© 2015 Cengage Learning Chapter Corporate Citizenship: Social Responsibility, Responsiveness, and Performance © 2015 Cengage Learning Learning Outcomes (1 of 2) Explain how corporate social responsibility (CSR) evolved and encompasses economic, legal, ethical, and philanthropic components Provide business examples of CSR and corporate citizenship Differentiate between corporate citizenship, social responsibility, responsiveness, and performance, and sustainability Elaborate on the concept of corporate social performance (CSP) © 2015 Cengage Learning Learning Outcomes (2 of 2) Explain how corporate citizenship develops in stages in companies Describe the triple bottom line and its relevance to sustainability Describe the socially responsible investing movement’s characteristics © 2015 Cengage Learning Chapter Outline • • • • • • • • • The Corporate Social Responsibility (CSR) as a Concept Traditional Arguments Against and For CSR Corporate Social Responsiveness Corporate Social Performance Corporate Citizenship Social Performance and Financial Performance Relationship Sustainability – Profits, People, Planet Socially Responsible, Sustainable, Ethical Investing Summary © 2015 Cengage Learning Allegations Against Business Business • Has little concern for the consumer • Cares nothing about the deteriorating social order • Has no concept of ethical behavior • Is indifferent to the problems of minorities and the environment • These claims have generated an unprecedented number of pleas for companies to be more socially responsible © 2015 Cengage Learning Corporate Social Responsibility As a Concept Early Definitions - •CSR means seriously considering the impact of a company’s actions on society •CSR requires the individual to consider his or her acts in terms of a whole social system, and holds him or her responsible for the effects of his or her acts anywhere in that system •These definitions provide useful insights into the concept of Corporate Social Responsibility © 2015 Cengage Learning Business CriticismSocial Responsibility Cycle Factors in the Societal Environment Criticism of Business Increased Concern for the Social Environment A Changed Social Contract Business Assumption of Corporate Social Responsibility Social Responsiveness, Social Performance, and Corporate Citizenship A More Satisfied Society Fewer Factors Leading to Business Criticism Increased Expectations Leading to More Criticism © 2015 Cengage Learning Corporate Citizenship Concepts © 2015 Cengage Learning Historical Perspective on CSR Economic Model Legal Model Social Model Stakeholder Model © 2015 Cengage Learning 10 Corporate Citizenship (1 of 2) Corporate citizenship •Embraces all the facets of corporate social responsibility, responsiveness, and performance •Corporate citizenship is not a new concept, but one whose time has come •Corporate Citizenship serves a variety of stakeholders © 2015 Cengage Learning 26 Corporate Citizenship (2 of 2) Broad View •A reflection of shared moral and ethical principles •A vehicle for integrating individuals into the communities in which they work •A form of enlightened self-interest that balances stakeholders’ claims and enhances a company’s long-term value Narrow View •Corporate community relations © 2015 Cengage Learning 27 Drivers of Corporate Citizenship © 2015 Cengage Learning 28 Benefits of Corporate CitizenshipBenefits to the business: •Improved employee relations (improves recruitment, retention, morale, loyalty, etc.) •Improved customer relationships (increases customer loyalty; a tiebreaker) •Improved business performance (positively impacts bottom-line returns, increases competitive advantage) •Enhanced marketing efforts ( helps create a positive company image) © 2015 Cengage Learning 29 Stages of Corporate Citizenship © 2015 Cengage Learning 30 Development Challenges That Trigger Movement of Corporate Citizenship © 2015 Cengage Learning 31 Global Corporate Citizenship • …and Global CSR are topics in which there has been an explosion of interest • Multinational enterprises are expected to: • be good corporate citizens in the countries in which they business • tailor their initiatives to conform to the cultural environment • International academics and business people around the world are now researching and advocating CSR and corporate citizenship concepts • Convergence in global CSR approaches will continue as the world economic stage becomes the common environment within which businesses function © 2015 Cengage Learning 32 Corporate Citizenship Awards by Business Press • Fortune's ranking of “Most Admired” and “Least Admired” corporations • Conference Board’s Ron Brown Award for Corporate Leadership • CRO Magazine Awards • Chamber of Commerce of the U.S Corporate Citizenship Awards © 2015 Cengage Learning 33 The Relationship Between Social and Financial Performance Perspective 1: Socially Responsible firms are more financially profitable Good Corporate Social Performance Good Corporate Financial Performance Good Corporate Reputation Perspective 2: A firm’s financial performance drives its social performance Good Corporate Financial Performance Good Corporate Social Performance Good Corporate Reputation Perspective 3: There is an interactive Relationship Among CSP, CFP, and CR Good Corporate Social Performance Good Corporate Financial Performance © 2015 Cengage Learning Good Corporate Reputation 34 One Bottom Line, or Many? • The stakeholder-bottom line perspective • Impacts or benefits of social performance cannot be fully measured or appreciated by considering only the impact on the firm’s bottom line • CSP cannot be fully comprehended unless it includes impacts and measures on consumers employees, the community and other stakeholder groups © 2015 Cengage Learning 35 A Multiple Bottom Line Perspective Owner Stakeholders’ “Bottom Line” Consumer Stakeholders’ “Bottom Line” Corporate Social Performance Employee Stakeholders’ “Bottom Line” Community Stakeholders’ “Bottom Line” Other Stakeholders’ “Bottom Line” © 2015 Cengage Learning 36 The Triple Bottom Line Perspective Business Must Attend to Three Key Spheres of Sustainability – •Economic •Social •Environmental The goal is corporate sustainability © 2015 Cengage Learning 37 Socially Responsible, Sustainable, Ethical Investing Socially Responsible Investing •Emerged in the 1970s •Over $3.74 trillion in socially responsible investments in the U.S Social Screening •A technique used to screen firms for socially-responsible investment purposes © 2015 Cengage Learning 38 Reasons for the Upsurge in Socially Responsible Investing • Total dollars invested in SRI has grown exponentially over past twenty years • Council on Economic Priorities suggests reasons: More reliable research on CSP Investment firms using social criteria have solid track record The socially conscious 1960s generation is making investment decisions © 2015 Cengage Learning 39 Key Terms • Business for Social Responsibility • community obligations • corporate citizenship • corporate social performance • corporate social responsibility • corporate social responsiveness • corporate sustainability • economic responsibilities • ethical responsibilities • global corporate citizenship • • • • • • • • • • • • • © 2015 Cengage Learning legal responsibilities mainstream adopters paternalism philanthropic responsibilities philanthropy pyramid of CSR social entrepreneurship social intrapreneurship socially responsible, sustainable or ethical investing stages of corporate citizenship sustainability sustainable development triple Bottom Line 40 [...]... © 20 15 Cengage Learning 19 Business Responses to calls for CSR Make the Business Case for CSR Defensive approach Cost-benefit approach Strategic approach Innovation and learning approach © 20 15 Cengage Learning 20 The Business Case for CSR 6 Reasons for Embracing CSR 4 Attract, retain, and maintain a happy workforce and be an 1.Innovation Employer of Choice 2. Cost savings 5 Save money on energy and. .. energy and 3.Brand differentiation operating costs and manage risk 4.Long-term thinking 6 Differentiate itself from 5.Customer engagement competitors 6.Employee engagement 7 Improve its business reputation and standing Business Benefits of CSR 8 Provide access to investment and 1.Win new business funding opportunities 2. Increase customer retention 9 Generate positive publicity and 3.Develop and enhance... © 20 15 Cengage Learning 25 Corporate Citizenship (1 of 2) Corporate citizenship •Embraces all the facets of corporate social responsibility, responsiveness, and performance •Corporate citizenship is not a new concept, but one whose time has come •Corporate Citizenship serves a variety of stakeholders © 20 15 Cengage Learning 26 Corporate Citizenship (2 of 2) Broad View •A reflection of shared moral and. .. unless it includes impacts and measures on consumers employees, the community and other stakeholder groups © 20 15 Cengage Learning 35 A Multiple Bottom Line Perspective Owner Stakeholders’ “Bottom Line” Consumer Stakeholders’ “Bottom Line” Corporate Social Performance Employee Stakeholders’ “Bottom Line” Community Stakeholders’ “Bottom Line” Other Stakeholders’ “Bottom Line” © 20 15 Cengage Learning 36... continually to improve quality © 20 15 Cengage Learning 17 Arguments Against CSR • Classical Economics: The classical economic view is that business only goal is the maximize profits for owners • Business Not Equipped: Business is not equipped to handle social activities • Dilutes Business Purpose: It dilutes the primary purpose of business • Too Much Power Already: Businesses have too much power already... which they do business • tailor their initiatives to conform to the cultural environment • International academics and business people around the world are now researching and advocating CSR and corporate citizenship concepts • Convergence in global CSR approaches will continue as the world economic stage becomes the common environment within which businesses function © 20 15 Cengage Learning 32 Corporate... social responsibility, and social responsiveness; anticipatory, preventive •Frederick’s CSR1, CSR2, and CSR3 • CSR1 is accountability-focused • CSR2 is responsibility-focused • CSR3 refers to corporate social rectitude •Epstein’s Process View • Emphasizes the process of social responsiveness © 20 15 Cengage Learning 23 Corporate Social Performance: Carroll’s Model © 20 15 Cengage Learning 24 Corporate Social... with customers, suppliers, and media interest in ethical business networks activities © 20 15 Cengage Learning 21 Corporate Social Responsiveness Corporate Social Responsiveness •An action-oriented variant of CSR Responsibility •Implies a state or condition of having assumed an obligation Responsiveness •Connotes a dynamic, action-oriented condition © 20 15 Cengage Learning 22 Corporate Social Responsiveness... communities in which they work •A form of enlightened self-interest that balances stakeholders’ claims and enhances a company’s long-term value Narrow View •Corporate community relations © 20 15 Cengage Learning 27 Drivers of Corporate Citizenship © 20 15 Cengage Learning 28 Benefits of Corporate CitizenshipBenefits to the business: •Improved employee relations (improves recruitment, retention, morale,... tiebreaker) •Improved business performance (positively impacts bottom-line returns, increases competitive advantage) •Enhanced marketing efforts ( helps create a positive company image) © 20 15 Cengage Learning 29 Stages of Corporate Citizenship © 20 15 Cengage Learning 30 Development Challenges That Trigger Movement of Corporate Citizenship © 20 15 Cengage Learning 31 Global Corporate Citizenship • and Global ... responsibility, responsiveness, and performance, and sustainability Elaborate on the concept of corporate social performance (CSP) © 20 15 Cengage Learning Learning Outcomes (2 of 2) Explain how corporate... The Business Case for CSR Reasons for Embracing CSR Attract, retain, and maintain a happy workforce and be an 1.Innovation Employer of Choice 2. Cost savings Save money on energy and 3.Brand differentiation... © 20 15 Cengage Learning 23 Corporate Social Performance: Carroll’s Model © 20 15 Cengage Learning 24 Corporate Social Performance: Wartick & Cochran’s Model Extensions © 20 15 Cengage Learning 25