Mgmt 110- Ch 7

Examples of Social-View theories of Social Responsibility: Stakeholder

Stakeholder—There is a social responsibility function of the interrelationships developed by the corporation with groups that have a stake. This approach was also referred to as "constituency theory." This theory is one of the main underpinnings of this book.

Several stages of implementing reputation management

A successful process to implement reputation management involves several stages: the identification of a desired perception of the corporation, the recognition of the significance of image with all stakeholders, an awareness of the influence of interactions with stakeholders on the corporation's reputation, and continuous efforts at maintaining relationships with stakeholders.

Approach to corporate citizenship

Building on the "extended" view that citizenship is based on the shared understanding of basic social, civil, and political rights, a different way of considering corporate citizenship emerges. However, it is questionable whether social and political rights can be regarded as rights of the corporation. Instead, the corporations could be viewed as powerful actors that have a responsibility to respect individual rights. Globalization has shifted responsibility for protecting citizenship rights away from governments, as seen by the activism of non-governmental organizations (NGOs). Instead of seeking from governments a solution to corporate misdeeds, NGOs pressure corporations directly or indirectly through stakeholders such as consumers and the media. The result is that many social changes are taking place beyond the power and influence of the nation-state. The absence of government initiatives has caused a gap in providing these rights, and corporations are increasingly filling this gap as they are principal actors in society and drivers of globalization.

Social problems becoming opportunities

Business must realize that social problems can become opportunities, or can lead to profits, lower costs, and reduced risks. Expenditures on pollution abatement may result in the retrieval of materials that were formerly disposed of as waste, or may allow for equipment to operate more efficiently, thereby generating more profits on future operations. Also with regard to social responsibility matters, business should take a long-run as opposed to a short-run view. Profits may increase in the long run as a result of actions taken at the present time. Judging the benefits of social responsibility becomes a simple matter of ascertaining whether it is in the corporation's longest-term self-interest to be conscious of social responsibility matters by reducing risk. Finally, some corporations have built their competitive advantage on social responsibility initiatives or strategies that set them apart from competitors. Business should be given an opportunity to solve some social problems. The logic behind this argument is that business can solve problems as well as government can and that it certainly cannot do any worse than government has in the past. Business possesses the expertise, in its managers and executives, to develop plans to overcome social problems. As government is reducing its efforts to address some social problems, business needs to fill the gap. Businesspersons are also concerned citizens and humans; it is not appropriate for them to ignore social matters

Corporate Social Responsibility (CSR)

CSR is known by many names, including corporate responsibility, corporate accountability, corporate ethics, corporate citizenship, sustainability, stewardship, and the triple-E bottom line (economical, ethical, and environmental). CSR is a general management concern; that is, it is important to all aspects of business, and it is integrated into a corporation's operations through its values, culture, decision making, strategy, and reporting mechanisms.

Carroll's Pyramid of Corporate Social Responsibility

Carroll views the total social responsibility of business as involving the simultaneous fulfillment of the four responsibilities—which, stated in pragmatic terms, means that the corporation should strive to make a profit, obey the law, be ethical, and be a good corporate citizen

Carroll's pyramid: integrating economic and social responsibilities

Carroll's pyramid represents one of the earliest attempts to integrate the economic and social responsibilities of the corporation. Evidence is accumulating that supports consideration of economic (tangible) and social (intangible) responsibilities: Economic (profits) and social responsibilities (ethics) are not mutually exclusive. Research shows that economic and social responsibilities are often inseparable. Corporations that consider social responsibilities seriously tend to outperform solely profit-seeking corporations

Marrewijk 5 levels of Corporate sustainability

Compliance-driven CS—Involves following government regulations and responding to charity and stewardship considerations considered appropriate by society. Profit-driven CS—Consideration is given to the social, ethical, and environmental aspects of business operations provided they contribute to the financial bottom line. Caring CS—Initiatives go beyond legal compliance and profit considerations where economic, social, and environmental concerns are balanced, as it is the right thing to do. Synergistic CS—Well-balanced and functional solutions are sought that create value in the economic, social, and environmental areas, as it is a winning approach for all stakeholders. Holistic CS—Corporate sustainability is fully integrated and embedded in every aspect of the corporation's activities, as this is important to the quality and continuation of life on this planet

