Managerial Ethics and Social Responsibility-2

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Chapter3-CorporateSocialResponsibilityandCitizenship.pptx

Chapter 3

Corporate Social Responsibility and Citizenship

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Ch. 3: Key Learning Objectives

3-1 Understanding the role of big business and the responsible use of corporate power in a democratic society.

3-2 Knowing when the idea of social responsibility originated and investigating how a company’s purpose or mission can integrate social objectives with economic and legal objectives.

3-3 Examining the key arguments in support of and concerns about corporate social responsibility.

3-4 Defining global corporate citizenship and recognizing the rapidly evolving management practices to support global citizenship.

3-5 Examining businesses with an explicitly social mission, such as social ventures and B corporations.

3-6 Distinguishing among the sequential stages of global corporate citizenship.

3-7 Understanding how businesses assess and report their social performance.

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Corporate Power and Responsibility

Corporate Power: Capability of corporations to influence government, the economy, and society, based on their organizational resources.

The tremendous power of the world's leading corporations has both positive and negative effects.

Positive

More resources.

Lower cost production.

New products.

Technologies.

Negative

Disproportionate political system.

Dominant public course.

Divide markets.

Squash competition.

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Comparison of Annual Sales Revenue and the GDP for Select Multinational Enterprises and Nations in $ Billions

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Figure 3.1

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Corporate Power and Responsibility1

Iron law of responsibility says in the long run, those who do not use power in ways that society considers responsible will tend to lose it.

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The Meaning of Corporate Social Responsibility

Act in a way that enhances society and its inhabitants and be held accountable.

Acknowledge any harm to people and society and correct it if possible.

May forgo some profits if its social impacts hurt its stakeholders or if its funds is usable for a positive social impact.

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Corporate Citizenship

Corporate Citizenship: the actions they take to put their commitments to corporate social responsibility into practice.

The term global corporate citizenship, similarly, refers to putting these commitments into practice worldwide.

Companies demonstrate their corporate citizenship by:

Proactively building stakeholder partnerships.

Discovering business opportunities in serving society.

Transforming a concern for financial performance into a vision of integrated financial and social performance.

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The Origins of Corporate Social Responsibility

In the United States, the idea of corporate social responsibility appeared around the start of the 20th century.

Corporations under attack for being too big, too powerful, and guilty of antisocial and anticompetitive practices.

To use their power and influence voluntarily for broad social purposes rather than for profits alone.

Example: Steelmaker Andrew Carnegie, Henry Ford.

Example: “new” philanthropists—Mark Zuckerberg, Priscilla Chen.

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Phases of Corporate Social Responsibility

Frederick provides expanded framework for understanding the evolution of the CSR concept.

Divided into 4 phases:

Corporate Social stewardship (1950s-1960s)

Corporate social responsiveness (1960s–1970s)

Corporate/

business ethics (1980s – 1990s)

Corporate/

global citizenship (1990s – 2000s)

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Evolving Phases of Corporate Social Responsibility

Figure 3.2

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Balancing Multiple Responsibilities

Multiple responsibilities of business include:

Economic responsibilities.

Social responsibilities.

Legal responsibilities.

Challenge is to balance all three.

Successful firm is one which finds ways to meet each of its critical responsibilities and develops strategies to enable the obligations to help each other.

Social responsibilities

Economic responsibilities

Legal Responsibilities

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“…to enable the obligations to help each other.” – could this be more clearly worded?

“… that facilitate the shared business responsibilities.” – or?

“… that facilitate those business obligations across social sectors.” – or similar?

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Enlightened Self-Interest

Economic and social goals come together in companies that practice enlightened self-interest.

The company’s self-interest in the long term to provide:

True value to its customers.

Help for its employees to grow and behave responsibility.

Example: Nestlé.

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The Corporate Social Responsibility Question

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Figure 3.3

In Support for Corporate Social Responsibility Concerns about Corporate Social Responsibility
Balances corporate power with responsibility. Discourages government regulation. Promotes long-term profits for business. Improves stakeholder relationships. Enhances business reputation. Lowers economic efficiency and profit. Imposes unequal costs among competitors. Imposes hidden costs passed on to stakeholders. Requires skills business may lack. Places responsibility on business rather than individuals.

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The Role of CSR in Business Strategy

Figure 3.4

Senior executives were asked:

Is CSR becoming an increasingly important part of your business strategy?

Their responses were:

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Business Reputation

Reputation refers to desirable or undesirable qualities associated with an organization or its actors that may influence the organization’s relationships with its stakeholders.

