Chapter 2 - Summary Business, Government and Society PDF

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Chapter 2: Corporate Social Responsibility, Citizenship, and Sustainability Corporate Social Responsibility supposes that the corporation has not only economic and legal obligations, but also certain responsibilities to society which extend beyond these obligations. The social responsibility of busi...

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Chapter 2: Corporate Social Responsibility, Citizenship, and Sustainability

Corporate Social Responsibility supposes that the corporation has not only economic and legal obligations, but also certain responsibilities to society which extend beyond these obligations.

The social responsibility of business encompasses the economic, legal, ethical, and discretionary (philantrophic) expectations that society had of organizations at a given point in time.

Chapter 2: Corporate Social Responsibility, Citizenship, and Sustainability

The Pyramid of CSR should not be interpreted in a way that businesses is expected to fulfill its social responsibility in a sequential manner. They are expected to fullfil all of its responsibilities simultaneously. It is also a dynamic, Sustainable Stakeholder Model    

Make a profit Obey the law Be ethical Be a good corporate citizen

CSR exemplar firms are socially responsible firms that have become models for other firms because they have tended to go well beyond the typical and established patterns for business firms in terms of their social responsibility excellence.

Social Entrepreneurship are firms that began their CSR initiatives at the very beginning of their founding and strategically carried them forward. A large part of their initial mission was to bring about social change or to reflect certain social values as a part of their organization’s character.

Social Intrapreneurship are companies that did not have a specific social agenda as part of their initial formation but later developed a highly visible social agenda or program.

Mainstream Adopters a group of CSR exemplar firms that include all other conventional businesses that have adopted, practiced, and achieved some degree of excellence or recognition for socially responsible policies and practices.

Arguments Against CSR

Chapter 2: Corporate Social Responsibility, Citizenship, and Sustainability

Classical Economics – Argues that social issues are not the concern of business people and that these problems should be resolved by the unfettered workings of the free market system. Management should only focus on maximizing shareholder wealth and let government and legislation to do the job. Business Not Equipped – Managers are oriented toward finance and operations and do not have the necessary expertise to make social decisions. Too Much Power Already – Business already has economic, environmental, political, and technological power. Why is there a need to wield additional power? Global Competitiveness – Businesses might be placed in a vulnerable position in terms of global competition in which they must internalize costs formerly passed on to society in the form of dirty air, unsafe products, etc.

Arguments in Support of CSR Enlightened Self-Interest – If a business is to have a healthy climate in which to operate in the future, it must take actions now to ensure its long-term sustainability. Warding Off Government Regulations – Prevents government intervention and regulations, which is one of the most practical reason. Resources Available – Business has the resources and expertise so let it try. Pro-action Better than Reaction – Proacting (anticipating and Initiating) is more practical and less costly than simply reacting to problems that have occurred. Public Support – Public strongly supports it, consumers are more willing to pay more for socially responsible companies.

Business Case for CSR

Chapter 2: Corporate Social Responsibility, Citizenship, and Sustainability

Defensive Approach – Designed to alleviate negative consequences. Companies will do what they must do to avoid pressure that makes them incur costs. Cost-Benefit Approach – firms will undertake those activities if they can identify direct benefits that exceed costs. Strategic Approach – Firms recognise the changing environment and engage with CSR as part of a deliberate, emergent corporate strategy. Innovation and Learning Approach – Provides new opportunities to understand the marketplace, provide innovative products and services, and enhance organizational learning, which leads to competitive advantage.

Business reasons for engaging in CSR 1. 2. 3. 4. 5. 6.

Innovation Cost Savings Brand Differentiation Long-term Thinking Customer Engagement Employee Engagement

Benefits to Business of CSR Policies 1. Win new business. 2. Increase customer retention. 3. Develop and enhance relationships with customers, suppliers and networks. 4. Attract, retain and maintain a happy workforce and be an Employer of Choice. 5. Save money on energy and operating costs and manage risk. 6. Differentiate itself from competitors. 7. Improve its business reputation and standing. 8. Provide access to investment and funding opportunities. 9. Generate positive publicity and media opportunities due to media interest in ethical business activities Visser’s Five Stages of CSR

Chapter 2: Corporate Social Responsibility, Citizenship, and Sustainability

 Age of Greed – CSR practices are undertaken when companies’ shareholder value needs to be protected.  Age of Philanthropy – Emphasizes charitable CSR when companies support social causes through donations and sponsorships.  Age of Marketing – CSR is used as a public relations approach to enhance the company’s image.  Age of Management – CSR activities are linked to the company’s core business.  Age of Responsibility – Identifying and remedying the root causes of irresponsibility and unsustainability.

