CSR

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Ch12CorporateSocialResponsibility.ppt
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Chapter 12

Corporate Social Responsibility

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Corporate Social Responsibility

  • The impact of a company’s actions on society.
  • Requires a manager to consider his/her acts in terms of a whole social system and be responsible for the effects.

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Corporation’s Economic Responsibilities

  • Producing goods and services
  • Providing jobs and good wages to the workforce while earning a profit
  • Seeking out supplies of raw materials
  • Discovering new resources and technological improvements and develop new products

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Corporate Social Responsiveness

  • Corporate Social Responsiveness is the capacity of a corporation to respond to social pressures
  • A socially responsive corporation uses its resources to anticipate social issues
  • Develops policies, programs, and other means of dealing with CSR concerns

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Examples of CSR

  • Choosing to operate on an ethical level that is higher than what the law requires
  • Making contributions to civic and charitable organizations and nonprofit institutions
  • Benefit for employees (ex: time off for volunteering activities)
  • Economic opportunities less profitable, but more socially desirable
  • Operate a program that addresses some major social problem

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The Debate Over CSR

  • 1950-60: The initial debate over CSR asked whether CSR was morally obligated or, at least, morally permitted to do.
  • The starting point for most of the arguments for and against corporate social responsibility is what has been called the “classical view” of the corporations.

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Milton Friedman’s CSR position

  • Well-known conservative economist
  • Received the 1976 Nobel Memorial Prize (www.nobelprize.org) in Economic Sciences for his research on consumption analysis

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Friedman’s Argument
Against CSR

  • Friedman’s main argument against CSR is that corporate executives are
  • Agents of the shareholders of the corporation
  • CSR causes the executives to:
  • Take on a role of imposing taxes and spending shareholders’ capital, manpower, and time resources

The Business Case for CSR

  • Arguments for the business case for CSR
  • CSR contributes to profitability because
  • The market rewards responsible behavior
  • The market punishes a company’s CSR failures
  • CSR can be a source of competitive advantage

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The Market for Virtue

  • If CSR is profitable then it’s profit opportunities should be sufficient to
  • Encourage managers to lead socially responsible companies
  • However, they must be made aware of the link between CSR and profitability.

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Program Selection and Design

  • Guiding principles of strategic CSR
  • There is an interdependence between business and society
  • Important Aspects of CSR
  • The management of reputation risk where companies need to know what activities could be the target of moral criticism.

Successful CSR programs

  • The most successful CSR programs make use of a company’s mission and core competencies
  • Truly strategic CSR identifies opportunities that fit with a company’s strategy.
  • Successful CSR programs incorporate stakeholder engagement or dialogue.

Reporting and Accountability

  • CSR has value only if it has the social benefits companies claim and outside groups want
  • The demand for measurement of social performance has given rise to social and ethical auditing, accounting, and reporting and triple-bottom-line accounting (social, environmental (or ecological) and financial)

Aaron Feuerstein

  • “Corporate responsibility to me means yes, you must…take care of the shareholder, but that is not your exclusive responsibility. The CEO has responsibility to his workers, both white collar and blue, collar, as well, and he has responsibility to his community and city. And he has to be wise enough to balance out these various responsibilities and…to act justly for the shareholder, as well as the worker.”

Case 12.2
Starbucks and Fair Trade Coffee

  • Starbucks built a fast growing business on a corporate’s philosophy that puts people first.
  • Global Exchange, a non-government organization that focus on human rights:
  • accused Starbucks of making profit at the expense of coffee growers in poor countries
  • threatened a national boycott if the company refused to buy and promote fair trade coffee