Chapter 2

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Corporate Citizenship: Social Responsibility, Responsiveness, and Performance

Business and Society: Ethics and Stakeholder Management, 7e • Carroll & BuchholtzCopyright ©2009 by South-Western, a division of Cengage Learning.  All rights reserved

Prepared by Deborah BakerTexas Christian University

Chapter 2

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Quote of the Day

There is a wonderful law of nature that the three things we crave most- happiness, freedom, and peace of mind- are always attained by giving them to someone else. - Anonymous

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Let’s get started……..

Wal-Mart – Merchant of Doom 1. Summary (review format) 2. Stakeholders (1 – 5) “Let’s MAP IT”

(shared vs. opposing interests?) 3. Models from chapter 1 4. Pro’s and con’s 5. How could this be presented?

(hand out rubrics)

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Wal-Mart Sample

Look at sample Grade partners 1, 2, 2

Where were there problems?

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Corporate Social Responsibility (CSR)

CorporateSocial

Responsibility

Seriously considering the impact of a company’s actions on society.

Requires the individual to consider his/her acts in terms of a wholesocial system, and holds him/her responsible for the effects of actsanywhere in that system.

Please “MEMORIZE”:

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Responsibility?

Business allegations…

Little concern for the consumer Cares nothing about the deteriorating social order Has no concept of acceptable ethical behavior Indifferent to the problems of minorities and the

environment

What responsibility does business have to society?

http://www.bsr.org@

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Corporate Citizenship Concepts

Corporate Social…

Responsibility

Performance

Responsiveness

Emphasizes…

Obligation, accountability

outcomes, results

action, activity

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Business Criticism/Social Responsibility Cycle

Factors in the Societal EnvironmentFactors in the Societal Environment

Criticism of BusinessCriticism of Business

Increased Concernfor the Social Environment

Increased Concernfor the Social Environment

A Changed Social Contract

A Changed Social Contract

Business Assumption ofCorporate Social Responsibility

Business Assumption ofCorporate Social Responsibility

Social Responsiveness, Social Performance, and Corporate Citizenship

Social Responsiveness, Social Performance, and Corporate Citizenship

A More Satisfied SocietyA More Satisfied Society

Fewer Factors Leading toBusiness Criticism

Fewer Factors Leading toBusiness Criticism

Increased ExpectationsLeading to More Criticism

Increased ExpectationsLeading to More Criticism

(have led to)

(which has resulted in)

Figure 2-1

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Modification of the Economic Model

PhilanthropyPhilanthropy

Community obligations Community obligations Paternalism Paternalism

Motivation: Keep government at arm’s length

Motivation: Keep government at arm’s length

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Avoid Regulation

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Corporate Responsibility

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Historical Perspective on CSR

Economic Model Economic Model

Legal Model Legal Model

Social Model Social Model

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Especially here in PORTLAND!!!

Portland Business Journal - 2:13 PM PST Thursday, Jan. 4, 2006

by Aliza Earnshaw

Business Journal staff writer

Sustainability: Oregon's brand and niche

“Oregon can -- and should -- seize the moment and capitalize on its worldwide reputation for sustainability. That was the recurring theme of the opening remarks and first panel discussion at Oregon's fifth economic-development summit, held Thursday at the Oregon Convention Center.”

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Acceptance and Broadening of Meaning

From the 1950’s to the present, the concept of CSR has gained considerable acceptance and the meaning has been broadened to include specific issues, such as:

• corporate governance• product safety• honesty in advertising• employee rights• affirmative action• environmental sustainability • ethical behavior• global CSR

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CSR: Evolving Viewpoints

1. CSR considers the impact of the company’s actions on society.

2. CSR requires decision makers to take actions that protect and improve the welfare of society as a whole along with their own interests.

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3. CSR supposes that the corporation has not only economic and legal obligations, but also certain responsibilities to society which extend beyond these obligations.

CSR: Evolving Viewpoints

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4. CSR relates primarily to achieving outcomes from organizational decisions concerning specific issues or problems which (by some normative standard) have beneficial rather than adverse effects upon pertinent corporate stakeholders. The normative correctness of the products of corporate action have been the main focus of CSR.

CSR: Evolving Viewpoints

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Carroll’s Four-Part Definition of CSR

The social responsibility of business encompasses the economic, legal, ethical and discretionary

expectations that society has of organizations at a given point in time.

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Carroll’s Four-Part Definition of CSR

Responsibility

Societal

Expectation

Examples

Economic

Required

Be profitable. Maximize sales, minimize costs.

Legal

Required

Obey laws, adhere toregulations

Ethical

Expected

Avoid questionable practices.Do what is right, fair, and just

Philanthropic

Desired/Expected

Be a good corporate citizen. Give back.

