Kinh tế học - Chapter 2: Corporate citizenship: Social responsibility, responsiveness, and performance

1© 2015 Cengage LearningChapter 2Corporate Citizenship: Social Responsibility, Responsiveness, and Performance2© 2015 Cengage LearningLearning Outcomes (1 of 2)Explain how corporate social responsibility (CSR) evolved and encompasses economic, legal, ethical, and philanthropic components.Provide business examples of CSR and corporate citizenship.Differentiate between corporate citizenship, social responsibility, responsiveness, and performance, and sustainability.Elaborate on the concept of corporate social performance (CSP).© 2015 Cengage Learning3Learning Outcomes (2 of 2)Explain how corporate citizenship develops in stages in companies.Describe the triple bottom line and its relevance to sustainability. Describe the socially responsible investing movement’s characteristics.© 2015 Cengage Learning4Chapter OutlineThe Corporate Social Responsibility (CSR) as a ConceptTraditional Arguments Against and For CSRCorporate Social ResponsivenessCorporate Social Performance Corporate CitizenshipSocial Performance and Financial Performance RelationshipSustainability – Profits, People, PlanetSocially Responsible, Sustainable, Ethical InvestingSummary© 2015 Cengage Learning5Allegations Against Business - Business - Has little concern for the consumerCares nothing about the deteriorating social orderHas no concept of ethical behaviorIs indifferent to the problems of minorities and the environmentThese claims have generated an unprecedented number of pleas for companies to be more socially responsible. © 2015 Cengage Learning6Corporate Social Responsibility As a Concept Early Definitions -CSR means seriously considering the impact of a company’s actions on society.CSR requires the individual to consider his or her acts in terms of a whole social system, and holds him or her responsible for the effects of his or her acts anywhere in that system.These definitions provide useful insights into the concept of Corporate Social Responsibility. © 2015 Cengage Learning7Business Criticism-Social Responsibility Cycle© 2015 Cengage Learning8Factors in the Societal EnvironmentCriticism of BusinessIncreased Concernfor the Social EnvironmentA Changed Social ContractBusiness Assumption ofCorporate Social ResponsibilitySocial Responsiveness, Social Performance, and Corporate CitizenshipA More Satisfied SocietyFewer Factors Leading toBusiness CriticismIncreased ExpectationsLeading to More CriticismCorporate Citizenship Concepts© 2015 Cengage Learning9Historical Perspective on CSREconomic Model Legal Model Social Model Stakeholder Model © 2015 Cengage Learning10Modifications of the Economic ModelPhilanthropyCommunity obligations Paternalism Motivation: Keep government at arm’s length © 2015 Cengage Learning11Evolving Meanings of CSRCSR:is seriously considering the impact of the company’s actions on society. is the obligation of decision makers to take actions that protect and improve the welfare of society as a whole, along with their own interests.supposes that the corporation has economic and legal obligations as well as responsibilities to society that extend beyond these obligations.© 2015 Cengage Learning12A Four-Part Definition of CSRWhile each definition is valuable, we will focus on the types of social responsibilities business has. Corporate social responsibility encompasses the: Economic Legal Ethical, and Discretionary expectations that society has of organizations at a given point in time.© 2015 Cengage Learning13The Four Components of CSR© 2015 Cengage Learning14 Responsibility SocietalExpectation Examples Economic Required Be profitable. Maximize sales, minimize costs. Legal Required Obey laws, adhere toregulations Ethical Expected Avoid questionable practices.Do what is right, fair, and just Philanthropic Desired/Expected Be a good corporate citizen. Give back.The Pyramid of CSR© 2015 Cengage Learning15Philanthropic ResponsibilitiesBe a good corporate citizen.Ethical ResponsibilitiesBe ethical.Legal ResponsibilitiesObey the law.Economic ResponsibilitiesBe profitable.The CSR Equation© 2015 Cengage Learning16Economic Responsibilities Legal ResponsibilitiesEthical Responsibilities Philanthropic ResponsibilitiesTotalCorporate