The Reputation Index measures a company’s social reputation.

It evaluates critical intangible assets that constitute corporate reputation.

Rating Research, a British firm, distributes the index and ratings to interested parties.

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Social Entrepreneurs

Social entrepreneurs are driven by a core mission to create and sustain social rather than economic value.

Social entrepreneurship is the process of identifying a social need and using their entrepreneurial skills to address this need.

Social ventures are the organizations founded by social entrepreneurs.

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Please review this new slide & stock image

JW: edit social entrep from: … are driven to create … to: … are driven by a core mission to create …

JW: edit social entrep-ship to: is the process of identifying a social need and using their entrepreneurial skills to address this need.

Note: Please stick to the text language more carefully here.

DS: OK I thought the slides paraphrased more. Will watch that.

JW: Debra, you are not wrong but in this case I felt it was good to include some key phrases from the textbook’s definitions.

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The B Corporation

Must meet rigorous, independent social and environmental performance standards.

Focus on social responsibility and citizenship by blending their social objectives with financial goals.

B Corporation must prove its socially responsible by meeting the B Lab standards.

B Lab is a non-profit organization that assesses a corporation’s social and environmental performance standards.

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Management Systems for Corporate Social Responsibility and Citizenship

Businesses for Social Responsibility (BSR) survey:

The goal of a global citizenship management system is to integrate corporate responsibility and citizenship concerns into a company’s values, culture, operations and decisions at all organizational levels.

One emerging trend is the consolidation of corporate citizenship efforts.

 Example: Samsung.

Citizenship as an opportunity to:

Create value for their organization.

Gain a competitive advantage.

Help address some of the world’s biggest challenges.

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Stages of Corporate Citizenship

From Figure 3.5

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Stages Citizenship Content Strategic Intent Leadership Structure Issues Management Stakeholder Relationships Transparency
Stage 5: Transforming Change the game Market creation or social change Visionary, ahead of the pack Mainstream; business driven Defining Multi-organization Full disclosure
Stage 4: Integrated Sustainability or triple bottom line Value proposition Champion, in front of it Organizational alignment Proactive, systems Partnership alliance Assurance
Stage 3: Innovative Stakeholder management Business case Steward, on top of it Cross-functional coordination Responsive, programs Mutual influence Public reporting
Stage 2: Engaged Philanthropy, environmental protection License to operate Supporter in the loop Functional ownership Reactive, policies Interactive Public relations
Stage 1: Elementary Jobs, profits, and taxes Legal compliance Lip service, out of touch Marginal, staff-driven Defensive Unilateral Flank protection

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Assessing and Reporting Social Performance

Social audit: a systematic evaluation of an organization’s social, ethical, and environmental performance.

Six Benefits of Social audits by Simon Zadek:

Help businesses know what is happening within their firm.

Understand what stakeholders think about and want from the business.

Tell stakeholders what the business has achieved.

Strengthen the loyalty and commitment of stakeholders.

Enhance the organization’s decision making.

Improve the business’s overall performance.

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Social Audit Standards

Three different ways:

1. Companies can develop standards designed to set expectations of performance for themselves or their suppliers or partners. Example: Apple.

2. Companies within an industry can agree on a common industry-wide standard.

Example: Responsible Business Alliance (RBA).

3. Can be developed by global nongovernmental organizations or standard-setting organizations.

Example: International Organisation for Standards, Social Accountability 8000, AccountAbility (AA), United Nations Global Compact, The Global Reporting Initiative and others.

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Social Reporting

When a company decides to publicize information collected in a social audit.

Transparency: When companies clearly and openly report their performance—financial, social, and environmental.

 Examples:

Australia.

New Zealand.

An emerging trend in corporate reporting is the integration of legally required financial information with social and environmental information into a single integrated report.

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Trends in Corporate Social Reporting

By 2017, a majority of the largest companies included information of corporate social responsibility in their annual financial reports.

This reflected a dramatic rise in integrated reporting, from 8 percent in 2008 and 51 percent in 2013 to 78 percent by 2017.

Ethical drivers replaced economic considerations (80 percent versus 50 percent) as the primary motivator for publishing reports over the past decade.

Stakeholder engagement increased from about 33 percent to nearly 66 percent, with financial analysts and investors now getting involved.

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Accessibility Content: Text Alternatives for Images

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Comparison of Annual Sales Revenue and the GDP for Select Multinational Enterprises and Nations in $ Billions Text Alternative

The y-axis runs down the middle of the figure between two horizontal sets of bars that extend outward from the middle on each side in increasing numbers from bottom to top.

