Chapter 2


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  • Chapter 2 Corporate Citizenship: Social Responsibility, Responsiveness, and Performance Source: Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders,” Business Horizons (July-August 1981). © 1991 by the Foundation for the School of Business at Indiana University. Used with permission.
  • Chapter 2

    1. 1. Corporate Citizenship: Social Responsibility, Responsiveness, and Performance Business and Society: Ethics and Stakeholder Management, 7e • Carroll & Buchholtz Copyright ©2009 by South-Western, a division of Cengage Learning.  All rights reserved Prepared by Deborah Baker Texas Christian University Chapter 2 0
    2. 2. Quote of the Day <ul><li>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 </li></ul>
    3. 3. Let’s get started…….. <ul><li>Wal-Mart – Merchant of Doom </li></ul><ul><li>1. Summary (review format) </li></ul><ul><li>2. Stakeholders (1 – 5) “Let’s MAP IT” </li></ul><ul><li>(shared vs. opposing interests?) </li></ul><ul><li>3. Models from chapter 1 </li></ul><ul><li>4. Pro’s and con’s </li></ul><ul><li>5. How could this be presented? </li></ul><ul><li>(hand out rubrics) </li></ul>
    4. 4. Wal-Mart Sample <ul><li>Look at sample </li></ul><ul><li>Grade partners </li></ul><ul><li>1, 2, 2 </li></ul><ul><li>Where were there problems? </li></ul>
    5. 5. Corporate Social Responsibility (CSR) <ul><li>Please “MEMORIZE”: </li></ul>0 Corporate Social Responsibility Seriously considering the impact of a company’s actions on society. Requires the individual to consider his/her acts in terms of a whole social system, and holds him/her responsible for the effects of acts anywhere in that system.
    6. 6. Responsibility? 0 Business allegations… <ul><li>Little concern for the consumer </li></ul><ul><li>Cares nothing about the deteriorating social order </li></ul><ul><li>Has no concept of acceptable ethical behavior </li></ul><ul><li>Indifferent to the problems of minorities and the environment </li></ul>What responsibility does business have to society? @
    7. 7. Corporate Citizenship Concepts 0 Corporate Social… Responsibility Performance Responsiveness Emphasizes… Obligation, accountability outcomes, results action, activity
    8. 8. Business Criticism/ Social Responsibility Cycle (have led to) (which has resulted in) Figure 2-1 0 Factors in the Societal Environment Criticism of Business Increased Concern for the Social Environment A Changed Social Contract Business Assumption of Corporate Social Responsibility Social Responsiveness, Social Performance, and Corporate Citizenship A More Satisfied Society Fewer Factors Leading to Business Criticism Increased Expectations Leading to More Criticism
    9. 9. Modification of the Economic Model 0 Philanthropy Community obligations Paternalism Motivation: Keep government at arm’s length
    10. 10. Avoid Regulation
    11. 11. Corporate Responsibility
    12. 12. Historical Perspective on CSR 0 Economic Model Legal Model Social Model
    13. 13. 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.”
    14. 14. Acceptance and Broadening of Meaning <ul><li>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: </li></ul><ul><ul><li>corporate governance </li></ul></ul><ul><ul><li>product safety </li></ul></ul><ul><ul><li>honesty in advertising </li></ul></ul><ul><ul><li>employee rights </li></ul></ul><ul><ul><li>affirmative action </li></ul></ul><ul><ul><li>environmental sustainability </li></ul></ul><ul><ul><li>ethical behavior </li></ul></ul><ul><ul><li>global CSR </li></ul></ul>0
    15. 15. CSR: Evolving Viewpoints <ul><li>CSR considers the impact of the company’s actions on society . </li></ul><ul><li>CSR requires decision makers to take actions that protect and improve the welfare of society as a whole along with their own interests . </li></ul>0
    16. 16. <ul><li>CSR supposes that the corporation has not only economic and legal obligations, but also certain responsibilities to society which extend beyond these obligations . </li></ul>CSR: Evolving Viewpoints 0
    17. 17. <ul><li>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. </li></ul>CSR: Evolving Viewpoints 0
    18. 18. Carroll’s Four-Part Definition of CSR <ul><li>The social responsibility of business encompasses the economic , legal , ethical and discretionary expectations that society has of organizations at a given point in time. </li></ul>0
    19. 19. Carroll’s Four-Part Definition of CSR Figure 2-2 0 Responsibility Societal Expectation Examples Economic Required Be profitable. Maximize sales, minimize costs. Legal Required Obey laws, adhere to regulations Ethical Expected Avoid questionable practices. Do what is right, fair, and just Philanthropic Desired/ Expected Be a good corporate citizen. Give back.
    20. 20. Legal Responsibilities <ul><li>Law cannot address all the topics or issues that business may face </li></ul><ul><li>Law often lags behind more recent concepts of what is considered appropriate behavior </li></ul><ul><li>Laws are made by lawmakers and may reflect the personal interests/motivation of legislators rather than appropriate ethical justifications </li></ul>0
    21. 21. The Pyramid of CSR Figure 2-3 0 Philanthropic Responsibilities Be a good corporate citizen. Ethical Responsibilities Be ethical. Legal Responsibilities Obey the law. Economic Responsibilities Be profitable.
