1. Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Chapter 2

2. Outline of Topics The Corporate Social Responsibility Concept
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Outline of Topics
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
The Corporate Social Responsibility Concept
Historical Perspective on CSR
Corporate Social Responsibility
The Four-Part Definition of CSR
Arguments Against and For Corporate Social Responsibility
Arguments Against CSR
Arguments for CSR
Corporate Social Responsiveness
Ackerman and Bauer’s Action-Orients View
Sethi’s Three-Stage Schema
Frederick’s CSR1 and CSR2
Epstein’s Process View
Other Views
Measurable Dimensions of Responsiveness
Corporate Social Performance
Carroll’s Corporate Social Performance Model
Usefulness of the Model to Academics and Managers
Wartick and Cochran’s Extensions
Wood’s Reformulated Model
Nonacademic Research on Corporate Social Performance
Social Performance and Financial Performance
Socially Conscious or Ethical Investing
Summary

3. What are Business’s Responsibilities?
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
What are Business’s Responsibilities?
Business allegations…
Little concern for the consumer
Cares nothing about social problems
Has no concept of acceptable ethical behavior
Indifferent to the problems of minorities and the environment
What responsibility does business have to society?

4. Corporate Social Responsibility (CSR)
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Social Responsibility (CSR)
Corporate Social Responsibility
CSR is a key concept
Seriously considering the impact of a company’s actions on society.

5. Corporate Citizenship Concepts
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Citizenship Concepts
Corporate Social…
Responsibility
Performance
Responsiveness
Emphasizes…
Obligation, accountability
outcomes, results
action, activity

6. Historical Perspective on CSR
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Historical Perspective on CSR
Economic Model
Legal Model
Social Model
Responsible for meeting only economic obligations
Responsible for meeting only economic and legal obligations
Responsibility goes beyond economic and legal

7. Modification of the Economic Model
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Modification of the Economic Model
Philanthropy
Community obligations
Paternalism
Motivation: Keep government at arm’s length

8. Acceptance and Broadening of Meaning
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
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

9. Carroll’s Four-Part Definition of CSR
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
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.

10. Carroll’s Four-Part Definition of CSR
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Carroll’s Four-Part Definition of CSR
Responsibility
Societal
Expectation
Examples
Economic
Required
Be profitable. Maximize sales, minimize costs.
Legal
Obey laws, adhere to regulations
Ethical
Expected
Avoid questionable practices. Do what is right, fair, and just
Philanthropic
Desired/ Expected
Be a good corporate citizen. Give back.

11. Legal Responsibilities
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Legal Responsibilities
Why laws are not sufficient:
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

12. Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
The Pyramid of CSR
Philanthropic Responsibilities Give back to society.
Ethical Responsibilities Be ethical.
Legal Responsibilities Obey the law.
Economic Responsibilities Be profitable.
Source: Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders,” Business Horizons (July-August 1981). © 1991 by the Foundation for the School of Business at Indiana University. Used with permission.

13. + Total Corporate CSR = The CSR Equation Economic Responsibilities
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
The CSR Equation
Economic Responsibilities
Legal Responsibilities
Ethical Responsibilities
Philanthropic Responsibilities + =
Total Corporate CSR

14. Arguments For CSR Enlightened self-interest
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Arguments For CSR
Enlightened self-interest
Wards off future government intervention
Proactive better than reactive
The public supports CSR

15. Arguments Against CSR These arguments do not hold favor any longer
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Arguments Against CSR
Restricts the classic economic goal of profit maximization
Business is not equipped to handle social activities
Limits the ability to compete in a global marketplace
Dilutes the primary purpose of business
These arguments do not hold favor any longer

16. Corporate Responsibility in the 21st Century
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Responsibility in the 21st Century
Millenium Poll on CSR (1999). Conclusion is that society expects businesses to:
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.

17. Corporate Social Responsiveness
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Social Responsiveness
Responsibility
Implies more of a state or condition of having assumed an obligation
Responsiveness
Connotes a dynamic, action-oriented condition

18. Corporate Social Performance
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Social Performance
Areas of Performance

19. Corporate Social Performance: What Gets Measured Gets Managed
Measuring and reporting key to communicating with stakeholders
Measurement (goals and measures)
Reporting: Global Reporting Initiative (GRI)
Example: Intel

20. Corporate Citizenship
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Citizenship
Corporate Citizenship…
Embraces all the facets of corporate social responsibility, responsiveness, and performance.
Widely accepted concept

21. Benefits of Corporate Citizenship
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Benefits of Corporate Citizenship
Improved employee relations
Improved customer relationships
Improved business performance
Enhanced marketing

22. Stages of Corporate Citizenship
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Stages of Corporate Citizenship

23. Business’s Interest in Corporate Citizenship
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Business’s Interest in Corporate Citizenship
Business Recognition
Fortune's ranking of “Most Admired” and “Least Admired” corporations
Conference Board’s Ron Brown Award for Corporate Leadership
Corporate Responsibility Officer Magazine Awards

24. Social and Financial Performance Relationship
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Social and Financial Performance Relationship
Perspective 1: CSP Drives the Relationship
Perspective 2: CFP Drives the Relationship
Perspective 3: Interactive Relationship Among CSP, CFP, and CR
Good Corporate Reputation
Good Corporate Social Performance
Good Corporate Financial Performance

25. “Multiple Bottom Line” Perspective
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
“Multiple Bottom Line” Perspective
Consumer Stakeholders’ “Bottom Line”
Employee Stakeholders’ “Bottom Line”
Community Stakeholders’ “Bottom Line”
Owner Stakeholders’ “Bottom Line”
Other Stakeholders’ “Bottom Line”
Corporate Social Performance

26. “Triple Bottom Line” Perspective
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
“Triple Bottom Line” Perspective
Key Spheres of Sustainability
Economic (easy to measure)
Environmental (harder to measure)
Social (hardest to measure)

27. Socially Responsible or Ethical Investing
A technique used to screen firms for socially-responsible investment purposes
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Socially Responsible or Ethical Investing
Social Screening
Shareholder resolutions force
companies to take action
Example: CERES
Shareholder Advocacy
Investments made in a community
with the purpose of enhancing its
social/environmental condition
Community
Investing