Corporate Citizenship

Corporate citizenship occurs when a corporation demonstrates that it takes into account its complete impact on society and the environment as well as its economic influence. It concerns the economic, ethical or social, and environmental responsibilities to all stakeholders involved, with consideration given to inputs from various stakeholders and the practices of corporations to develop relationships with stakeholders.

Examples of Social-View theories of Social Responsibility: Corporate citizenship

Corporate citizenship—With the charter, the corporation becomes a legal entity with standing as a citizen similar to that of the individual and has duties as well as rights and privileges.

Contemporary CSR

Corporate social responsibility is the terminology still widely used to represent business' social responsibilities. However, other terms have appeared that incorporate the consideration of economic responsibilities as well, including corporate sustainability, reputation management, social impact management, triple bottom line (TBL), and corporate citizenship.

Bucholz five key elements that are found in most, if not all, definitions of CSR

Corporations have responsibilities that go beyond the production of goods and services at a profit. These responsibilities involve helping to solve important social problems, especially those they have helped create. Corporations have a broader constituency than shareholders alone. Corporations have impacts that go beyond simple marketplace transactions. Corporations serve a wider range of human values than can be captured by a sole focus on economic values

Carroll's Pyramid of Corporate Social Responsibility: Economic responsibilities

Economic responsibilities relate to business' provision of goods and services of value to society. Profits result from this activity and are necessary for any other responsibilities to be carried out. It is assumed that corporations will be as profitable as possible, maintain a strong competitive position, and maintain a high level of operating efficiency. These are responsibilities that the corporation "must do" and the key stakeholders are shareholders, creditors, and consumers.

Dahlsrud 5 dimensions of CSR

Environmental: the natural environment Social: the relationship between business and society Economic: socio-economic and financial aspects Stakeholder: stakeholders and stakeholder groups Voluntariness: actions not prescribed by law

Examples of amoral-view theories of social responsibility

Fundamentalism- the corporation has no or very little social responsibility Legal Recognition- the corporation is an autonomous entity and not the creation of society Individual agreement- Corporations can be socially responsible, but only within the limits of a prior contractual agreement with shareholder Traditional shareholders model- Beyond individual agreements, orporations are not ethically required to be socially responsible; they are responsible only to monies and to maximize profits (as so famously stated by Milton Friedman).

Carroll's Pyramid of Corporate Social Responsibility: Ethical Responsibilities

Ethical responsibilities include those activities that are not expected or prohibited by society as economic or legal responsibilities. Standards, norms, or expectations that reflect concern for select stakeholder input are fair, just, or in keeping with their moral rights. Ethics or values may be reflected in laws or regulations, but ethical responsibilities are seen as embracing the emerging values and norms that society expects of business even if not currently required by law. These responsibilities can be thought of as things the corporation "should do." These responsibilities are more difficult for business to deal with as they are often ill-defined or under continual public debate. Ethical responsibilities also involve the fundamental ethical principles of moral philosophy, such as justice, human rights, and utilitarianism. The changing or emerging ethical responsibilities are constantly pushing legal responsibilities to broaden or expand, while at the same time expecting business' ethical behaviour to go beyond mere compliance with laws and regulations.

Examples of Social-View theories of Social Responsibility: Ideological/historical

Ideological/Historical—Society evolves and history gives rise to new social needs, societal demands, and changes in social values to which business is expected to contribute.

