Chapter 04 - Global Corporate Citizenship

CHAPTER 4
GLOBAL CORPORATE CITIZENSHIP
INTRODUCTION

Corporate citizenship means putting a commitment to social and environmental

responsibility into practice. It involves building positive relationships with stakeholders,
discovering business opportunities in serving society, and transforming a concern for
financial performance into a vision of integrated financial and social and environmental
performance. Establishing effective structures and processes to meet a company’s social
responsibilities, assess results, and report them to the public is an important part of job of
today’s managers.

PREVIEW CASES

Mattel, Novo Nordisk, and Cemex

These three introductory cases are meant to provide students with variant
expressions of corporate citizenship, exhibited by firms operating in different
industries and countries. Students might identify similarities across these
examples, despite their differences, as well as discuss how firms from many
different industries and countries practice corporate citizenship.
CHAPTER OUTLINE

I. CORPORATE CITIZENSHIP

Teaching Tip: Corporate Citizenship

Besides the examples included in the text book, students could explore
differences in corporate citizenship, possibly from around the world,
based on their own experiences, observations, or from information
acquired by surfing the Internet.

A. Global Corporate Citizenship

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II. MANAGEMENT SYSTEMS FOR CORPORATE CITIZENSHIP

Teaching Tip: Department of Corporate Citizenship

Student could “adopt” a firm and investigate elements of its corporate
citizenship. Which stakeholders are addressed by the firm’s department
of corporate citizenship? What information is easily available on the
company’s website? What information can be acquired by emailing
someone at the company? Why is information readily available for
some firms but not others?
If students are assigned into groups, they might identify firms within
an industry and compare which firms better address their corporate
citizenship responsibilities or publicize their corporate citizenship
practices.

A. Stages of Corporate Citizenship

Teaching Tip: Corporate Citizenship on Video*

In this segment, reporter Paul Solman attends the annual convention of
Business for Social Responsibility (BSR) and interviews representatives of
McDonalds, Greyston Bakery, Eileen Fisher, Hewlett-Packard, and
Green@Work about the costs and benefits of corporate social
responsibility (CSR). This segment may be used with the discussion of
how companies implement citizenship initiatives in Ch. 4.
* The video segment is from the Public Broadcasting Services’s “News Hour with Jim
Lehrer” and is available on the Instructor’s Resource Manual DVD that accompanies the
textbook, available upon request from the publisher.

Teaching Tip: Corporate and Individual Philanthropy

Continuing the exercises discussed above or introducing the assignment
here, it might be interesting for students to identify firms operating at
different stages of corporate citizenship. Are there firms within an
industry that are at different stages? Or, student might explore
corporate citizenship practices by a single over time to see if the firm
has progressed from one stage of corporate citizenship to another.
Another interesting question for exploration is whether firms change in
their stage of corporate citizenship after experiencing a corporate crisis,
embarrassment in the press, or change in senior leadership at the firm.

Teaching Tip: Limits of Corporate Citizenship

A debate among students might be organized around the question of
whether there are limits to corporate citizenship. Students might be
assigned to read the full text of the material quoted in Exhibit 4.D.

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III. CORPORATE CITIZENSHIP IN COMPARATIVE PERSPECTIVE

IV. SOCIAL PERFORMANC AUDITING

Teaching Tip: Corporate Social Audits

Locate, using the Internet, examples of firms that conduct social
performance audits, such as The Gap (the end of the chapter case
example). Assess their audit evaluations – Do they consider the right
elements of corporate citizenship? – and their conclusions and
commitment for future actions – Are they pursuing an effective
corporate citizenship strategy?

A. Global Social Audit Standards

B. Social and Environmental Reporting

* Balanced Scorecard

* Triple Bottom Line

VI. AWARDS FOR CORPORATE CITIZENSHIP

Teaching Tip: Awards for Corporate Citizenship

Students might conduct their own “Corporate Conscience Awards”
contest. They could discuss and generate a set of criteria (what does it
mean to be a good corporate citizen?) and then identify local or global
firms as candidates for their awards. Students could vote for the firm
that should receive an award and justify their selection. They might
even invite a senior leader from the winning organization if it is local
firm to receive the award from the students.
GETTING STARTED

KEY LEARNING OBJECTIVES

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1.
2. Defining corporate citizenship and global corporate citizenship.

Corporate citizenship refers to putting social responsibility into practice by building

stakeholder partnerships, discovering business opportunities in serving society, and
transforming a concern for financial performance into a vision of integrated financial and
social performance. When a company does business in more than one country in this
way, it is practicing global corporate citizenship. Corporate citizenship programs can be
considered a strategic investment by the firm.

2. Contrasting the structures and processes businesses use to manage their social
responsibilities.

Leading-edge companies have developed a variety of structures and processes to manage

their citizenship responsibilities, including creating departments of corporate citizenship.

