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Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin

Chapter 7

Global Corporate Citizenship

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Ch. 7: Key Learning Objectives

• Defining global corporate citizenship
• Understanding how the multiple dimensions of corporate citizenship progress through a series of stages
• Assessing how corporate citizenship differs among various countries and regions of the world
• Understanding how a business or social groups can audit corporate citizenship activities and report their findings to stakeholders
• Recognizing how an organization communicates its corporate citizenship practices and manifests its attention to the balanced scorecard and triple bottom line approaches

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Global Corporate Citizenship

• Refers to putting an organization’s commitment to social and environmental responsibility into practice worldwide not only locally and regionally.

• Entails putting corporate social responsibility into practice 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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Global Corporate Citizenship

• Concept is consistent with several major themes discussed throughout this book:

• Managers and companies have responsibilities to all their stakeholders

• Corporate citizenship (CC) involves more than just meeting legal requirements

• CC requires that a company focus on, and respond to, stakeholder expectations and undertake those voluntary acts that are consistent with its values and business mission

• CC involves both what the corporation does and the processes and structures through which it engages stakeholders and makes decisions

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Citizenship Profile

• Research by Gardberg and Fombrun argues that corporate citizenship activities should be viewed as strategic investments (like research and development)
• Create intangible assets that lead to improved legitimacy, reputation and competitive advantage
• Particularly true of global firms where citizenship activities overcome nationalistic barriers and build local advantage

• Important for global firms to choose a Citizenship Profile which matches the local setting
• Public expectations vary on factors such as environmental risk, philanthropy and worker rights
• Companies that choose the right configuration of citizenship activities to match public expectations will reap strategic advantages

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Management Systems for Global Corporate Citizenship

• Global corporate citizenship is more than espoused values; it requires action

• In order to become leading citizens of the world, companies must establish management processes and structures to carry out their citizen commitments
• Could be assigned to committee of the board, senior executive committee, single executive/group of executives, or departments of corporate citizenship

• As the practice of corporate citizenship has spread, so have professional associations and consultancies serving managers in this arena
• Business for Social Responsibility, Canadian Business for Social Responsibility, Asian Forum on Corporate Social Responsibility

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The Stages of Global Corporate Citizenship

• Is a developmental change process, involving new attitudes, routines, policies, programs and relationships
• Mirvis and Googins of the Center for Global Citizenship proposed a five stage model of global corporate citizenship

• Each stage is characterized by distinct patters of:
• Citizenship content
• Strategic intent
• Leadership
• Structure
• Issues management
• Stakeholder relationships
• Transparency

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Stages of Global Corporate Citizenship

Figure 7.1

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Corporate Citizenship in Comparative Perspective

• How businesses interpret and act on their citizenship varies across the glob
• Trends from current studies
• Companies in Northern America and Europe are more likely than Asian companies to have written corporate citizenship policies, Asian companies however are more likely to have written ethics policies
• Comparative study across the Americas showed “huge gap” between the practices of companies in U.S. and Canada and Latin America and Caribbean
• Governments in Europe play a much more important role in promoting CSR than in the U.S.

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Social Performance Auditing

• Is a systematic evaluation of an organization’s social, ethical, and environmental performance

• Demand for social auditing has gained momentum in Europe and U.S.
• In some European countries auditing is required by law

• Corporate citizenship scales against which a firm’s citizenship activities can be compared include:
• Performance measured against a company’s own mission statement or policies
• Performance measured against a set of established standards

Like the Davenport Principles presented in Exhibit 7B of the text, or the global standards presented on the following slides

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Global Social Audit Standards

Figure 7.2

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Trends in Corporate Social Reporting

Figure 7.3

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Other Social Reporting Methods

• Balanced Scorecard
• A focused set of key financial and nonfinancial indicators, with four quadrants or perspectives – internal business processes, learning and growth, customer, and financial

• Triple Bottom Line
• Companies report to stakeholders not just their financial results -- as in the traditional annual report to stakeholders – but also their environmental and social impacts
• Financial, social, and environmental results, taken together as an integrated whole, constitute a company’s triple bottom line

• Transparency
• Growing demand by stakeholders for companies to report clearly, fully, and publicly the results of their financial, social and environmental performance audits