*Corporate Social Responsibility*

building their Bata companies abroad also with the aim to overcome customs tariffs on foreign products to cut the operational costs [21]. Batas' vision was for a whole society, where the Bata-ville was planned, to construct the factory and to complete it with worker housing, all shops and service facilities, schools for their children, and entertainment (cinemas, theater, filming studio), hospital and transport facilities. Tilbury's story inspired the documentary film Bata-ville: "We Are Not Afraid of the Future" [15, 19] that we may name the cultural witness of the CSR example coming from great entrepreneurs from Czechoslovakia [22] (**Table 2**).

Anticipating the Second World War, Baťa's son Thomas J. Bata, along with over 100 families from Czechoslovakia, moved to Canada in 1939, carrying on in his


facilities, hotel, restaurant, grocery and butcher shops, post office, and its own newspaper.

**Table 2.**

*Batas' unique management and leadership style [15–18, 21–25].*

### *Integrity of the Corporate Social Responsibility and Management of Financial Services… DOI: http://dx.doi.org/10.5772/intechopen.101057*

father's Bata-ville project, with the Bata Shoe Company of Canada developed, in town that still bears his name, Batawa, Ontario [15, 17, 18, 25]. For a 21st century developed environment to certain extent it may be perceived an utopia though, but "Bata-ville project", for undeveloped regions all over the world e.g. African, Asian, Central American and other impoverished regions, where a strong and inspiring leadership is needed, it may be a possible alternative solution to cope with poverty and illiteracy securing economic, social and environmental sustainability. It provokes a room for the next research.

The Bata's imperium expanded into new markets throughout Asia, the Middle East, Africa, and Latin America. The Bata Shoe company had unprecedented growth. It became the world's largest manufacturer and marketer of footwear selling over 300 million pairs of shoes each year and employing over 80,000 people. Sustainability of the Bata business is a proof of their very progressive sustainable CSR management concept and CSR leadership style, none of the leaders lives though [23–25].

### *2.2.1 CSR and Tomáš Baťa a J.a. Baťa as predecessosr of inclusive Capitalism*

Tomáš Baťa's management concept was ultra-modern for that era characterized with introducing modern production and decentralization of the company's management that he observed in Ford's plant in Michigan in the USA enriching it with social consciousness. He wanted to motivate the workers to hard work and loyalty by introducing one of the first profit-sharing initiatives, transforming all employees into associates with a shared interest in the company's success (today's equivalent of performance-based incentives and stock options) [15]. The strong points of their leadership implemented in their work are summarized in **Table 3**.


#### **Table 3.**

*Batas' unique good governance: Corporate and municipal government.*

The entrepreneurial, social, and humanitarian ideals of Tomas Bata that he set down in life-time: during his entrepreneurial and his short political career as a mayor of the town of Zlin served as a base for the responsible economic and political system and it is his heritage for today's society. Tomas Bata can be considered as one of the most significant representatives of the responsible, inclusive capitalism with CSR activities embedded in it, together with his half-brother Jan Antonin and his son Thomas Jan who followed the founder's moral testament and pursued Thomas Bata's ideals, that are highly actual nowadays, as well. Nowadays we know that visionary leadership and management in business entities but also government institutions implementing in their work CSR concept is a primary objective for a well-being of each society.

## *2.2.2 (Re)birth of responsible and stakeholders' Capitalism and inclusive Capitalism*

The Council for Inclusive Capitalism is a movement of the world's business and pu- blic sector leaders who are working to build a more inclusive, sustainable, and trusted economic system. Inclusive capitalism shall incorporate best practices of stakeholders and responsible capitalism, including the best experiences from the past connecting them with contemporary progressive inventions. The idea is not new, trust towards entrepreneurship and governments must be regained, without moral recovery we cannot face financial recovery, it is worth praising revival of the Bata's ideas, or think over ideas of Freeman who summarized contemporary representatives' thoughts and ideological streams in the paper The New Story of Business: Towards a More Responsible Capitalism. Mankind welcomes the effort and initiatives of The Council for Inclusive Capitalism which is supporting CSR concept implementation in addressing society's challenges to improve people' lives. The Coalition for Inclusive Capitalism, a not-for-profit organization, was formed in 2015 in the United States as, [26] with a belief that all stakeholders, including business and society, should be engaged in the enactment of an inclusive capitalism agenda [27, 28]. In 2020, the Council for Inclusive Capitalism, a partnership of the Coalition with the Vatican, was created [29–31]. We believe it is essential that global governments should also join this partnership because integrity of CSR and Government Social responsibility is inevitable.