Three principles of CSR: Managerial Discretion

Last, the principle of managerial discretion refers to managers as moral actors who are obliged to exercise such discretion as is available to them to achieve socially responsible outcomes. Discretion is involved because the actions of managers are not totally prescribed by corporate procedures. The level of application is the individual who has the choices, opportunities, and personal responsibility to achieve the corporation's social responsibility

Examples of Social-View theories of Social Responsibility: Legal Creator

Legal creator—The corporation is a creature of law, existing only in contemplation of law, and is thus made by society for the common good of society.

Three principles of CSR

Legitimacy Public Responsibility Managerial discretion *table 7.1*

Three views of corporate citizenship: The limited, equivalent and extended views

Limited: Corporate giving or philanthropic responsibility was the focus Reasoning is that something should be given back to the community Considered to be enlightened self-interest Equivalent: Citizenship is defined as what society expects are responsibilities of business Emphasis on sustainability, the stewardship role of business, and the stakeholder approach Considered to be rebranding or re-launching existing ideas and concepts of business-society relations Extended: Citizenship is defined as a set of individual, social, civil, and political rights Social rights provide the individual with the freedom to participate in society, for example the right to education Civil rights provide freedom from abuses and interference by third parties, for example the right to own property Political rights extend beyond the protection of the individual and involve the individual's participation in society, for example the rights to hold office and to vote

The inappropriate view

Many have posed the questions, "Can the corporation be a citizen?" and "Is a corporate citizen the same as an individual citizen?" The nature of citizenship has its roots in political theory, philosophy, law, sociology, and psychology and is a complex phenomenon that has been discussed and debated for centuries. Individual citizenship involves the relationship of the person to the state, the rights and duties of citizens, and the national and cultural identity involved. Any attempt to extend the individual's role as a citizen to that of a corporation is thought by many to be completely inappropriate. A corporation is not an individual citizen, as it does not possess the attributes or characteristics of a person. Any attempt to project the qualities of a person to the corporation is false and meaningless. Given the prominence of corporate citizenship in the academic and practitioner spheres, this view is not widely held, although it does have its advocates.

Examples of Social-View theories of Social Responsibility: Moral gratitude/reciprocity

Moral gratitude/reciprocity—As business operates within a social system, it should be socially responsible out of "gratitude" or have a moral responsibility to "reciprocate." Corporations benefit from and thus owe society.

Social Impact Management

One of the main advocates of social impact management is the Aspen Institute. The Institute defines social impact management as "the field of inquiry at the intersection of business needs and wider societal concerns that reflects and respects the complex interdependency between the two." This is very much a "business and society" approach, stressing the need for contemporary business to recognize and understand this interdependency if business and the society in which it operates wish to thrive. The Institute argues that this understanding is becoming increasingly important as corporations take on a bigger role and society increases pressure for corporations to address more essential social and environmental concerns.

Carroll's Pyramid of Corporate Social Responsibility: Legal responsibilities

Society expects business to conform to laws and regulations formulated by governments that act as the ground rules under which business must operate. Corporations are expected to pursue profits within the framework of the law, which establishes what are considered fair operations. Society expects that all goods and services and relationships with stakeholders will meet at least minimal legal requirements.

Carroll's Pyramid of Corporate Social Responsibility: Philanthropic responsibilities

Philanthropic responsibilities involve being a good corporate citizen and include active participation in acts or programs to promote human welfare or goodwill. Examples are contributions to the arts, charities, and education. Such responsibilities are not expected in an ethical or moral sense, making philanthropy more discretionary or voluntary on the part of business even though society may have such expectations of business. Few in society expect corporations to have these responsibilities, and they can be thought of as things corporations "might do."

