Corporate Social Responsibility

LECTURE 17

Corporate Social ResponsibilityMGT 610

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Corporate Social Responsibility

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Chapter 5 Creating CSR Framework

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LEARNING OBJECTIVES

•Understand the importance of historical evidence in

exploring the concept of CSR

•Examine the processes of integrating CSR into the

strategic framework of organizations

•Provide simple suggestions on implementation

processes of CSR for organizations understand that CSR

•Perception and delivery have to take into account

both global and local practices

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•Creation of strategy• Definition of strategy

• Analyzing, projecting and directing the different engagements

• How each engagement is linked • Operates in a controlled environment• Not a guessing game• It is rational and a conscious reaction to environment

• Some important assessments that an organizations needs to make on pursuing CSR are • Risk analysis

• Strategy is built from studying history and culture• Foremost policy that needs to be articulated

• Goals and objectives• Long term and short term

• Analyze the impact on society and community both long term and short term

• Required because resources are derived from the society which are needed to fulfill the aims and objectives

• This is where the stakeholders theory finds its legitimacy

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•To implement this organizations needs to be committed towards governance and transparency• Accountability and integrity are brand ambassadors and cannot

be quantified• Intangible assets having effect on financial bottom line

•Risk management would have to be undertaken with sincerity• Within the organization• Within the departments

•The firm has to take stock of assets, relationships, processes, technology and its capabilities to achieve its mission•Mission neither too broad nor too narrow• Create competitive advantage and long term viability

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•Building trust• Investor friendly environment

• Built trust In the mind of the customers• Trust is not a unilateral process• Reciprocal relationship with all stakeholders• CSR is the prime intervention required to create good

relationship with all stakeholders• Go beyond financial reporting and report intangible aspects • All governance codes demand reporting of the non financial

factors impacting profits• The corporate needs to stream line its value chain to bring

transparency• Allow stakeholders to judge the corporate strategy and actions

related to quality and sustainability and thus create trust

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•Subliminal impact of history • History provides tools which are pivotal to every day life• To understand thought , feeling and actions comprehend history• History = culture= way of life• Social cohesion needs an in depth study of history• Form of government and political system plays an important role

in deciding the terms of social reforms• Example Greece

• Socialist country • Needs to balance its economic needs• Cannot cut public sector pay required to ease economic

pressure• Example Spain

• Retain labor markets law• Retrenchment permanent employees extremely

expensive• Question: is CSR being trampled in the name of social cohesion

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•In the name of cohesion, public sector employees retain perks while private sector suffers•Highlight the disparity in CSR within the same country as a fall out of their past historical traditions•Linking democracy and economy• World wars were fought between economically developed

nations• 21% of the poorest democracy will go to war• Conflict is not related to economic prosperity• China and Saudi Arabia have state managed economies • Democracy and civil peace are related when country has a high

literacy rate and development• Risk of civil war decreases with development in democratic

countries• Conclusion: formulating business strategies without

understanding these contradictory factors may not lead to expected gains by the business world

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•Corporate ideology and history• the history and cultures of countries play a crucial role with

respect to accountability, integrity and transparency• There is a correlation between economic growth and economic

behavior• The advancement and development of the legal system

and/or social expectations and the need for involved parties contributed to that

• This is corroborated when the corruption indexed is viewed• Corruption in India is wide spread despite the fact that the

economy is growing• This is because the corrupt money is spread over a

large number of people and they return it back to the economy

• CSR needs to give warning that such practices would corrode economy over time and sustainable growth would be a illusion

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•Corporations need to realize that corruption is a cost that they are passing on to the unit price of their products• Never be competitive in the market• The government/corporate corruption is harming national

competitiveness• Role of tax haven • End to secrecy in bank accounts

•Root of CSR being challenged due to the unique practice of different countries

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•Appreciating cultures• Society is people who carry the baggage of their cultures• Cultures process initiated by historical events may lead to group

think or satisficing• Different decision in corporate world may result from different

value systems• Globalization and liberalization may push countries towards

convergence of ideas• Corporations have to take in to account the local and

international tensions to this effect• Example : Toyota

•Apprehensions of societies• Sweeping changes in the global economy has created an

uncertain environment• Business needs to rethink strategies• 1990s was abundance• Recession = scarcity• Debate has shifted to taking power and save themselves

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• History and culture shape the sub conscious behavior of managers who design the strategies

• Culture provides the cushion in times of uncertainty by offering guidelines to social integration

• To understand CSR one has to enter the domain of history and culture

• Country efforts are again embedded and integrally connected to the history and culture of the country

•True nationalism• In the global economy disparities cannot increase

• Will result in discontentment • Small companies are now competing with giants

• This needs to be monitored to see if resource utilization is right or not

• A god measure of nationalism is how honestly the corporations and citizens pay their taxes