Part II: A Stakeholder Perspective

Chapter 4: Corporate Stakeholder Responsibility

1. CSR: A Corporate Responsibility?
• Whose responsibility is CSR?

The term corporate social responsibility suggests that

such behavior is the responsibility of corporations--that
the corporation has a responsibility to society. Is this the
best way to think about CSR? Does it produce optimal
outcomes? In reality, where does the motivation for
socially responsible behavior come from?

Chandler, Strategic Corporate Social Responsibility,

2
5e. © SAGE Publishing, 2020
2. CSR: A Corporate Responsibility?
• What does it mean to be responsible?

To be responsible for something is to be accountable. If

there is no consequence for doing (or not doing)
something, there is no responsibility. Stakeholders define
the firm’s responsibility by rewarding behavior they like
and punishing behavior they dislike.

Chandler, Strategic Corporate Social Responsibility,

3
5e. © SAGE Publishing, 2020
Chandler, Strategic Corporate Social Responsibility,
4
5e. © SAGE Publishing, 2020
4. Inequality

“In 1976 the richest 1 percent of Americans took home

about 8.5 percent of our national income. Today they take
home more than 20 percent. In major sectors of the
economy – banking, airlines, agriculture, pharmaceuticals,
telecommunications – economic power is increasingly
concentrated in a small number of companies.”

Chandler, Strategic Corporate Social Responsibility, 5e. © SAGE Publishing, 2020 5

Chandler, Strategic Corporate Social Responsibility,
6
5e. © SAGE Publishing, 2020
6. Milton Friedman Versus Charles Handy

The business of business is business?

versus

Enlightened business?

Chandler, Strategic Corporate Social Responsibility,

7
5e. © SAGE Publishing, 2020
7. Milton Friedman Versus Charles Handy
• For Friedman:
• Profit is an end in itself.
• Value to society is maximized if individual actors pursue
their self-interest above all else.

• For Handy:
• Profit is only a means to a larger end.
• A firm should not remain in existence just because it is
profitable but because it is meeting a need that society
as a whole values.

Chandler, Strategic Corporate Social Responsibility,

8
5e. © SAGE Publishing, 2020
9
10
10. CSR: A Stakeholder Responsibility?

The reason that fast-food companies pay the low wages that they do,
for example, is that they are able to staff all of their open positions at
that rate with employees who have the skill set needed to do the job. In
other words, employees value those jobs either because they have no
alternative or because any alternative pays at a lower rate. For this to
change, a stakeholder needs to act--either the government (by
increasing the minimum wage) or employees (refusing to work at that
wage rate) or consumers (by refusing to shop at McDonald’s because
they are unhappy with the wages the company is paying its employees).
Until one of its key stakeholders sends a serious message to McDonald’s
that its current wages are unacceptable, then McDonald’s will (and
should) continue doing exactly what it is doing.

Chandler, Strategic Corporate Social Responsibility,

11
5e. © SAGE Publishing, 2020
11. CSR: A Stakeholder Responsibility?

• The responsibilities of stakeholders are central to CSR:

Firms do not define our societal values; instead they

reflect them. Firms are very good at providing us with
what we actually want (rather than what we say we
want). As such, all stakeholders have an obligation to help
design the society in which they want to live and work.

Chandler, Strategic Corporate Social Responsibility,

12
5e. © SAGE Publishing, 2020
12. Corporate Stakeholder Responsibility

A responsibility among all of a firm’s stakeholders to

hold the firm to account for its actions by rewarding
behavior that meets expectations and punishing
behavior that does not meet expectations.

Chandler, Strategic Corporate Social Responsibility,

13
5e. © SAGE Publishing, 2020
14
15
15. Firm and Stakeholders as Independent
Actors

Chandler, Strategic Corporate Social Responsibility,

16
5e. © SAGE Publishing, 2020
16. Firm and Stakeholders as Integrated Actors

Chandler, Strategic Corporate Social Responsibility,

17
5e. © SAGE Publishing, 2020
17. Engaged Stakeholders

• Engaged stakeholders shape society, rather than exist in a society

shaped by others:

 Caring stakeholders (see Figure 4.2)

 Informed stakeholders (see Figure 4.3)
 Transparent stakeholders (see Figures 4.4 and 4.5)
 Educated stakeholders (see the PRME Principles)

Chandler, Strategic Corporate Social Responsibility,

18
5e. © SAGE Publishing, 2020
18. The Strategic CSR Window of Opportunity

Chandler, Strategic Corporate Social Responsibility,

19
5e. © SAGE Publishing, 2020
19. The CSR Sweet Spot Versus Danger Zone

Chandler, Strategic Corporate Social Responsibility,

20
5e. © SAGE Publishing, 2020
20. Perceptions of Business Executives

Chandler, Strategic Corporate Social Responsibility,

21
5e. © SAGE Publishing, 2020
21. Consumers’ Willingness to Pay for CSR (2011–2014)

