The four types of corporate responsibility, which include ethical, economic, legal, and philanthropic responsibilities, are typically aligned to either the stockholder theory or stakeholder theory (Beal, 2013). The main theories dominating discussions about corporate social responsibility (CSR) are the stakeholder theory and stockholder theory. Essentially, the stockholder theory suggests that the profits generated for stockholders serve as a corporation’s main social responsibility. The stakeholder theory holds that groups other than the stockholders of a company are interested in the management of a corporation. In most instances, the community can represent the stakeholders. According to Bolton (2011), the stakeholder theory proposes that corporations have social responsibilities that go beyond profit maximization.
Ethical responsibility is a type of CSR that concerns itself with a corporation’s duty of acting in an ethical manner towards all stakeholders. It is associated with the stakeholder theory because it maintains that corporations must be ethical in all their dealings. In this case, the stakeholders may be customers, employees, and the other members of the community who should be treated with respect. Corporations should develop ethical cultures and ensure that they are performing in a manner that is consistent with the organization’s ethical norms (Beal, 2013).
Economic responsibility is concerned with the profitability of corporations. It is widely related to the stockholder theory because it recommends a commitment to profitability, the maximization of stockholder earnings, maintaining a competitive position, and maintaining high levels of efficiency.
Legal responsibility is concerned with issues of regulatory guidelines and laws so that a corporation maintains its legal standing in the society (Bolton, 2011). It suggests that corporations have a responsibility to comply with set laws and regulations. Specifically, legal responsibility is related to the stakeholders’ theory, which suggests that corporations should concern themselves with affairs of the larger community.
Finally, philanthropic responsibility, which is widely related to the stakeholders’ theory, emphasizes on the importance of investing in the community through various initiatives such as supporting scholarship programs or funding educational initiatives.
References
Beal, D. (2013). Corporate social responsibility: Definition, core issues, and recent developments. New Jersey: Pearson Press.
Bolton, D. (2011). Key concepts in corporate social responsibility. Oxford: Oxford University Press.