### **3. CSR: development, complements and deviations**

Returning to the 1950-ties to identify CSR pioneers, a former executive with Standard Oil Company in New Jersey, Frank Abrams deserves to be mentioned, who presented concerns about management's broader responsibilities in a complex world [32] and so does Howard Bowen and his Social Responsibilities of a Businessman, which were published two years later [33]. The formation process of the CSR together with its sisters' concepts such as corporate social responsiveness<sup>2</sup> , corporate social performance<sup>3</sup> , and corporate citizenship<sup>4</sup> has taken an

<sup>2</sup> corporate social responsiveness means corporate policies and practices reflecting the values and attitudes of the top management group as argued by Chamberlain [34].

<sup>3</sup> corporate social performance represents an inclusive and global concept to embrace CSR, responsiveness, and the entire spectrum of socially beneficial activities of businesses.

<sup>4</sup> corporate citizenship (being a law-abiding corporate citizen) is sometimes presented as a successor to CSR [35].

*Integrity of the Corporate Social Responsibility and Management of Financial Services… DOI: http://dx.doi.org/10.5772/intechopen.101057*

interest of researchers and highlight how CSR concept appeal to them more than seventy years [36].

At first, discussions on the CSR prevailed among American authors, but since the 1980s the CSR theme has spread to Europe and across the world. With the time passing immense streams were derived from the first CSR concept and with the economic development and the multidimensional development of society new varieties of CSR concepts and definitions were introduced to justify the tension between economic profit, as a main firm's responsibility, and benefits to the society provided by the entity.

#### **3.1 CSR, ethics management and entity's performance**

The last two decades, full of financial and political scandals and public's disgust and disappointment over inequality income gap increasing and inactivity of governments, are marked with strengthening corporate and government social responsibility development. It has been reflected also in the research focus and that can be traced in the literature of innumerable authors for a quite long time. A Nobel prize winner, the economist Friedman, considered the most important to achieve profitability and maximalization of shareholders' wealth, the purpose of business is to 'use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception or fraud' [37]. His argument that without profitable company there would be no resources for thinking environmentally and socially friendly highlighted his preference for economic component. He explained that "boards of directors, insufficiently committed to making profits for their shareholders, were instead engaging in 'pernicious benevolence' by being philanthropic with money taken not from their own pockets but from those of the corporate shareholders [38]". "One of the virtues of the market economy is that it protects individuals from conformity and the abuse of political power." We are asking does it protect indeed, desired though? "For Friedman, power must be checked and used responsibly. Since in his view economic freedom is a large subset of political freedom, we may deduce that he would agree that economic power is also subject to responsible use [38].

But contemporary situation and progress in technology pushes companies to innovate production in the way that these aspects are not postponed but are incorporating already during the production process, so the impact is automatically generated. Therefore, countries that hesitate to join European Green Deal Project demonstrate their attitude of the economic profit importance, what cannot be considered as a responsible approach, from the perspective that we allow to destroy or scarify something what was built due to a big profit and then we start thinking how to cure and heal it again.

**Corporate social responsibility** (CSR) is defined broadly "as actions that appear to further some social good, beyond the interests of the firm and what is required by law" [39, 40], this definition has gained a prominent position in management literature. The definition of CSR according to the World Business Council for Sustainable Development stresses that "CSR is the ongoing commitment by business to behave ethically and contribute to economic development while improving the quality of the workforce and their families as well as of the local community at large" [41, 42]. **CSR** is described **as the management concept** expressing how firms manage the business processes to manufacture and sell products or provide services and moreover producing an overall positive impact on society. It goes without saying that stable and profitable companies are the base for job creation that is crucial and brings a positive effect for society. On the contrary,

indirectly, the successful company should also positively influence a society through its manufactured products if their production having been fulfilling environmental or social responsibilities. CSR may be perceived as enterprises' commitments and continuing obligations (*4 obligations towards, economic, legal, ethical, and philanthropic responsibilities*) to contribute via their performance to a better life for local communities and society [38]. But we stress that the integrity of all responsibilities is essential, at each phase of production or service providing in order that the CSR management concept will be maintained. It is aimed at final result, which we name a "**CSR quality product/service**".

