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0. Corporate Citizenship: Social Responsibility, Responsiveness, and Performance. Chapter 2. The Corporate Social Responsibility Concept Arguments Agains t and For Corporate Social Responsibility Corporate Social Responsiveness Corporate Social Performance Corporate Citizenship

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corporate citizenship social responsibility responsiveness and performance

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Corporate Citizenship: Social Responsibility, Responsiveness, and Performance

Chapter2

outline of topics
The Corporate Social Responsibility Concept

Arguments Against and For Corporate Social Responsibility

Corporate Social Responsiveness

Corporate Social Performance

Corporate Citizenship

Business’s Interest in Corporate Citizenship

Social Performance and Financial Performance Relationship

Socially Responsible or Ethical Investing

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Outline of Topics
what are business s responsibilities

Business allegations…

  • Little concern for the consumer
  • Cares nothing about social problems
  • Has no concept of acceptable ethical behavior
  • Indifferent to the problems of minorities and the environment

What responsibility does business have to society?

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What are Business’s Responsibilities?
corporate social responsibility csr

CSR is a key concept

Seriously considering the impact of a company’s actions on society.

CorporateSocial Responsibility

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Corporate Social Responsibility (CSR)
corporate citizenship concepts

Corporate Social…

Emphasizes…

Responsibility

Obligation, accountability

Responsiveness

action, activity

Performance

outcomes, results

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Corporate Citizenship Concepts
historical perspective on csr

Economic Model

Legal Model

Social Model

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Historical Perspective on CSR

Responsible for meeting only economic obligations

Responsible for meeting only economic and legal obligations

Responsibility goes beyond economic and legal

modification of the economic model

Philanthropy

Community obligations

Paternalism

Motivation: Keep government at arm’s length

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Modification of the Economic Model
acceptance and broadening of meaning

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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:

  • corporate governance
  • product safety
  • honesty in advertising
  • employee rights
  • affirmative action
  • environmental sustainability
  • ethical behavior
  • global CSR
carroll s four part definition of csr

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Carroll’s Four-Part Definition of CSR

The social responsibility of business encompasses the economic, legal, ethical and discretionaryexpectations that society has of organizations at a given point in time.

carroll s four part definition of csr1

Responsibility

Societal

Expectation

Examples

Economic

Legal

Ethical

Philanthropic

Desired/Expected

Expected

Required

Required

Be profitable. Maximize sales, minimize costs.

Be a good corporate citizen. Give back.

Obey laws, adhere toregulations

Avoid questionable practices.Do what is right, fair, and just

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Carroll’s Four-Part Definition of CSR
legal responsibilities

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Legal Responsibilities
  • Why laws are not sufficient:
    • Law cannot address all the topics or issues that business may face
    • Law often lags behind more recent concepts of what is considered appropriate behavior
    • Laws are made by lawmakers and may reflect the personal interests/motivation of legislators rather than appropriate ethical justifications
the pyramid of csr

Philanthropic ResponsibilitiesGive back to society.

Ethical ResponsibilitiesBe ethical.

Legal ResponsibilitiesObey the law.

Economic ResponsibilitiesBe profitable.

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The Pyramid of CSR
the csr equation

+

TotalCorporate CSR

=

+

+

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The CSR Equation

Economic Responsibilities

Legal Responsibilities

Ethical Responsibilities

Philanthropic Responsibilities

arguments for csr

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Arguments For CSR
  • Enlightened self-interest
  • Wards off future government intervention
  • Proactive better than reactive
  • The public supports CSR
arguments against csr
Restricts the classic economic goal of profit maximization

Business is not equipped to handle social activities

Limits the ability to compete in a global marketplace

Dilutes the primary purpose of business

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Arguments Against CSR

These arguments do not hold favor any longer

corporate responsibility in the 21 st century

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Corporate Responsibility in the 21st Century
  • Millenium Poll on CSR (1999). Conclusion is that society expects businesses to:
    • 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 and its 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.
corporate social responsiveness

Implies more of a state or condition of having assumed an obligation

Connotes a dynamic, action-oriented condition

Responsibility

Responsiveness

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Corporate Social Responsiveness
corporate social performance

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Corporate Social Performance

Areas of Performance

corporate social performance what gets measured gets managed
Corporate Social Performance: What Gets Measured Gets Managed
  • Measuring and reporting key to communicating with stakeholders
    • Measurement (goals and measures)
    • Reporting: Global Reporting Initiative (GRI)
      • Example: Intel
corporate citizenship

Corporate Citizenship…

Embraces all the facets of corporate social responsibility, responsiveness, and performance.

Widely accepted concept

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Corporate Citizenship
benefits of corporate citizenship
Improved employee relations

Improved customer relationships

Improved business performance

Enhanced marketing

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Benefits of Corporate Citizenship
business s interest in corporate citizenship

Business Recognition

  • Fortune's ranking of “Most Admired” and “Least Admired” corporations
  • Conference Board’s Ron Brown Award for Corporate Leadership
  • Corporate Responsibility Officer Magazine Awards

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Business’s Interest in Corporate Citizenship
social and financial performance relationship

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

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Social and Financial Performance Relationship
multiple bottom line perspective

Owner Stakeholders’ “Bottom Line”

Consumer Stakeholders’ “Bottom Line”

Corporate Social Performance

Employee Stakeholders’“Bottom Line”

Community Stakeholders’“Bottom Line”

Other Stakeholders’ “Bottom Line”

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“Multiple Bottom Line” Perspective
triple bottom line perspective

Key Spheres of Sustainability

  • Economic (easy to measure)
  • Environmental (harder to measure)
  • Social (hardest to measure)

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“Triple Bottom Line” Perspective
socially responsible or ethical investing

A technique used to screen firms for socially-responsible investment purposes

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Socially Responsible or Ethical Investing

Social Screening

Shareholder resolutions force

companies to take action

Example: CERES

Shareholder Advocacy

Investments made in a community

with the purpose of enhancing its

social/environmental condition

Community

Investing