Corporate Citizenship: Social Responsibility,

Responsiveness, and Performance

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Business and Society: Ethics and Stakeholder Management, 7e • Carroll & Buchholtz
Copyright ©2009 by South-Western, a division of Cengage Learning. All rights reserved
 Learning Outcomes

1. Explain how corporate social responsibility (CSR)

evolved and now encompasses economic, legal,
ethical, and philanthropic components.
2. Provide business examples of CSR and corporate
citizenship.
3. Differentiate between corporate citizenship, social
responsibility, responsiveness, and performance.
4. Elaborate on the concept of corporate social
performance (CSP).

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 Learning Outcomes

5. Explain how corporate citizenship develops in stages

in companies.
6. Describe the socially responsible investing
movement.

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 Outline

 The Corporate Social Responsibility Concept

 Arguments Against and For Corporate Social
Responsibility
 Corporate Social Responsiveness
 Corporate Social Performance
 Corporate Citizenship
 Business’s Interest in Corporate Citizenship
 Social Performance and Financial Performance
Relationship
 Socially Responsible or Ethical Investing
 Summary
 Key Terms
 Discussion Questions
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 Introduction
Business allegations…

 Little concern for the consumer

 Cares nothing about the deteriorating social order
 Has no concept of acceptable ethical behavior
 Indifferent to the problems of minorities and the
environment

What responsibility does business have to society?

@ http://www.bsr.org

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 Corporate Social Responsibility (CSR)

Seriously considering the impact of

a company’s actions on society.
Corporate
Requires the individual to consider
Social his/her acts in terms of a whole
Responsibility social system, and holds him/her
responsible for the effects of acts
anywhere in that system.

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 Corporate Citizenship Concepts

Corporate Social… Emphasizes…

Responsibility Obligation, accountability

Responsiveness action, activity

Performance outcomes, results

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 Business Criticism/
Social Responsibility Cycle
Factors in the Societal Environment
(have led to)

Criticism of Business

(which has resulted in)

Increased Concern A Changed
for the Social Environment Social Contract

Business Assumption of
Corporate Social Responsibility

Social Responsiveness, Social

Performance, and Corporate Citizenship

A More Satisfied Society

Fewer Factors Leading to Increased Expectations8

Business Criticism Figure 2-1 Leading to More Criticism
Historical Perspective on CSR

Economic Model

Legal Model

Social Model

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 Acceptance and Broadening of Meaning

From the 1950’s to the present, the concept of CSR has

gained considerable acceptance and the meaning has been
broadened to include specific issues, such as:

• corporate governance
• product safety
• honesty in advertising
• employee rights
• affirmative action
• environmental sustainability
• ethical behavior
• global CSR

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 CSR: Evolving Viewpoints

1. CSR considers the impact of the company’s actions

on society.

2. CSR requires decision makers to take actions that

protect and improve the welfare of society as a
whole along with their own interests.

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 CSR: Evolving Viewpoints

3. CSR supposes that the corporation has not only

economic and legal obligations, but also certain
responsibilities to society which extend beyond
these obligations.

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 CSR: Evolving Viewpoints

4. CSR relates primarily to achieving outcomes from

organizational decisions concerning specific
issues or problems which (by some normative
standard) have beneficial rather than adverse
effects upon pertinent corporate stakeholders. The
normative correctness of the products of corporate
action have been the main focus of CSR.

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 Carroll’s Four-Part Definition of CSR

The social responsibility of business encompasses the

economic, legal, ethical and discretionary
expectations that society has of organizations at a
given point in time.

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 Carroll’s Four-Part Definition of CSR

Societal
Responsibility Examples
Expectation

Be profitable. Maximize sales,

Economic Required
minimize costs.

Obey laws, adhere to

Legal Required
regulations

Avoid questionable practices.

Ethical Expected
Do what is right, fair, and just

Desired/ Be a good corporate citizen.