CSR=+++A stakeholder perspective focuses on the CSR pyramid as a unified whole.Top 20 Activities or Characteristics ofSocially Responsible CompaniesMakes products that are safe.Does not pollute air or water. Obeys the law in all aspects of business.Promotes honest or ethical employee behavior.Commits to safe workplace ethics.Does not use misleading or deceptive advertising.Upholds stated policy banning discrimination.Utilizes “environmentally friendly” packaging.Protects employees against sexual harassment. Recycles within company.Shows no past record of questionable activity. Responds quickly to customer problems. Maintains waste reduction program.Provides or pays portion of medical costs. Promotes energy conservation program.Helps displaced workers with placement.Gives money toward charitable or educational causes. Utilizes only biodegradable or recyclable materials.Employs friendly or courteous or responsive personnelTries continually to improve quality.© 2015 Cengage Learning17Arguments Against CSR - Classical Economics: The classical economic view is that business’ only goal is the maximize profits for owners.Business Not Equipped: Business is not equipped to handle social activities.Dilutes Business Purpose: It dilutes the primary purpose of business.Too Much Power Already: Businesses have too much power already .Global Competitiveness: It limits the ability to compete in a global marketplace.© 2015 Cengage Learning18Arguments For CSR -Enlightened self-interest: Businesses must take actions to ensure long-term viability.Warding off government regulations. This is one of the most practical reasons.Resources Available: Business has the resources and expertise. Let it try. Proaction is better than Reaction. Proaction is also less costly. Public supports: the public strongly supports CSR.© 2015 Cengage Learning19Business Responses to calls for CSR Make the Business Case for CSR © 2015 Cengage Learning20Cost-benefit approachStrategic approachInnovation and learning approachDefensive approachThe Business Case for CSR6 Reasons for Embracing CSRInnovationCost savingsBrand differentiationLong-term thinkingCustomer engagementEmployee engagementBusiness Benefits of CSRWin new businessIncrease customer retentionDevelop and enhance relationships with customers, suppliers, and networks. Attract, retain, and maintain a happy workforce and be an Employer of Choice. Save money on energy and operating costs and manage risk.Differentiate itself from competitorsImprove its business reputation and standingProvide access to investment and funding opportunitiesGenerate positive publicity and media opportunities due to media interest in ethical business activities. © 2015 Cengage Learning21Corporate Social ResponsivenessCorporate Social Responsiveness - An action-oriented variant of CSR.Responsibility - Implies a state or condition of having assumed an obligation.Responsiveness - Connotes a dynamic, action-oriented condition.© 2015 Cengage Learning22Corporate Social ResponsivenessOther Views -Sethi’s Three-Stage SchemaSocial obligation, social responsibility, and social responsiveness; anticipatory, preventiveFrederick’s CSR1, CSR2, and CSR3CSR1 is accountability-focused.CSR2 is responsibility-focused.CSR3 refers to corporate social rectitude.Epstein’s Process ViewEmphasizes the process of social responsiveness.© 2015 Cengage Learning23Corporate Social Performance: Carroll’s Model© 2015 Cengage Learning24Corporate Social Performance: Wartick & Cochran’s Model Extensions© 2015 Cengage Learning25Corporate Citizenship (1 of 2)Corporate citizenship - Embraces all the facets of corporate social responsibility, responsiveness, and performance.Corporate citizenship is not a new concept, but one whose time has come. Corporate Citizenship serves a variety of stakeholders.