Corporate Social Responsibility Chapter 7, 8, and 9

profitable

a company cannot be socially responsible unless it is _____

resource constraints policy constraints environmental constraints

a firms vision, mission, strategy, and tacts are broadly constrained in three ways:

competencies

are actions a firm can do very well

capabilities

are actions that a firm can do, such as pay its bills, in ways that add value to the production process.

core competencies

are the processes the firm not only does very well, but is superior at than its competitors

business level strategies

can be divided roughly into those that pursue low costs and those that pursue differentiation

behavioral economics

combines economic theory and human psychology to account for the irrational way in which human beings act and make decisions

mutually exlsuive

csr and profit are not what?

tactics

day-to-day management decision made to implement the firm's strategy

coerced reporting (early) opportunistic reporting (early but closer) imitative reporting (late and safe)

evolution of CSR reporting

CSR filter structure

exists to support the strategy

core resources

firm's assets that are unique and difficult to replicate

valued

firms should seek to be ______ by the communities in which they do business

increases costs

firms will never do more than is required if the action ______

resources perspective

identifies the firm's unique resources (e.g., highly skilled employees or monopoly access to valuable raw materials) and capabilities (e.g., effective research and development or efficient production processes) as the main determinant of a competitive advantage those with the most valuable resources and capabilities create the most valued product or service

external perspective

identifies the structure of the environment in which the firm operates as the main determinant of its competitive advantage

profit motive

if certain actions are tied to success, then the _________ will deliver the necessary innovation

lifestyle pricing

if prices reflected all the costs including ecological costs spread across generations, the world would not face sustainability challenges at least in theory

profit maximization

impossible to prove definitively but better approximates the subjective nature of the decision making process as different people will use different values to determine what they consider to be optimal; suggests a more relative state of existence

increasing profits

in general, firms pursue their interests, which usually focus on ______

exteralities

in order to price CSR, the firm has to measure _______ which is costs that firms previously have often pushed onto others "A side-effect or consequence (of an industrial or commercial activity) which affects other parties without this being reflected in the cost of the goods or services involved; a social cost or benefit."

consumption component

incorporating costs that consumers currently seek to avoid such as the pollution emitted during consumption

production component

incorporating costs that firms currently seek to externalize like pollution emitted during manufacturing

transportation, storage, processing materials and energy

inputs at every stage

It should "provide potential access to a wide variety of markets." It "should make a significant contribution to the perceived customer benefits of the end product." It "should be difficult for competitors to imitate."

there are three tests that define a core competency -- Prahalad and Hamel's three tests

1.By focusing primarily on the internal characteristics of the firm as the source of competitive advantage, the resources perspective de-emphasizes the external context in which the firm operates. 2.The resources perspective provides a description of the firm that is very deliberate and rational.

there are two main limitations of the resources perspective

self interest does not equal selfishness the idea or rational self interest is a misnomer

there are two responses to this that allow the pursuit of self interest to lead to optimal outcomes for society:

allowing firms voluntarily

those who support ______ to define for themselves how to serve their stakeholders believe excessive regulation is, at best, a distraction and, at worst, a cost to business that generates suboptimal outcomes

mandatory enforcement

those who support the _________ of societies interests believe that coercion is the only way to ensure firms behave in a way that is broadly acceptable

porters five forces

threat of entry, threat of substitute, supplier power, buyer power, and industry rivalry

in defining strategic CSR five components are essential:

(1) that firms incorporate a CSR perspective in their culture and strategic planning process, (2) that any actions taken are directly related to core operations, (3) that firms seek to understand and respond to the needs of their stakeholders, (4) that they aim to optimize value created, and (5) that they shift from a short-term perspective to managing relations with key stakeholders over the medium to long term

sustainable competitive advantage

Competencies, resources, or structural positioning that separates the firm from its competitors in the marketplace over the medium to long term.

delivers innovation to customers and, in theory, lowers prices as more companies enter an attractive industry and reduce profits

Competition is valuable because it

thalers three principles

1.All nudging should be transparent and never misleading. 2.It should be as easy as possible to opt out of the nudge. 3.There should be good reason to believe that the behavior being encouraged will improve the welfare of those being nudged.

differentiation

A business strategy used by firms to distinguish their products from the products of other firms along a dimension that customers value and for which they are willing to pay a price premium. Firms like Apple and Whole Foods pursue this

low cost

A business strategy used by firms to distinguish their products from the products of other firms on the basis of more efficient operations. Firms like Walmart and Exxon pursue this

resource constraints

Access to resources and capabilities--the human, social, and financial capital that determine the firm's productive parameters.

optimize their contribution to societal well-being.