**CSR enhancement**: The value of CSR activities will be enhanced if they are ingrown into the process of production and sale of products. (The product is meant here the result of the manufacturing, merchandise or completed service sale). CSR activities must be embedded into the whole process since the design of a product until after sale customer's care, i.e. ingrown into the entire value added chain. The board of management under good leadership is responsible for execution of this integral CSR management concept aiming at high quality product that was produced bringing social and environmental value leading to customers'satisfaction, firm's profitability and sustainability and contributing to the welfare of community and well-being of employees and shareholders. The **Figure 1** demonstrates the results of many researchers confirming CSR's positive impact on many areas of management, we add it should be leading to CSR certain quality product, dependant on the quality of CSR implementation. The list still may be enlarged [43].

CSR is perceived to be a service to people, communities, the environment in ways that overstep the generally accepted level legally and financially required of a firm [44]. Enterprises send a signal on their product quality to the society via implementa-tion of their CSR activities. But it is necessary to emphasize that CSR is implemented by human beings running the company, by the management of the corporation or by the management in other companies as well. It is no use Moreover, researchers also found out that "firms use governance mechanisms, along with CSR engagement, to reduce conflicts of interest among managers and noninvesting stakeholders [44]". CSR is a stakeholder-oriented practice [45],

**Figure 1.**

*CSR management concept and its effects elaborated by the authors based on [3, 43–57].*

#### *Integrity of the Corporate Social Responsibility and Management of Financial Services… DOI: http://dx.doi.org/10.5772/intechopen.101057*

performed for society, by society, and due to society; at its very core, its objective is to achieve both business and social growth and development [43].

We perceive CSR management concept is a subset of Ethics management, we consider it as the prerequisite for CSR activities implementation conducted by the corporate management. Managers should be familiar and follow a corporate code of ethics. Ethics management is characterized as "a fundamentally participative and collaborative process, as a way of building relationships with external stakeholders, balancing structured planning and flexible change, and profoundly amalgamating with human resource management processes [55]" and the managers who run this collaborative process are highly ethical and their behavior is compliant to the Code of ethics. It makes no sense to speak about either business or ethics without speaking about human beings [38]. The literature typically emphasizes "establishing internal relationships in the company, mostly on an owner-manager-employee basis setting the ethical tone at the top of the company, clarifying ethical norms and expectations, educating people in ethics, monitoring and control of behavior, evaluating behavior, drawing the consequences (rewards and punishments), fostering leader–member interactions, empowering employees, and building trustful relationships with external stakeholders [55]". Owners/managers oversee managing and implementing CSR activities and responsible leaders highly respect their internal and external stakeholders, studying their cultural environment when they strive to meet their requirements. The respect and fulfilling commitments shall be reciprocal [58]. "CSR practises have made significant contributions to the growth and development of companies globally" [46] concerning the higher quality production and service processes focusing on augmenting the services of employees, other stakeholders, communities, and society, because "corporate policies directly or indirectly affect companies' credibility" [47].

Lately, CSR emerged as an important **concept for measuring a business entity performance**, especially its long term corporate financial performance and viability and company's ethical behavior, which may enhance corporate and personal reputation [48]. CSR is integrated into a dynamic by-production framework, and it is stressed, based on the research findings, that higher CSR performance is associated with a larger firm size, and a higher R&D intensity. In addition, entities in networkoriented systems (Germanic or Latin) tend to have a better CSR performance than the entities in market-oriented systems (Anglo-Saxon) [49].

As the society became more aware of environmental and social issues such as global warming, endangered wildlife, deforestation, sweatshops, illiteracy and poverty, etc. changes are observed in the role of corporations and a significant increase in involvement into "social responsibility" and "sustainability" at the organizational level, engaging in a partnership with societal stakeholders [50]. **CSR** is also defined **as the integrity of economic, legal, moral, and philanthropic actions** of firms that influence the quality of life of relevant stakeholders [51].

"Doing well by doing good," is a belief represented by major group of CSR initiatives what argues that financial performance will improve as a direct consequence of strong CSR performance. On the contrary, opponents, in part, supported by research argue that CSR activities are a waste of corporate resources, because only firms with excess of current resources will be asked to use resources for social investments [52], similarly firm's resources would be provided if there is their excess [53].

