Corporate Social Responsibility

 the obligation toward society assumed by business

 maximizes it positive effects on society and minimizes it
negative effects
 economic responsibilities - produce goods and services that
society wants at a price that perpetuates the business
 legal responsibilities - obey local, state, federal and relevant
international laws
 ethical responsibilities - meeting other societal expectations,
not written as law
 voluntary responsibilities - additional behaviors that society
finds desirable and that the values of the business support
Pyramid Of Corporate Social
Responsibility
Voluntary
Responsibilities
Be a good corporate
citizen

Ethical
Responsibilities
Be ethical

Legal
Responsibilities
Obey the law

Economic
Responsibilities
Be profitable
 Corporate Social
Responsibility (cont.)
 Contrasting views
 profit maximization view
 managers obligated to maximize the present value of the firm

 economic performance is an organization’s primary social

responsibility
 business judgment rule - allows management wide latitude in policy
if the policy can be justified
 duty to pursue profits is not absolute

 principled moral reasoning view

 ethical actions are not optional, but mandatory

 organizations have a wider range of responsibilities that extend

beyond the production of goods and services for a profit
Corporate Social Responsibility

 Reconciliation
 based on the idea that ethical behavior is both right
and more profitable
 competitive advantages of socially responsible
actions, especially over the long-term
 avoid unnecessary and costly regulation
 pay dividends to the reputation of the company

 profits can be made from attempts to solve society’s

problems
 Corporate Social Responsibility
 Corporate social responsiveness
 the process companies follow and the actions they take in the
domain of corporate social responsibility
 CSR1 (corporate social responsibility) - principles,
philosophies, and beliefs
 CSR2 (corporate social responsiveness) - processes
companies follow and the actions they take
 both CSR1 and CSR2 have their critics in academia
and business
 stakeholder management - managers do not manage
relationships with society but with stakeholders
 Approaches To Corporate
Social Responsiveness
Approach Posture or Strategy Performance

1. Reactive Deny responsibility Do less than required

2. Defensive Admit responsibility Do the least that is required

but fight it

3. Accommodative Accept responsibility Do all that is required

4. Proactive Anticipate responsibility Do more than is required

Corporate Social
Responsibility (cont.)
 Strategic voluntarism
 corporate philanthropy has become more
strategic
 striveto do things that matter
 get recognition for their contributions

 support causes that both capitalize on and

serve their businesses
 community service is increasingly an
employee benefit
 The Political Environment
 Competitive advantage
 progressive organizations realize that government may be the
source of competitive advantages for an individual company or
an entire industry
 numerous examples of public policy that assists business

 Corporate legitimacy
 motive for business involvement in the public policy process

 organizations are legitimate to the extent that their goals and

methods are consistent with those of society
 domain defense - activities intended to counter challenges to
the organization’s legitimacy
 The Political Environment
 Strategies for influencing the political environment
 public affairs department - monitors key events and trends,
analyzes their effects on the organization, recommends
organizational responses, and implements political strategies
 Lobbying - traditional form of influence
 involves political professionals or company executives who
establish communication channels with regulatory bodies
 Political action committees (PACs) - make donations to
candidates for political office
 companies may ask employees or shareholders for
contributions to political candidates, subject to certain
limitations
 “protection money” - donated money intended to ensure that
company is not disadvantaged in the legislative process
 Public Affairs Department
Issues
management
Institutional Government
advertising relations

Activities
of
Corporate Public Public
contributions Affairs relations

Investor and
International
stockholder
relations
relations
The Political Environment
 Strategies for influencing the political environment (cont.)
 Corporate constituency programs - organizational effort
to identify, educate, and motivate individuals to take political
action that could benefit the organization
 encourage interested stakeholders to take grassroots
action
 probably requires the greatest commitment of
organizational resources
 Coalition building - finding other organizations or voter
groups that share political interests on a particular
legislative issue
 combine efforts and power to influence the
environment
 The Political Environment
 Strategies for influencing the political environment (cont.)
 Stonewalling - use of public relations, legal action, and
administrative processes to prevent or delay the introduction of
legislation and regulation that may have an adverse impact on
the organization
 rarely changes the conditions that led to the adverse
regulation
 consumes considerable time and money, and may
boomerang
 Strategic retreat - response to adverse regulatory change

 efforts to adapt products and processes to changes in the

political and social environments while minimizing the
negative effects of those changes
 The Natural Environment
 Environmental issues
 range of issues is broad, and the impact huge
 must consider a mix of technical, ethical, social, and
competitive issues
 e.g., many technological developments used by business
are contributing to the destruction of ecological
ecosystems
 A risk society
 sources of risk include:
 excessive production of hazards
 ecologically unsustainable consumption of natural resources
 risk has proliferated due to population explosion, industrial pollution,
and environmental degradation
The Natural Environment
(cont.)
 Ecocentric management
 has as its goal the creation of sustainable economic
development and improvement of quality of life
worldwide for all organizational stakeholders
 seeks to minimize negative environmental impact
 design for environment (DFE) - tool for creating
products that are easy to recover, reuse, or recycle
 all environmental effects of a product are
examined during the design phase
 assessments of inputs

 analysis of how consumers will use and

dispose of the product
 Eco-centric Management
Encourage low
energy loss

Products with
Use smaller
recyclable
resource quantities
materials Ecocentric
Management

Products with Environmentally

ecofriendly appropriate production
packaging technologies
 The Natural Environment

 Environmental agenda for the future

 corporations are the only organizations with the
resources, technology, and global power to help
create a sustainable world
 websof companies with a common ecological vision can
combine their efforts into high-leverage, impact action
 companies beginning to acquire the motivation to
solve environmental problems
 may
represent the biggest opportunity in the history of
commerce