According to Carroll (1991), companies have economic, legal, ethical and philanthropic responsibility to the society within CSR.
Companies will not be able to take care of their social and environmental responsibilities unless they make profit (Schilly 2017). Aspects of the economic responsibility includes making sure that the shareholders are getting a return, employees are being paid and customers are served at a fair price (Carroll ).
All companies are required to follow the law, hence they have legal responsibilities. This impacts their planning process, since they have to be aware of all the external and internal factors in the industry they operate within (Doucet 2009). Legal responsibilities include labor, criminal and environmental law as well as securities regulations (Schilly 2017).
Ethical responsibilities are not obligations in the same sense as the legal ones. These are aspects of the company's policies that the owners believe are the right thing to do, for example refusing to do business with oppressive countries as well being environmentally friendly (Schilly 2017). These acts as well reaffirm the organization's social legitimacy (Carroll 1991).
What is CSR?
The last aspect of Corporate Social Responsibility, according to Carroll, is philanthropic responsibilities. These responsibilities go beyond the law of what is ethically the right thing to do (Schilly 2017). These are considered the acts of voluntarily resolving social issues (Mihaljevic & Tokic 25). For example, by donating money to charitable causes or services, helping with community organizations, and engaging in projects to aid the environment (Schilly 2017).
In conclusion, economic and legal responsibilities are the core of each business, while philanthropy and ethical activities are optional. However, these optional CSR activities are becoming increasingly important in the business world today (Mihaljevic & Tokic 2015). Nowadays it is even common for big companies to have in-house CSR divisions and strategies (Morfit 2014).This is because people are becoming more aware of ethical and environmental impacts of products when in the Ethical Consumerism Report in 2012 50% of consumers avoided products based on the company’s negative responsibility reputations (BusinessGreen 2017)
In 2016 Forbes listed the companies with the best CSR reputations; Google, the Walt Disney Company and Microsoft took the first three places (Strauss 2016).