulfilment of responsibilities by being a ‘good’

IIMS Journal of Management Science 39

 Repaul Kanji and Rajat Agrawal

corporate citizenship). Thus, sustainability, which has of any implementation of CSR practices, without any
recently been clubbed with CSR, is the ulterior motive former reservations of sticking to particular fields of
of any CSR proposition. It is known that every activities only or earning financial fruits off the services,
corporate must follow internationally laid standards would be to gauge the performance of stakeholder
and abide by certain regulations to report Bebbington dialogue. Freeman in 1984 defined stakeholder as
et al. (2008) used the term CSR reporting, which ‘groups and individuals who can affect or are affected
highlights the link between the reporting function and by, the achievement of an organisation’s mission’, and,
the organisational functions and operations that are thus, stakeholder dialogue becomes the exchange of
concerned with, and impacted by, activities associated CSR offerings (firm to stakeholders) and approval or
with CSR.) their achievements in sustainability and, support (stakeholders to firm) (Murray and Vogel,
based on their performance judged through certain 1997). Thus, it won’t be incorrect to state that, in
specific parameters, corporates are ranked. Going by turn, the CSR activities what the firms seek, majorly,
the reports of such rankings (ESG Reporting on are consents and approvals of their philanthropic fame.
sustainability in Asia), their parameters to gauge the The methods to understand the credibility of any
performance were used to gauge the performance of stakeholder dialogue are ambiguous; what the
the models; social index: assessment of the probability stakeholders give back in the exchange is what actually
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of the model impacting communities, suppliers, determines the success but the stakeholders give back
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employees and customers; environment index: different things at different times. More volumes of
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assessment of the probability of the model involving sale, increased inclination towards employment in a
environmental issues of national and international particular firm/industry, more trust in the stocks of
heights; governance index: assessment of the the firm and other are just some of the ways to
probability of the model including governmental understand that a particular firm through its various
policies and internationally or nationally accepted CSR activities is being well accepted by its societal
standards. Studies conducted by Aviva Geva used some surrounding. Talking about performance of the
indicators of comparison for which parameters have dialogues, the action-oriented concept of CSR and
been adopted by this research; scope of responsibilities, CSP needs to be discussed. Carroll illustrated social
order of importance and role of philanthropy and performance through a three-dimensional model. The
CSR–Corporate Finance Performance relationship. In first dimension consisted of different categories of CSR
addition to these six parameters, two more are (economic, legal, ethical and discretionary), the second
voluntarily added: acceptance and attractiveness. Using dimension consisted of modes of social responsiveness
these parameters, the analysis is shaped out as tabulated (reaction, defence, accommodation and pro-action)
in later sections. and the third dimension consisted of social issues that
needs to be addressed (consumerism, environment and
Finally the table is used to draw a conclusion about
product safety). Wartick and Cochran evolved this
the worthiness of the models.
model trying to integrate the three primary
orientations of business and society; philosophical
THE GENERIC MODELS OF CSR
orientation (principles of social responsibility),
It was the 1950s when the idea of CSR first surfaced institutional orientation (processes of social
and since then, there has been many definitions and responsiveness) and organisational orientation (policies
interpretations of it which have clouded the judgment of social issue management). Thus, CSP takes into
of how to strategically implement the various CSR account a wide variety of aspects to measure the
activities. At this, the best way to determine the success credibility of a corporate’s performance.

40 Vol. 7, No. 1, January-April, 2016

 Models of Corporate Social Responsibility: A Comparative Understanding

It becomes necessary to understand how to increase actually supposed to be discretionary in nature.

this public acceptance in a stakeholder’s dialogueor
The pyramid model argues against the widely accepted
the overall performance by understanding the various
separation thesis which claims that business cannot
models through which CSR has evolved and to
focus on social as well as financial concerns at the same
investigate whether a parallel model can be designed
time. It arranges the different fields of responsibilities
to suit the set-up in India.
and obligations in an order without integrating them
The Pyramid Model of CSR in any way. Although postulated way back, this model
is in agreement with what Milton Friedman about
It was Carroll (1991) who had stated that individual
business; it is to make the maximum profit staying
responsibilities and obligations in different fields is
within the limits of legal and ethical boundaries. The
finally summarised into the totality of CSR. As shown
philanthropic responsibility is perhaps the icing on
in Figure 1, the pyramid model constitutes four very
the cake as it distinguishes one as a ‘corporate citizen’
different aspects.
highlighting the importance of corporate giving. This
The pyramid is arranged according to decreasing order model has a positive impact on the Corporate
of priorities, economic responsibilities being the most Financial Performance (CFP) (a money minded way
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important one as Carroll points out ‘all other business of saying CSP) through its impact on reputation.
responsibilities are predicated upon the economic Aupperle, Carroll and Hatfield say that the social
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responsibility of the firm, because without it the others outlook of an organisation can very well be measured
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become moot considerations.’ Legal responsibility is by observing the importance it gives to the three non-
of the second priority while ethical responsibility, those economic strata.
responsibilities and obligations which are not legally
The Intersecting Circles Model of CSR
codified but has to be done anyways for the greater
good, is the third priority. The least priority has been The intersecting circles model presented in Figure 2,
given to philanthropic responsibilities which are is a change from the previous one as it outright refutes

