The document discusses Bill Gates and the establishment of the Bill & Melinda Gates Foundation, which has an endowment of $33 billion and has given out more than $13.4 billion. It also discusses key elements of corporate social responsibility implementation including leadership, review, strategy, reporting, and verification. Additionally, it covers topics like corporate and strategic philanthropy, cause-related marketing, and new forms of philanthropy that apply business methods.

1. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

2. 6 - 2
Chapter 6
Implementing Social
Responsibility
This chapter:
 Discusses the key elements of managing for social
responsibility, including leadership, review, strategy,
reporting, and verification.
 Discusses corporate and strategic philanthropy.

3. 6 - 3
The Bill & Melinda Gates
Foundation Opening Case
 Bill Gates was a slender, intense boy with a messy
room and a dazzling mind who often challenged his
teachers in class.
 He attended Harvard University, but left to pursue
his fascination with computers.
 At age 19, Gates founded Microsoft Corporation
and twelve years later he was a billionaire.
 He was energetic, independent, and
confrontational and developed the reputation of a
fanatical competitor willing to appropriate any
technology and crush market rivals.

4. 6 - 4
The Bill & Melinda Gates
Foundation Opening Case
(continued)
 Gates established the Bill & Melinda Gates
Foundation, which has an endowment of $33
billion.
 The foundation’s work is based on a two values:
 All lives—no matter where they are being led—have equal
value;
 To whom much is given, much is expected.
 The foundation has given out more than $13.4
billion.
Gates follows a long tradition of wealthy entrepreneurs who
have made fortunes, sometimes by compromising ethics,
then later in life used their wealth for works of extraordinary
benevolence..

5. 6 - 5
Sources of Pressure for
Social Responsibility

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Leadership and Business Models
 Top management sets the tone for a company’s
social response.
 A traditional business model is one in which the
central strategy is based on meeting market
demands.
 A progressive business model is one is which the
central strategy is to meet market needs by
mitigating social problems.
 Although based on traditional business models,
some companies have cultures emphasizing
voluntary social responsibility in one or more
dimensions because of the influence of founders.

7. 6 - 7
A Spectrum of Responses to
Social Demands

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CSR Implementation:
CSR Review
 CSR implementation includes an assessment of
the firm’s current situation and activities, discovery
of the firm’s core values ,and engagement of
stakeholders.
 A key source of values is the mission statement,
a brief statement of the basic purpose of an
organization.
 Engagement has advantages:
 Mapping helps identify sphere of influence.
 Dialogue can review gaps between company performance
and stakeholder expectations, provide important
information, build trust, and lead to cooperative efforts.

9. 6 - 9

10. 6 - 10
CSR Implementation:
CSR Strategy
 A company defining its CSR strategy must first find
an objective, or a vision of what it will achieve,
then create a method for reaching it.
 For large firms the task of setting priorities is
complex because multiple, sometimes
conflicting, stakeholder demands exist.
 Border and Kramer suggests an “essential test” for
the worthiness of any additional social initiative is
to determine whether it produces a meaningful
benefit for society that is also vital to the business.

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CSR Implementation
 Steps for CSR implementation:
 Create a CSR decision-making structure within
the overall organization
 Develop an action plan that sets forth a
multitude of tasks that will bring the strategy to
fruition
 Establish performance targets and timelines for
their accomplishment
 Setup incentives to encourage achievement of
goals and targets
 Align corporate culture with strategic intent

12. 6 - 12
CSR Implementation:
Reporting and Verification
 Assessment and reporting create transparency
and allows managers to evaluate corporate social
performance and measure overall progress toward
strategic goals.
 In the last decade a new wave of social reporting
has risen.
 The leading effort to create a new reporting format
is the Global Reporting Initiative (GRI)
 GRI guidelines show performance on a triple
bottom line of economic, social, and environmental
results.

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Corporate Philanthropy
 Large philanthropic contributions by American
companies are a relatively recent phenomenon.
 Until about 50 years ago courts held that
corporate funds belonged to shareholders;
therefore, managers had no right to give away
money, even for noble motives.
 The first major break from narrow legal restrictions
on corporate giving was the Revenue Act of 1935,
which allowed charitable contributions to be
deducted from taxable earnings up to 5 percent of
net profits before taxes (raised to 10 percent in
1981.)

14. 6 - 14
Patterns and Magnitudes of
Corporate Giving
 Charitable giving is now a traditional
dimension of corporate social
responsibility.
 Corporate philanthropy is only a small part
of overall private philanthropy in the U.S.
 The basic motives for corporate giving are:
 Response to pressure
 Belief that it will bring monetary profit
 Desire for reputational gain
 Altruism

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Strategic Philanthropy
 As corporations gained experience with
philanthropy, many concluded that the traditional
approach of diffuse giving to myriad worthy causes
was noble but flawed.
 Many firms decided to change their philosophy of
giving from one of pure generosity to one that
aligned charity with commercial objectives.
 Strategic philanthropy is a form of corporate and
three in which charitable activities reinforce
strategic business goals
 Not everyone approves of strategic philanthropy.

16. 6 - 16
Cause-Related Marketing
 Cause-related marketing is a marketing
method linking a corporation or brand to a
social cause so that both benefit.
 Corporations realize that if their brand is
connected to a social cause or charity, this
appeals to the conscience of a consumer.
 Cause-related marketing raises big sums of
money for worthy causes but its mixture of
altruism and self-interest attracts criticism.

17. 6 - 17
New Forms of Philanthropy
 Philanthropy can be inefficient compared
with market-driven business activity.
 An emerging approach seeks to increase
productivity from charitable giving by
bringing businesslike methods to the task.
 These new approaches to philanthropy
seek to solve global problems by correcting
market failures and applying the tools of
capitalism.

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Concluding Observations
 If a corporation announces aspirations to be socially
responsible, it must follow up with the hard work of
building those aspirations into its operations.
 Corporate philanthropy, while not a management
method, is a long-standing way of implementing
social responsibility.
 Recently, corporations have shifted from a tradition
of altruistic giving to a new style of philanthropy that
aligns with business strategy.
 Some critics attack this approach as too self-interested.
 Strategic philanthropy may be a promising development
because it injects thinking about corporate social
responsibility into the strategic mainstream.