The Corporate Social The Corporate Social Responsibility of Responsibility of Pure-Play Sites Pure-Play Sites

versusversus Brick-and-Mortar Corporations Brick-and-Mortar Corporations

By By Juliana Muñoz and Dr. Johnny SnyderJuliana Muñoz and Dr. Johnny Snyder

Mesa State CollegeMesa State College

AbstractAbstract The goal of this paper is to The goal of this paper is to beginbegin to to

compare the relationships between brick-compare the relationships between brick-and-mortar companies and pure-play and-mortar companies and pure-play companies in a socially conscious setting.companies in a socially conscious setting.

This comparison will be made utilizing a This comparison will be made utilizing a model known as Carroll’s Pyramid and the model known as Carroll’s Pyramid and the business standards that have been set out business standards that have been set out for brick-and-mortar companies. for brick-and-mortar companies.

Introduction: The EventsIntroduction: The Events

The terrorist attacks of 9/11The terrorist attacks of 9/11 The Asian Tsunami of 2004The Asian Tsunami of 2004 Hurricane Katrina in 2005Hurricane Katrina in 2005 The South Asian Earthquake of 2005The South Asian Earthquake of 2005

Introduction: FrequencyIntroduction: Frequency

EM-DAT (2006)

Who was there to help?Who was there to help?

Brick-and-Mortar corporations such Brick-and-Mortar corporations such as Wal-Mart, GM, and many others.as Wal-Mart, GM, and many others.

Pure-play sites such as Amazon.com, Pure-play sites such as Amazon.com, and other Internet corporations like and other Internet corporations like eBbay, Yahoo, and many others eBbay, Yahoo, and many others

So?So?

Brick-and-Mortar companies are Brick-and-Mortar companies are expected to fulfill certain social expected to fulfill certain social responsibilities by the communities responsibilities by the communities that surround them.that surround them.

For amazon.com and other Internet For amazon.com and other Internet sites, there are no such expectations sites, there are no such expectations due to the lack of a surrounding due to the lack of a surrounding physical community. physical community.

What’s the Difference?What’s the Difference? A Brick-and-Mortar Corporation:A Brick-and-Mortar Corporation:

- has all their resources (buying, - has all their resources (buying, selling, shipping, services, and all selling, shipping, services, and all other functions), put into one or other functions), put into one or several physical locationsseveral physical locations

- is surrounded by a community of some kind- is surrounded by a community of some kind- probably has some Web presence (don’t be - probably has some Web presence (don’t be

fooled)fooled)- most importantly, has a direct impact on the - most importantly, has a direct impact on the

community which surrounds itcommunity which surrounds it

Example: Wal-MartExample: Wal-Mart

What’s the Difference? Cont.What’s the Difference? Cont.

A Pure-Play organization:A Pure-Play organization:- has physical building which serves only to - has physical building which serves only to

house employees, an IT infrastructure, house employees, an IT infrastructure,

and/or products for shippingand/or products for shipping

- conducts all day-to-day transactions and - conducts all day-to-day transactions and

activities via the Internetactivities via the Internet

- has far less of an impact on the community - has far less of an impact on the community

that surrounds it’s physical buildingthat surrounds it’s physical building

Example: Amazon.comExample: Amazon.com

The Key Element of Embedded The Key Element of Embedded CorporationsCorporations

A A direct impactdirect impact on a on a

community, society and community, society and

economy surrounding a corporationeconomy surrounding a corporation

Defining Corporate Social Defining Corporate Social Responsibility (CSR)Responsibility (CSR)

Generic definition of CSR-Generic definition of CSR-

““the concept that business should be the concept that business should be

actively concerned with the welfare of actively concerned with the welfare of

society at large” society at large”

(Brigham, 2004, p.16)(Brigham, 2004, p.16)

The Three Roles of The Three Roles of Brick-and-Mortar CorporationsBrick-and-Mortar Corporations

Wood (1991)Wood (1991)1. As an institution in 1. As an institution in societysociety 2. As a particular corporation, or 2. As a particular corporation, or organization in organization in societysociety 3. As individual managers who are 3. As individual managers who are

moral actors within the moral actors within the corporation (p. 695)corporation (p. 695)

Wal-Mart ExampleWal-Mart Example

According to CNNmoney.com, after According to CNNmoney.com, after Hurricane Katrina, one hundred and Hurricane Katrina, one hundred and twenty three Wal-Mart stores were twenty three Wal-Mart stores were closed in the gulf coast region.closed in the gulf coast region.