Carroll’s CSR Pyramid

Figure 1: Pyramid model of CSR

IIMS Journal of Management Science 41

 Repaul Kanji and Rajat Agrawal

and not normative. However, Schwartz and Carroll

point out that this model can be used to establish
CSR portraits for different entities like individuals,
Moral (M) corporations, stakeholders, industries and nations. This
Economics (E) model is flexible as one has the advantage of
interpreting it as necessary.
The Concentric Circles Model of CSR
The concentric model of CSR has been adopted from
a statement issued by the Committee for Economic
Ethical (E)
Development in 1971. The committee came up with
the statement that social contracts of any business
process is not only feasible but also morally necessary
and, hence, urged corporations to adopt a more
Figure 2: Intersecting circles model of CSR
humane view towards of its function in society
the hierarchical prioritisation of CSR aspects and (Figure 3).
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illustrates the integration of three aspects; economic,

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legal and moral.

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Schwartz and Carroll proposed this model to illustrate Philan-

the fact that when it comes to CSR, none of the aspects thropic
are more important than the other. Davis’ Iron Law Ethical
of Responsibility can be highlighted here that rejects
economic responsibility being the first and foremost
priority. It says that although businesses are created Economic
for profit-making but at the heart of it, it is actually a Legal
social creation and for it to survive and thrive the
society must be willing to support them and endure
them, which of course can only be earned by an
organisation through the responsibilities and
obligations they fulfil.
Converting the above diagram into a Venn diagram,
we can have eight categories or classes: ELʹMʹ, LMʹ Figure 3: Concentric circles model of CSR
Eʹ, MLʹEʹ, ELMʹ, EMLʹ, LMEʹ, ELM and E ʹLʹMʹ.
Purely economic responsibility without any moral The original model of the committee had only three
(ethical) and legal concerns is ELʹMʹand purely ethical rings: economic: products, job, financial stability and
responsibility is ELʹMʹ and so on. However, these growth; ethical: responsibility to exercise the economic
two classes that we just discussed are not feasible as functions with a sensitive awareness of ethical norms;
earning profit without any legality or doing ethical philanthropic: amorphous responsibilities that
work without any profit is just not acceptable yet they businesses should get involved into to improve the
somehow find themselves in classes of total CSR. social environment. This model is in agreement with
Thus, this model can be said to be descriptive in nature Logsdon and Wood’s words, ‘CSR is a concept

42 Vol. 7, No. 1, January-April, 2016

 Models of Corporate Social Responsibility: A Comparative Understanding

supporting social control of business that resides and of corporate social competencies and advantages to
operates inside business itself, with the aim of solve major social problems. Thus, the problem of
protecting and enhancing the public welfare as well as the previous two models of multiple objectives
private interests.’ The move from outer circle towards creating confusion, conflict and inefficiency has been
inner circle reflects the control that society needs to solved by this model as it has a single criterion of
impose on standards of business activity to ensure improvement of social welfare.
social progress through proper functioning of the
3C-SR Model
business core. The move from inside to outside
represents the internalisation of social norms that reside This model has been proposed by John Meehan,
and operate within business itself as affirmative or Karon Meehan and Adam Richards of Liverpool John
positive duties. Moores University. The components of the model
are ethical and social commitments, connections with
This model has a wider scope of economic
partners in the value network, consistency of behaviour
responsibilities. It is about generating wealth to
to build trust. Thus, commitments, connections and
improve the nation’s standard of living, supplying the
consistency form the 3Cs of the model (Figure 4).
needs and wants of people for goods and services,
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selling them at fair prices, employment and fair wages

and holistically eliminating poverty. The legal circle
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encompasses two responsibilities according to