Counter argument to the case for involvement

Profit maximization is the primary purpose of business, and to have any other purpose is not socially responsible. To have anything other than a profit-maximizing goal is to sabotage the market mechanism and distort the allocation of resources. Business corporations are responsible to the shareholders and, in effect, have no authority to operate in the social area. When a corporation becomes involved in social matters, there is a question of legitimacy. Social policy is the jurisdiction of governments, not business. Business lacks training in social issues, and lacks social skills necessary to carry out social programs. Business involvement in social matters increases costs—not only costs to the organization, but also possibly even social costs—instead of decreasing them. This in turn may lead to business failures

Reputation Management

Reputation management is any effort to enhance the corporation's image and good name. In the past, the focus of these efforts was on media and public relations and, to some extent, crisis management. Today, reputation management is being extended to relations with all stakeholders. Many managers believe that reputation management enhances financial performance, improves competitive positions, and increases public approval of corporate activities, and studies support this view.

Good corporate citizenship can provide business benefits in eight areas

Reputation management—A corporate reputation is built and maintained by fulfilling the expectations of multiple stakeholders. Risk profile and risk management—Risk is reduced when corporations understand stakeholder concerns. Employee recruitment, motivation, and retention—Obtaining and keeping employees is made easier for companies known as good corporate citizens. Investor relations and access to capital—Many investors are interested in non-financial as well as financial performance, and there is a proven link between good corporate citizenship and good financial performance. Learning and innovation—Corporate citizenship objectives can encourage creativity and innovation. Competitiveness and market positioning—Increasingly, consumers are inquiring about the corporate citizenship performance of companies and tend to be loyal to those with a good record. Operational efficiency—A focus on corporate citizenship can lead to direct improvements to the bottom line. Licence to operate—Companies with a good record of corporate citizenship are given greater leeway when problems occur and are less subject to unfair criticism.

Scwartz and Carroll

Schwartz and Carroll developed a model of the business and society field that integrated and unified five frameworks in common usage by academics and managers: corporate social responsibility (CSR), business ethics (BE), stakeholder management (SM), sustainability (SUS), and corporate citizenship (CC). They named their framework the VBA model and believed that it would reduce the confusion resulting from the existence of the various frameworks. Three core concepts were identified as being common, to some degree, in all frameworks: value, balance, and accountability

Examples of Social-View theories of Social Responsibility: Social contract

Social contract—An implicit social agreement exists between business and society that determines the social nature of the corporation, identifies its duties and rights, and is considered to be an evolving document.

Examples of Social-View theories of Social Responsibility: Social impact

Social impact—Business has the power to change society and must consider social responsibilities.

Examples of Social-View theories of Social Responsibility: Social permission

Social permission—Society can legitimately demand the corporation do certain kinds of activities and, if the corporation is harming the public good, can restrict or eliminate its activities.

Social responsibility and the shareholder

Social responsibility is in the shareholder's interest; that is, corporate virtue is good for profits, especially in the long term. A poor social responsibility role on the part of the corporation means poor management to some investors. They view failure to perform in society's interests in much the same way as they view the corporation's failure to perform in financial matters. Similarly, investors and consumers are showing increasing interest in and support for responsible business

Social impact management and three aspects of a business

The Institute believes that "social impact management, as a way of thinking about business activities, explicitly considers and evaluates three aspects of a business: Purpose: What is the purpose—in both societal and business terms—of a business or business activity? Social Context: Are the legitimate rights and responsibilities of multiple stakeholders considered? Is a proposed strategy evaluated not only in terms of predicted business outcomes, but also in terms of its broader impacts—for example, on quality of life, the wider economy of a region, and security and safety? Metrics: How is performance and profitability measured? What is being counted and what is not being counted? Are impacts and results measured across both short- and long-term time frames?

How is social impact management two-directional?

The approach stresses the intersection of traditional business concerns (i.e., for financial or economic matters) and society's concerns for the consequences of the impact of the corporation (i.e., the social impact of business). Thus, social impact management is two-directional: society's influence on corporations, and the corporations' influence on the social and environmental concerns of society.

VBA Model

The authors argue that by focusing on three core elements of the five frameworks, the VBA model integrates the shareholder theory and emphasizes the importance of others in managerial decision making while maintaining relevance for managers and ensuring a long-term global prospective.