Wal-Mart offered all affected employees jobs Wal-Mart offered all affected employees jobs at other Wal-Mart stores…philanthropic at other Wal-Mart stores…philanthropic behavior. behavior.

Bhatnagar, P. (2005)Bhatnagar, P. (2005)

CSR on the WebCSR on the Web

After Katrina and the Asian Tsunami After Katrina and the Asian Tsunami the pure play corporations were the pure play corporations were

quick to install buttons on their sites quick to install buttons on their sites (home pages) to aid the consumer in (home pages) to aid the consumer in

donating to these relief causes. donating to these relief causes.

Note that as “best practices” are Note that as “best practices” are created, rivals tend to copy them created, rivals tend to copy them

quickly (Porter, 2001)quickly (Porter, 2001)

Justification?Justification?

The Humanist says, “Philanthropy”The Humanist says, “Philanthropy”

The Skeptic says, “PR ploy”The Skeptic says, “PR ploy”

The business person turns to a model The business person turns to a model that could help better explain the that could help better explain the possible logic behind such a move for possible logic behind such a move for both brick-and-mortar and pure-play both brick-and-mortar and pure-play sites.sites.

Carroll’sCarroll’s

The QuestionThe Question

Why should Pure-Play sites care?Why should Pure-Play sites care?

One answer could be in Porter’s model, One answer could be in Porter’s model, the the rivalry among existing rivalry among existing

competitorscompetitors (for page views). (for page views).

(Porter, 2001)(Porter, 2001)

The Debate:The Debate: To Give or Not to GiveTo Give or Not to Give

Brick-and-Mortar vs. Pure-PlayBrick-and-Mortar vs. Pure-Play

Against:Against:- Business fundamentals = maximize profitsBusiness fundamentals = maximize profits

““social policy is the jurisdiction of governments, not social policy is the jurisdiction of governments, not business” (Sexty, 2004, p. 4) business” (Sexty, 2004, p. 4)

For:For:- Society (consumers), fuel corporations, in turn a - Society (consumers), fuel corporations, in turn a

corporation should serve society corporation should serve society

- “social responsibility is in the stockholder's - “social responsibility is in the stockholder's interest…Corporate virtue is interest…Corporate virtue is

good for profits” good for profits” (Sexty, 2004, p. 3).(Sexty, 2004, p. 3).

PitfallsPitfallsBrick-and-Mortar vs. Pure-PlayBrick-and-Mortar vs. Pure-Play

Focus shifted from Focus shifted from profit makingprofit making

Possible Possible dissatisfaction of dissatisfaction of shareholdersshareholders

Could be seen as Could be seen as utilizing misfortune utilizing misfortune for pressfor press

Buttons divert Buttons divert traffic from sitetraffic from site

Customer focus is Customer focus is shifted from buyingshifted from buying

Could be seen as Could be seen as utilizing misfortune utilizing misfortune for pressfor press

BenefitsBenefitsBrick-and-Mortar vs. Pure-PlayBrick-and-Mortar vs. Pure-Play

Helps employeesHelps employees Helps community in Helps community in

which embeddedwhich embedded Promotes company Promotes company

name in positive name in positive mannermanner

Giving entails:Giving entails:• Employee timeEmployee time• Cash contributionsCash contributions• In-kind contributionsIn-kind contributions

Promotes company Promotes company name in positive name in positive mannermanner

Giving entails:Giving entails: • Employee time Employee time

(minimal)(minimal)• Addition of a button Addition of a button

to a web siteto a web site• Web page space Web page space

(minimal)(minimal)

Largest Corporate Contributors to Largest Corporate Contributors to KatrinaKatrina

Alexa (2006)

Pure Play Companies Contribute Pure Play Companies Contribute

By enabling the e-consumer to By enabling the e-consumer to contributecontribute

By facilitating easy payment optionsBy facilitating easy payment options• Pay-PalPay-Pal• Credit CardCredit Card• eGoldeGold• gBuygBuy

Users Want to DonateUsers Want to Donate

Search term on Google Trends “Hurricane Katrina Donate”

Google Trends, 2006

Online ContributionsOnline Contributions

Pearlstein (2006, February)

