3 Corporate Social Responsibility - The Concept CHP 7 (Jan 22)

1
Canadian Business and Society: Ethics & Responsibilities

Chapter Seven
Chapter Outline
2
Corporate Social Responsibility Debate: The role of business is to make money vs. Its more than that Social Responsibility Theories Pyramid of Corporate Social Responsibility Corporate Sustainability (CS) Reputation Management Social Impact Management Triple-E Bottom Line (TBL) Good Corporate Citizenship
Copyright 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Corporate Social Responsibility: Definition

3
The way a corporation achieves a balance among it economic, social, and environmental responsibilities in its operations so as to address shareholder and other stakeholder expectations.
Chapter 7
Key Elements of CSR

4
Corporations have responsibilities beyond the production of goods and services. These responsibilities involve helping to solve social problems. Corporations have a broader constituency than just stockholders. Corporations have impacts beyond simple marketplace transactions. Corporations serve a wider range of human values than just economic values.
Copyright 2008 McGraw-Hill Ryerson Ltd. Chapter 7
Debate: Case for Involvement

5
Business must satisfy societys needs and expectations. CSR prevents public criticism and government regulation.
McDonalds
Clam Shells
Business and society are interdependent.

Boom
towns
Chapter 7
Case for Involvement

6
CSR is good for the bottom line.

Insurance
companies
Investors and consumers support CSR.

Green
mutual funds
Addressing social problems can become financial opportunities (e.g., pollution abatement).
Playgrounds
surfaces made from recycled tires
Chapter 7

7
Business should take long-term CSR approach.

MEC
Social actions improve public image and goodwill. Business can solve problems as well as government.
African
countries
Chapter 7

8
Proactive approach is better than reactive.

Home
Depot
Inc. (Bernard and Honey Sherman)
Businesspeople are also concerned citizens.

Apotex
Chapter 7
Debate: Counterarguments
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Profit maximization is the primary purpose of business.

Milton
Friedman, Nobel Prize winner in Economics should be their decision
Business is responsible to shareholders.

It
Chapter 7
Counterarguments
10
Social policy is role of government. Business lacks training in social issues.

It
is not competent
CSR would give too much power to business.

Take
over a community Impose business values
Chapter 7
Counterarguments
11
Business involvement in social matters increases costs.

Someone
is paying for it Mistakes can be made
No reliable guidance for business in CSR matters.

PR
vs. real action Needed vs. waste of time Charity accountability

Counterarguments
12
Business cannot be held accountable unlike social institutions.

To
what standard? Whose responsible to hold them accountable?
There is divided support in business community for social involvement.

No
competition to get involved
The concept is unclear, so business action is uncertain.

Social Responsibility Theories

13
Amoral view
Amoral
(not immoral) an activity without moral
quality Traditional view of business profit-making entity Laws governing incorporated businesses make them legitimate Milton Friedman
Source: Klonoski, 1991


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Personal view
Corporations
There
are like people and can therefore be held accountable for their actions.
is a right thing to do and corporations can be punished for acting immorally.
Counterarguments:
Only
Corporations are legal entities not persons and can not be held accountable.
the people running the organization can be held accountable for the actions of the corporation.
Chapter 7

15
Social view
Corporations
exist within a social context Corporations are social institutions with social responsibilities The Amoral view is incomplete There are many examples of the social view
Chapter 7
Examples of the Social View

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Chapter 7
Pyramid of Corporate Social Responsibility

17
Be a good corporate citizen
Philanthropic
Desired
Be ethical
Obey the law Be profitable
Ethical
Legal Economic
Expected
Required Required
Source: Archie Carroll, 1991

Corporate Sustainability (CS)

18
Most prominent term after CSR Definition: Corporate Sustainability refers to corporate activities demonstrating the inclusion of social and environmental as well as economic responsibilities in business operations as they impact all stakeholders.
Chapter 7
Corporate Sustainability (CS)

19
Marrewijk s five levels of CS

Compliance-driven
CS: follow regulations Profit-driven CS: focus on bottom line Caring CS: go beyond legal compliance Synergistic CS: well balanced solutions Holistic CS: fully integrated CS
Chapter 7
Reputation Management
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Definition: Reputation management is an effort to enhance a corporations image Previous focus on media and public relations as well as crisis management Today, focus is on relationships with all stakeholders
Chapter 7
Reputation Management
21
Reputation Management can:

Enhance
financial performance Improve competitive positions Increase public approval
Reputations take a long time to be established, but can be destroyed quickly
Chapter 7
Social Impact Management

22
Field of inquiry at the intersection of business needs and wider societal concerns that reflects and respects the complex interdependency between the two. Interdependency of business and society Two directional:
Societys
influence on corporations Corporation's influence on society
Chapter 7
Social Impact Management

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Evaluates 3 aspects of business:

Purpose
of business Social context of business Metrics: how performance is measured
Chapter 7
Triple-E Bottom Line (TBL)

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Evaluates a corporations performance according to a summary of the economic, social, and environmental value the corporation adds or destroys. Now forms the basis for corporate reporting of economic, ethical, and environmental responsibilities.
Chapter 7
Corporate Citizenship
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Definition: The demonstration by a corporation that it takes into account its complete impact on society and the environment as well as its economic influence.
Chapter 7
Good Corporate Citizenship: Benefits

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Reputation management Risk profile and risk management Employee recruitment, motivation, and retention Investor relations and access to capital
Learning and innovation Competitiveness and market positioning Operational efficiency Licence to operate
Greater leeway
Source: World Economic Forum

Chapter 7
New Approach to Corporate Citizenship

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Limited
Focus
on corporate giving
on sustainability
Equivalent
Emphasis
Extended
Defined
as a set of individual, social, civil, and political rights
Source: Matten and Crane, 2005


3 Corporate Social Responsibility - The Concept CHP 7 (Jan 22)

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3 Corporate Social Responsibility - The Concept CHP 7 (Jan 22)

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1

Canadian Business and Society: Ethics & Responsibilities

Copyright 2008 McGraw-Hill Ryerson Ltd.

Corporate Social Responsibility: Definition

Copyright 2008 McGraw-Hill Ryerson Ltd.

Key Elements of CSR

Debate: Case for Involvement

Business and society are interdependent.

Copyright 2008 McGraw-Hill Ryerson Ltd.

Case for Involvement

CSR is good for the bottom line.

Investors and consumers support CSR.

surfaces made from recycled tires

Copyright 2008 McGraw-Hill Ryerson Ltd.

Case for Involvement

Business should take long-term CSR approach.

Copyright 2008 McGraw-Hill Ryerson Ltd.

Case for Involvement

Proactive approach is better than reactive.

Businesspeople are also concerned citizens.

Copyright 2008 McGraw-Hill Ryerson Ltd.

Profit maximization is the primary purpose of business.

Friedman, Nobel Prize winner in Economics should be their decision

Business is responsible to shareholders.

Copyright 2008 McGraw-Hill Ryerson Ltd.

Social policy is role of government. Business lacks training in social issues.

CSR would give too much power to business.

over a community Impose business values

Copyright 2008 McGraw-Hill Ryerson Ltd.

Business involvement in social matters increases costs.

is paying for it Mistakes can be made

No reliable guidance for business in CSR matters.

vs. real action Needed vs. waste of time Charity accountability

Business cannot be held accountable unlike social institutions.

what standard? Whose responsible to hold them accountable?

There is divided support in business community for social involvement.

competition to get involved

The concept is unclear, so business action is uncertain.

Social Responsibility Theories

(not immoral) an activity without moral

Source: Klonoski, 1991

Social Responsibility Theories

Copyright 2008 McGraw-Hill Ryerson Ltd.

Social Responsibility Theories

Copyright 2008 McGraw-Hill Ryerson Ltd.

Examples of the Social View

Copyright 2008 McGraw-Hill Ryerson Ltd.

Pyramid of Corporate Social Responsibility

Be a good corporate citizen

Source: Archie Carroll, 1991

Corporate Sustainability (CS)

Copyright 2008 McGraw-Hill Ryerson Ltd.

Corporate Sustainability (CS)

Marrewijk s five levels of CS

Copyright 2008 McGraw-Hill Ryerson Ltd.

Copyright 2008 McGraw-Hill Ryerson Ltd.

Reputation Management can:

financial performance Improve competitive positions Increase public approval

Reputations take a long time to be established, but can be destroyed quickly

Copyright 2008 McGraw-Hill Ryerson Ltd.

Social Impact Management

influence on corporations Corporation's influence on society

Copyright 2008 McGraw-Hill Ryerson Ltd.