Corporate social responsibility (CSR)
Definition of pressure groups
A group of people with common interests who organise to influence public opinion and the decisions of businesses and governments
Carroll's CSR pyramid
A way of setting out ways in which an organisation could meet its social responsibilities By creating different layers in the pyramid it can assist managers in understanding different types of obligations that business has towards society
CSR and stakeholders
Businesses have become increasingly aware of expectations of stakeholder groups Growing awareness of business activities by consumer and other stakeholder groups, driven by social media Businesses are subject to attention of pressure groups
Legal responsibilities
Businesses should obey laws Meeting these responsibilities will help ensure the business acts in best interests of society e.g. paying minimum wages and avoiding activities that cause pollution
Corporate social responsibility (CSR)
CSR is a business philosophy that emphasises that firms should behave as good citizens They shouldn't merely operate within the law but should consider the effects of their activities on society as a whole Thus a socially responsible business attempts to fulfil the duties that it has towards its employees, customers and others
Pressures for socially responsible behaviour
Consumers are better informed about activities of behaviour with respect to environment and stakeholders - rise of social media - bad news can reach many potential customers Businesses have to care about being socially responsible because customers do - consumers spending decisions influenced Being judged to be socially responsible can help organisations attract best employees and build a strong employer brand Can help businesses to access new markets and this can be attractive at time when globalisation is increasing competitive pressures Attract investors Attract suppliers who want to work with business Avoid negative press comments
Definition of corporate social reports
Documents setting out a business's targets for meeting its social obligations and extent to which previous social targets have been achieved
Downsides of corporate social reports
Doesn't guarantee a firm is socially responsible Less active approach publicise weaknesses and firms are seen not to respond with damaging consequences for corporate image Some reports don't cover all issues Many companies do not have their corporate social reports independently audited to confirm accuracy Some firms don't analyse their supply chains Effects of slow rates of economic growth may reduce numbers of businesses prepared to devote resources to producing a corporate social report
Definition of CSR
Duties a business has towards employees, customers, society and the environment
4 types of responsibility that a business should meet to be socially responsible:
Economic responsibilities Legal responsibilities Ethical responsibilities Philanthropic responsibilities
Ethical responsibilities
Entails behaving in a morally correct way Thus a business might pay living wage rather than legally enforceable minimum wage
Stakeholders
Individuals or groups within society who have an interest in an org's operation and performance
Shareholder concept
Management teams should only aim to meet responsibilities to shareholders and this is best done by maximising business's profits Argue this should result in higher dividends and share prices rising which will satisfy shareholders Needs of other stakeholders are regarded as of secondary importance Tends to encourage short-termism
Philanthropic responsibilities
Relate to discretionary behaviour by businesses to improve the lives of others in society e.g. charitable donations
Economic responsibilities
Responsibility to be profitable Without this the org would be unlikely to survive in the LT and thus not be able to fulfil its others responsibilities to society
Stakheolder concept
Some management teams operate with expectation that the business will take into account obligations it may have to society in general in all its decision making Known as stakeholder concept whereby business consider needs of its stakeholders and not just its shareholders
Implications meeting social responsibilities has for businesses
Taking into account impact of their activities on local community Producing in a way that minimises pollution or reckless use of finite resources Treating employees fairly and not simply meeting demands of employment legislation Considering when the likely source of supplies will run out and whether they are sustainable and the ways in which suppliers meet their social responsibilities
Enlightened shareholder value
The idea that companies should pursue shareholder wealth with a long-term orientation that seeks sustainable growth and profits based on responsible attention to all relevant stakeholder interests Middle way that focuses on generating shareholder value whilst having regard to long term external impacts on stakeholders Legal requirement Emergence of ESV constitutes an important development in corporate governance
Benefits of corporate social reporting
Valuable exercise for firms to conduct e.g. may identify anti social behaviour before problems arise Also help to promote corporate image of business as a caring and responsible organisation
