Chapter 5: Corporate Social Responsibility

The Economic Model of CSR Figure Notes

-The economic model of CSR states the primary responsibility of management is to maximize profit within the law. -The economic model is the dominant model of CSR and some refer to it as "managerial capitalism." -In the economic model management may choose to contribute to society as a matter of philanthropy, but not as a matter of duty or social responsibility. -Businesses may contribute for reputational purposes. Social responsibility contributes to profitability. -Or businesses may contribute because it is the right thing to do

Stakeholder and Integrative Models Figure Notes

-The stakeholder model of CSR assets that business is embedded within a web of social relationships of mutual rights and responsibilities. -Business managers have responsibilities to a range of stakeholders. -The integrative model of CSR holds that social responsibility is integrated directly into the mission and purpose of the corporations. -Examples would be benefit corporations such as Ben and Jerry's.

Philosophers often distinguish three different levels of ethical responsibilities on a scale from less to more obligatory:

1. do good 2. prevent harm 3. don't cause harm to others

Don't Cause Harm to Others

A duty or an obligation Enforced by legal punishment

Is there a responsibility to prevent harm?

A more inclusive understanding of corporate social responsibility would hold that business has a responsibility to prevent harm.

Freeman refers to is as

"managerial capitalism."

The Construction of Corporate Reputation CHART

LOOK IN NOTES

Stakeholder Theory

Recognizes that every business decision affects a wide variety of people, benefiting some and imposing costs on others

Integrative Model of CSR asks

Should business be expected to sacrifice profits for social ends?

Is there a responsibility to do good?

Some argue it is praiseworthy but not obligatory. Others argue it is obligatory.

Do Good

Volunteering Sponsoring a charity event

The Implications of Sustainability: As a topic within CSR, sustainability means

a firm's financial goals must balance against, and may be overridden by, environmental considerations.

Research shows that it does pay for businesses in emerging markets to pursue

a wider role in environmental and social issues.

Companies may be challenged for engaging in CSR activities solely for the purpose of

affecting their reputations.

The Implications of Sustainability: Defenders say

all economic activity exists in a biosphere that supports all life. And, they argue, we are up against the limits of capacity to sustain life. From this perspective, success must be judged by the financial bottom line, as well as the ecological and social bottom lines

Norman Bowie argues that business has

an ethical duty to respect human rights. A "moral minimum." The obligation to cause no harm overrides other ethical considerations. If managers comply with the moral minimum, they should maximize profits.

The stakeholder model

assets that neither a business nor the employees are exempt from ordinary ethical responsibilities.

the Economic Model of CSR places shareholders at the

center of the corporation.

Social responsibility requires decisions to prioritize

competing and conflicting responsibilities.

Exploring Enlightened Self-Interest: Measurement is

critical as there are detractors.

The narrow economic model of CSR

directs managers to maximize profit and shareholder wealth within legal limits.

there are ambiguities involved in

each of the three terms corporate, social, and responsibilities.

Business has no social responsibilities beyond the

economic and legal.

The law created a form of business called a corporation, which promotes __?__ by

economic ends limiting the liability of individuals for the risks involved in these activities.

Expert reputation management includes all six dimensions of corporate reputation:

emotional appeal, products and services, financial performance, social responsibility, the workplace environment, and vision and leadership.

Enlightened self-interest theorists continue to dispute whether

ethical decisions lead to more significant profits than unethical decisions. There is a general agreement that ethics pays off but how to measure that payoff is the challenge. Often the long-term value is not evident or obvious.

Corporate social responsibility refers to the

ethical expectations society has for business. What a business should or ought to do for the sake of society, even if it comes with an economic cost.

Stakeholder theory requires balancing

ethical interests of all affected parties.

The general definition of the term corporate social responsibility (CSR) is the

ethical responsibilities a business has to the society in which it operates

The economic model holds that philanthropy done for repetitional reasons is

ethically responsible.

Studies find there are a number of __?__ outcomes to ethics programs in organizations.

expected and measurable

The Implications of Sustainability : A corporate sustainability report provides all stakeholders with

financial and other information regarding a firm's economic, environmental, and social performance

The economic model of CSR holds that businesses' sole social responsibility is to

fulfill the economic functions they were designed to serve.

Powerful reputation management may

increase sales, secure talented employees, earn investor confidence, create business growth, gain market leadership, and build stakeholder loyalty.

Because these firms integrate economic and social goals, they are using the

integrative model of CSR.

Is good ethics also good business? Enlightened self-interest presumes

it is, or at least can be.

Models of Corporate Social Responsibility CHART

look in notes

The problem with a focus on reputation is that social responsibility can become

merely social marketing.

David Vogel from Berkeley contends that firms with strong CSR missions serve a

niche market of consumers and investors. Not a global shift, just an option.

The strongest sense of responsibility is

not to cause harm. Even when not prohibited by law, ethics demands we not cause avoidable harm. Overrides business's pursuit of profit.

Corporations are expected to

obey legal mandates.

Businesses have a social responsibility to

obey the law.

Business is free to contribute as

philanthropy -->It builds goodwill and/or a good reputation. -->Some anonymous contributions are done because it is the right thing.

Failing to attend to the firms image might be a

poor business decision.

There are no claims that every business should adopt the

principles of benefit corporations Benefit corporations show profit is not incompatible with doing good. Others argue sustainability is relevant to every business concern.

Economically, businesses have a social responsibility to

produce the goods and services society demands.

From an economic perspective, a business exists to benefit society by

producing goods and services and creating jobs and wealth that provide further social benefits.

The primary question of CSR is the extent to which businesses have ethical responsibilities beyond

producing goods and services within the law.

Managers have a primary responsibility to

pursue profit within the law.

Within the Economic Model of CSR model, there is room to

pursue social responsibilities.

The practice of attending to the "image" of a firm is referred to as

reputation management.

CSR can impact a firm's

reputation within a community

The chapter explored the challenge of how an inanimate entity (a corporation) could have a

responsibility to others. The chapter also discussed the extent of that obligation, both in law and ethics.

The integrative model of CSR

says that part of the managerial responsibility to shareholders is to serve the social good.

nonprofits are an example of organizations that pursue

social ends as the very core of their mission

Some for-profit organizations have

social goals as a central part of the strategic mission.

This chapter sought to answer the question of whether there exists a

social responsibility of business. Several sources were proposed. Responsibility may be based in a concept of good corporate citizenship, a social contract, or enlightened self-interest.

The law recognizes moral obligations to

stakeholders other than stockholders.

Like utilitarianism, the stakeholder theory asks managers to consider

the consequences of its decisions.

Reputation can be hurt if the company is seen as

unresponsive even if they are not.

the Economic Model of CSR view has its roots in the

utilitarian tradition.

One thing is certain: it is impossible to engage in business today

without encountering and addressing CSR.

Is there a business case for return on investment from ethics?

Evidence says yes, but the dominant thinking is that, if it cannot be measured, it is not important.

Prevent Harm

Good Samaritan Use renewable energy

Stakeholder Model of CSR

Businesses exist within a web of social and ethical relationships and create value for a range of stakeholders

The words responsible and responsibility are used in several different ways

1. One meaning attributes something as a cause for an event or action 2. In a second sense, to be responsible does carry ethical connotations -->When a business is responsible to someone or for something, it means what a business ethically ought or should do. -->Product safety and liability laws involve these meanings of responsible.

There are competing understandings of corporate social responsibility:

1. The narrow economic model of CSR 2. The stakeholder model 3. The integrative model of CSR

Exploring Enlightened Self-Interest asks

Are there reasons besides self-interest and economics for a business to engage in socially responsible activities?