Response to Research from Peer

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Chapter 3 Corporate Social Responsibility

and Ci;zenship

§ Understanding the role of big business and the responsible use of corporate power in a democra8c society.

§ Knowing when the idea of corporate social responsibility originated and inves8ga8ng how a company’s purpose or mission can integrate social objec8ves with economic and legal objec8ves.

§ Examining the key arguments for and against corporate social responsibility.

§ Defining global corporate ci8zenship and recognizing the rapidly evolving management prac8ces to support global ci8zenship.

§ Dis8nguishing among the sequen8al stages of global corporate ci8zenship.

§ Understanding how businesses assess and report their social performance.

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Ch. 3: Key Learning Objec;ves

§ Corporate Power: Capability of corpora8ons to influence government, the economy, and society, based on their organiza8onal resources.

§ The tremendous power of the world's leading corpora8ons has both posi%ve and nega%ve effects.

Corporate Power and Responsibility

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Comparison of Annual Sales Revenue and the GDP for Select Transna;onal Corpora;ons and Na;ons, 2014

Figure 3.1

§ 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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Corporate Power and Responsibility

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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 posi8ve social impact.

§ Corporate Ci;zenship: the ac8ons they take to put their commitments to corporate social responsibility into prac8ce.

§ The term global corporate ci%zenship, similarly, refers to puLng these commitments into prac8ce worldwide.

§ Companies demonstrate their corporate ci8zenship by: § proac8vely building stakeholder partnerships § discovering business opportuni8es in serving society § transforming a concern for financial performance into a vision of integrated financial and social performance

Corporate Ci;zenship

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

§  Corpora8ons under aRack for being too big, too powerful, and guilty of an8social and an8compe88ve prac8ces.

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

à Example: Steelmaker Andrew Carnegie, Henry Ford

The Origins of Corporate Social Responsibility

§ Frederick provides expanded framework for understanding the evolu8on of CSR concept.

§ Divided into 4 phases:

Corporate Social

Stewardship (1950s-‐1960s)

Corporate social

responsiveness (1960s – 1970s)

Corporate/ business ethics (1980s – 1990s)

Corporate/ global

ci;zenship (1990s – 2000s)

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Phases of Corporate Social Responsibility

Evolving Phases of Corporate Social Responsibility Figure 3.2

§ Mul8ple responsibili8es of business include

§ Economic responsibili8es § Social responsibili8es § Legal responsibili8es

§ Challenge is to balance all three.

§ Successful firm is one which finds ways to meet each of its cri8cal responsibili8es and develops strategies to enable the obliga8ons to help each other.

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Economic responsibili8es

Legal Responsibili8es

Social responsibili8es

Balancing Mul;ple Responsibili;es

§ Economic and social goals come together in companies that prac8ce enlightened self-‐interest § The company’s self-‐interest in the long term to provide: § true value to its customers § to help its employees grow and behave responsibility

à Example: Nestle

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Enlightened Self-‐Interest

Figure 3.3

The Corporate Social Responsibility Debate

Business Execu;ves’ View of the Role of Business in Society

Figure 3.4

§ Reputa;on refers to desirable or undesirable quali8es associated with an organiza8on or its actors that may influence the organiza8on’s rela8onships with its stakeholders.

§ The Reputa;on Index measures a company’s social reputa8on. §  It evaluates cri8cal intangible assets that cons8tute corporate reputa8on.

§ Ra8ng Research, a Bri8sh firm, distributes the index and ra8ngs to interested par8es.

Business Reputa;on

§ Must meet rigorous, independent social and environmental performance standards.

§ Focus on social responsibility and ci8zenship by blending their social objec8ves with financial goals.

§ B Corpora8on must prove its socially responsible by mee8ng the B Lab standards. § B Lab is a non-‐profit organiza8on that assesses a corpora8on’s social and environmental performance standards.

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The B Corpora;on

§ Businesses for Social Responsibility (BSR) survey: § The goal of a global ci8zenship management system is to integrate corporate responsibility and ci8zenship concerns into a company’s values, culture, opera8ons and decisions at all organiza8onal levels.

§ One emerging trend is the consolida8on of corporate ci8zenship efforts. Example: GAP

§ Ci8zenship as an opportunity to: § Create value for their organiza8on § Gain a compe88ve advantage § Help address some of the world’s biggest challenges

Management Systems for Corporate Social Responsibility and Ci;zenship

Figure 3.5

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Stages of Corporate Ci;zenship

§ Social audit: a systema8c evalua8on of an organiza8on’s social, ethical, and environmental performance.

§ 6 Benefit 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 organiza8on’s decision making §  Improve the business’s overall performance

Assessing and Repor;ng Social Performance

Three different ways: 1. Companies can develop standards designed to set expecta8ons 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: EICC

3. Can be developed by global nongovernmental organiza8ons or standard-‐seLng organiza8ons. Example: Interna8onal Organisa8on for Standards, AccountAbility (AA), United Na8ons Global Compact, The Global Repor8ng Ini8a8ve and others.

Social Audit Standards

§ When a company decides to publicize informa8on collected in a social audit.

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

à Example: § Australia § New Zealand

§ An emerging trend in corporate repor8ng is the integra8on of legally required financial informa8on with social and environmental informa8on into a single integrated report.

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Social Repor;ng

Figure 3.6

Trends in Corporate Social Repor;ng