BA 385 Corporate Social Responsibility: The Many Meanings of CSR

1. BA 385 Corporate Social Responsibility: The Many Meanings of CSR Chapter Two: Corporate Citizenship: Social Responsibility, Responsiveness and Performance

2. The Pullman Story • The Pullman Town Should business demonstrate concern for societal welfare?

3. The impact of a company’s actions on society. Requires the individual to consider his/her acts in terms of a wholesocial system, and holds him/her responsible for the effects of actsanywhere in that system. CorporateSocial Responsibility Corporate Social Responsibility (CSR) The Gap, Inc. Social Responsibility Page

4. Corporate Social… Emphasizes… Responsibility obligation, accountability Responsiveness action, activity Performance outcomes, results Corporate Citizenship Concepts McDonald’s and CSR

5. Factors in the Societal Environment Criticism of Business Increased Concernfor the Social Environment A Changed Social Contract Business Assumption ofCorporate Social Responsibility Social Responsiveness, Social Performance, and Corporate Citizenship A More Satisfied Society Fewer Factors Leading toBusiness Criticism Increased ExpectationsLeading to More Criticism Business Criticism/Social Responsibility Cycle

6. Legal Model Laws developed to constrain business Social Model Stakeholder expectations heightened Historical Perspective on CSR Economic Model Society determines wants/needs through the marketplace

7. Philanthropy Community obligations Paternalism Motivation: Keep government at arm’s length Modification of the Economic Model

8. Acceptance and Broadening of Meaning From the 1950’s to the present, the concept of CSR has gained considerable acceptance and the meaning has been broadened to include specific issues, such as:

9. CSR: Evolving Viewpoints Definitions Over Time • CSR considers the impact of the company’s actions on society. --Bauer • CSR requires decision makers to take actions that protect and improve the welfare of society as a whole along with their own interests. --Davis and Blomstrom

10. CSR: Evolving Viewpoints More Definitions Over Time • CSR mandates that the corporation has not only economic and legal obligations, but also certain responsibilities to society which extend beyond these obligations. --McGuire

11. CSR: Evolving Viewpoints Even More Definitions Over Time • CSR relates primarily to achieving outcomes from organizational decisions concerning specific issues or problems, which by some normative standard have beneficial rather than adverse effects upon pertinent corporate stakeholders. The normative correctness of the products of corporate action have been the main focus of CSR. --Epstein

12. Carroll’s Four-Part Definition of CSR – The Big One, The “King” of All CSR Definitions • The social responsibility of business encompasses the economic, legal, ethical and discretionary (philanthropic) expectations that society has of organizations at a given point in time.

13. Understanding the Four Components Responsibility Societal Expectation Examples Legal Economic Philanthropic Ethical Expected Required Required Desired/Expected Obey laws and regulations Do what is right, fair, and just Be a good corporate citizen Be profitable. Maximize sales, minimize costs Carroll’s Four-Part Definition of CSR

14. Philanthropic ResponsibilitiesBe a good corporate citizen. Ethical ResponsibilitiesBe ethical. Legal ResponsibilitiesObey the law. Economic ResponsibilitiesBe profitable. The Pyramid of CSR

15. Restricts the free market goal of profit maximization Business is not equipped to handle social activities Dilutes the primary aim of business Increase business power Limits the ability to compete in a global marketplace Arguments Against CSR

16. Addresses social issues business caused and allows business to be part of the solution Protects business self-interest Limits future government intervention Addresses issues by using business resources and expertise Addresses issues by being proactive Arguments For CSR

17. Defensive approach Cost-benefit approach Strategic approach Innovation and learning approach Ways Firms Respond to CSR Pressure Alleviates pain – do what it takes to avoid problems Only do things for which you identify direct benefit Recognize changing environment and engage CSR as strategy CSR involvement provides new opportunities for learning and understanding the marketplace and this brings competitive advantage. The Civil Corporation, Simon Zadek

18. Corporate Responsibility in the 21st Century 1000 Global Business Leaders surveyed in 2000 said the following will be necessary for 21st century companies: • Demonstrate a commitment to society’s values and contribute to society’s social, environmental, and economic goals through action. • Insulate society from the negative impacts of company operations, products and services. • Share benefits of company activities with key stakeholders as well as with shareholders. • Demonstrate that the company can make more money by doing the right thing.

19. TWO Alternative Views Sethi’s Three-Stage Schema Frederick’s CSR1, CSR2, and CSR3 Corporate Social Responsiveness

20. Sethi’s Three Stage Schema Three ways to classify corporate behavior: • Social obligation – stage one: respond to market forces • Example: McDonald’s offers apples because parents complain • Social responsibility – stage two: bring behavior up to general norms of society • Example: McDonald’s gives out pedometers because “fit is in” • Social responsiveness – stage three: see below • Example: You tell me…. Responsiveness suggests corporations be “anticipatory” and “preventive”. Obligation and responsibility alone are not enough. The final stage in CSR is business taking a long-term role in the social context in which it operates.

21. Frederick’s CSR1, CSR2 and CSR3 • CSR1– corporate social responsibility • Example: We acknowledge many families dine regularly at McD’s. We have an obligation to offer some options that are healthier. • CSR2 – corporate social responsiveness • Capacity to respond to social pressures • Literal act of responding or being poised to respond • Example: We offer tasty sliced apples as an alternative to fries (response) because we already have apple suppliers for our pies (capacity). • CSR3 – corporate social rectitude • The moral correctness of the actions taken • Example: You tell me….

22. Corporate Social Performance (CSP)

23. Carroll’s Corporate Social Performance Model – 3D Plane One: Social Responsibility: economic, legal, ethical and discretionary/philanthropic Plane Two: Philosophy of Social Responsiveness (or mode of responding): reaction, defense, accommodation and proaction Plane Three: Stakeholder Issues Involved: consumers, environment, community, government, employees, etc.

24. Corporate Citizenship… …embraces all the facets of corporate social responsibility, responsiveness, and performance. …embraces the functions of business interaction with nonprofit organizations, citizen groups, and other community stakeholders. Corporate Citizenship

25. Research-based Benefits of Good Corporate Citizenship • Improved employee relations • Improved customer relations • Improved business performance • Enhanced company’s marketing efforts

26. Perspective 1: CSP Drives the Relationship Good CorporateSocial Performance Good CorporateFinancialPerformance Good CorporateReputation Perspective 2: CFP Drives the Relationship Good CorporateFinancialPerformance Good CorporateSocial Performance Good CorporateReputation Perspective 3: Interactive Relationship Among CSP, CFP, and CR Good CorporateSocial Performance Good CorporateFinancialPerformance Good CorporateReputation Social and Financial Performance

27. Owner Stakeholders’ “Bottom Line” Consumer Stakeholders’ “Bottom Line” Corporate Social Performance Employee Stakeholders’“Bottom Line” Community Stakeholders’“Bottom Line” Other Stakeholders’ “Bottom Line” A Multiple Bottom-Line Perspectiveeconomic, social, environmental, other?

28. A technique used to screen firms for socially-responsible investment purposes Social Screening Socially Responsible or Ethical Investing Portfolio 21: Global Fund using Sustainability SRI (socially responsible investing) Principles

29. More reliable research on CSP (corporate social performance) Investment firms using social criteria have solid track record The socially conscious 1960s generation is making investment decisions Reasons for Upsurge in Socially Responsible Investing

30. For Next Class (1/28) • Read chapters three and six • Complete and Hand-In Best Practices Report Assignment by start of class • Read online or print newspaper(s) of choice to find stories of businesses challenged by issues relating to CSR