By seeking to create value for all stakeholders firms.....

relative

CSR as a continuum

absolute

CSR as a dichotomy

environment

Customers, competitors, economics, technology, government, sociocultural factors, and other forces all shape the firm's operating ____

environmental constraints

Generated by a complex interaction of sociocultural, legal, and other external factors, such as the influence of markets and technology.

idiosyncratic

If CSR remains _______ (different things to different people), then it loses its essential meaning and ability to influence the way we structure the economic order.

economic and social

In reality, there is no ____ value and no ____ value, there is only value, which the firm creates (or destroys) for each of its stakeholders.

production and consumption

The challenge we face as a society, therefore, is to strike a balance between the part of our standard of living that is formed from the ____ of goods and services and the part that is formed from the ____ of goods and services

policy constraints

The firm's internal policies that shape its culture by requiring and forbidding specific actions.

csr threshold

The point beyond which the need to be responsive to a broader set of stakeholders becomes essential to the survival of the firm and/or industry

external validation

The second step in the reporting process focuses on

disclosure of goals and progress to external stakeholders

The third step in the reporting process concerns the _____________ (in particular, consumers; CSR reports are usually aimed at investors)

Profit

What drives all for-profit organizations but is also a reason for not being able to pursue csr according to some business leaders

transparent

When a firm's CSR reporting is _______, it allows external observers to evaluate all aspects of the organization, its managers, and policies. Misleading reporting, however, if discovered, can have a negative impact on external perceptions.

resources

While stakeholders depend on the value firms create, firms depend on their stakeholders for the _____ that enable them to deliver that value, including the legitimacy necessary to remain in business.

strategy

is about the "how" and is the set of actions the firm takes to achieve its mission and build a competitive advantage in the marketplace that can be sustained determines how the organization is going to undertake its mission. It sets forth the ways the organization will negotiate its competitive environment in order to attain a sustainable advantage seeks to add value to customers in order to built a sustainable advantage

legislation

is essential to ensure behavior that benefits society as a whole

1.It presents business as a combative pursuit--a zero-sum game of survival. 2.It presents a narrow view of the firm's operating environment. 3.It fails to give sufficient recognition to differences in characteristics among companies, which likely predict a firm's competitive success.

limitations of the industry perspective

waste materials, pollution

outputs at every stage

product lifecycle

raw materials extraction materials processing product manufacturer wholesale retail purchase/consumer dispose/recycle

profit

represents its ability to sell a good or service at a higher price than it costs to produce

mission

states what the organization is going to do achieve its vision and addresses the types of activities the firm seeks to perform

creating value

strategic CSR is also not about sharing value -- it is about ______

resource persepctive

the core idea is the distinction between a firm built around a portfolio of business units and a firm built around a portfolio of core competencies

synonymous

the firm and its stakeholders are _____

CSR standards

the first step in the reporting process is to establish ______

All costs incurred during production and consumption are incorporated into the final product price.

the goal of lifecycle pricing

strategic csr

the perceived gap between a firm's pursuit of profit and its social responsibility is bridged by _________

strategic analysis strategy formulation strategy implementation

the three parts of strategy

1.Combining the resources and industry perspectives 2.Integrating CSR

two steps are apparent in more recent work of integrating CSR

VRIO

valuable rare imitate organized

social value

value that is derived above and beyond the functional purpose of a product or service

capitalism

what is a vehicle by which we channel our individual ethics and values central to strategic csr

profit and csr

what is one of the goals of strategic csr... to overcome the perceived divide between ____ and _____

CSR

what represents a short-term cost that the firm has a duty to minimize in order to be as profitable as possible and maximize returns to investors

industry perspective

which focuses on the firm's operating context as the main determinant of its competitive advantage

vision

why the organization exists and ids the needs the firm aspires to solve for others