© 2015 Cengage Learning26Corporate Citizenship (2 of 2)Broad ViewA reflection of shared moral and ethical principles.A vehicle for integrating individuals into the communities in which they work.A form of enlightened self-interest that balances stakeholders’ claims and enhances a company’s long-term value.Narrow ViewCorporate community relations© 2015 Cengage Learning27Drivers of Corporate CitizenshipInternal MotivatorsExternal PressuresTraditions and valuesCustomers and consumersReputation and imageExpectations in the communitiesBusiness strategyLaws and political pressuresRecruiting and retaining employees© 2015 Cengage Learning28Benefits of Corporate Citizenship-Benefits to the business: Improved employee relations (improves recruitment, retention, morale, loyalty, etc.)Improved customer relationships (increases customer loyalty; a tiebreaker)Improved business performance (positively impacts bottom-line returns, increases competitive advantage)Enhanced marketing efforts ( helps create a positive company image) © 2015 Cengage Learning29Stages of Corporate Citizenship© 2015 Cengage Learning30Development Challenges That Trigger Movement of Corporate Citizenship© 2015 Cengage Learning31Global Corporate Citizenship -and Global CSR are topics in which there has been an explosion of interest. Multinational enterprises are expected to:be good corporate citizens in the countries in which they do business.tailor their initiatives to conform to the cultural environment.International academics and business people around the world are now researching and advocating CSR and corporate citizenship concepts.Convergence in global CSR approaches will continue as the world economic stage becomes the common environment within which businesses function.© 2015 Cengage Learning32Corporate Citizenship Awards by Business PressFortune's ranking of “Most Admired” and “Least Admired” corporationsConference Board’s Ron Brown Award for Corporate Leadership CRO Magazine AwardsChamber of Commerce of the U.S. Corporate Citizenship Awards© 2015 Cengage Learning33The Relationship BetweenSocial and Financial Performance© 2015 Cengage Learning34Perspective 1: Socially Responsible firms are more financially profitable.Perspective 2: A firm’s financial performance drives its social performance.Perspective 3: There is an interactive Relationship Among CSP, CFP, and CR.Good CorporateReputationGood CorporateSocial PerformanceGood CorporateFinancialPerformanceGood CorporateReputationGood CorporateFinancialPerformanceGood CorporateSocial PerformanceGood CorporateReputationGood CorporateSocial PerformanceGood CorporateFinancialPerformanceOne Bottom Line, or Many?The stakeholder-bottom line perspective -Impacts or benefits of social performance cannot be fully measured or appreciated by considering only the impact on the firm’s bottom line. CSP cannot be fully comprehended unless it includes impacts and measures on consumers. employees, the community and other stakeholder groups.© 2015 Cengage Learning35A Multiple Bottom Line Perspective© 2015 Cengage Learning36Consumer Stakeholders’ “Bottom Line”Employee Stakeholders’“Bottom Line”Community Stakeholders’“Bottom Line”Owner Stakeholders’ “Bottom Line”Other Stakeholders’ “Bottom Line”Corporate Social PerformanceThe Triple Bottom Line PerspectiveBusiness Must Attend to Three Key Spheres of Sustainability – EconomicSocialEnvironmentalThe goal is corporate sustainability.© 2015 Cengage Learning37Socially Responsible, Sustainable, Ethical InvestingSocially Responsible Investing -Emerged in the 1970sOver $3.74 trillion in socially responsible investments in the U.S.Social Screening - A technique used to screen firms for socially-responsible investment purposes.© 2015 Cengage Learning38Reasons for the Upsurge in Socially Responsible InvestingTotal dollars invested in SRI has grown exponentially over past twenty years.Council on Economic Priorities suggests 3 reasons: More reliable research on CSPInvestment firms using social criteria have solid track recordThe socially conscious 1960s generation is making investment decisions© 2015 Cengage Learning39Business for Social Responsibilitycommunity obligationscorporate citizenshipcorporate social performancecorporate social responsibilitycorporate social responsivenesscorporate sustainabilityeconomic responsibilitiesethical responsibilitiesglobal corporate citizenshiplegal responsibilitiesmainstream adopterspaternalismphilanthropic responsibilitiesphilanthropypyramid of CSRsocial entrepreneurshipsocial intrapreneurshipsocially responsible, sustainable or ethical investingstages of corporate citizenshipsustainabilitysustainable developmenttriple Bottom Line© 2015 Cengage Learning40Key Terms