The generation of value to business and society

The generation of value to business and society was found to be a fundamental element of all the frameworks. Value results "when business meets society's needs by producing goods and services in an efficient manner while avoiding unnecessary negative externalities." A degree of balance occurs when some effort is made in "addressing and appropriately responding to potentially conflicting stakeholder interests and/or moral standards." Other similar concepts are respect, weigh, trade-off, and satisfy. Accountability is present in all frameworks, meaning that while attempting to fulfill its economic, legal, and ethical responsibilities, business "must acknowledge responsibility for [its] actions and decisions and take steps to rectify failure and prevent them from happening again in the future

Three principles of CSR: Legitimacy

The principle of legitimacy refers to society's granting of legitimacy and power to business, and business' appropriate use of that power and the possibility of losing that power. Corporate social responsibility defines the institutional relationship between business and society that is expected of any corporation. Society has the right to grant this power, to impose a balance of power among its institutions, and to define their legitimate functions. The focus is on business' obligations as a social institution, and society takes away power or imposes some sort of sanction on business if expectations are not met.

Three principles of CSR: Public responsibility

The principle of public responsibility means that business is responsible for outcomes related to its areas of involvement with society. The level of application is organizational—that is, the corporation—and confines business' responsibility to those problems related to a firm's activities and interests. This principle includes the view that corporations are responsible for solving the problems they create. The nature of social responsibility will vary from corporation to corporation as each corporation impacts society's resources in different ways or creates different problems. The principle involves emphasizing each corporation's relationship to its specific social, ethical, and political environment.

Triple Bottom Line

The triple-E (economic, ethical, and environmental) bottom line evaluates a corporation's performance according to a summary of the economic, social, and environmental value the corporation adds or destroys. A variation of the term is the triple-P bottom line: people, planet, profit. The narrowest meaning of the term is a framework for measuring and reporting corporate performance against economic, social, and environmental indicators. Recently, a broader meaning has been attributed to the term in that the concept is used to capture a whole set of values, issues, and processes that corporations must address in order to minimize any harm resulting from their value-adding or destroying activities. This includes clarifying the corporation's purpose and taking into consideration all stakeholders. The triple bottom line approach is often the basis for corporate reporting of economic, ethical, and environmental responsibilities

Social responsibility theories: The Amoral View

This category represents a traditional view of business and the role of the corporation; that is, the corporation is seen as a "highly individualized rights bearing economic entity designed for profit making and legitimatized by the laws governing incorporated businesses."14 Free market defenders and legal recognition theorists are among those holding this view, including some who believe there is no such thing as corporate social responsibility. Over the years many theories have advocated this view of social responsibility; these are listed in Table 7.2. The amoral view is still held by some in the business community. The "amoral" view should be carefully defined and not confused with an "immoral" view. Amoral refers to an activity without a moral quality; that is, something that is neither moral nor immoral: moral standards, restraints, or principles do not exist. This is quite different from immoral, which denotes activities that are not moral and do not conform to usually accepted or established patterns of conduct. Amoral means lacking in morals, good or bad, while immoral connotes evil or licentious behaviour. Although in some contexts being amoral is considered as reprehensible as being immoral, that is not the position taken by most advocates of the theories listed in this category.

International Organization for Standardization (ISO)

This standards-setting organization already has formulated standards for risk, quality, environmental, and energy management. Its ISO 26000 standard defined social responsibility as the responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour that: contributes to sustainable development, including health and the welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behaviour; and is integrated throughout the organization and practised in its relationships

Social responsibility theories: The personal View

This view discusses the nature of the corporation in ascertaining whether it can be held accountable. The question involved is whether corporations are "moral agents" or "full-fledged" moral persons Those arguing that corporations are persons claim that corporations are responsible for their actions in a way comparable to the actions taken by natural persons or individuals. Therefore, the corporation can be morally blamed in a way that is identical or very similar to natural persons. A strong counterargument in the literature claims that corporations are not persons. Supporters of this view argue that it is not possible to impose moral sanctions or punishments on corporations as corporations. It is possible to blame or punish the people who work for or manage the corporation, but not the corporation itself. Some punishments, such as fines, are in effect paid by shareholders or passed on as costs to consumers. Those who claim the corporation is a person believe that it is socially responsible for its impact on society, and that it can be held morally accountable for its actions in the social sphere. Those who do not consider the corporation to be a person say that claims against the corporation by society need a different basis than that provided by the moral person or agency theory. The "personal" view represents a middle position between the amoral and social views.