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Christopher Stone, the first one is to follow law and

the second one is to follow the spirit of law, that is,
approach law through socially appropriate
considerations (considered autonomy). Restrictive
compliance, opportunistic compliance, avoidance of
civil litigation and anticipation of changes in legislation
falls within the ambit of this ring. The ethical ring
more or less holds the same meaning as it had in the
pyramid model but the only addition to this is the
responsibility of not exploiting stakeholders who are
not protected by well-established ethical norms and
customs. The notion that goes under this is the fact
that an organisation can be called socially responsible
even when it takes advantage of an ill-defined local Figure 4: 3C-SR model of CSR
norm. Sethi (1975) says, ‘The large corporation, and
especially the multinational corporation, must become The commitments encompass the legal, ethical and
an active agent for social change….As a dominant economic dimensions proposed by Schwartz and
institution in society, the corporation must assume Carroll in their models. These commitments can be
its rightful place and contribute to shaping the public verified through Global Reporting Initiative, Account
agenda instead of simply reacting to policy choices Ability’s AA1000 and so on. Normann and Ramirez
advocated by others’. The philanthropic ring highlights (1993, p. 69) argue, ‘Value occurs not in sequential
the fact that corporate philanthropy is not about chains but in complex constellations’, and this defines
corporate contributions to further a cause but the use the connections with partners in the value network.

IIMS Journal of Management Science 43

 Repaul Kanji and Rajat Agrawal

Walmart’s reluctance to engage in certain Multi developed the notion of trusteeship, whereby the
Stakeholder Initiatives (MSI) like that of Fair Labour owners of property would voluntarily manage their
Association has earned heavy critics and given the wealth on behalf of the people.
general approach of consumers towards corporate
The history of Indian corporate philanthropy has
responsibility, their steadfast negligence will not hold
encompassed cash or kind donations, community
good. Failure to ‘walk the talk’, that is, inconsistencies
investment in trusts and provision of essential services
of behaviour also lead to ill fame. The idea in this
such as schools, libraries, hospitals and others from
model is to become a good corporate citizen through
that very period. Many firms, particularly family-run
the 3Cs defined here.
businesses, continue to support such philanthropic
Liberal Model initiatives even now and notable among them are the
Ambanis (Reliance) and the Tatas.
This approach was encapsulated by the American
Economist Milton Friedman, who in 1958 challenged Statist Model
the very notion of corporate responsibility with the
A second model of CSR emerged in India after
idea that companies are solely responsible to their
independence in 1947, when India adopted the
owners. Arguments say that it is sufficient for business
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socialist and mixed economy framework, with a large

to obey the law and generate wealth, which through
public sector and state-owned companies. The
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taxation and private charitable choices can be directed

boundaries between the state and society were clearly
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to social ends, thus, fulfilling the social responsibility

defined for the state enterprises. Elements of corporate
of an organisation towards the community and the
responsibility, especially those relating to community
nation.
and worker relationships, were enshrined in labour
Stakeholder Model laws and management principles. This state sponsored
corporate philosophy still operates in the numerous
This view is often associated with R. Edward Freeman,
public sector companies that have survived the wave
whose seminal analysis of the stakeholder approach
of privatisation of the early 1990s.
to strategic management in 1984 brought stake
holding into the mainstream of management This model has been well evolved and has been
literature (Freeman, 1984).The rise of globalisation adopted now. The Companies Act 2013, which has
has brought with it a growing consensus that with come into effect in the fiscal year 2014–2015, states
increasing economic rights, business also has a growing that any company with an annual turnover of 1,000
range of social obligations giving rise to the stakeholder crore INR and more, or a net worth of 500 crore
model of corporate responsibility. INR and more, or a net profit of 5 crore and more
will have to get involved in activities to fulfil their
THE INDIAN MODELS OF CSR social responsibility. The companies need to spend at
least 2% of their average profit in the previous three
Ethical Model
years on CSR activities. Thus, India becomes the first
This model was developed under the influence of country to officially legislate CSR practices.
Mahatma Gandhi and, hence, finds its seat in India,
prevalent during the early nineteenth century. The ANALYSIS AND DISCUSSIONS
pressure on Indian industrialists to demonstrate their
This section analyses the eight different models that
commitment to social development increased during
have been identified using eight parameters selected
the independence movement, when Mahatma Gandhi

