CHAPTER 4

Corporate Social Responsibility,

Citizenship, and Diversity

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 Learning Outcomes

After studying this chapter, you should be able to:

1. Compare and contrast corporate social responsibility, citizenship, and
social performance
2. List the reasons for and against corporate social responsibility
3. Characterize the three levels of corporate social responsibility
4. Describe the five stages of corporate citizenship
5. Compare the motivation and activity for corporate social responsibility
(CSR) and corporate social performance (CSP) and the social audit
6. Describe the Equal Employment Opportunity Commission (EEOC)
7. Define key terms in the chapter.

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Corporate Social Responsibility and Citizenship

The firm’s conscious effort (enlightened

Corporate Social
self-interest) to operate in a manner
Responsibility (CSR) that balances all stakeholder interests.

Corporate Includes the firm’s social responsibility,

Citizenship responsiveness, and performance.

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 Corporate Social Responsibility (CSR)
Arguments for
Social Responsibility
1. Being socially responsible promotes
business long-term self-interest.
2. CSR improves business value and
reputation—public sentiment.
3. Society expects business to be socially
responsible.
4. Business is responsible for correcting
the social problems it causes.
5. CSR discourages government
regulation.
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Arguments against
Social Responsibility
1. A firm’s sole responsibility is to
maximize profits while obeying the law.
2. The cost of CSR is passed on to
stakeholders.
3. Less socially responsible competitors
may gain a cost advantage.
4. A firm involved in social issues can
lose focus on operating as effectively
as possible.
5. Dealing with social problems is the job
of the government, not business.
Figure 4.1 Arguments For and Against Corporate Social Responsibility

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Figure 4.2 Levels of Corporate Social Responsibility

Benevolent Focus on profitability and helping

CSR society through philanthropy.

Ethical Focus on profitability and going beyond

CSR the law to do what is right, just, and fair.

Legal Focus on maximizing profits while

CSR obeying the law.

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 An Overall Approach to CSR

The Situational
Approach to CSR

Legal Ethical Benevolent

CSR CSR CSR

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Figure 4.3 Stages of Corporate Citizenship

Stage 5. Transform
Change the game (Unilever)

Stage 4. Integrated
Partnerships, triple bottom line
(AT&T)

Stage 3. Innovative
Stakeholder management (Baxter
and ABB)

Stage 2. Engaged
Philanthropy, social issues
(Chiquita and Nestlé)

Stage 1. Elementary
Profit (GE)

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 Benefits of Corporate Citizenship

Advantages of CSR

Better
Enhanced Customer Awards and
employee
reputation loyalty recognition
relations

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 Stakeholders and the Triple Bottom Line

Social
Performance

Financial Environmental
Performance Performance

Overall
Performance
of the Firm

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 Corporate Social Performance (CSP)

Assessing CSR and

responsiveness

CSP reporting Global social Socially

and audit responsible
social audits standards investing

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 Diversity

• Diversity
 The degree of differences among members
of a group or an organization.
• Protected classes/groups
 Groups legally protected by EEO laws from
workplace discrimination include: race/ethnicity,
gender, age, ability, religion, and others.
• The Equal Employment Opportunity
Commission (EEOC)
 Created in 1964 as the major federal agency to
administer and enforce job discrimination laws to
provide equal employment opportunity for all.
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 Discrimination in the Workplace

Includes slurs, derogatory comments, or other verbal

Workplace or physical abuse that creates an intimidating, hostile,
Harassment or offensive work environment or interferes with an
employee’s work performance.

Occurs when any employee experiences unwelcome

Sexual sexual advances or when on-the-job conditions are
Harassment hostile or threatening in a sexual way.

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Figure 4.4 Employment Laws and Executive Orders
Law or Executive Order
Equal Employment Opportunity
Title VII of the Civil Rights Act
of 1964
Civil Rights Acts of 1972, 1991
Equal Employment Opportunity
Act of 1972
Executive Order 11246 of 1965—
Affirmative Action
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Description
Prohibited discrimination in all areas of the
employment relationship (hiring, compensating,
promoting, discharging, and other aspects) based
on race, religion, color, sex, or national origin. It
also made racial and sexual harassment illegal.
Civil Rights Amendments provided possible
compensation and punitive damages for
discrimination.
Gave greater power to the Equal Employment
Opportunity Commission (EEOC) to combat
discrimination.
Mandated affirmative action for all federal
contractors and subcontractors to accelerate the
movement of minorities into the workforce.
Companies doing business with the government
were given preferential treatment if they had set
employment percentages and quotas for minorities.
Figure 4.4 Employment Laws and Executive Orders

Law or Executive Order Description

Equal Employment Opportunity (cont’d)
Age Discrimination in Prohibited age discrimination against people older
Employment Act than 40 and restricted mandatory retirement.
of 1967
Rehabilitation Act Prohibited discrimination based on physical or
of 1973 mental disability.
Americans with Disabilities Act Strengthened the Rehab Act to require employers
of 1990 (ADA) to provide “reasonable accommodations” to allow
disabled employees to work and to provide access
to facilities (ramps, elevators, rest rooms). ADA
also required transportation systems and
communication systems to facilitate access for the
disabled.

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Figure 4.4 Employment Laws and Executive Orders

Law or Executive Order Description

Compensation (salary and benefits)
Equal Pay Act Required that men and women be paid the same
of 1963 for substantially equal work.
Pregnancy Discrimination Act Prohibited discrimination against women because
of 1978 of pregnancy and childbirth. Prior to the act,
employers could exclude health coverage to pay
the cost of prenatal care and childbirth.
Family and Medical Leave Act Required employers (with 50 or more employees)
of 1993 to provide up to 12 weeks unpaid leave for family
(childbirth, adoption, eldercare) or medical
reasons.

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 Diversity and Minority Progress

Work and Jobs

100%

90% 85%
80%
80%
70%
70%

60%

50%

40%

30%

20%
14%
11% 9%
10% 7% 8%
5% 5% 4% 4%
0%
Percentage of Workforce Management Jobs Professional Jobs

African American Hispanic Asian/Pacific Caucasian

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 Benefiting from CSP

Business Nonmarket
and Market Strategies

Information Societal strategies Political and legal

strategies that that will gain a strategies that help
foster a positive strategic advantage the firm avoid legal
view of the firm for the firm and ethical problems

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Key Terms

benevolent CSR harassment

cause-related marketing legal CSR
corporate citizenship levels of CSR
corporate reputation protected groups
corporate social performance (CSP) sexual harassment
corporate social responsibility (CSR) social audit
diversity triple bottom line
ethical CSR

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