The x-axis has two labels. The label on the left reads sales in billions of dollars (2017). The label on the right reads gross domestic product in billions of dollars (2016).

From the bottom to the top the data comparing company sales to the gross domestic product of similar valued nations reads as follows:

Wells Fargo sales of 95 billion dollars compared to Ecuador with a GDP of 97 million dollars.

BMW with sales of 104 billion dollars compared to Ukraine with a GDP of 104 billion.

China Mobile Communications with 107 billion dollars of sales compared to Morocco with a GDP of 110 billion dollars.

Costco with 118 billion dollars in sales compared to Kuwait with a GDP of 118 billion dollars.

Amazon with sales of 135 billion dollars compared to Hungary with a GDP of 132 billion dollars.

General Motors with 166 billion dollars in sales compared to Qatar with a GDP of 166 billion dollars.

Exxon Mobile with sales of 205 billion dollars compared to Romania with a GDP of 205 billion dollars.

Apple with sales of 216 billion dollars compared to Vietnam with a GDP of 216 billion dollars.

Toyota Motor with sales of 255 billion dollars compared to Bangladesh with a GDP of 250 billion dollars.

China National Petroleum with sales of 263 billion dollars compared to Chile with a GDP of 263 billion dollars.

State Grid with sales of 315 billion dollars compared to the Philippines with a GDP of 321 billion dollars.

And at the top of the chart, Walmart with sales of 486 billion dollars compared to Belgium with a GDP of 492 billion dollars.

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Evolving Phases of Corporate Social Responsibility Text Alternative

The chart has five rows and four columns.

The top row contains headings as follows: the first column is blank. The second column reads Phases of Corporate Social Responsibility. The third column reads CSR Drivers. And the fourth column reads CSR polity instruments.

The second row reads as follows: the first column reads CSR 1 early in the 20th century but formally in the 1950s to 60s. The second column contains a few points that read Corporate Social Stewardship

Corporate philanthropy—acts of charity; Managers as public Trustee-stewards; Balancing social pressures. The second column has two points that read Executive conscience and Company image/reputation. The forth column has two points that read Philanthropic funding and Public relations.

The third row reads as follows. Column one reads CSR 2 1960s to 70s. The second column has several points as follows: Corporate Social Responsiveness,

Social impact analysis, Strategic priority for social response, Organizational redesign and training

for responsiveness; and Stakeholder mapping and

Implementation. The third column has points as follows: Social unrest or protest, Repeated corporate misbehavior; Public policy or government regulation; Stakeholder pressures think tank policy papers. The forth column has several points that reads: Stakeholder strategy; Regulatory compliance; Social audits; Public affairs function;

Governance reform; and Political lobbying.

The forth rows reads as follows: CSR 3 1980s to 90s. The second column has a few points that read: Corporate or Business Ethics; Foster an ethical corporate culture; Establish an ethical organizational climate; and Recognize common ethical principles. The third column has several points that read: Religious or ethnic beliefs;

Technology-driven value changes; Human rights pressures; Code of ethics; Ethics committee or officer or audits; Ethics training; and Stakeholder negotiations. The forth column has a two points as follows: Mission or vision or values Statements;

And CEO leadership ethics.

The forth row reads as follows: column one reads CSR 4 1990s to the present. The second column has a number of points as follows: Corporate or Global Citizenship; Stakeholder partnerships; Integrate financial, social, and environmental performance;

Identify globalization impacts; Sustainability of company and environment. The third column lists a few points as Global economic trade or investment;

High-tech communication networks; Geopolitical shifts or competition; Ecological awareness or concern; and NGO pressures. The forth column reads Intergovernmental compacts; Global audit standards; NGO dialogue; Sustainability audits or reports

.

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The Role of CSR in Business Strategy Text Alternative

A key indicates that bars in gray represent a yes response and bars in blue indicate a no response.

The y-axis contains six percentage markers labeled from left to right as: 0, 20, 40, 60, 80, and 100.

The x-axis lists three geographical groups of executives. Two horizontal bars extend out from this axis for each group. The gray bar indicates no responses and the blue bars yes responses.

From top to bottom the data reads as follows:

Asia-Pacific executives 10 percent no and 90 percent yes.

The second row reads North American executives and indicates 12 percent no and 88 percent yes.

The last row reads European executives and indicates 15 percent no and 85 percent yes.

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