44 Vol. 7, No. 1, January-April, 2016

 Models of Corporate Social Responsibility: A Comparative Understanding

from sources which are extensively and implicitly about the sustainability of the models. It is only right
related to gauging CSR initiatives on an international to equip oneself with the logic to differentiate amongst
platforms. The best of such parameters combined the commonly viable models and to be decisive on
with erstwhile parameters used by researchers coupled which model to implement based on its sustainability
with two additional parameters to assess the in the real-world scenario. Thus, an additional aspect
employability of the models has been used. Not all of gauging the sustainability of the models was added
of the models have been implemented as it is, and, to this section. However, it would be apt to
hence, their assessment from the success of their understand the point of view of the researchers as to
instances becomes impossible. Thus, to generalise the how they have perceived the quotient of sustainability
process, content analysis technique has been used. of the complex models.
Previous literatures obtained on these eight models
The research identifies sustainability of two types:
have been analysed keeping the selected parameters as
internally sustainable models and externally sustainable
the factors, and, thus, the comparison table (Table 1)
models. Internally sustainable models are those unique
has been developed. Each of the entries has been
models which once taken into consideration and rolled
explained in the later sections.
out into the implementation phase will not be taken
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In addition to the comparison and analysis of the eight back if there are minute changes in the administrative
models, it becomes equally important to seek clarity or executive structure of the organisation. The simple
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Table 1: Comparison of models based on parameters

Pyramid Intersecting Concentric 3C-SR Liberal Stakeholder Ethical Statist
circle circle
Order of Hierarchical; No particular Inclusion Commitment, Priority to Stakeholder’s Equal Government
importance economic order system; Connections economic needs are weightage to defined
responsibilities economic and responsibilities, priorities. economic
first responsibilities consistency all other responsibilities
at the core are equally being as well as
important. discretionary. social
commitments
Scope of Narrow Split Wide Holistic Narrow Split Wide but Wide
responsibilities discretionary
Role of Discretionary Subsumed Integral to Social Discretionary; Only if it Integral Partially
philanthropy within other the design commitment almost nil. benefits essence discretionary
responsibilities one of the stakeholders.
three Cs.
Social index Moderate Low High High Low Moderate High High
Environment Moderate Low Moderate Moderate Low Moderate High High
index
Governance Moderate Low High High Low High Low High
index
Acceptance Evolved and Low Evolved and High Evolved and Wide Wide Wide
adopted adopted adopted
CSR–CFP Positive Positive, Nonlinear Positive, Positive Positive Undetermined CSR
relationship negative or negative or dependent on
neutral neutral CFP and vice
versa
Attractiveness Low Low Moderate High Low High High High

IIMS Journal of Management Science 45

 Repaul Kanji and Rajat Agrawal

example that can be cited in this regard is of a case for whom it has been designed, the entire fleet of
where an individual officer with a prominent portfolio operations related to it becomes utterly futile. Thus,
constitutes a CSR committee and takes up certain any models of CSR need to be owned and accepted
CSR activities to be implemented and the officer who by the population it targets. Thus, it can be mapped
succeeds him in few months’ time pays no heed to as a function of attractiveness, acceptance, social index
the man-hours that have already been put into and environment index. Higher the quotient of social
implementing those activities and decides to roll back index and environment index, more would be the
and stop such initiatives just because he might not attractiveness of the model and more the attractiveness
have any interest. Such a scenario not only reflects of the model, more the likeliness of the model being
bad management but also portrays the inefficiency of accepted and owned by the targeted community.
an organisation to come up with a sustainable CSR Hence, the analysis and discussion section of each
model. Thus, internally sustainable models can be model ends with an attempt to quantify its internal
mapped as the function of certain parameters that has and external sustainability.
been used to compare the models. Internally
General Observations
sustainable models are the function of mission and
vision of the organisation, the role of philanthropy in It is interesting to note that a stringent variant of this
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the model implemented, the pressure of having a high model is the liberal model which emphasises on
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governance index and finally a positive CSR–CFP economic gains rather than social inputs under the
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relationship. To put it down in a layman’s word, the strong belief that the tax through the incomes of the
mission and vision of the organisation motivates the corporate would finally be invested towards the
quotient of philanthropy amongst its employees upliftment of the nation and thus there is no need of
which is then reflected in the models they adopt (if an independent venture. A little moderated version
the social structure of the organisation is philanthropic, of this is the statist model of CSR which exacts the
it is more than obvious that they will collectively work range of CSR investment based on profit after tax,
towards intentional CSR), couple with this the thus, silently adopting the fact that economic
pressure of maintaining a high governance index, that responsibilities of the corporate is truly the basic
is, an obligation to report its CSR activities and outdo responsibility that the corporate has to fulfil towards
its strategic cluster, it will have to implement CSR its stakeholders, and, hence, the stakeholder model
initiatives. If the rolled-out initiatives have a positive can be said to have developed. This model is an add-
financial feedback then it would be the reason that all on of the liberal model where apart from the economic
need to be more engaged in such activities, thus responsibilities of the corporate towards the
inspiring every employee down the hierarchy to stakeholders, it also needs to take care of other issues
positively involve themselves in such schemes. The like satisfaction and trust. Thus, it can be said that
role of philanthropy with the high quotient of down the ages, evolution of the pyramid model has
governance index will lead to a successful CSR model given rise to various other models.
but if it also has a positive financial relation then it
The intersecting model is a very different and stand-
would lead to a self-sustaining CSR model.
alone model amongst the set of other prevalent models
Externally sustainable CSR models are those models of CSR. This model had within itself certain irrational
which are pretty much owned by the community in aspects, already discussed in previous sections like
which it is implemented. If a CSR model, rolled out economic responsibilities without paying heed to
by an organisation, is cared less about by the people legalities or moral responsibilities without fulfilling

