Corporate Social Responsibility and Citizenship - Chapter 3

Enlightened self-interest.

this concept reflects the notion that providing value to stakeholders is in a business's long run self-interest. *Example: Nestle launching a large scaled research on children's nutrition leading to product modification

Arguments for Corporate Social Responsibility:

1) Balances corporate power with responsibility. 2) Discourages government regulation. 3) Promotes long-term profits for business. 4) Improves stakeholder relationships. 5) Enhance business reputation.

Arguments against Corporate Social Responsibility:

1) Lowers economic efficiency and profit. 2) Imposes unequal costs among competitors. 3) Imposes hidden costs passed on to stakeholders. 4) Requires skills business may lack. 5) Places responsibility on business rather than individuals.

[Principles of Corporate Citizenship] Ethical Business Behavior

1. Engages in fair and honest business practices in its relationship with stakeholders. 2. Sets high standards of behavior for all employees. 3. Exercises ethical oversight of the executive and board levels.

[Principles of Corporate Citizenship] Employees

12. Provides a family-friendly work environment. 13. Engages in responsible human resource management. 14. Provides an equitable reward and wage system for employees. 15. Engages in open and flexible communication with employees. 16. Invests in employee development.

[Principles of Corporate Citizenship] Investors

17. Strives for a competitive return on investment.

[Principles of Corporate Citizenship] Suppliers

18. Engages in fair trading practices with suppliers.

[Principles of Corporate Citizenship] Environment Commitment

19. Demonstrates a commitment to the environment. 20.Demonstrates a commitment to sustainable development.

[Principles of Corporate Citizenship] Stakeholder Commitment

4. Strives to manage the company for the benefit of all stakeholders. 5. Initiates and engages in genuine dialogue with stakeholders. 6. Values and implements dialogue.

[Principles of Corporate Citizenship] Community

7. Fosters a reciprocal relationship between the corporation and community. 8. Invests in the communities in which the corporation operates.

[Principles of Corporate Citizenship] Consumers

9. Respects the rights of consumers. 10. Offers quality products and services. 11. Provides information that is truthful and useful.

well-known quotation, frequently appearing in journals for business executives, challenges its readers to assume a responsible role for business in society:

Business has become . . . the most powerful institution on the planet. The dominant institution in any society needs to take responsibility for the whole. . . . Every decision that is made, every action that is taken, must be viewed in light of that kind of responsibility

Transforming Stage.(5)

Companies have visionary leaders and are motivated by a higher sense of corporate purpose.

[Evolving Phases of Corporate Social Responsibility] CSR(2) 1960s-1970s

Corporate Social Responsiveness: 1) Social impact analysis 2) Strategic priority for social response 3) Organizational redesign and training for responsiveness 4) Stakeholder mapping and implementation

[Evolving Phases of Corporate Social Responsibility] CSR(1) Early in the 20th century but formally in the 1950s-60s

Corporate Social Stewardship: 1) Corporate philanthropy—acts of charity 2) Managers as public 3) Trustee-stewards 4) Balancing social pressures

[Evolving Phases of Corporate Social Responsibility] CSR(3) 1980s-1990s

Corporate/Business Ethics: 1) Foster an ethical corporate culture 2) Establish an ethical organizational climate 3) Recognize common ethical principles

[Evolving Phases of Corporate Social Responsibility] CSR(4) 1990s-present

Corporate/Global Citizenship: 1) Stakeholder partnerships 2) Integrate financial, social, and environmental performance 3) Identify globalization impacts 4) Sustainability of company and environment

The Origins of Corporate Social Responsibility

In the United States, the idea of corporate social responsibility appeared around the start of the 20th century. Corporations at that time came under attack for being too big, too powerful, and guilty of antisocial and anticompetitive practices.

The Stages of Global Corporate Citizenship:

Stage 1 - Elementary Stage 2 - Engaged Stage 3 - Innovative Stage 4 - Integrated Stage 5 - Transforming

Social audit

a systematic evaluation of an organization's social, ethical, and environmental performance

Elementary Stage.(1)

citizenship is undeveloped. Managers are uninterested and uninvolved in social issues. Although companies at this stage obey the law, they do not move beyond compliance.

Integrated Stage.(4)

companies see the need to build more coherent initiatives.

Engaged Stage.(2)

companies typically become aware of changing public expectations and see the need to maintain their license to operate.

B Corporations

explicitly seek to balance the interests of multiple stakeholders. They focus on social responsibility and citizenship by blending their social objectives with financial goals and use the power of business to solve social and environmental problems.

The focused power found in the modern business corporation means that every action it takes can affect the quality of human life—for ____________ , for ____________ , and for the _______________________

individuals , communities, entire globe

An emerging trend in corporate reporting is the integration of legally required financial information with social and environmental information into a single ___________________

integrated report.

Corporate social responsibility (CSR)

means that a corporation should act in a way that enhances society and its inhabitants and be held accountable for any of its actions that affect people, their communities, and their environment.

Innovative Stage.(3)

organizations may become aware that they lack the capacity to carry out new commitments,

Corporate power

power, refers to the capability of corporations to influence government, the economy, and society, based on their organizational resources.

Reputation

refers to desirable or undesirable qualities associated with an organization or its actors that may influence the organization's relation- ships with its stakeholders

Corporate citizenship

refers to the actions they take to put their commitments to corporate social responsibility into practice. *refers not to an abstract principle or set of beliefs, but rather to actual behaviors.

Iron law of responsibility

says that in the long run those who do not use power in ways that society considers responsible will tend to lose it.

While there is a risk of incurring repetitional damage from exposing any problems publicly, many companies see value in practicing _______________

transparency

Corporate social reporting.

when a company decides to publicize information collected in a social audit