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7/22/2019 3 Corporate Social Responsibility - The Concept Chp 7 (Jan 22)
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1
Chapter
Seven
Canadian Business and Society:
Ethics & Responsibilities
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Chapter Outline
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Corporate Social Responsibility
Debate: The role of business is to make money vs.Its more than that
Social Responsibility Theories
Pyramid of Corporate Social Responsibility Corporate Sustainability (CS)
Reputation Management
Social Impact Management
Triple-E Bottom Line (TBL)
Good Corporate Citizenship
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Corporate Social Responsibility:
Definition
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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The way a corporation achieves a balance
among it economic, social, and environmental
responsibilities in its operations so as to
address shareholder and other stakeholderexpectations.
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Key Elements of CSR
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Corporations have responsibilities beyond theproduction of goods and services.
These responsibilities involve helping to solve socialproblems.
Corporations have a broader constituency than juststockholders.
Corporations have impacts beyond simplemarketplace transactions.
Corporations serve a wider range of human valuesthan just economic values.
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Debate: Case for Involvement
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Business must satisfy societys needs andexpectations.
CSR prevents public criticism and government
regulation.McDonalds Clam Shells
Business and society are interdependent.
Boom towns
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Case for Involvement
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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CSR is good for the bottom line.
Insurance companies
Investors and consumers support CSR.
Green mutual fundsAddressing social problems can become
financial opportunities (e.g., pollutionabatement).
Playgrounds surfaces made from recycled tires
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Case for Involvement
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Business should take long-term CSRapproach.
MEC
Social actions improve public image andgoodwill.
Business can solve problems as well asgovernment.
African countries
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Case for Involvement
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Proactive approach is better than reactive.
Home Depot
Businesspeople are also concerned citizens.
Apotex Inc. (Bernard and Honey Sherman)
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Debate: Counterarguments
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Profit maximization is the primary purpose of
business.
Milton Friedman, Nobel Prize winner in
Economics Business is responsible to shareholders.
It should be their decision
http://www.youtube.com/watch?v=ivLIA25FQYYhttp://www.youtube.com/watch?v=ivLIA25FQYYhttp://www.youtube.com/watch?v=ivLIA25FQYYhttp://www.youtube.com/watch?v=ivLIA25FQYY7/22/2019 3 Corporate Social Responsibility - The Concept Chp 7 (Jan 22)
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Counterarguments
Social policy is role of government.
Business lacks training in social issues.
It is not competent
CSR would give too much power to business.
Take over a community
Impose business values
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Counterarguments
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Business involvement in social matters
increases costs.
Someone is paying for it
Mistakes can be made
No reliable guidance for business in CSR
matters.
PR vs. real actionNeeded vs. waste of time
Charity accountability
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Counterarguments
Business cannot be held accountable unlike
social institutions.
To what standard?
Whose responsible to hold them accountable?
There is divided support in business
community for social involvement.
No competition to get involved The concept is unclear, so business action is
uncertain.
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Social Responsibility Theories
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Amoral view
Amoral (not immoral) an activity without moralquality
Traditional view of business profit-making entity
Laws governing incorporated businesses makethem legitimate
Milton Friedman
Source: Klonoski, 1991
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Social Responsibility Theories
Personal view
Corporations are like people and can therefore beheld accountable for their actions. There is a right thing to do and corporations can be
punished for acting immorally.
Counterarguments: Corporations are legal entitiesnot persons and can not be held accountable.Only the people running the organization can be held
accountable for the actions of the corporation.
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Social Responsibility Theories
Social view
Corporations exist within a social context
Corporations are social institutions with social
responsibilities The Amoral view is incomplete
There are many examples of the social view
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Examples of the Social View
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Pyramid of Corporate Social
Responsibility
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Economic
Legal
Ethical
Philan-
thropic
Be profitable
Obey the law
Be ethical
Be a good
corporate citizenDesired
Expected
Required
Required
Source: Archie Carroll, 1991
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Corporate Sustainability (CS)
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Most prominent term after CSR
Definition: Corporate Sustainability refers to
corporate activities demonstrating the
inclusion of social and environmental as wellas economic responsibilities in business
operations as they impact all stakeholders.
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Corporate Sustainability (CS)
Marrewijk s five levels of CS
Compliance-driven CS: follow regulations
Profit-driven CS: focus on bottom line
Caring CS: go beyond legal compliance
Synergistic CS: well balanced solutions
Holistic CS: fully integrated CS
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Reputation Management
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Definition: Reputation management is an effort
to enhance a corporations image
Previous focus on media and public relations
as well as crisis management
Today, focus is on relationships with all
stakeholders
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Reputation Management
Reputation Management can:
Enhance financial performance
Improve competitive positions
Increase public approval
Reputations take a long time to be
established, but can be destroyed quickly
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Social Impact Management
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Field of inquiry at the intersection of businessneeds and wider societal concerns thatreflects and respects the complexinterdependencybetween the two.
Interdependency of business and society
Two directional:
Societys influence on corporations
Corporation's influence on society
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Social Impact Management
Evaluates 3 aspects of business:
Purpose of business
Social context of business
Metrics: how performance is measured
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Triple-E Bottom Line (TBL)
Chapter 7Copyright 2008 McGraw-Hill Ryerson Ltd.
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Evaluates a corporations performance
according to a summary of the economic,
socia l,and environmentalvalue thecorporation adds or destroys.
Now forms the basis for corporate reporting of
economic, ethical, and environmental
responsibilities.
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Corporate Citizenship
Definition: The demonstration by a corporation
that it takes into account its complete impact
on society and the environment as well as its
economic influence.
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Good Corporate Citizenship: Benefits
Reputation management
Risk profile and risk
management
Employee recruitment,motivation, and retention
Investor relations and
access to capital
Learning and
innovation
Competitiveness and
market positioning Operational
efficiency
Licence to operate
Greater leeway
Chapter 7
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Copyright 2008 McGraw-Hill Ryerson Ltd.
Source: World Economic Forum
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New Approach to
Corporate Citizenship
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Limited
Focus on corporate giving
Equivalent
Emphasis on sustainability
Extended
Defined as a set of individual, social, civil, and
political rights
Source: Matten and Crane, 2005