Figure 2-2

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Legal Responsibilities

Law cannot address all the topics or issues that business may face

Law often lags behind more recent concepts of what is considered appropriate behavior

Laws are made by lawmakers and may reflect the personal interests/motivation of legislators rather than appropriate ethical justifications

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The Pyramid of CSR

Philanthropic ResponsibilitiesBe a good corporate citizen.

Ethical ResponsibilitiesBe ethical.

Legal ResponsibilitiesObey the law.

Economic ResponsibilitiesBe profitable.

Philanthropic ResponsibilitiesBe a good corporate citizen.

Ethical ResponsibilitiesBe ethical.

Legal ResponsibilitiesObey the law.

Economic ResponsibilitiesBe profitable.

Figure 2-3

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The CSR Equation

Economic Responsibilities

Legal Responsibilities

Ethical Responsibilities

Philanthropic Responsibilities

+

+

+

=Total

Corporate CSR

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Arguments Against CSR

Restricts the classic economic goal of profit maximization

Business is not equipped to handle social activities

Dilutes the primary purpose of business

Increases the power of business

Limits the ability to compete in a global marketplace

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Addresses social issues brought on by business, and allows business to be part of the solution

Protects business self-interest

Wards off future government intervention

Addresses issues by using business resources and expertise

Addresses issues by being proactive

The public supports CSR

Arguments For CSR

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Ways Firms Respond to CSR Pressure

Cost-benefit approachCost-benefit approach

Strategic approachStrategic approach

Innovation and learning approachInnovation and learning approach

Defensive approachDefensive approach

The Civil Corporation, Simon Zadek

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Capitalism

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Demonstrate a commitment to society’s values and contribute to society’s social, environmental, and economic goals through action.

Insulate society from the negative impacts of company operations and its products and services.

Share benefits of company activities with key stakeholders as well as with shareholders.

Demonstrate that the company can make more money by doing the right thing.

Corporate Responsibility in the 21st Century

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Corporate Social Responsiveness

ResponsibilityImplies more of a state or condition of having assumed an obligation

ResponsivenessConnotes a dynamic, action-oriented condition

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Corporate Social Performance

Figure 2-10

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Corporate Citizenship

Corporate Citizenship…

…embraces all the facets of corporate social responsibility, responsiveness, and performance.

…serves a variety of stakeholders.

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Corporate Citizenship

Charles J. Fombrum, “Three Pillars of Corporate Citizenship”

A reflection of shared moral and ethical principles

A vehicle for integrating individuals into the communities in which they work

A form of enlightened self-interest that balances stakeholders’ claims and enhances a company’s long-term value

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Drivers of Corporate Citizenship

Traditions and values

Reputation and image

Business strategy

Recruiting and retainingemployees

Customers and consumers

Expectations in the community

Laws and political pressures

Internal Motivators External Pressures

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Benefits of Corporate Citizenship

Improved employee relations

Improved customer relationships

Improved business performance

Enhanced company’s marketing efforts

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Stages of Corporate Citizenship

Figure 2-11

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The future is in our hands……….

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Development Challenges of Corporate Citizenship

Figure 2-12

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Business’s Interest in Corporate Citizenship

Nonacademic Research

Fortune's ranking of “Most Admired” and “Least Admired” corporations

Conference Board’s Ron Brown Award for Corporate Leadership

CRO Magazine Awards

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Most Admired….

1 Apple 2 Berkshire Hathaway 3 General Electric 4 Google 5 Toyota Motor 6 Starbucks 7 FedEx 8 Procter & Gamble 9 Johnson & Johnson 10 Goldman Sachs Group

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And the TRUTH is…..

http://walmartwatch.com/ http://www.walmartfounda

tion.org/wmstore/goodworks/scripts/index.jsp

Don’t believe just one “story”. Seek counter claims.

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“Multiple Bottom Line” Perspective

Consumer Stakeholders’ “Bottom Line”

Consumer Stakeholders’ “Bottom Line”

Employee Stakeholders’“Bottom Line”

Employee Stakeholders’“Bottom Line”

Community Stakeholders’“Bottom Line”

Community Stakeholders’“Bottom Line”

Owner Stakeholders’ “Bottom Line”

Owner Stakeholders’ “Bottom Line”

Other Stakeholders’ “Bottom Line”

Other Stakeholders’ “Bottom Line”

Corporate Social

Performance

Corporate Social

Performance

Figure 2-14

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“Triple Bottom Line” Perspective

Key Spheres of Sustainability

1. Economic

2. Social

3. Environmental

“Worm Poop” – Terra Cycle Site

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Socially Responsible or Ethical Investing

Social Screening

A technique used to screen firms for socially-responsible investment purposes

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Reasons for Upsurge in Socially Responsible Investing

1. More reliable research on CSP

2. Investment firms using social criteria have solid track record

3. The socially conscious 1960s generation is making investment decisions

4. Gen “Y” is looking for purpose and meaning

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Next Time…

Enron Movie Activity in lieu of quiz No chapter to read – but do read case (33-

Hudson River) just in case you have questions….

Have a great weekend!