3. Evaluating how the multiple dimensions of corporate citizenship progress

through a series of stages.

Companies progress through five distinct stages as they develop as corporate citizens;
these are termed the elementary, engaged, innovative, integrated, and transforming
stages. A particular company may be at more than one stage at once, as it may be
progress more quickly on some dimensions than on others.

4. Assessing how corporate citizenship differs among various countries and

regions of the world.

Corporate citizenship differs among various countries and regions of the world, according
to variations in regulatory requirements, stakeholder expectations, and historical and
cultural patterns of behavior.

5. Understanding how a business or social group can audit their corporate

citizenship activities and report their findings to stakeholders.

Many companies have experimented with systemic audits of their social, ethical, and
environmental performance, measured against company policies as well as auditing
standards developed by global standard-setting organizations. An emerging trend is the
practice of communicating social, environmental, and financial results to stakeholders
through a balanced scorecard system or in an integrated, triple-bottom line report.

6. Recognizing the leading-edge corporate citizenship companies and how they

carry out their corporate citizenship mission.

Recent awards for corporate citizenship illustrate best practices against which other firms
may benchmark their own programs.

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KEY TERMS AND CONCEPTS USED IN THE CHAPTER

balanced scorecard, 79

citizenship profile, 66

corporate citizenship, 65

department of corporate citizenship, 69

global corporate citizenship, 68

social and environmental reports, 76

social performance audit, 74

transparency, 80

triple bottom line, 79

INTERNET RESOURCES

www.accountability.org.uk AccountAbility: Institute for Social and Ethical

Accountability
www.bsr.org Businesses for Social Responsibility
www.globalreporting.org Global Reporting Initiative
www.iso.ch/iso/en/ISOOnline.frontpage International Organization for
Standardization
www.sa-intl.org Social Accountability International

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DISCUSSION CASE

THE GAP INC.’S SOCIAL RESPONSBILITY REPORT

Discussion Questions

1. Do you think Gap Inc. has demonstrated global corporate citizenship, as

defined in this chapter? Why or why not?

There is ample evidence that The Gap is serious about global corporate citizenship.
Executives from various social watchdog organizations have applauded The Gap’s Social
Responsibility Report as “historic” and “raises the bar.” Borne out social concern for
Gap sweatshop operations in the 1990s and early 2000s, The Gap appears to have
embraced the notion of corporate citizenship and has applied these practices throughout
their global operations. Beyond their social report, the company has a comprehensive
audit procedure of their global operations, based on their Code of Vendor Conduct, and
ensured by hundreds of vendor compliance officers. It appears that The Gap has
“walked the talk” when it comes to global corporate citizenship.

2. In its response to problems in its contractor factories, do you think Gap Inc.
moved through the stages of corporate citizenship presented in this chapter? Why
or why not?

While the case does not provide a detailed timeline to evaluate The Gap’s activities
according to the stages of corporate citizenship, it appears that the company has moved
well beyond the elementary and engaged stages of corporate citizenship. As shown by
their recent citizenship practices, it appears that The Gap may be operating at the
integrated stage – a champion of citizenship with proactive systems and many
partnership alliances – or even the highest transforming stage – a visionary of
citizenship, defining the term for other businesses in their industry with full disclosure of
operations to the public.

3. Compare Gap Inc.’s social audit and reporting practices with those of other
companies described in this chapter. In what ways is Gap’s effort different, and in
what ways is it similar? Do you think Gap’s social auditing and reporting is better
or worse than those of other companies, and why?

Responses to this question could be highly varied based on interpretation of

information and which companies are selected for comparison. Clearly The Gap stands
near, if not at, the front of the line of companies interested to promoting global corporate
citizenship practices through their attention to vendor operations, audit procedures, and
social responsibility report.

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Other firms, such as Mattel, Novo Nordisk and Cemex whose stories begin this
chapter, have developed strong programs that address citizenship in terms of specific
stakeholder relationships. Examples of exemplary corporate citizenship in terms of
transparency are described in Exhibit 4.B, where various firms having corporate
citizenship statements posted on their company websites are featured.

One way to fully answer this discussion question is to further explore The Gap and
other firms in terms of the Principles of Corporate Citizenship found in Exhibit 4.A.

4. What are the costs and benefits to Gap Inc. of its approach?

The case mentions a number of costs or risks to the firm, as well as many benefits.
For example, full transparency opens The Gap up to increased scrutiny and criticisms
from groups who believe the company is not doing enough or acting quickly enough. The
company has accepted extensive costs for developing, meeting, and monitoring the
vendor compliance standards described in the case. Hiring hundreds of vendor
compliance officers alone is a major cost to the firm, yet the company obviously believes
that there are payoffs to this cost.

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