46 Vol. 7, No. 1, January-April, 2016

 Models of Corporate Social Responsibility: A Comparative Understanding

the basic economic responsibilities. Owing to such does away with the discrepancies that the pyramid
anomalies, the practical implementation of this model model had. One of the major drawbacks in the
cannot be found; however, it needs to be studied as it pyramid model was that each of the responsibilities
has inspired the 3C-SR model. had an associated priority with it which made the
model a little vulnerable but this new model defines
The 3C-SR model can be said to be the successor of
the same thing without the decreasing order of priority.
the intersecting circles model without the irrational
It holds that economic responsibilities are at the core
clauses. The 3Cs, commitment, connection and
of any operation but equally important and built over
consistency, effectively realign the entire existing
this responsibility are other responsibilities like legal,
model. Importance is no more given to economic,
ethical and philanthropic. Thus, the responsibilities
legal or ethical issues but to the 3Cs; commitment
have a wide scope with no priorities or limitations
towards the stakeholders and society, connections to
tied to it.
carry out the commitments and consistency or ‘walk
the talk’ attitude to continue the efforts. The scope of responsibilities in the 3C-SR model is
not clubbed within few dimensions but it is holistic
Order of Importance, Scope of Responsibilities
in nature; moving towards being a better corporate
and Role of Philanthropy
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citizen. Philanthropy is through commitments, more

Pyramid model has been illustrated in the form of a importantly social commitments that a corporate has.
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hierarchical construct, and, hence, the order of Now, the spectrum of commitment can be
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importance is maximised in the case of economical discretionary, and, thus, it is here where governmental
responsibilities, and this goes on decreasing as the agencies or international standards should be brought
responsibilities shift from legal to ethical and finally in to ensure that the scope does not get narrowed
to philanthropic. The last one is a mere icing on the down to a handful few.
cake. The scope of responsibilities depicted in the
The liberal model, as already stated, can be perceived
pyramid model is really narrow because as the priority
as a stringent version of the pyramid model where the
of the responsibility goes on decreasing as one moves
economic responsibilities form the most important
up the pyramid, the scope and the attention required
priority of CSR, and the overlying responsibilities are
to address these issues go down. Philanthropy is just
kept at bay under the assumption that the amount
an ‘icing’, it is discretionary.
paid to the government as taxes or other fees would
In the intersecting circles model, the order of in turn be utilised for nation building. Thus,
importance of economic, legal or moral responsibilities importance is only given to economic responsibilities.
has not been differentiated in this model, and, hence, The role of philanthropy automatically gets removed
the scope of responsibilities can be viewed as three as the prima facie interest is towards profit making.
different avenues which when merged together brings However, it has to be understood that what Friedman
about total CSR and failure to do so, in any part, proposed was way before any other generic models
would lead to an undetermined chaos. Philanthropic (excluding the Indian ones) were proposed, and it is
ventures have been assumed within the moral obvious that the concept of social responsibility and
responsibilities, thereby merging the last two levels of sustainability had yet not taken the front seat.
the pyramid model.
Freeman normalised the liberal model and added the
The concentric model can be looked upon as the concept of addressing the issues of stakeholders along
refined version of the pyramid model – a model that with the hardcore profit-making mechanism in the

