Lecture Business and society - Chapter 2: Corporate Citizenship: Social Responsibility, Responsiveness, and Performance

Contents: The Corporate Social Responsibility (CSR) as a Concept, Traditional Arguments Against and For CSR, Corporate Social Responsiveness, Corporate Social Performance, Corporate Citizenship, Social Performance and Financial Performance Relationship, Sustainability – Profits, People, Planet Socially Responsible, Sustainable, Ethical Investing.

© 2015 Cengage Learning

Chapter 2

Corporate Citizenship:

Social Responsibility, Responsiveness, and Performance

2

© 2015 Cengage Learning

Learning Outcomes (1 of 2)

evolved and encompasses economic, legal, ethical, and philanthropic components.

citizenship.

3. Differentiate between corporate citizenship, social

responsibility, responsiveness, and performance, and sustainability.

performance (CSP).

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Chapter Outline

• The Corporate Social Responsibility (CSR) as a Concept

• Traditional Arguments Against and For CSR

• Corporate Social Responsiveness

• Corporate Social Performance

• Corporate Citizenship

• Social Performance and Financial Performance

Relationship

• Sustainability – Profits, People, Planet

• Socially Responsible, Sustainable, Ethical Investing

• Summary

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Allegations Against

Business -

Business -

• Has little concern for the consumer

• Cares nothing about the deteriorating social order

• Has no concept of ethical behavior

• Is indifferent to the problems of

minorities and the environment

• These claims have generated an

unprecedented number of pleas for companies to be more socially

responsible

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Corporate Social Responsibility

As a Concept

Early Definitions

-•CSR means seriously considering the

impact of a company’s actions on

society

•CSR requires the individual to consider his or her acts in terms of a whole social system, and holds him or her responsible for the effects of his or her acts anywhere

Business Social Responsibility Cycle

Corporate Social Responsibility Social Responsiveness, Social Performance, and Corporate Citizenship

A More Satisfied Society

Fewer Factors Leading to

Business Criticism

Increased Expectations Leading to More Criticism

Corporate Citizenship

Concepts

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Modifications of the Economic

Model

Philanthropy Philanthropy Community obligations Paternalism Paternalism

Evolving Meanings of CSR

• CSR:

• …is seriously considering the impact

of the company’s actions on society.

• … is the obligation of decision makers

to take actions that protect and improve the welfare of society as a whole, along with their own interests.

• …supposes that the corporation has

economic and legal obligations as well

as responsibilities to society that extend beyond these obligations.

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Ethical, and

Discretionary

expectations that society has of

organizations at a given point in time

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The Four Components of CSR

Ethical     

Expected

     Avoid questionable practices.

Do what is right, fair, and just

Philanthropic

     Desired/

Expected

Be a good corporate citizen Give back.

e CSR

= +

+ +

A stakeholder perspective focuses on the CSR

pyramid as a unified whole.

Top 20 Activities or Characteristics of Socially Responsible Companies

• Makes products that are safe.

• Does not pollute air or water

• Obeys the law in all aspects of

business.

• Promotes honest or ethical

employee behavior.

• Commits to safe workplace ethics.

• Does not use misleading or

• Recycles within company.

• Shows no past record of

Arguments Against CSR -

• Classical Economics: The classical

economic view is that business’ only

goal is the maximize profits for owners

• Business Not Equipped: Business is not equipped to handle social activities

• Dilutes Business Purpose: It dilutes the primary purpose of business

• Too Much Power Already: Businesses have too much power already

• Global Competitiveness: It limits the ability to compete in a global

marketplace.© 2015 Cengage Learning 18

Arguments For CSR

-• Enlightened self-interest: Businesses

must take actions to ensure long-term viability

• Warding off government

regulations This is one of the most

practical reasons

• Resources Available: Business has

the resources and expertise Let it try

• Proaction is better than Reaction

Proaction is also less costly

• Public supports: the public strongly

supports CSR

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Business Responses to calls for CSR Make the Business Case for

The Business Case for CSR

6 Reasons for Embracing

1.Win new business

2.Increase customer retention

3.Develop and enhance

relationships with customers,

suppliers, and networks

4 Attract, retain, and maintain a happy workforce and be an Employer of Choice

5 Save money on energy and operating costs and manage risk.

6 Differentiate itself from competitors

7 Improve its business reputation and standing

8 Provide access to investment and funding opportunities

9 Generate positive publicity and media opportunities due to

media interest in ethical business activities

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Corporate Social Responsiveness Corporate Social Responsiveness

Corporate Social Responsiveness

Other Views

-•Sethi’s Three-Stage Schema

• Social obligation, social responsibility, and

social responsiveness; anticipatory, preventive

•Frederick’s CSR 1 , CSR 2 , and CSR 3

• CSR1 is accountability-focused.

• CSR2 is responsibility-focused.

• CSR3 refers to corporate social rectitude.

•Epstein’s Process View

• Emphasizes the process of social

responsiveness.

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Corporate Social Performance:

Carroll’s Model

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Corporate Social Performance:

Wartick & Cochran’s Model

Extensions

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Corporate Citizenship (1

of 2)

Corporate citizenship -

•Embraces all the facets of corporate

social responsibility, responsiveness,

and performance.

•Corporate citizenship is not a new

concept, but one whose time has come

•Corporate Citizenship serves a variety of stakeholders

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•A form of enlightened self-interest that

balances stakeholders’ claims and enhances

a company’s long-term value.

Narrow View

•Corporate community relations

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Drivers of Corporate

Citizenship

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competitive advantage)

•Enhanced marketing efforts ( helps create a positive company image) 

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Stages of Corporate Citizenship

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Development Challenges That Trigger Movement of Corporate

Citizenship

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Global Corporate

Citizenship

-• …and Global CSR are topics in which there has been an explosion of interest

• Multinational enterprises are expected to:

• be good corporate citizens in the countries

in which they do business.

• tailor their initiatives to conform to the

• Convergence in global CSR approaches will

continue as the world economic stage

becomes the common environment within

which businesses function.

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Corporate Citizenship

Awards

by Business Press

• Fortune's ranking of “Most Admired”

and “Least Admired” corporations

• Conference Board’s Ron Brown

Award

for Corporate Leadership

• CRO Magazine Awards

• Chamber of Commerce of the U.S

Corporate Citizenship Awards

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The Relationship Between

Social and Financial

Good Corporate

Social Performance

Good Corporate Financial Performance

Good Corporate Reputation

Good Corporate

Financial

Performance

Good Corporate Social Performance

Good Corporate Reputation

Good Corporate

Social Performance

Good Corporate Financial Performance

One Bottom Line, or

• The stakeholder­bottom line perspective ­

• Impacts or benefits of social 

performance cannot be fully measured or appreciated by considering only the 

A Multiple Bottom Line

The Triple Bottom Line

Socially Responsible, Sustainable, Ethical Investing

Socially Responsible Investing

-•Emerged in the 1970s

•Over $3.74 trillion in socially

responsible investments in the U.S.

Reasons for the Upsurge in

Socially Responsible

Investing

• Total dollars invested in SRI has grown

exponentially over past twenty years

• Council on Economic Priorities

suggests 3 reasons:

1 More reliable research on CSP

2 Investment firms using social criteria

have solid track record

3 The socially conscious 1960s generation

is making investment decisions

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• Business for Social

• stages of corporate citizenship

• sustainability

• sustainable development

• triple Bottom Line

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Key Terms