© 2005 by nelson, a division of thomson canada limited. 1 corporate citizenship: social...
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© 2005 by Nelson, a division of Thomson Canada Limited. 1
Corporate Corporate Citizenship: Citizenship: Social Social ResponsibilityResponsibility, , ResponsiveneResponsiveness, ss, and and PerformancePerformance
Search the WebOne of the leading organizations promoting corporate responsibility is Business for Social Responsibility : www.bsr.org.
© 2005 by Nelson, a division of Thomson Canada Limited. 2
Chapter Two Objectives• Explain corporate social responsibility (CSR)• Provide business examples of CSR• Differentiate social responsibility and
responsiveness• Explain corporate social performance (CSP)• Relate social performance to financial
performance• Describe the socially conscious investing
movement
© 2005 by Nelson, a division of Thomson Canada Limited. 3
• The CSR Concept• Arguments For
and Against Corporate Social Responsibility
• Corporate Social Responsiveness
• Corporate Social Performance (CSP)
• Nonacademic Research on CSP
• Social Performance and Financial Performance
• Socially Conscious or Ethical Investing
• Summary
Chapter Two Outline
© 2005 by Nelson, a division of Thomson Canada Limited. 4
Introduction to Chapter Two
Search the WebOne of the leading corporations promoting corporate responsibility is Proctor and Gamble: www.pg.com/about_pg/corporate/corp_citizenship_main.jhtml
This chapter’s focus is on corporate social demands, and responsibilities outside of making a profit and asks:
• Does business have a social responsibility?
• What is the extent and type of their responsibility?
© 2005 by Nelson, a division of Thomson Canada Limited. 5
Corporate Social Responsibility
Definitions of CSR• To understand the impact of a
company’s actions on society• Demands that management be
responsible for their acts and consider these actions as part of the social system
© 2005 by Nelson, a division of Thomson Canada Limited. 6
Corporate Social Responsibility Corporate Citizenship Concepts• Corporate social responsibility –
emphasizes obligation and accountability
• Corporate social responsiveness – emphasizes action and responsibility
• Corporate social performance – emphasizes outcomes and results
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Corporate Social Responsibility
Business Criticism/ Social Response CycleFactors in the Societal Environment
Criticism of Business
Increased concern for Social
Environment
A Changing Social Contract
Corporate Social Responsibility
Social Responsiveness/Performance, Corporate Citizenship
A More Satisfied Society
Fewer Factors Leading
to Business Criticism
Increased Expectations Leading to More Criticism
© 2005 by Nelson, a division of Thomson Canada Limited. 8
Corporate Social Responsibility (CSR)
Historical Perspective• Economic model – the
marketplace protected societal interest
• Legal model – laws protected societal interests
© 2005 by Nelson, a division of Thomson Canada Limited. 9
Corporate Social Responsibility (CSR)
Historical Perspective• Modified the economic model
– Philanthropy– Community obligations– Paternalism Search the Web
Milton Hershey was a leading example of an individual who employed philanthropy, community obligation and paternalism To learn more about Milton Hershey and the company, school and town he built, log on to: http://www.miltonhershey.com/
© 2005 by Nelson, a division of Thomson Canada Limited. 10
Corporate Social Responsibility
Historical Perspective• The motivation was to keep
government at arm’s lengthSearch the WebBusinesses are interested in CSR and one leading business organization that companies can join is Business for Social Responsibility. To learn more about BSR, visit their web site at:: http://www.bsr.org/
© 2005 by Nelson, a division of Thomson Canada Limited. 11
Corporate Social Responsibility
Historical PerspectiveFrom the 1950s to the present, the concept of CSR has gained considerable acceptance and additional components
© 2005 by Nelson, a division of Thomson Canada Limited. 12
Corporate Social Responsibility
Evolving Viewpoints• CSR considers the impact of the
company’s actions on society (Bauer)• CSR requires decision makers to
take action to protect and improve the welfare of society as well as their own interests (Davis and Blomstrom)
© 2005 by Nelson, a division of Thomson Canada Limited. 13
Corporate Social Responsibility
Evolving Viewpoints• CSR mandates that the
corporation has not only economic and legal obligations, but also social responsibilities (McGuire)
© 2005 by Nelson, a division of Thomson Canada Limited. 14
Corporate Social Responsibility
Evolving Viewpoints• CSR relates primarily to achieving
outcomes from organizational decisions, which have beneficial rather than adverse effects upon corporate stakeholders. The normative correctness of the products of corporate action have been the main focus of CSR (Epstein)
© 2005 by Nelson, a division of Thomson Canada Limited. 15
Corporate Social Responsibility
Carroll’s Four Part Definition
• CSR encompasses the economic, legal, ethical, and discretionary (philanthropic) expectations that society has of organizations at a given point in time
Corporate Social Responsibility (CSR)
CARROLL’S FOUR PART DEFINITIONUnderstanding the Four Components
Responsibility
Societal Expectati
on
Examples
Economic Required Maximize sales, minimize costs, increase profits
Legal Required Obey laws and regulations.