IIMS Journal of Management Science 47

 Repaul Kanji and Rajat Agrawal

stakeholder model. This improved the model many- Social, Environmental and Governance Indexes
folds in various dimensions. The immediate The pyramid model envelopes legal and ethical
stakeholders in the period proposed were customers, responsibilities within itself, although with lower
suppliers, employees and investors. Taking care of the priorities but as an essential constituent, and, hence,
investor’s interests meant profit making and taking it has within it the mechanism to address the basic
care of customers’ satisfaction, and suppliers meant social demands. Hence, the social index is moderate
their satisfaction and trust through products and due to lowered priorities. Environment index has been
services. Thus, a particular circle of people were determined to be moderate in the same way as social
benefitted. As the scope of business increased, the index. The ethical perspective of this model, to some
ambit of people concerned increased. Now not only extent, ensures the safe and proper maintenance of
the employee’s interest had to be taken care of but the environment (working as well as surrounding).
also their families – the immediate community. This Governance index has also been determined as
bred a sense of security and improved the performance moderate because the legal and ethical responsibilities
many-folds. Thus, new dimensions of stakeholders would force the corporate to abide by the rules set
came into being and the earlier stringent liberal model forth but reporting initiatives has no mention in it.
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moulded into a more sensitive model, However, it also has to be taken into account that the
era in which the model was proposed was way before
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philanthropically speaking.
the reporting initiatives were introduced. This model
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The man behind the ethical model is none other than has evolved and been accepted in forms like the liberal,
Mahatma Gandhi, and, hence, it can be expected that stakeholder or statist model.
it might mildly orient itself towards a ‘purely ethical’ The different indexes in the intersecting circles model
model. However, it is obvious that this model gives like social, environment and governance have been
equal weightage to both economic responsibilities as determined to be low because of the eight different
well as moral obligations. The scope of responsibilities, cases that might arise if each of the three responsibilities
thus, widens, and it is expected that the corporate is not fulfilled equally.
would do anything in its power for the betterment of
Philanthropic and ethical responsibilities form the
the nation. The Tatas are a brilliant example upholding
outer core of the concentric circles model; thus, it has
the virtue of this model in India. Thus, philanthropy
to have a high social index. However, the environment
is discretionary but obvious.
index cannot be properly determined on the basis of
The statist model is that what India follows now. the existing responsibilities; it’s not adequate, and,
There is a stark distinction between state owned and hence, it has been marked moderate. The legal and
private corporations, and there are ethical and legal ethical responsibilities take care of the governance
responsibilities enshrined within regulations and acts index and, hence, has been determined to be high.
like the labour laws or the companies act. Defining In the 3C-SR model, social index and governance
the amounts to be sanctioned for CSR has within itself index are high due to the commitments which it has
the essence of fulfilling the economic responsibility towards the stakeholders. Environment index has been
of the corporate to ensure its sustenance. The scopes determined to be moderate because its stand on such
of responsibilities are wide. Indian government speaks issues cannot be clearly determined; however, taking
of wide activities, encompassing social, environmental into account the commitment it might have towards
and ethical issues to contribute to. a sustainable environment, it has been rated moderate.

48 Vol. 7, No. 1, January-April, 2016

 Models of Corporate Social Responsibility: A Comparative Understanding

Drawing an analogy with the concentric model, one be out of proportion to state that this model, with
would conclude that the liberal is a more focused economic responsibilities as an added core and
version of the earlier model as the other responsibilities reporting initiatives as an outer layer, may look like
(legal, ethical and philanthropic) have a very narrow the statist model.
scope in this context. Thus, a narrow scope of
In the statist model, all three indexes are determined
economic responsibility is what this model postulates.
to be high because social and environmental indexes
The social, environment and governance indices are
are primarily addressed by the very structure of the
pretty low as neither there are provisions nor the CSR policies of the state, and it’s mandatory to report
necessity to think beyond profit making in the liberal the achievements. Thus, each of them is high.
model. Although it might come as an intrinsically
associated corollary that the efforts of pure profit CSR–CFP Relationship
making were done within the purview of legality and As economic responsibilities form the core of the
ethical values. pyramid model, it is obvious that implementing this
In the stakeholder model, the two indexes, social and model would ensure proper economic gains, and
environment, have been determined to be moderate hence, the corporate finance performance would be
positive in this model and so would be the case in any
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because the definition of stakeholder seems to vary.

For some corporations, stakeholders can be customers, model which has evolved from this model.
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suppliers and employees with their next immediate

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Owing to cases like ‘purely economic’ or ‘purely