CSR Greenwashing is intentionally seeking to convey the image of a socially responsible firm when the evidence of their practices does not support this conclusion.

Political CSR (PCSR) entails those responsible business activities that turn corporations into political actors, by engaging in public deliberations, collective decisions, and the provision of public goods or the restriction of public bads in cases where public authorities are unable or unwilling to fulfil this role.

Corporate Social Responsiveness is an action-oriented variant of CSR.  Responsibility – Implies a state or condition of having assumed an obligation  Responsiveness – Connotes a dynamic, action-oriented condition.

Corporate Social Performance The performance focus suggests that what really matters is what companies can achieve – The results of their acceptance of social responsibility and the adoption of a responsiveness viewpoint.

Corporate Social Performance: Carroll’s Model

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Corporate Social Performance: Wartick & Cochran’s Model Extensions

Corporate Citizenship  Views companies as citizens and all this implies.

Chapter 2: Corporate Social Responsibility, Citizenship, and Sustainability

 Embraces all the facets of corporate social responsibility, responsiveness, and sustainability.  Serving a variety of stakeholders.

Stages of Corporate Citizenship How companies deliver on their core values in a way that minimizes harm, maximizes benefits, is accountable and responsive to key stakeholders, and supports strong financial results.

The stages range from elementary (lowest) to transforming (highest). Elementary Managers are uninterested and uninvolved in social issues. They merely obey the law. Engaged Companies are aware of changing public expectations and see the need to maintain their license to operate. Innovative Companies are aware that they lack capacity to carry out new commitments, prompting a structural innovation.

Chapter 2: Corporate Social Responsibility, Citizenship, and Sustainability

Integrated Companies see the need to build more coherent initiatives by adopting triple bottom line measures. Transforming Companies have visionary leaders motivated by a higher sense of corporate purpose.

Global Corporate Citizenship The view that companies are expected to conduct themselves appropriately wherever they do business around the world. Multinational enterprises are expected to be good corporate citizens in the different countries and tailor their initiatives to conform to the cultural environment.

Stakeholder-bottom line argues that the impacts or benefits of social performance cannot be fully measured or appreciated by considering only the impact on the firm’s financial bottom line.

Chapter 2: Corporate Social Responsibility, Citizenship, and Sustainability

CSP cannot be fully comprehended unless it includes impacts and measures on consumers, employees, the community and other stakeholder groups.

Sustainable Development is a pattern of resource use that aims to meet human needs while preserving the environment so that these needs can be met not only in the present but also for future generations. It includes other business environments as well.

Triple bottom line (TBL) is a concept which seeks to broaden the focus on the financial bottom line by businesses to include social and environmental responsibilities. A triple bottom line measures a company's degree of social responsibility, its economic value, and its environmental impact. People, Planet, Profit

Business must attend to three key spheres of sustainability – Economic, social and environment. The goal is corporate sustainability.

Creating Shared Value (CSV), Business and society can be brought back together if business redefined the basic purpose as creating shared value – generating economic value in a way that also produces value for society.

Conscious Capitalism is a more complex form of capitalism that reflect and leverages the interdependent nature of life and all the stakeholders in business. Follows four guiding pillars; a higher purpose, stakeholder orientation, conscious leadership, and a conscious culture. Using TBL https://pagecentertraining.psu.edu/public-relations-ethics/corporate-social-responsibility/lesson-2introduction-to-conscious-capitalism/conscious-capitalism-vs.-corporate-social-responsibility/

Socially Responsible, Sustainable, or Ethical Investing (SRI) movement embraces social screening, shareholder advocacy, and community investing. Also referred to today as Impact Investing, or Environmental, Social, and Governance (ESG) Investing.

Chapter 2: Corporate Social Responsibility, Citizenship, and Sustainability

Social Screening is a technique used to screen firms for socially-responsible investment purposes....