The implicit assumption is that CSR initiatives use corporate resources, which implies that CSR expenditures are akin to a form of corporate charity. Researchers concentrated in their research to find out the correlation between provided capital to the company to support CSR activities (via testing their 3 hypothesis: charity, investment and signaling hypotheses) and found out that CSR performance is

correlated with financial performance assuming the CSR activities are signaling the information on future company's financial prospects and the CSR information is compliant with an accepted disclosure regulation for the content and creditability of corporate accountability reporting [59]. Digitalisation offers help. It requires digital access and spreading utilisation of different products and services but compliant to CSR approach [54]. At present the topic of CSR resonates in public life, entrepreneurs' circle, in the municipal/state government level or variety of institutional authorities level due to many corruption scandals or fraudulent behavior cases, no unified definition or model is outlined, discrepancy in concepts of CSR exist, the terminology vary. Many conceptual definitions look for the support in the stakeholder theory and therefore stakeholders' approach is frequent in researchers' debates [56]. The interests of stakeholders are joint aiming at creating value for each and all stakeholders. Each of stakeholders is affected by the actions of others as well as managers.

## **3.2 CSR and corporate political and socio-political activities**

Another dimension, which is also associated to the CSR and its activities, is explained by the substance of the socio-political issues with general approval, but also the ones that polarize a society. Within a democratic society the people or entities are guaranteed to express their stand, but both polarized sides must respect one another. This polarization may lead to clashes and public strikes aggravating towards unrest and violence that could be avoided by moral leadership secured on the level of government governance (backed with high quality legislation) and good corporate management. Commonly favored CSR activities support aims that majority of the general public approve and strive for. Nevertheless, there is another wing of the CSR that polarize or divide the general public. Many stakeholders assume enterprises to convey their stand for or against these distinctive sociopolitical issues which are considered difficult for solving at this moment, such as immigration, gun control, climate change. They are called partisan activities, which have a power to divide general public support, they have tendency to strengthen or sever stakeholder's relationship, i.e. influencing by this positively or negatively an entity's value. This phenomenon is called corporate socio-political activism (CSA) [2]. CPA and CSA activity may be used and abused for lobbying on the political level (**Table 4**).

But it is also important to stress that at the time of democracy human's rights to be respected, mutual respect shall be priority. If in gender question both sexes work and perform the same performance, under the same risk and working conditions, then the reward shall be the same, but if it differs the reward reflects the type of the work and qualification fulfilled for this type of work. But man and woman from physical anatomy perspective will never be the same, and this is a factor that has an impact on the performance of some activity, but democratic principle allows everybody to strive to perform the jobs that other sex would be more predetermined to it. The reward for the work shall reflect the quality of performance disregarding gender, race or religion. Not only for the reward but also for responsibilities, should the same job is performed, everybody must have equal duties and responsibilities if the reward is the same. Failing to fulfill them should signal an equal punishment, reduction in salary etc. without regard of gender, race or religion.

We are different and we have different capabilities and talent, that leads us to choose the direction in our life. But we all, as responsible citizens should be having responsible approach towards common duties to pursue common good of the society or specific duties implying for the job specification also eventually contributing to the *Integrity of the Corporate Social Responsibility and Management of Financial Services… DOI: http://dx.doi.org/10.5772/intechopen.101057*

*<sup>1</sup> Good governance is a way of measuring how public institutions conduct public affairs and manage public resources in a preferred way. Governance is "the process of decision-making and the process by which decisions are implemented."*

#### **Table 4.**

*Organizations and municipal & federal/state level governments linkage processed by authors based on [2].*

common good of the society. The government oversees the education, health, and security of its citizens through good socially responsible governance representing the entire society with its citizen's variety. Social political activism is useful to raise the problem for tackling, but it should not be abused for creating legislative norms that would be against the common good. Sound competitiveness among businesses must be a key to the success [60] not lobbying skills.

In human rights respecting society distinguishing e.g., laziness from illness, responsible from irresponsible approach of employees, diligent people from those fluctuant ones enable the courageous CSR leaders create the motivating and inspiring environment, although it seems trivial, it is a very difficult task. Moreover, if socially responsible politicians bring supporting legal norms to the life to support entrepreneurship, and education, health and security for all citizens, this mutual collaboration, mutual respect and responsibility influence and could contribute to accomplishment of SDGs becoming reality. Integrity of responsible governance<sup>5</sup> and corporate social responsibility approach shall result in good corporate management<sup>6</sup> and responsible, environmental and social government governance. Business entities, governmental institutions and non-government institutions and citizens should have the same goal to accomplish social and environmental responsibility concept.

