Dear Amitabh, Vikas A business organisation could serve the society best by focusing on their business and increasing legal/ethical profits. 'Profit is Charity' and the best way to add value to the society (Ref: article below).
CSR should be done if and only when it helps improve profits. It should compete with other long term investments that the company could make (eg. technology upgradation, marketing to develop new markets, improving customer service and communications). "Individuals" could do charity work directly or by donating to NGOs, etc. Business organisations should focus first on their business. Please find below some more details for my argument. Regards, Dipinder Sekhon http://dipinder.googlepages.com Member - The Freedom Team of India (http://freedomteam.in) MPA - LSE (London), Sciences Po (Paris) Director - Planning & Strategy, KritiKal Solutions Pvt Ltd (Delhi) MTech, BTech - IIT Delhi ********* Profit is Charity *********** Dipinder Sekhon, http://freedomteam.in, November 2009 Profit legally and ethically generated - is one of the best measures of social value add. Clients buy services and products only when they can extract value from them. Example, if a company sells a soap for Rs 10 when it costs it Rs 8, the customer buys it only because s/he can extract more than Rs 10 of value from it (say Rs 12). Hence while the company generates profit in the transaction, the customer also gains. A company's profits therefore are a measure of the cumulative value it injects into the society. If the soap making company is earning crores of rupees in profits, it is doing so by adding value to millions of people. A business need not do any traditional `Corporate Social Responsibility' (CSR) activity for contributing to the society. In fact traditional CSR like donating to schools or hospitals - may not be a very economically efficient or effective way of impacting developmental outcomes. As long a business keeps generating higher and higher profits ethically and legally, it will be making greater and greater social contributions by injecting value to its customers, and helping them inject value into their own lives or into the lives and businesses of their customers. Donating to a school or a needy child or family produces immediate visible outcomes. Therefore, these are typically more satisfying personally, and may be necessary for keeping one motivated towards social welfare. However, these may not be the most effective and efficient ways for achieving desired outcomes. For example, the same effort, time and money contributed towards governance reforms in education may help create more schools and raise more people out of poverty. Perfect markets require information symmetry between buyers and sellers, and absence of monopolies etc. Long term complex developmental outcomes like reduction of corruption, governance reforms, environmental sustainability etc whose benefits are spread across several people and are difficult to quantify may not find easy market based solutions. Even though these things will be economically beneficial for many individuals and businesses, it may be difficult for these objectives to raise business investments due to complexity of information involved, long term diffused results, collective action problem etc. Such efforts therefore may still largely depend on traditional charitable and philanthropic support. Please watch the following video interview by Nobel Laureate Prof. F. A. Hayek's to understand more: http://vimeo.com/4063439 ****************************************** --- In [email protected], VIKAS DHANKHAR <dhankhar.vi...@...> wrote: > > Sir I strongly believe that coercion is not the best thing to do which any > statute will imply.It may be used as a measure of last resort.As for the > motivation, may be govt: can come out with some tax breaks or such > organisations may be given concession in eligibility norms applying for a > tender,etc:. > > Take example of EIA. One ingredient of philosophy behind this act is > corporations have to be socially responsible towards their impact on > environment. But i dont think we have been able to make concerned parties > fully realise the mening of social responsibility and tat is why corruption > is reportedly rampant in EIA clearences. > > On Mon, Feb 15, 2010 at 7:34 PM, Amitabh Thakur <amitab...@...> wrote: > > > > > > > Friends, > > > > I pose a question before this august gathering. > > There are a few countries that have definite and specific Corporate Social > > responsibility Acts. India does not have as on now. Does any country need > > specific Corporate Responsibility Act for the Corporate to become > > responsible to their Social responsibilities? Or should it be left to their > > own wisdom? > > > > Amitabh Thakur > > IPS > > Presently at IIM Lucknow > > # 94155-34526 > > > > > > > > > > -- > vikas dhankhar > research engineer > c-dot > new delhi >
