lecture four · 2019. 12. 26. · lecture four corporate social responsibility 12/26/2019. overview...

Lecture Four

Corporate Social Responsibility

12/26/2019

Overview

Meaning of CSR,Evolution of CSR,Nature of CSR;Related concepts in CSR

Corporate Citizenship,Corporate Social Performance,Corporate Environmental Reporting

© 2016 H. K. Mensah (PhD) 2

Instances of Activism againstBusiness

Facilitators: IT (espInternet), media, low costtravel

Boycotts, brand damage,influence legislation,domino effect e.g. Shell in Nigeria, Exxonin Cameroon, Sinopec inSudan, Apparel Industry(Nike, Gap), GMO, WoodProducts, etc.

Allegations Against Business

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Business -Has little concern for the consumerCares nothing about the deteriorating socialorderHas no concept of ethical behaviorIs indifferent to the problems of minorities andthe environmentThese claims have generated anunprecedented number of pleas for companiesto be more socially responsible.

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Case of Two Scenarios but the SameBusiness

Business for societyReinvest dividendsFord Motor Company, Michigan USA

Ford Snr (1919)Ford Jnr (1999)


The Concept of Corporate SocialResponsibility (CSR)

Historical Antecedents Ancient Mesopotamia’s King Hammurabi,around 1700 BC introduced codes to sanctionbuilders, farmers innkeepers etcsenators of Ancient Rome agitate on the failureof business entities to contribute taxes that aresufficient to finance their military escapadesAfrica Traditional SocietiesThe Bible/Quran – Almsgiving etc


What is Corporate SocialResponsibility

Early Definitions –CSR means seriously considering the impact of acompany’s actions on society.CSR requires the individual to consider his or her actsin terms of a whole social system, and holds him orher responsible for the effects of his or her actsanywhere in that system.These definitions provide useful insights into theconcept of Corporate Social Responsibility.


Historical Perspective on CSR


Economic Model

Legal Model

Social Model

Stakeholder Model

Contemporary Definitions ofCSR

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…is seriously considering the impact of thecompany’s actions on society.… is the obligation of decision makers to takeactions that protect and improve the welfare ofsociety as a whole, along with their own interests.…supposes that the corporation has economic andlegal obligations as well as responsibilities tosociety that extend beyond these obligations.

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A Four-Part Definition of CSR byA. Carroll

While each definition is valuable, we will focus on the typesof social responsibilities business has. Corporate socialresponsibility encompasses the:

Economic

Legal

Ethical, and

Discretionary/Philanthropic

expectations that society has of organizations at a givenpoint in time.

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The Pyramid of CSR

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Philanthropic ResponsibilitiesBe a good corporate citizen.

Ethical Responsibilities

Be ethical.

Legal ResponsibilitiesObey the law.

Economic ResponsibilitiesBe profitable

The CSR Equation

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Economic Responsibilities Legal Responsibilities Ethical Responsibilities Philanthropic Responsibilities

TotalCSR

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The socially responsible firm should strive to: Make aprofit; Obey the law; Be ethical; Be a good corporate

citizen

Nature and Practice of CSRTop 20 CSR Activities

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Argument AGAINST CSR

Classical Economics: The classical economic view isthat business’ only goal is the maximize profits forowners.Business Not Equipped: Business is not equipped tohandle social activities.Dilutes Business Purpose: It dilutes the primarypurpose of business.Too Much Power Already: Businesses have toomuch power already .Global Competitiveness: It limits the ability tocompete in a global marketplace.

© 2016 H. K. Mensah (PhD) 15

Argument FOR CSR

Enlightened self-interest: Businesses must take actionsto ensure long-term viability.Warding off government regulations. This is one of themost practical reasons.Resources Available: Business has the resources andexpertise. Let it try.Proaction is better than Reaction. Proaction is also lesscostly.Public supports: the public strongly supports CSR.

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The Business Case for CSR

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Business Benefits of CSR

Win new businessIncrease customer retentionDevelop and enhance relationships

with customers, suppliers, andnetworks.

Attract, retain, and maintain ahappy workforce and be anEmployer of Choice.

Save money on energy andoperating costs and manage risk.

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Differentiate itself fromcompetitorsImprove its business reputationand standingProvide access to investmentand funding opportunitiesGenerate positive publicity andmedia opportunities due tomedia interest in ethicalbusiness activities.

Related Concepts of CSR

Corporate Social ResponsivenessCorporate Social Performance (CSP)Corporate Citizenship

Note: The concept has grown from………Responsibility…… Responsiveness……..

Performance……… Citizenship……

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Corporate Social Responsiveness(CSP)

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Corporate Social Responsiveness -An action-oriented variant of CSR.

Responsibility -Implies a state or condition of having assumed anobligation.

Responsiveness -Connotes a dynamic, action-oriented condition.

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Corporate Citizenship

Corporate citizenship -Embraces all the facets of corporate social responsibility,

responsiveness , and performance .

A Political Concepts used in Business

Who is a citizen

Companies as “citizens” of the countries in which theyreside

CP: Companies have certain responsibilities that they mustfulfill in order to be perceived as good corporate citizens

Corporate Citizenship serves a variety of stakeholders.20

Corporate Citizenship Cont’

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Broad ViewA reflection of shared moral and ethicalprinciples.A vehicle for integrating individuals into thecommunities in which they work.A form of enlightened self-interest thatbalances stakeholders’ claims and enhances acompany’s long-term value.

Note: “just as private citizens are expected to fulfill theseresponsibilities, companies are as well.”

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Corporate Citizenship

Narrow ViewCorporate community relationsit embraces the functions throughwhich business intentionally interactswith

nonprofit organizations,citizen groups, andother stakeholders at the communitylevel.© 2016 H. K. Mensah (PhD) 22

Drivers of Corporate CitizenshipWhat motivates companies to embrace corporate

citizenship/ become corporate citizens

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Internal motivatorsTraditions and valuesReputation and imageBusiness strategyRecruiting/retaining

employees

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External pressuresCustomers and

consumersExpectations in the

communityLaws and political

pressures

Benefits of Corporate Citizenship•

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Improved employee relations (improvesrecruitment, retention, morale, loyalty, etc.)Improved customer relationships (increasescustomer loyalty; a tiebreaker)Improved business performance (positivelyimpacts bottom-line returns, increasescompetitive advantage)Enhanced marketing efforts ( helps create apositive company image)

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lecture four · 2019. 12. 26. · lecture four corporate social responsibility 12/26/2019. overview...

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