Chandler, Strategic Corporate Social Responsibility,

22
5e. © SAGE Publishing, 2020
22. The United Nations PRME Principles

 Principle 1: Purpose
 Principle 2: Values
 Principle 3: Method
 Principle 4: Research
 Principle 5: Partnership
 Principle 6: Dialog

Chandler, Strategic Corporate Social Responsibility,

23
5e. © SAGE Publishing, 2020
23. A Stakeholder’s Responsibilities

Chandler, Strategic Corporate Social Responsibility,

24
5e. © SAGE Publishing, 2020
24. Is a Manager a Professional?

• There are three main characteristics that define what it means to

belong to a profession:

1. A sense of duty beyond the self.

2. A certified body of knowledge.
3. A code of ethics.

Chandler, Strategic Corporate Social Responsibility,

25
5e. © SAGE Publishing, 2020
25. Questions for Discussion and Review
1. Who is responsible for CSR--firms or their stakeholders? Why? Is the
responsibility equal or does one party have a greater responsibility?
2. List three points in favor of Friedman’s view of the firm and its
responsibilities and three points in favor of Handy’s view. Which
position do you agree with? Why?
3. Would you report a classmate you suspected of cheating at school?
Why or why not? What is the role of the business school in teaching
ethics to its students?
4. Think about a recent example of a firm that changed its behavior in
response to a stakeholder’s demands. Is this an example of corporate
stakeholder responsibility?
5. If a firm’s stakeholders condone the irresponsible behavior of a firm,
should the firm keep acting this way or should it change? Why?

Chandler, Strategic Corporate Social Responsibility,

26
5e. © SAGE Publishing, 2020
Chandler, Strategic Corporate Social Responsibility,
27
5e. © SAGE Publishing, 2020
27. First Watch 2 videos on Learning Mall

Chandler, Strategic Corporate Social Responsibility,

28
5e. © SAGE Publishing, 2020
Chandler, Strategic Corporate Social Responsibility,
29
5e. © SAGE Publishing, 2020
29. The Financial Crisis

• As Citibank’s Chuck Prince said in 2007, shortly before his ouster as

CEO later that year:

“As long as the music is playing, you’ve got to

get up and dance. We’re still dancing.”

Chandler, Strategic Corporate Social Responsibility, 5e. © SAGE Publishing, 2020 30

30. Moral Hazard

To take risk in search of personal benefit where the

consequences of that risk are not born by the individual.
The effect is to privatize gains and socialize losses.

Chandler, Strategic Corporate Social Responsibility, 5e. © SAGE Publishing, 2020 31

31. Critiques of Capitalism

“What if the crisis of 2008 represents something much

more fundamental than a deep recession? What if it’s
telling us that the whole growth model we created over the
last 50 years is simply unsustainable economically and
ecologically and that 2008 was when we hit the wall--when
Mother Nature and the market both said: ‘No more?’”
—Thomas Friedman, The New York Times

Chandler, Strategic Corporate Social Responsibility, 5e. © SAGE Publishing, 2020 32

32. The Cost of the Financial Crisis

Chandler, Strategic Corporate Social Responsibility, 5e. © SAGE Publishing, 2020 33

33. The Financial Crisis--Ten Years On
• Lehman Brothers (1850–2008):

Chandler, Strategic Corporate Social Responsibility, 5e. © SAGE Publishing, 2020 34

34. The Finance Industry

“Oversight and disclosure have been improved and

capital-adequacy rules toughened. But some of these
rules are now being relaxed, at least in America, and the
financial industry’s weight in the world economy has
scarcely changed. As a share of American GDP it has
actually increased somewhat since 2007.”

Chandler, Strategic Corporate Social Responsibility, 5e. © SAGE Publishing, 2020 35

35. The Institutional Response

• The response has not lived up to many people’s expectations. This is

apparent in three areas, in particular:

1. The system remains largely unchanged.

2. Few individuals were ever held to account.
3. The core problem, excessive personal debt, remains.

Chandler, Strategic Corporate Social Responsibility, 5e. © SAGE Publishing, 2020 36

 CORPORATE SOCIAL
RESPONSIBILITY (CSR)
Lecturer: Dr. Xuanwei Cao
Office: BS226
Office Hour: 15:00-17:00 Wed.
Email: xuanwei.cao@xjtlu.edu.cn