acquaintance whereas for others, it might be the ethical’, corporate finance performance can be positive
community they work in or serve, and for few others, or even zero or negative in the case of the intersecting
it might be the entire nation. The same goes with the circles model.
environmental issues; some may take care of the
immediate environment they affect, whereas others In the concentric circle model, rather than a simple
might not even bother to think of the environment linear CSR–CFP link (as reflected in the common
until and unless it becomes an issue with the use of correlations and regression analysis for the
stakeholders. Thus, both of these indexes have been detection of positive or negative association between
determined to be moderate owing to the uncertainty social and economic performance), a hypothesis of an
attached to them. However, the governance index has inverted U-shaped relationship between these two
been determined to be high because no stakeholder variables is called for. To wit, a positive relationship
would want to be associated with a corporation which between CSR and CFP can be expected for the range
does not abide by rules, regulation or international of under-normal and normal profits (here profit levels
policies. Thus, to ensure success of the model, it is are acceptable, that is, higher profits mean higher
intrinsic that governance index be maintained at a high reward for responsiveness), and an inverse CSR–CFP
relationship for the range of above-normal profits
quotient.
(here corporate power is used to deprive ineffectual
In the ethical model, being ethical in nature, it comes stakeholders of their market-based gains, that is, higher
automatically to have a high social and environment profits mean less social responsibility). According to
index; however, governance and reporting initiatives the CON model, a socially responsible firm is
are not a prime agenda. It is basically based upon the expected to refrain from chasing unfairly high profits
idea of ‘do and forget’. However, now even the biggest and to follow its inner commitment to contribute to
pioneers have taken up reporting initiatives to keep achieving social progress, even at the expense of
up with the fast pace of globalisation. Thus, it won’t profitability.

IIMS Journal of Management Science 49

 Repaul Kanji and Rajat Agrawal

Just like the intersecting circle model, in the 3C-SR Attractiveness and Acceptance
model, the CSR–CFP relationship can be positive,
As the pyramid model is a pretty old one, its
negative or neutral. However, it is the next best thing
attractiveness has been eroded by the newer models
to the statist model and, thus, can be rated to have a
that have been developed from this very model.
high acceptance and attractiveness.
The intersecting circles model neither has any
Owing to its typical economic structure, the CSR–
attractiveness due to its irrational interpretations nor
CFP relationship in the liberal model would no doubt
does it find any practical acceptance. However, a
be positive. However, purely economic corporations
similar model has been developed as the 3C-SR model
are not so much liked in today’s world which is
which bypasses the irrational sub-cases of this model.
affectionate towards the philosophy of symbiotic
existence – working for the sustenance of each other. The concentric model’s attractiveness is moderate as
it has evolved and has been widely accepted in other
In the stakeholder model, the CSR–CFP relationship
forms. As Sethi (1975) noted, under conditions of
is also positive because it is only a healthy corporate
imperfect competition, as in most modern economies,
that can actually attract investments and stakeholders’
social expectations play a rather small role in inspiring
trust. Thus, owing to its high attractiveness (fulfils
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good corporate conduct. Instead, it is the values and

almost all the responsibilities with equity), it is a widely
the traditions of the corporations, and their perceived
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accepted model.
risks in exploiting market opportunities, that influence
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The ethical model speaks of services rendered morally the extent of a corporation’s socially responsible
and not much about the economic front but it is conduct.
obvious that moral, social and ethical services also
The 3C-SR model is highly attractive and has a high
require a financial backup without which such services
acceptance owing to its three dimensions.
won’t be possible. However, there are also examples
of corporations and few non-governmental The liberal model has a low attractiveness, and, hence,
organisations whose primary motto is service only its evolved forms with a bit of leniency can afford
irrespective of financial gains. Keeping this in mind, to demonstrate a good acceptance among the masses.
the CSR–CFP relationship cannot be determined.
The stakeholder model has evolved down the ages
The regulations in India for the various enterprises and has, thus, become attractive and is now widely
suggest what is to be done and how it is to be done accepted among the relevant stakeholders which, in
but it says nothing about what happens if it is not cases, may even magnify to the stature of a nation.
done. The statist model opens up an interesting field
The ethical model is highly attractive as people
that illustrates that investing in CSR would be
everywhere readily accept favours coming from big
beneficial as it would improve the company’s portfolio
corporates. Any firm doing something for the society
and stance, and, hence, it would become more likely
or the nation other than pure money-making becomes
that stakeholders would take more interest, and this
an attractive and acceptable prospect.
would attract more investment and would perform
better on a financial front. Thus, a positive CSR–CFP The statist model is what is needed now; more of
relationship is attained. So, CSR is dependent on CFP. governmental involvement to ensure investments in
But CSR would only be possible if the corporate has the development and upliftment of nation, especially
a good CFP. It is a cycle that would only enhance the developing ones. Thus, it is acceptable, and the
both the aspects (CSR and CFP), if taken care of. prospect of CSR–CFP cycle makes it attractive as well