<sup>5</sup> The concept of responsible governance usually bears strong reference to public governance and questions of responsibility in implementing public policies. It entails rules, norms, processes and practices that incorporate values into administrative decisions, and combines accountability with discretionary action.

<sup>6</sup> Corporate management works as a team to lead and direct the company's work towards the executivelevel goals. Managers are expected to understand the strategic goals of the company and then work to allocate company resources to obtain those objectives

#### **3.3 CSR versus stakeholders corporate digital responsibility**

IT is gaining a strategic role in organizations due to digitalisation and its expansion into different business areas. Once the trustworthy, verifiable data are processed and converted into information utilizing a new digital technology, the results are communicated to all interested parties. The trust that we can rely on this digital technology, on the various application being offered to us in the market is crucial. The control over the proper functioning of this technology must be regular, results shall be recorded and verifiable by humans and in symbiosis with the technology. Digital users must be persuaded that there are moral norms and ethical considerations taken into account, monitored, and regularly evaluated and updated and whether they are effective and applicable for humans.

Business performance is ever more dependent on the effective use of IT. Chief information officers (CIOs) are responsible for information systems and techniques functioning and in the case of failure they are first to be blamed [61]. A strong business–IT partnership relationship is recommended for companies since it helps to attract valuable customers and obtain a competitive advantage. This is particularly important where proper collaboration between business and IT is crucial [62]. The challenges of digital transformation, which refers to mutual effects of digital innovations, practices and values, require partners to significantly expand their cooperation capability [63].

We know the examples in the history of intentional or unintentional malpractice, for instant the latest and famous one is the Post office scandal in Great Britain linked to the Horizon used in the post offices over Great Britain. The Horizon was the computer system, developed by the Japanese company Fujitsu, used for tasks such as transactions, accounting and stocktaking, it was introduced in British post offices in 1999 and 20 years later in December 2019 it was proved to be flawed, the Post Office agreed to settle with 555 claimants. Many postmasters and postmistresses were sentenced to the jail for false accounting and theft, many were financially ruined and have described being shunned by their communities. Some have already died [64]." Control elements failed, or there were not sufficient technological controlling processes at that time capable of discovering the failing element in the technology. Since the society is endangered and exposed to the irresponsible behavior of individuals, does not matter if on the corporate level, governmental level or public citizen level controlling function in management cannot be ignored.

The largest successful cyberattack of the hacker in August 2021 in decentralized finance history exploiting a vulnerability in Poly Network's code enabled hackers to transfer tokens to their own crypto wallets. It revealed a failure in programming of some security elements of Poly Network, decentralized financial platform in which led to the theft of 600 mil USD in crypto assets. Cybercrime example confirms that control is crucial and technology failure can be harmful, the hacker announced willingness to return money as an exchange for immunity, it never has intended to swindle the cryptocurrency, but the case is alarming because trust towards digital technology security is malfunctioning. Executed controls may assure that system does not contain "bugs, errors and defects". It is the responsibility of management to carry out controls regularly and thoroughly because blind trust towards technology without proper control activities may lead to the similar situations again. It opens the area for research and the role of corporate digital responsibility. It is worthwhile investing in research on how to control these digital tools because the benefits of digital technology outcry their possible losses when abused by humans.

Corporate digital responsibility (CDR) has been proposed as a novel concept, CDR is defined as the set of shared values and norms guiding an organization's

*Integrity of the Corporate Social Responsibility and Management of Financial Services… DOI: http://dx.doi.org/10.5772/intechopen.101057*

#### **Figure 2.**

*Corporate digital responsibility elaborated by authors based on [65].*

operations with respect to four main processes related to digital technology and data. First of all,


These processes are illustrated on **Figure 2** [65].

The digitalisation of data, information connected with the monetary or nonmonetary assets and other qualitative business information essentially requires a focus especially due to the protection from



**Table 5.**

*Present and future digital technologies in the supply chain companies source: Statista database.*

#### **Figure 3.**

*Present and future digital Technologies in the supply chain companies source: Statista database.*


**Table 5** and **Figure 3** illustrates digital technologies today in use and in future plans in supply chain companies.
