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

7/22/2019 3 Corporate Social Responsibility - The Concept Chp 7 (Jan 22)

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Chapter

Seven

Canadian Business and Society:

Ethics & Responsibilities


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Chapter Outline

Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.

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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


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Corporate Social Responsibility:

Definition


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The way a corporation achieves a balance

among it economic, social, and environmental

responsibilities in its operations so as to

address shareholder and other stakeholderexpectations.


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Key Elements of CSR


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Corporations have responsibilities beyond theproduction of goods and services.

These responsibilities involve helping to solve socialproblems.

Corporations have a broader constituency than juststockholders.

Corporations have impacts beyond simplemarketplace transactions.

Corporations serve a wider range of human valuesthan just economic values.


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Debate: Case for Involvement


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Business must satisfy societys needs andexpectations.

CSR prevents public criticism and government

regulation.McDonalds Clam Shells

Business and society are interdependent.

Boom towns


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Case for Involvement


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CSR is good for the bottom line.

Insurance companies

Investors and consumers support CSR.

Green mutual fundsAddressing social problems can become

financial opportunities (e.g., pollutionabatement).

Playgrounds surfaces made from recycled tires


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Business should take long-term CSRapproach.

MEC

Social actions improve public image andgoodwill.

Business can solve problems as well asgovernment.

African countries


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Proactive approach is better than reactive.

Home Depot

Businesspeople are also concerned citizens.

Apotex Inc. (Bernard and Honey Sherman)


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Debate: Counterarguments


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Profit maximization is the primary purpose of

business.

Milton Friedman, Nobel Prize winner in

Economics Business is responsible to shareholders.

It should be their decision
http://www.youtube.com/watch?v=ivLIA25FQYYhttp://www.youtube.com/watch?v=ivLIA25FQYYhttp://www.youtube.com/watch?v=ivLIA25FQYYhttp://www.youtube.com/watch?v=ivLIA25FQYY


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Counterarguments

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


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Counterarguments


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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 actionNeeded vs. waste of time

Charity accountability


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Counterarguments

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.


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Amoral view

Amoral (not immoral) an activity without moralquality

Traditional view of business profit-making entity

Laws governing incorporated businesses makethem legitimate

Milton Friedman

Source: Klonoski, 1991


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Personal view

Corporations are like people and can therefore beheld accountable for their actions. There is a right thing to do and corporations can be

punished for acting immorally.

Counterarguments: Corporations are legal entitiesnot persons and can not be held accountable.Only the people running the organization can be held

accountable for the actions of the corporation.


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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


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Examples of the Social View


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Pyramid of Corporate Social

Responsibility


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Economic

Legal

Ethical

Philan-

thropic

Be profitable

Obey the law

Be ethical

Be a good

corporate citizenDesired

Expected

Required

Required

Source: Archie Carroll, 1991


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Corporate Sustainability (CS)


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Most prominent term after CSR

Definition: Corporate Sustainability refers to

corporate activities demonstrating the

inclusion of social and environmental as wellas economic responsibilities in business

operations as they impact all stakeholders.


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Corporate Sustainability (CS)

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


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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


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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


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Field of inquiry at the intersection of businessneeds and wider societal concerns thatreflects and respects the complexinterdependencybetween the two.

Interdependency of business and society

Two directional:

Societys influence on corporations

Corporation's influence on society


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Evaluates 3 aspects of business:

Purpose of business

Social context of business

Metrics: how performance is measured


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Triple-E Bottom Line (TBL)


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Evaluates a corporations performance

according to a summary of the economic,

socia l,and environmentalvalue thecorporation adds or destroys.

Now forms the basis for corporate reporting of

economic, ethical, and environmental

responsibilities.


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Corporate Citizenship

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.


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Good Corporate Citizenship: Benefits

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

Chapter 7

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Copyright 2008 McGraw-Hill Ryerson Ltd.

Source: World Economic Forum


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New Approach to

Corporate Citizenship


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Limited

Focus on corporate giving

Equivalent

Emphasis on sustainability

Extended

Defined as a set of individual, social, civil, and

political rights

Source: Matten and Crane, 2005

Documents

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