Social responsibility theories: The Social View

This view holds that the activities of corporations occur within an interpersonal and, most likely, social context. The corporation is considered a social institution in society, with social responsibilities. The social nature of business can rest in many different theories, some of which are listed in Table 7.3. The extent of corporate social responsibility depends on the theoretical foundation used to support the view. It is argued that the corporation should be considered a social institution, as it exists because individuals come together to achieve some objective related to the provision of goods and services. Today, corporations exist because society implicitly sanctions them to operate in that form. Many in society believe that corporations now operate within the "social" view of corporate social responsibility despite the continuing claims of those who argue the "amoral" view, with its incomplete vision of the corporation operating as a private institution with a solely economic purpose

Examples of Social-View theories of Social Responsibility: Utilitarian

Utilitarian—It is to the benefit of society or for the greatest good for the greatest number of people that corporations are socially responsible; social responsibility is in business' best interest.

VBA (value, balance, accountability) model equation

Value + Balance + Accountability = Proper Role of Business in Society

Examples of Social-View theories of Social Responsibility: Virtue-based

Virtue-based—This view focuses on the development of good or morally virtuous people instead of principles or contracts. A morally responsible business is one in which good people make decisions based on generally developed moral character, self-discipline, moderation, hard work, courage, creativity, good humour, and intelligence.

The business view

Wood and Logsdon argue that the term "business citizenship" may better incorporate the broader perspective on business rights and duties, stakeholder relationships, and responses to the opportunities and challenges that accompany the global socio-economy of the twenty-first century. Business citizenship includes the responsibilities of corporate citizenship on a local and national basis and extends it to a global or universal scope. The authors explain the status of citizenship for individuals and then compare this reasoning to the business organization or the corporation. Thus, the individual as citizen is local, community, and national in scope and the relationship of the individual is with the state and involves rights and duties. Today, the individual as citizen is global or universal in scope and concerned with common humanity, interdependence, and universalism, which are less grounded on fixed rules or laws. a "business citizen" would be responsible not only for local actions—that is, concerned with organizations' rights and societies within and across national and/or cultural borders—but also for global or universal actions.

Corporate Sustainability

refers to corporate activities demonstrating the inclusion of social and environmental as well as economic responsibilities in business operations as they impact all stakeholders.

Examples of Social-View theories of Social Responsibility: Social interpenetration

social interpenetration—Business is so intertwined with society that it cannot avoid social responsibilities.

Critiquing CSR

the corporate social responsibility movement dominates most management thinking, and that this is unfortunate because it is not necessary if the functioning of capitalism is understood. Furthermore, CSR is practised in many different ways, creating confusion regarding what it really means. The point is made that capitalism has been the driving force behind unparalleled economic and social progress, but unfortunately it is still suspected, feared, and deplored. Two reasons are given for this fear of capitalism: the idea that profit is inconsistent with the public or social good, and the belief that in their pursuit of private gain corporations are placing crippling burdens on society and the environment.

The case for involvement

the existence of the business system depends on its acceptance by society. If business is to prevent criticisms or mutinous behaviour, it must be receptive to what is happening in society and respond in some way. Corporations must be concerned with the public image and the goodwill generated by responsible social actions. A social responsibility role should be undertaken in order to prevent some public criticism and discourage further government involvement or regulation. This is a defensive approach designed to offset possible government action against those in the business system who use their power irresponsibly. Preventing is better than curing. It is better to take a proactive stance than a reactive one.