Philanthropic
Expected Give back.
Figure 2-2 15
 Legal Responsibilities

 Law cannot address all the topics or issues that

business may face

 Law often lags behind more recent concepts of what

is considered appropriate behavior

 Laws are made by lawmakers and may reflect the

personal interests/motivation of legislators rather
than appropriate ethical justifications

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 The Pyramid of CSR

Figure 2-3 17
 The CSR Equation

Economic Responsibilities
+ Total
Legal Responsibilities

+ = Corporate
Ethical Responsibilities CSR
+
Philanthropic Responsibilities

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 Arguments Against CSR

 Restricts the classic  Increases the power of

economic goal of profit business
maximization

 Limits the ability to

 Business is not
equipped to handle compete in a global
social activities marketplace

 Dilutes the primary

purpose of business

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 Arguments For CSR

 Addresses social issues  Addresses issues by

brought on by business, using business resources
and allows business to be and expertise
part of the solution
 Addresses issues by
 Protects business being proactive
self-interest
 The public supports CSR
 Wards off future
government intervention

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Ways Firms Respond to CSR Pressure

Defensive approach

Cost-benefit approach

Strategic approach

Innovation and learning approach

The Civil Corporation, Simon Zadek

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 Corporate Responsibility
in the 21st Century

 Demonstrate a commitment to society’s values and

contribute to society’s social, environmental, and
economic goals through action.
 Insulate society from the negative impacts of
company operations and its products and services.
 Share benefits of company activities with key
stakeholders as well as with shareholders.
 Demonstrate that the company can make more
money by doing the right thing.

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 Corporate Social Responsiveness

Implies more of a state or

Responsibility condition of having assumed
an obligation

Connotes a dynamic,
Responsiveness
action-oriented condition

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 Corporate Social Performance

Figure 2-10 24
 Corporate Citizenship

Corporate Citizenship…

…embraces all the facets of corporate

social responsibility, responsiveness,
and performance.

…serves a variety of stakeholders.

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 Corporate Citizenship

 A reflection of shared moral and ethical principles

 A vehicle for integrating individuals into the

communities in which they work

 A form of enlightened self-interest that balances

stakeholders’ claims and enhances a company’s
long-term value

Charles J. Fombrum, “Three Pillars of Corporate Citizenship” 26

 Drivers of Corporate Citizenship

Internal Motivators External Pressures

Traditions and values Customers and consumers

Reputation and image Expectations in the community

Business strategy Laws and political pressures

Recruiting and retaining

employees

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 Benefits of Corporate Citizenship

 Improved employee relations

 Improved customer relationships

 Improved business performance

 Enhanced company’s marketing efforts

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 Stages of Corporate Citizenship

Figure 2-11 29
 Development Challenges
of Corporate Citizenship

Figure 2-12 30
 Business’s Interest in
Corporate Citizenship

Nonacademic Research

 Fortune's ranking of “Most Admired” and

“Least Admired” corporations

 Conference Board’s Ron Brown Award

for Corporate Leadership

 CRO Magazine Awards

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 Social and Financial
Performance Relationship
Perspective 1: CSP Drives the Relationship

Good Corporate
Good Corporate Good Corporate
Financial
Social Performance Reputation
Performance

Perspective 2: CFP Drives the Relationship

Good Corporate
Good Corporate Good Corporate
Financial
Social Performance Reputation
Performance

Perspective 3: Interactive Relationship Among CSP, CFP, and CR

Good Corporate
Good Corporate Good Corporate
Financial
Social Performance Reputation
Performance

Figure 2-13 32
 “Multiple Bottom Line” Perspective

Owner Stakeholders’
“Bottom Line”

Consumer Stakeholders’
“Bottom Line”
Corporate
Employee Stakeholders’
Social
“Bottom Line”
Performance
Community Stakeholders’
“Bottom Line”

Other Stakeholders’
“Bottom Line”
Figure 2-14 33
 “Triple Bottom Line” Perspective

Key Spheres of Sustainability

1. Economic

2. Social

3. Environmental

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 Socially Responsible
or Ethical Investing

A technique used to screen

Social
firms for socially-responsible
Screening investment purposes

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