    22. 22. The CSR Equation <ul><li>Economic Responsibilities </li></ul><ul><li>Legal Responsibilities </li></ul><ul><li>Ethical Responsibilities </li></ul><ul><li>Philanthropic Responsibilities </li></ul>0 + + + = Total Corporate CSR
    23. 23. Arguments Against CSR <ul><li>Restricts the classic economic goal of profit maximization </li></ul><ul><li>Business is not equipped to handle social activities </li></ul><ul><li>Dilutes the primary purpose of business </li></ul><ul><li>Increases the power of business </li></ul><ul><li>Limits the ability to compete in a global marketplace </li></ul>0
    24. 24. <ul><li>Addresses social issues brought on by business, and allows business to be part of the solution </li></ul><ul><li>Protects business self-interest </li></ul><ul><li>Wards off future government intervention </li></ul><ul><li>Addresses issues by using business resources and expertise </li></ul><ul><li>Addresses issues by being proactive </li></ul><ul><li>The public supports CSR </li></ul>Arguments For CSR 0
    25. 25. Ways Firms Respond to CSR Pressure The Civil Corporation, Simon Zadek 0 Cost-benefit approach Strategic approach Innovation and learning approach Defensive approach
    26. 26. Capitalism
    27. 27. <ul><li>Demonstrate a commitment to society’s values and contribute to society’s social, environmental, and economic goals through action. </li></ul><ul><li>Insulate society from the negative impacts of company operations and its products and services. </li></ul><ul><li>Share benefits of company activities with key stakeholders as well as with shareholders. </li></ul><ul><li>Demonstrate that the company can make more money by doing the right thing. </li></ul>Corporate Responsibility in the 21 st Century 0
    28. 28. Corporate Social Responsiveness 0 Responsibility Implies more of a state or condition of having assumed an obligation Responsiveness Connotes a dynamic, action-oriented condition
    29. 29. Corporate Social Performance Figure 2-10 0
    30. 30. Corporate Citizenship 0 Corporate Citizenship… … embraces all the facets of corporate social responsibility, responsiveness, and performance. … serves a variety of stakeholders.
    31. 31. Corporate Citizenship <ul><li>A reflection of shared moral and ethical principles </li></ul><ul><li>A vehicle for integrating individuals into the communities in which they work </li></ul><ul><li>A form of enlightened self-interest that balances stakeholders’ claims and enhances a company’s long-term value </li></ul>Charles J. Fombrum, “Three Pillars of Corporate Citizenship” 0
    32. 32. Drivers of Corporate Citizenship <ul><li>Traditions and values </li></ul><ul><li>Reputation and image </li></ul><ul><li>Business strategy </li></ul><ul><li>Recruiting and retaining employees </li></ul><ul><li>Customers and consumers </li></ul><ul><li>Expectations in the community </li></ul><ul><li>Laws and political pressures </li></ul>Internal Motivators External Pressures 0
    33. 33. Benefits of Corporate Citizenship <ul><li>Improved employee relations </li></ul><ul><li>Improved customer relationships </li></ul><ul><li>Improved business performance </li></ul><ul><li>Enhanced company’s marketing efforts </li></ul>0
    34. 34. Stages of Corporate Citizenship Figure 2-11 0
    35. 35. The future is in our hands……….
    36. 36. Development Challenges of Corporate Citizenship Figure 2-12 0
    37. 37. Business’s Interest in Corporate Citizenship 0 Nonacademic Research <ul><li>Fortune's ranking of “Most Admired” and “Least Admired” corporations </li></ul><ul><li>Conference Board’s Ron Brown Award for Corporate Leadership </li></ul><ul><li>CRO Magazine Awards </li></ul>
    38. 38. Most Admired…. <ul><li>1 Apple </li></ul><ul><li>2 Berkshire Hathaway </li></ul><ul><li>3 General Electric </li></ul><ul><li>4 Google </li></ul><ul><li>5 Toyota Motor </li></ul><ul><li>6 Starbucks </li></ul><ul><li>7 FedEx </li></ul><ul><li>8 Procter & Gamble </li></ul><ul><li>9 Johnson & Johnson </li></ul><ul><li>10 Goldman Sachs Group </li></ul>
    39. 39. And the TRUTH is….. <ul><li> </li></ul><ul><li> </li></ul><ul><li>Don’t believe just one “story”. Seek counter claims. </li></ul>
    40. 40. “ Multiple Bottom Line” Perspective Figure 2-14 0 Consumer Stakeholders’ “Bottom Line” Employee Stakeholders’ “Bottom Line” Community Stakeholders’ “Bottom Line” Owner Stakeholders’ “Bottom Line” Other Stakeholders’ “Bottom Line” Corporate Social Performance
    41. 41. “ Triple Bottom Line” Perspective 0 Key Spheres of Sustainability <ul><li>Economic </li></ul><ul><li>Social </li></ul><ul><li>Environmental </li></ul><ul><li>“ Worm Poop” – Terra Cycle Site </li></ul>
    42. 42. Socially Responsible or Ethical Investing Social Screening A technique used to screen firms for socially-responsible investment purposes 0
    43. 43. Reasons for Upsurge in Socially Responsible Investing <ul><li>More reliable research on CSP </li></ul><ul><li>Investment firms using social criteria have solid track record </li></ul><ul><li>The socially conscious 1960s generation is making investment decisions </li></ul><ul><li>Gen “Y” is looking for purpose and meaning </li></ul>0
    44. 44. Next Time… <ul><li>Enron Movie </li></ul><ul><li>Activity in lieu of quiz </li></ul><ul><li>No chapter to read – but do read case (33- Hudson River) just in case you have questions…. </li></ul><ul><li>Have a great weekend! </li></ul>