How Much Charities Raised Online

192525

10251435

1900

3000

0

500

1000

1500

2000

2500

3000

3500

1999 2000 2001 2002 2003 2004

Year

Mill

ion

s o

f U

S$

Contributions of Pure-Play Sites Contributions of Pure-Play Sites

Pearlstein (2006, February)

American Red Cross Disaster Fundraising

1078

568

1670

8.30

200

400

600

800

1000

1200

1400

1600

1800

2001 - 9/11Terrorist Attacks

2004 - AsianTsunami

2005 - HurricaneKatrina

2005 - SouthAsian

Earthquake

Year - Disaster

Mil

lio

ns

of

US

$

0%

10%

20%

30%

40%

50%

60%

Per

cen

t R

aise

d O

nli

ne

The Effect on Brick-and-Mortar The Effect on Brick-and-Mortar WebsitesWebsites

Alexa (2006)

Increased Page ViewsIncreased Page ViewsRank Spikes due to Hurricane Katrina

Alexa (2006)

Site 8/22 UniqueAudience (000)

8/29 UniqueAudience (000)

Growth

Advance Internet 516 1395 170%

ABCNews Digital 486 1102 127%

MSNBC 3181 6532 105%

WorldNow 558 1086 95%

Fox News 1106 2037 84%

Weather Channel 4482 7736 73%

AOL News 1833 3126 71%

AccuWeather 622 961 55%

Internet Broadcasting 1474 2140 45%

CNN 4817 6917 44%

News – Before and After News – Before and After Hurricane KatrinaHurricane Katrina

Nielsen//NetRatings (2005).Nielsen//NetRatings (2005).

The Effect on Pure-play SitesThe Effect on Pure-play Sites

Alexa (2006)

Hurricane Katrina

South Asian Earthquake

Post Holiday Slow down

Costs?Costs?

Search engine placement: $500.00Search engine placement: $500.00

Click through advertising: $2.15/clickClick through advertising: $2.15/click

A button on Google’s home page: A button on Google’s home page:

- priceless- priceless

Google’s Pioneering EffortGoogle’s Pioneering Effort

ConclusionConclusion

Pure play corporations are becoming Pure play corporations are becoming more mainstreammore mainstream

Pure play corporations are concerned Pure play corporations are concerned with their “public image”with their “public image”

Pure play corporations can react Pure play corporations can react faster than brick-and-mortar faster than brick-and-mortar corporationscorporations

Conclusion (2)Conclusion (2)

““Donate Here” buttons do not cost Donate Here” buttons do not cost much for the pure play corporationmuch for the pure play corporation

““Donate Here” buttons seem to Donate Here” buttons seem to benefit the pure play corporation in benefit the pure play corporation in the arena of Web metricsthe arena of Web metrics

Will it continue? Unfortunately we Will it continue? Unfortunately we have to wait to see…have to wait to see…

Thanks! Thanks!

Thanks for coming to the talk. Thanks for coming to the talk.

Questions? Questions?

ReferencesReferences Alexa (2006). Alexa Web Search. Retrieved 7/3/2006 from: Alexa (2006). Alexa Web Search. Retrieved 7/3/2006 from:

http://www.alexa.com/# http://www.alexa.com/#

Bhatnagar, P. (2005). Wal-Mart closes 123 stores from storm. Bhatnagar, P. (2005). Wal-Mart closes 123 stores from storm. CNN Money.comCNN Money.com. .

Retrieved January 21, 2005 from Retrieved January 21, 2005 from http://money.cnn.com/2005/08/30/news/fortune500/katrina_retailehttp://money.cnn.com/2005/08/30/news/fortune500/katrina_retailers/?cnn=yes rs/?cnn=yes

Brigham, E. (2004). Brigham, E. (2004). Fundamentals of Financial ManagementFundamentals of Financial Management. . China: Thomson South-Western. China: Thomson South-Western.

Carroll, A. (1991). The pyramid of corporate social responsibility: Carroll, A. (1991). The pyramid of corporate social responsibility: toward the moral management of organizational stakeholders. toward the moral management of organizational stakeholders. Business HorizonsBusiness Horizons, 34(4), 39-49., 34(4), 39-49.

Carroll, A. (2000). Ethical challenges for business in the new Carroll, A. (2000). Ethical challenges for business in the new millennium: corporate social responsibility and models of millennium: corporate social responsibility and models of management morality. management morality. Business Ethics Quarterly, Business Ethics Quarterly, 10(1), 33-42. 10(1), 33-42.

