Corporate Social Responsibility also referred to as CSR, is becoming an increasingly important topic within the business landscape today. CSR is all about doing business the right way by embracing ethical and sustainable practices and processes within your business operations in order to minimize your environmental and societal impact.
Carroll’s CSR Pyramid is a simple model that explains why organizations should meet their social responsibilities while aiming for profit maximization. Within this context, Archie Carroll puts forward four different corporate responsibilities which are illustrated on a pyramid. Each of them is further discussed below:
Carroll’s Pyramid of CSR: The Four Components
1. Economic
The first responsibility of the pyramid concerns the company’s profitability and ability to survive over the long term. If the company is not generating profit, it will then start to sink and decease. In order to avoid such a situation, corporations should primarily aim for overall growth and development through research & development, marketing activities, customer service, and strategical thinking.
2. Legal
The second layer of the pyramid is legal responsibility, and this is where the organization is required to meet all applicable laws, policy frameworks and regulations as laid by authorities. This component encapsulates various areas, ranging from employment to health & safety. It is important to note that the nature of the business will significantly affect the laws and regulations the company needs to adhere to.
3. Ethical
Climbing up to the next component of the model, we encounter the ethical responsibility of the business. This is the point at which the organization is expected to act morally, responsibly and ethically. During this phase, the company is not obliged to act in a certain way. However, if it does not then society will be quick to respond by favoring the competition. Therefore, the key takeaway message from this layer of the pyramid is that companies should not solely stick to what is written in the book – they should take a step further to meet the expectations of the society.
4. Philanthropic
The fourth and final layer of the model is philanthropic responsibility. Here, the goal is to contribute towards philanthropic causes such as social, cultural, environmental, educational and recreational purposes. This might be achieved through charitable events, donations, volunteering, fundraising, community programs, and many other initiatives. Although this facet is discretionary, it is highly advisable that all companies embrace it within the culture of the company.
Application
Carroll’s Pyramid of CSR is a fairly simple tool to use and is applicable to any type of market and industry. An important key message to hold on to is that although ethical and moral corporate behavior is discretionary, the current era demands companies to change their way of doing business by embracing a moral and ethical culture. If you do not meet the needs of society, then you are putting your business in a real hazard. After all, being philanthropic can yield many benefits to your company such as enhanced employee morale, improved brand value and as a result as increased organizational performance.