What is Carroll’s Pyramid of Corporate Social Responsibility?

Pyramid of Corporate Social Responsibility is a simple framework that argues on the aspect that why organizations should meet their corporate social responsibilities. The pyramid was developed by Archie Carroll and highlights on the four main responsibilities of the organization, namely, Economic, Legal, Ethical, and Discretionary or Philanthropic.

Anatomy of Carroll’s Pyramid of Corporate Social Responsibility

In the current era, it is expected from the corporate companies to come forward and help the various institutions and communities and take part in filling the shortages for the welfare of the society and as a part of their corporate social responsibilities.

All the 4 components of Carroll’s Pyramid of Corporate Social Responsibility complement each other but are not mutually exclusive.

The factor of Corporate Social Responsibility has been around for more than six decades now, but its importance and practice came into the picture much later.

The first component of the framework is the economic responsibility that is to generate profits for the company.

The second component is legal responsibility that is to adhere to the laws and compliances set by the society.

The third component is ethical responsibility and is closely linked to the second one. It harps on the fact that the businesses should indulge in the righteous practiced even when they are not compelled by the law.

The fourth component is the philanthropic responsibility that involves serving the society by contributing towards social, educational, cultural, and recreational purposes.

The pyramid is still quite relevant even in today’s market scenario and is regularly discussed, debated, cited, modified, and criticized by the various corporate leaders, politicians, academia, and social commentators.

To understand the true relevance of the entire framework and use it on an optimal level, it is necessary for the corporate companies to focus on its practical implications and applications and look beyond the point of debate and discussions.

The entire framework of the pyramid is easy to use and understand given its fundamentals that make the companies comprehend its necessary principles and set forth the practices within the organization to reach the top of the pyramid.

Features of the Carroll’s Pyramid of Corporate Social Responsibility

The first and foremost feature of the pyramid is that it is built on the foundation and objective of profit signifying that the aspect of profit always comes first for the company.

The second feature comes in line is that the company needs to ensure that it dedicatedly complies with all the prevalent laws, regulations, and compliances.

It is necessary for the company to understand that before considering the philanthropic responsibilities, it needs to meet its ethical duties before.

4 Components of Carroll’s Pyramid of Corporate Social Responsibility

• Economic – For the business to survive on a long-term basis and benefit the society, the first responsibility of the company is to gain profits.
• Legal – It is imperative for the company to obey and adhere to the laws and regulations related to the nature of its business, competition, employment, and health and safety among others.
• Ethical – It is important for the company to act on the grounds of ethics and morals in society and should also go beyond the narrow requirements of the law and order.
• Philanthropic – It is the responsibility of the company to give back to society. This facet of responsibility holds an important place even though it is discretionary in nature.

Strengths and Weaknesses of Carroll’s Pyramid of Corporate Social Responsibility

Strengths

The model is easy to use and understand.

It conveys the message that CSR has more than one element to it.

It lays its main emphasis on the aspect of profit generation.

Weaknesses

The model seems too simplistic to many corporate leaders.

There is an argument that should morals and ethics come at the top before the profit generation.

Businesses do not always adhere to the factors of CSR.

In-depth analysis of the 4 responsibilities of Carroll’s Pyramid of Corporate Social Responsibility

1) Economic

The economic responsibilities are the most basic and significant part and elements of the business. It is quite imperative for the business to generate the maximum amounts of profits for its shareholders and stakeholders and the model itself states that the business is an economic unit to the society as a whole.

The company has to overcome the various internal and external factors that work as an obstacle for the overall growth and development of the business. Right from facing the competition, brand enhancement, marketing and promotional techniques to overcoming other business and market dynamics; the main responsibility of the company is to generate the maximum amount of profit by making sensible strategic business decisions.

2) Legal

The second layer of the pyramid talks about the legal responsibilities of the company. The management of the company has to adhere to the laws and compliances laid by society and the authorities related to the nature of the business and its business operations.

3) Ethical

The main difference between the ethical responsibilities of the firm from the legal and economic responsibilities is that ethical responsibilities are at the discretion of the management and are not required for the company to fulfill but are expected by the society. It talks about the moral values and rights that are not written in the books of law but are the expectations of the society. It refers to the good and ethical behavior of the company whilst conducting its business operations serving as the guideline for the future.

4) Philanthropic

This set of responsibilities stand at the top of the pyramid and it harps on the fact that it is imperative to be a good corporate citizen and should provide impetus in improving the quality of life of the society and its people. Volunteering in various community programs, corporate contribution, fundraising for social issues, and other such initiatives should be undertaken and initiated by the company with the motive of giving back to society. To some extent, this set of responsibilities are desired and expected by the society from the corporate company.

Take Away from Carroll’s Pyramid of Corporate Social Responsibility

If the company does not fulfill its economic responsibilities and not generate enough profits, it directly affects the employees and owners of the company.

Legal set of responsibilities are quite important and vital for the business to survive within the ecosystem, but they also have a relationship with the employees, customers, and other stakeholders of the company.

Ethical responsibilities frequently engage with the customers and employees, but they impact the other stakeholders of the firm.

Philanthropic responsibilities influence the morale of the employees, enhance the brand value, and have a major impact on the community.