1. Corporate Social Responsibility
Chapter 17
Corporate Social Responsibility

2. LEARNING OBJECTIVES
After studying this chapter, you should be able to:
Articulate a stakeholder view of the firm
Apply the institution based view to analyze corporate social responsibility
Use the resource based view to better understand corporate social responsibility
Participate in three leading debates concerning corporate social responsibility
Draw implications for action

3. STAKEHOLDER VIEW OF THE FIRM
stakeholder - group or individual who can affect or is affected by the achievement of the organization’s objectives
corporate social responsibility (CSR) - consideration of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm to accomplish social benefits along with the traditional economic gains which the firm seeks

5. BIG PICTURE PERSPECTIVE
global sustainability - ability “to meet the needs of the present without compromising the ability of future generations to meet their needs”

6. BIG PICTURE PERSPECTIVE
primary stakeholder groups - constituents on which the firm relies for its continuous survival and prosperity
secondary stakeholder groups - those who influence or affect, or are influenced or affected by, the firm, but are not engaged in transactions with the firm and are not essential for its survival
triple bottom line - economic, social, and environmental performance that simultaneously satisfies demands of all stakeholders

8. INSTITUTIONS AND CORPORATE SOCIAL RESPONSIBILITY
reactive strategy - response to relatively little or no support of top management to CSR causes
defensive strategy - focus on regulatory compliance with little involvement by top management
accommodative strategy - characterized by some support from top managers, who may increasingly view CSR as a worthwhile endeavor
proactive strategy - being responsible and endeavoring to do more than is required

9. INSTITUTIONS AND CORPORATE SOCIAL RESPONSIBILITY
codes of conduct (codes of ethics) - tangible action firms often take to indicate their willingness to accept CSR

10. RESOURCES AND CORPORATE SOCIAL RESPONSIBILITY VRIO framework
social issue participation - actions not directly related to management of primary stakeholders – may reduce value
expertise, techniques, and processes associated with the direct management of primary stakeholder groups are likely to add value

11. RESOURCES AND CORPORATE SOCIAL RESPONSIBILITY VRIO framework
complex processes require strong management capabilities, such as negotiating with local suppliers, undertaking internal verification, coordinating with NGOs for external verification, and disseminating such information to stakeholders - valuable but common (not rare) resources

12. RESOURCES AND CORPORATE SOCIAL RESPONSIBILITY VRIO framework
pollution-prevention technologies are more complex and integrated with the entire production chain - competitors often have a harder time imitating these complex capabilities
pollution-reduction technologies may offer no such advantage because relatively simple, “end-of-pipe” pollution-reduction technologies can be more easily imitated

13. RESOURCES AND CORPORATE SOCIAL RESPONSIBILITY VRIO framework
process-focused best practices of pollution prevention are not in isolation and are often difficult to separate from a firm’s other organizational activities

16. DOMESTIC vs. OVERSEAS SOCIAL RESPONSIBILITY
Given that corporate resources are limited, resources devoted to overseas CSR, unfortunately, often mean fewer resources devoted to domestic CSR.
When companies have enough resources, it would be nice to take care of domestic employees and communities.
However, when confronted with relentless pressures for cost cutting and restructuring, managers have to prioritize.
Paradoxically, in this age of globalization, while the CSR movement is on the rise, the great migration of jobs away from developed economies is also accelerating.

17. RACE TO THE BOTTOM (“Pollution Haven”) vs. RACE TO THE TOP
Because of heavier environmental regulation in developed economies, MNEs may have an incentive to shift pollution-intensive production to developing countries, where environmental standards may be lower.
To attract investment, developing countries may enter a “race to the bottom” by lowering (or at least not tightening) environmental standards, and some may become “pollution havens.”
Many MNEs’ voluntary adherence to environmental standards are higher than those required by host countries.
Although it is difficult to suggest that the race to the bottom does not exist, MNEs as a group do not necessarily add to the environmental burden in developing countries.

18. ACTIVE vs. INACTIVE CSR ENGAGEMENT OVERSEAS
Active CSR engagement is now increasingly expected of MNEs. MNEs that fail to do so are often criticized by NGOs.
The nonintervention principle originated from concerns that MNEs might engage in political activities against the national interests of the host country.
What exactly is the “legitimate role” of CSR initiatives in host countries?