References Cont.References Cont. EM-DAT (2006). Trends and relationships for the period 1900 – 2005. EM-DAT (2006). Trends and relationships for the period 1900 – 2005.

Retrieved June 16, 2006 from: http://www.em-dat.net/disasters/trends.htm Retrieved June 16, 2006 from: http://www.em-dat.net/disasters/trends.htm

Google Trends (2006). Google Trends Labs. Retrieved October 10, 2006 Google Trends (2006). Google Trends Labs. Retrieved October 10, 2006 from: from: http://www.google.com/trends?http://www.google.com/trends?q=hurricane+katrina&ctab=1&geo=all&date=allq=hurricane+katrina&ctab=1&geo=all&date=all

Internet Archive (2006). The Wayback Machine. Retrieved June 12, 2006 Internet Archive (2006). The Wayback Machine. Retrieved June 12, 2006 from: http://www.archive.org/web/web.phpfrom: http://www.archive.org/web/web.php

Money (2006). Corporate giving for Katrina reaches 547 million. Retrieved Money (2006). Corporate giving for Katrina reaches 547 million. Retrieved

7/3/2006 from: http://www.usatoday.com/money/companies/2005-09-12-7/3/2006 from: http://www.usatoday.com/money/companies/2005-09-12-katrina-corporate-giving_x.htm katrina-corporate-giving_x.htm

Nielsen//NetRatings (2005). Hurricane Katrina drives concerned web users Nielsen//NetRatings (2005). Hurricane Katrina drives concerned web users online to web sites for Red Cross, NOAA, news and weather, according to online to web sites for Red Cross, NOAA, news and weather, according to Nielsen//NetRatings. Retrieved 7/6/2006 from: http://www.nielsen-Nielsen//NetRatings. Retrieved 7/6/2006 from: http://www.nielsen-netratings.com/pr/pr_050901.pdf netratings.com/pr/pr_050901.pdf

Pearlstein, J. (2006, February) “Click Here to Donate: Disaster relief efforts Pearlstein, J. (2006, February) “Click Here to Donate: Disaster relief efforts spur growth in online fundraising”. spur growth in online fundraising”. Wired MagazineWired Magazine, 54., 54.

References Cont.References Cont. Porter, M. (2001). Strategy and the Internet. Porter, M. (2001). Strategy and the Internet. Harvard Business ReviewHarvard Business Review

79(3), 63-78.79(3), 63-78.

Porter, M. & Kramer, M. (2002). The competitive advantage of corporate Porter, M. & Kramer, M. (2002). The competitive advantage of corporate philanthropy. philanthropy. Harvard Business ReviewHarvard Business Review, 80(12), 56-68., 80(12), 56-68.

Sexty, R. (2004). Corporate Social Responsibility: The Concept. Retrieved Sexty, R. (2004). Corporate Social Responsibility: The Concept. Retrieved

December 5, 2005, from December 5, 2005, from http://www.ucs.mun.ca/~rsexty/business8107/CSocialR.htm http://www.ucs.mun.ca/~rsexty/business8107/CSocialR.htm

Stiner, Ina. (2005Stiner, Ina. (2005). ). eBay Donates $1 Million to eBay Sellers Affected by eBay Donates $1 Million to eBay Sellers Affected by Hurricane Katrina. Hurricane Katrina. Auctionbytes.comAuctionbytes.com. Retrieved on January 5, 2005 from . Retrieved on January 5, 2005 from http://www.auctionbytes.com/cab/abn/y05/m09/i12/s01 http://www.auctionbytes.com/cab/abn/y05/m09/i12/s01

Turban, E., King, D., Viehland, D., & Lee, J. (2006). Turban, E., King, D., Viehland, D., & Lee, J. (2006). Electronic Commerce Electronic Commerce 2006: A Managerial Perspective2006: A Managerial Perspective. Upper Saddle River, NJ: Prentice Hall.. Upper Saddle River, NJ: Prentice Hall.

Vise, D. & Malseed, M. (2005). Vise, D. & Malseed, M. (2005). The Google StoryThe Google Story. New York: Delacorte . New York: Delacorte Press.Press.

Wood, D. (1991). Corporate social performance revisited. Wood, D. (1991). Corporate social performance revisited. The Academy The Academy of Management Reviewof Management Review, 16, 691-718 , 16, 691-718