Definition of CSR“The duty a corporation has to create wealth by using means that avoid harm to, protect, or enhance soci...
Three Basic Elements of CSR Market Forces Mandated Social Programs Voluntary Social Programs   Exceed regulations (leg...
Basic Elements of Social     Responsibility                           5-11
The Evolving Idea of Corporate        Social Responsibility The fundamental idea is that corporations  have duties that g...
Arguments Against CSR1   Classical Economic Argument:    Management’s only responsibility is to    maximize the profits of...
Arguments For CSR CSR is in business’s long-term self-interest   Must use power or lose legitimacy (social    contract) ...
General Principles of CSR Corporations are Primarily Economic  Institutions. Must follow the law. Managers must act eth...
General Principles of CSR cont. Social responsibility varies with company  characteristics (e.g., size, industry, locatio...
Are Social and Financial             Performance Related? A review of 95 studies over 30 years found that a  majority (53...
Market for Morals There is no evident relationship between  ethics and corporate market value.    Can be a profitable ni...
Concluding Observations Historically, corporations have been motivated  primarily by the central focus on profits. Corpo...
Definitions   Stakeholders       Those who are affected by and affect the        actions of a firm.   Primary Stakehold...
Stakeholder Management   Strategic Approach       Views stakeholders as factors to be taken into        consideration an...
Criticisms   Not a realistic assessment of power    relationships.     seeks   to replace force with moral duty.   Sets...
5 Major Questions   Who are our stakeholders?   What are their stakes?   What opportunities and challenges do    our st...
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Csrstake

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Csrstake

  1. 1. Definition of CSR“The duty a corporation has to create wealth by using means that avoid harm to, protect, or enhance societal assets”p. 116
  2. 2. Three Basic Elements of CSR Market Forces Mandated Social Programs Voluntary Social Programs  Exceed regulations (legal plus; safety, pollution, discrimination,…)  Respond to national consensus (charities)  Actions beyond public consensus (work to make changes)
  3. 3. Basic Elements of Social Responsibility 5-11
  4. 4. The Evolving Idea of Corporate Social Responsibility The fundamental idea is that corporations have duties that go beyond lawful execution of their economic function. Over time the doctrine has evolved to require more expansive action by companies largely because:  Stakeholder groups have gained more power to impose their agendas  The ethical and legal philosophies underlying it have matured 5-4
  5. 5. Arguments Against CSR1 Classical Economic Argument: Management’s only responsibility is to maximize the profits of its owners.  a. Role of business in our system  b. Duty to shareholders - private property rights2 Cost of social action is passed on to consumers3 CSR decreases competitiveness (esp. international)4 Business already has enough power
  6. 6. Arguments For CSR CSR is in business’s long-term self-interest  Must use power or lose legitimacy (social contract)  Ward off government intervention & regulation  Public relations Ethical Imperative Other:  Businesses are reservoirs of skill
  7. 7. General Principles of CSR Corporations are Primarily Economic Institutions. Must follow the law. Managers must act ethically. Duty to correct the adverse social impacts they cause.
  8. 8. General Principles of CSR cont. Social responsibility varies with company characteristics (e.g., size, industry, location). Managers should try to meet the legitimate needs of stakeholders. Comply with the norms of the social contract. Publicly report on market, mandated, and voluntary actions.
  9. 9. Are Social and Financial Performance Related? A review of 95 studies over 30 years found that a majority (53 percent) of businesses showed a positive relationship between profits and responsibility, while 5 percent showed a negative Results inconsistent and ultimately inconclusive due to methodological questions. Generally held that it will not hurt you, even if it doesn’t help. 5-13
  10. 10. Market for Morals There is no evident relationship between ethics and corporate market value.  Can be a profitable niche strategy  People want it to be true.  It eliminates the issue of ethics in business  Confirmation bias – select data that support preconceived views and ignore data that challenge those views  Bad things happen to good people and to good businesses, naïve to think otherwise.
  11. 11. Concluding Observations Historically, corporations have been motivated primarily by the central focus on profits. Corporations are now being pressured to alter this focus.  The idea of corporate social responsibility has continuously expanded in meaning.  The power of stakeholders to define corporate duty has increased. The explosive growth of global trade and global corporations has created new standards and practices of social responsibility tied to global norms. 5-24
  12. 12. Definitions Stakeholders  Those who are affected by and affect the actions of a firm. Primary Stakeholders  Those who have a formal, official or contractual relationship with a firm.  E.g., stockholders, customers, employees, communities, governmental agencies, … Secondary Stakeholders  All other stakeholders  E.g., environmentalists, media, trade groups, …
  13. 13. Stakeholder Management Strategic Approach  Views stakeholders as factors to be taken into consideration and managed while the firm is pursuing profits for the shareholders Multifiduciary Approach  Management has a fiduciary responsibility to stakeholders just as it does to shareholders. Places stakeholders and shareholders on roughly equal footing. Stakeholder Synthesis  The firm has a moral but not a fiduciary responsibility to stakeholders
  14. 14. Criticisms Not a realistic assessment of power relationships.  seeks to replace force with moral duty. Sets up too vague a guideline.  Who is a stakeholder? What do we owe them? How do we balance competing demands?  No single, clear, objective measure of ethical/economic performance.
  15. 15. 5 Major Questions Who are our stakeholders? What are their stakes? What opportunities and challenges do our stakeholders present? What responsibilities does our firm have to all its stakeholders? What strategies or actions should our firm take to deal with stakeholder challenges and opportunities?

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