Ethical Expected Do what is right, fair and just.
Discretionary(Philanthropic)
Desired/Expected
Be a good corporate citizen.
Business and Society: Ethics and Stakeholder Management, 5E • Carroll & Buchholtz
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved
© 2005 by Nelson, a division of Thomson Canada Limited. 17
Pyramid of CSR
Philanthropic ResponsibilitiesPhilanthropic ResponsibilitiesBe a good corporate citizen.
Ethical ResponsibilitiesEthical ResponsibilitiesBe ethical.
Legal ResponsibilitiesLegal ResponsibilitiesObey the law.
Economic ResponsibilitiesEconomic ResponsibilitiesBe profitable.
© 2005 by Nelson, a division of Thomson Canada Limited. 18
Corporate Social Responsibility CSR in Equation Form Is the Sum of:
Economic Responsibilities (Make a profit)+Legal Responsibilities (Obey the law)+Ethical Responsibilities (Be ethical)+Philanthropic Responsibilities (Good
corporate citizen)
© 2005 by Nelson, a division of Thomson Canada Limited. 19
Corporate Social Responsibility
Stakeholder View Stakeholder Group Addressed and Affected
CSR Component
Owners
Con-sumers
Employees
Community
Others
Economic 1 4 2 3 5
Legal 3 2 1 4 5
Ethical 4 1 2 3 5
Philanthropic
3 4 2 1 5
© 2005 by Nelson, a division of Thomson Canada Limited. 20
Corporate Social Responsibility Arguments Against• Restricts the
market goal of profit maximization
• Business is not equipped to handle social activities
• Limits the ability to compete in a global marketplace
• Dilutes the primary aim of business
© 2005 by Nelson, a division of Thomson Canada Limited. 21
Corporate Social Responsibility Arguments For• Addresses
social issues caused by business
• Protects business self-interest
• Limits future government intervention
• Addresses issues by using business resources and expertise
• Addresses issues by being proactive
© 2005 by Nelson, a division of Thomson Canada Limited. 22
Corporate Social Responsibility: Business Responsibilities in the 21st Century• Demonstrates a commitment to
society’s values through involvement.
• Insulates society from the negative impacts of company operations.
• Share benefits with key stakeholders and shareholders.
• Demonstrates more profits by doing the right thing.
© 2005 by Nelson, a division of Thomson Canada Limited. 23
Corporate Social Responsiveness
Evolving Viewpoints• Ackerman and Bauer’s action view• Sethi’s three stage schema• Frederick’s CSR1, CSR2, and CSR3
• Epstein’s process view
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Corporate Social Performance
Extensions and Reformulations
• Wartick and Cochran’s extensions
• Wood’s reformulations• Swanson’s Reorientation
© 2005 by Nelson, a division of Thomson Canada Limited. 25
Corporate Social PerformanceNonacademic Research• Fortune's most and least
admired corporations• Council on Corporate
Conscience Awards• Business Ethics Magazine
Awards• Walker’s Research on the impact
of social responsibility
© 2005 by Nelson, a division of Thomson Canada Limited. 26
Corporate Citizenship
Corporate citizenship embraces all the facets of corporate social responsibility, responsiveness, and performance
© 2005 by Nelson, a division of Thomson Canada Limited. 27
Social—and Financial—Performance
Good CorporateSocial Performance
Perspective 1: CSP Drives the Relationship
Good Corporate Financial Performance
Good CorporateReputation
Good CorporateFinancialPerformance
Perspective 2: CFP Drives the Relationship
Good CorporateSocial Performance
Good CorporateReputation
Good CorporateSocial Performance
Perspective 3: Interactive Relationship Among CSP, CFP, and CR
Good CorporateFinancialPerformance
Good CorporateReputation
© 2005 by Nelson, a division of Thomson Canada Limited. 28
Socially Conscious or Ethical Investing?
Social screening is a technique used to screen firms for investment purposes
© 2005 by Nelson, a division of Thomson Canada Limited. 29
Selected Key Terms• Business for Social
Responsibility• Community
obligations• Corporate
Citizenship• Corporate social
responsibility and responsiveness
• Corporate social performance
• Economic, legal, ethical, and discretionary responsibilities
• Paternalism• Philanthropy• The CSR Pyramid• Socially conscious
investing