However, it is best for a company to be ethical as this not only shows their stakeholders that they are moral and just, but people will feel more comfortable purchasing goods/services from the company as well. Unlike the first two levels, this is something that a company is not obligated to do. A company should not only be obeying the law, but it should also do their business ethically. Ethical Responsibility The ethical layer of the pyramid is described as doing the right thing, being fair in all situations and also avoiding harm. Failing to be legally responsible can be very bad for businesses. Employment laws, competition with other companies, tax regulations and health and safety of employees are some examples of the legal responsibilities a company should adhere to. This is the most important responsibility out of the four levels as this will show how companies conduct their business in the marketplace. Legal Responsibility The second level of the pyramid is the business’s legal obligation to obey the law. Additionally, this also means that it is a company’s duty to produce goods and services that are needed/wanted by the customers, at a reasonable price. Being profitable is the only way for a company to be able to survive long term, and benefit society. Without profit, the company would not be able to pay their workers, employees will lose their jobs even before the company starts CSR activities. Economic Responsibility The lowest level of the pyramid represents a business’s first responsibility, which is to be profitable. Carroll’s pyramid suggests that corporate has to fulfil responsibility at four levels – Economic, Legal, Ethical and Philanthropic. Its simplicity, yet ability to describe the idea of CSR with four areas, has made the pyramid one of the most accepted corporate theories of CSR since. CSR, in the form that we see today, became popular after it was defined by Archie Carroll’s “Pyramid of Corporate Social Responsibility” in 1991. However, it wasn’t until much later that people started understanding its meaning, significance and impact. The idea of Corporate Social Responsibility (CSR) has been a topic of discussion since the 1950s.
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