Chapter Two Objectives: Responsiveness

Chapter Two Objectives
• Explain corporate social responsibility (CSR)

• Provide business examples of CSR
• Differentiate social responsibility and
responsiveness
• Explain corporate social performance (CSP)
• Relate social performance to financial performance
• Describe the socially conscious investing
movement
2-1
2
Corporate Social Responsibility
(CSR)
Preliminary definitions of CSR
• The impact of a company’s actions on
society
• Requires a manager to consider his acts in
terms of a whole social system, and holds
him responsible for the effects of his acts
anywhere in that system
2-2
(CSR)
Corporate Citizenship Concepts
• Corporate social responsibility – emphasizes
obligation and accountability to society
• Corporate social responsiveness –
emphasizes action, activity
• Corporate social performance – emphasizes
outcomes, results
2-3
Corporate Social Responsibility (CSR)
Business Criticism/ Social Response Cycle
Factors in the Societal Environment
Criticism of
Business
Increased concern A Changed
for the Social Environment Social Contract
Business Assumption of Corporate Social Responsibility
Social Responsiveness, Social Performance, Corporate

Citizenship
A More Satisfied Society
Fewer Factors Leading Increased Expectations Leading

to Business Criticism to More Criticism
2-7
(CSR)
Historical Perspective
• Economic model – the invisible hand of the
marketplace protected societal interest
• Legal model – laws protected societal
interests
2-5
(CSR)
• Modified the economic model
– Philanthropy Search the Web
Milton Hershey was a leading example of an
– Community obligations individual who employed philanthropy,
community obligation and paternalism To learn
– Paternalism more about Milton Hershey and the company,
school and town he built, log on to:
http://www.miltonhershey.com/
2-6
(CSR)
• What was the main motivation?
– To keep government at arms length
Search the Web

Businesses are interested in CSR and one leading business
organization that companies can join is Business for
Social Responsibility. To learn more about BSR, visit
their web site at:: http://www.bsr.org/
2-7
(CSR)
From the 1950’s to the present the concept
of CSR has gained considerable acceptance
and the meaning has been broadened to
include additional components
2-8
(CSR)
Evolving Viewpoints
• CSR considers the impact of the company’s
actions on society (Bauer)
• CSR requires decision makers to take
actions that protect and improve the welfare
of society as a whole along with their own
interests (Davis and Blomstrom)
2-9
(CSR)
Evolving Viewpoints
• CSR mandates that the corporation has not
only economic and legal obligations, but
also certain responsibilities to society that
extend beyond these obligations (McGuire)
2-10
(CSR)
Evolving Viewpoints
• 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 (Epstein)
2-11
(CSR)
Carroll’s Four Part Definition
• CSR encompasses the economic, legal,
ethical and discretionary (philanthropic)
expectations that society has of
organizations at a given point in time
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Carroll’s Four Part Definition
Understanding the Four Components
Responsibility Societal Examples

Expectation
Economic Required Be profitable. Maximize sales,
minimize costs, etc.
Legal Required Obey laws and regulations.
Ethical Expected Do what is right, fair and just.
Discretionary Desired/ Be a good corporate citizen.
(Philanthropic) Expected
Business and Society: Ethics and Stakeholder Management, 5E • Carroll & Buchholtz
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved
2-16
Pyramid of CSR
Philanthropic Responsibilities
Be a good corporate citizen.
Ethical Responsibilities
Be ethical.
Legal Responsibilities
Obey the law.
Economic Responsibilities
Be profitable.
2-14
CSR in Equation Form Is the Sum of:

Economic Responsibilities (Make a profit)
Legal Responsibilities (Obey the law)
Ethical Responsibilities (Be ethical)
Philanthropic Responsibilities (Good corporate citizen)
CSR
2-15
Arguments Against
• Restricts the free • Increase business
market goal of power
profit maximization
• Limits the ability to
• Business is not
compete in a global
equipped to handle
social activities marketplace
• Dilutes the primary
aim of business
2-16
Arguments For
• Addresses social • Limits future government
issues business caused intervention
and allows business to • Addresses issues by
be part of the solution using business resources
• Protects business self- and expertise
interest • Addresses issues by
being proactive
2-17
Business Responsibilities 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, 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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Social—and Financial—Performance
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
Financial Social
Reputation
Performance Performance
Perspective 3: Interactive Relationship Among CSP, CFP, and CR
Good Corporate
Financial
Social Performance Reputation
Performance
2-19

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Chapter Two Objectives

• Explain corporate social responsibility (CSR)

Business Assumption of Corporate Social Responsibility

Social Responsiveness, Social Performance, Corporate

Fewer Factors Leading Increased Expectations Leading

Search the Web

Responsibility Societal Examples

CSR in Equation Form Is the Sum of:

Perspective 2: CFP Drives the Relationship

Good Corporate Good Corporate

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

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