Chapter3 - Stakeholders and CSR

Chapter 3:
Stakeholders and Corporate Social

Responsibility
Ethics and the Conduct of Business
Eighth edition
Chapter 12:
Textbook
Stakeholders and
Corporate Social
Responsibility
Copyright © 2017, 2012, 2009 Pearson Education, Inc. All Rights Reserved
Modules
• Introduction: Corporate Social Responsibility
• 12.1: The CSR Debate
• 12.2: Normative Case for CSR
• 12.3: Business Case for CSR
• 12.4: Implementing CSR
• 12.5: Business with a Mission
• 12.6: Case Studies
• Conclusion: Corporate Social Responsibility
Learning Objectives (1 of 2)
• 12.1: Recognize the significance and implications of
corporate social responsibility for businesses, how CSR is
commonly demonstrated, and its related concepts
• 12.2: Describe the dominant moral arguments against the
concept of CSR and the counterarguments and
justifications for CSR as a requirement of companies
• 12.3: Analyze the arguments that a market for virtue makes
CSR a profitable strategy and a source of competitive
advantage
Learning Objectives (2 of 2)
• 12.4: Summarize the important aspects of successful CSR
programs, the difficulties with measuring the social
performance of companies, and various attempts at
measurement
• 12.5: Compare how nonprofit and for-profit social
enterprises operate and can compete successfully in the
marketplace
• 12.6: Compare how nonprofit and for-profit social
enterprises operate and can compete successfully in the
marketplace
Introduction: Corporate Social
Responsibility
• Basis for social responsibility
• Requirements to implement CSR programs
• Benefits of CSR programs
• Social enterprises
12.1: The CSR Debate (1 of 2)
Objective: Recognize the significance and implications of corporate social responsibility
for businesses, how CSR is commonly demonstrated, and its related concepts
• 12.1.1: Meaning of CSR

– Concept of CSR
Figure 12.1
12.1: The CSR Debate (2 of 2)
Objective: Recognize the significance and implications of corporate social responsibility
for businesses, how CSR is commonly demonstrated, and its related concepts
• 12.1.2: Examples of CSR

– General agreements
• 12.1.3: Related Concepts
– Corporate social responsiveness
– Elements of corporate social performance
– Corporate citizens
12.2: Normative Case for CSR
Objective: Describe the dominant moral arguments against the concept of CSR and the
counterarguments and justifications for CSR as a requirement of companies
• 12.2.1: Classical View

– Expression of classical view
• 12.2.2: Friedman on CSR
– Fiduciary argument
– Taxation argument
12.3: Business Case for CSR (1 of 2)
Objective: Analyze the arguments that a market for virtue makes CSR a profitable strategy
and a source of competitive advantage
• 12.3.1: The Market for Virtue

– Factors that induce managers to take on CSR activities
– Power of virtue
Table 12.2: A Watch List of Industries
and Companies
Industries Issue(s) Companies
Consumer goods: shoes, apparel, and Goods are manufactured in contract Nike, Gap, Walmart
household products factories overseas.
Petroleum, timber, and mining Environment issues Shell, Home Depot, Rio Tinto
Food and beverage Raw materials are sourced from less- Starbucks, Nestlé, Coca-Cola
developed countries.
Tobacco and fast foods Tobacco-related deaths and obesity Altria (Philip Morris), Kraft, McDonald’s
12.3: Business Case for CSR (2 of 2)
Objective: Analyze the arguments that a market for virtue makes CSR a profitable strategy
and a source of competitive advantage
• 12.3.2: Competitive Advantage

– Strategic CSR
12.4: Implementing CSR
Objective: Summarize the important aspects of successful CSR programs, the difficulties
with measuring the social performance of companies, and various attempts at
measurement
• 12.4.1: Program Selection and Design

– Guidelines
• 12.4.2: Reporting and Accountability
– Social reporting
12.5: Business with a Mission
Objective: Compare how nonprofit and for-profit social enterprises operate and can
compete successfully in the marketplace
• 12.5.1: Social Enterprise

– Definition
– Forms
• 12.5.2: Competing Successfully
– Overview
• 12.5.3: Mission and Trust
– For-profit organization
Table 12.3: Nonprofit versus For-Profit
Social Enterprises
Categories Nonprofit SE For-Profit SE
Definition A nonprofit whose main source of revenue is A business created for a social purpose, that operates in
earned income, not donations a socially-beneficial manner
AKA Enterprising nonprofits, commercial nonprofits Possible forms:

• subsidiary of a hybrid nonprofit
• benefit corporation (community interest company)
• Certified B Corporation
Example(s) Benetech (technology to aid global literacy) Patagonia (environmentally-sustainable clothing)

Toms Shoes (donates shoes to the needy)
Available Sales, donations, loans Sales, equity capital, impact investment
funding
Advantages Tax benefits Equity capital allows faster growth, more effective use of
Income from donations resources
People have more confidence in nonprofit causes Ability to make a profit
Challenges Need for innovation Sales, equity capital, impact investment

Pressure to use donations for given purposes Need for innovation
Limits on spending Pressure to give some control to outside investors
Difficulty keeping focus on social mission over profit
Loss of public trust
12.6: Case Studies (1 of 2)
• 12.6.1: Case: Starbucks and Fair Trade Coffee

– Mission
– Issue
– Fair trade coffee
– Starbucks response
Table 12.4: Requirements for Fair Trade
Certification
Condition Description
Fair prices Democratically organized farmer groups receive a guaranteed minimum floor price
and an additional premium for certified organic products. Farmer organizations are
also eligible for pre-harvest credit.
Fair labor conditions Workers on Fair Trade farms enjoy freedom of association, safe working conditions,
and living wages. Forced child labor is strictly prohibited.
Direct trade Importers purchase from Fair Trade producer groups as directly as possible,
eliminating unnecessary middlemen and empowering farmers to develop the
business capacity necessary to compete in the global marketplace.
Democratic and transparent Fair Trade farmers and farmworkers decide democratically how to invest Fair Trade
organizations revenues.
Community development Fair Trade farmers and farmworkers invest Fair Trade premiums in social and
business development projects such as scholarship programs, quality-improvement
training, and organic certification.
Environmental sustainability Harmful agrochemicals and GMOs are strictly prohibited in favor of environmentally
sustainable farming methods that protect farmers’ health and preserve valuable
ecosystems for future generations.
12.6: Case Studies (2 of 2)
• 12.6.2: Case: Timberland and Community Service

– Commerce and justice
– City Year nonprofit organization
– Community service program
– Change in economic situation
• 12.6.3: Case: Coca-Cola’s Water Use in India
– Groundwater depletion case
Conclusion: Corporate Social
Responsibility
• Meaning of CSR
• Arguments for CSR
• Normative case for CSR
• Virtual industry
• Strategic CSR

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Chapter 3:

Stakeholders and Corporate Social

• 12.1.1: Meaning of CSR

• 12.1.2: Examples of CSR

• 12.2.1: Classical View

• 12.3.1: The Market for Virtue

• 12.3.2: Competitive Advantage

• 12.4.1: Program Selection and Design

• 12.5.1: Social Enterprise

AKA Enterprising nonprofits, commercial nonprofits Possible forms:

Example(s) Benetech (technology to aid global literacy) Patagonia (environmentally-sustainable clothing)

Challenges Need for innovation Sales, equity capital, impact investment

• 12.6.1: Case: Starbucks and Fair Trade Coffee

• 12.6.2: Case: Timberland and Community Service

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