50 Vol. 7, No. 1, January-April, 2016

 Models of Corporate Social Responsibility: A Comparative Understanding

(it is a win–win situation; investment in CSR and the social index is high, making it a model with high
CFP improves and vice versa). attractiveness and acceptance. Thus, it determines itself
to be an externally sustainable model.
Sustainability
There is no scope of philanthropy in the liberal model,
The role of philanthropy is discretionary and the
and the pressure of good practices of reporting finds
governance index is moderate in the pyramid model.
no mention in the model. Thus, it is not only
So, assuming a moderate level of philanthropy, a
sustainable but not even fit for CSR, the way we
model of moderately ‘internally’ sustainable CSR is perceive it. Thus, this model is just a self-sustaining
obtained. However, this model has a positive CSR– economic model working under the assumption that
CFP relationship, and, hence, this model stands out its profit would in turn benefit the society. This model
as an internally sustainable model. The model has low suited the sociopolitical fabric of the era in which it
social and environment indexes and a low was proposed but now a hardly economic corporation
attractiveness due to the existence of its evolved can’t survive, and, hence, there has to be social and
successors. Thus, it is not externally sustainable. philanthropic agendas associated with it, and, thus,
In the intersecting circles model, the role of its acceptance makes sense only when it has been
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philanthropy is very much inherently present, the low normalised a bit, as in the stakeholder model.
governance index puts forward a model where
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With a high governance index and considering the apt

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employees might want to involve in CSR initiatives growth of spectrum of stakeholders, the stakeholder
but there are no competitive forces behind it. Thus, model is sustainable internally. The CSR–CFP relation
in the long run, the model loses internal sustainability. is also positive, thus, qualifying it to become a self-
The coupled effect of social and environmental index sustainable model. Though the social and environment
is low, and, hence, its attractiveness is low resulting in indexes are moderate, it’s highly attractive and widely
an externally non-sustainable model. accepted making it one of the best externally
In the case of the concentric circle model, the sustainable models.
governance index, as well as the quotient of governance The ethical model qualifies as internally sustainable
index, is high resulting in an efficient, implementable purely on the basis of the organisation’s intent to
and sustainable model. Add to it the prospect of undertake CSR initiatives. It might not even have the
normal profit, the model can evolve to become a self- financial efficiency to back the projects to ensure
sustainable example of itself. The social index is high sustainability. Talking about external sustainability, the
with moderate level environment index, making it model qualifies as the best of its kind due to its high
moderately attractive and acceptable. Thus, it is social and environment quotient, coupled with its
externally sustainable; however, better models have high attractiveness and acceptance.
evolved out of it, which promises better external
In the case of the statist model, the governance index
sustainability.
is high and the quotient of philanthropy, if considered
The quotient of philanthropy is embedded within the to be of some value as it is partially discretionary, even
very core of the 3C-SR model, and with its high if altruistic in nature, qualifies the model as internally
governance index, it qualifies as an internally sustainable one. The model intrinsically binds CSR
sustainable model. If the CSR–CFP relationship is and CFP in an exquisite manner, making it self-
positive, then the model can also become self- sustainable. This model is widely accepted due to its
sustainable. The environment index is moderate but high social and environmental quotients and, thus,

IIMS Journal of Management Science 51

 Repaul Kanji and Rajat Agrawal
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Figure 5: Evolution and integration of CSR models

becomes the only model which has a sustainable won’t be an exaggeration to claim that the concept of
nature, both internally as well as externally. CSR is moving towards a unification. Taking the best
from the previous models, learning through failures
CONCLUSION and experiences, the model of CSR is reaching a state
where only attributes can be added but the basic
What is evident from the study is that the concept of
structure or construct of it remains the same.
CSR started way back, and, since then, it has been
Irrespective of the timescale, if we tend to interpret
interpreted and understood in various different ways.
the evolution of models, what comes up is something
However, down the ages it has been modified, evolved
stated in Figure 5.
(knowingly or unknowingly) and has been applied
and implemented through various models. As the Each and every model has evolved in terms of addition
world moved towards globalisation, new concepts or removal of attributes and finally seems to converge
were understood to be the two faces of same coin like with the statist model. Perhaps, this is where the model
social responsibility and sustainability or social would consolidate with addition of attributes like
responsibility and financial performance. Thus, it more refined regulations, penalties or reporting

52 Vol. 7, No. 1, January-April, 2016

 Models of Corporate Social Responsibility: A Comparative Understanding

initiatives. This is the model which India is following of 2nd when the country which has the first rank had
currently, and there can be no doubt in the success got only 20 companies analysed, much fewer than
which it has bagged till now. India is proudly the first the number of companies India got analysed. Thus,
country to have legislated CSR, knowing or on a general note, India is doing pretty good with its
unknowingly including the best of all these models. current model and addition of attributes like non-
According to the Sian Sustainability Reporting, India compliance might even improve the performance on
ranks 1st in general category and has a country ranking financial as well as sustainable front.

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54 Vol. 7, No. 1, January-April, 2016