Global Corporate Citizenship Chapter 7 Global Corporate Citizenship

Ch. 7: Key Learning Objectives Defining global corporate citizenship Understanding how the multiple dimensions of corporate citizenship progress through a series of stages Assessing how corporate citizenship differs among various countries and regions of the world Understanding how a business or social groups can audit corporate citizenship activities and report their findings to stakeholders Recognizing how an organization communicates its corporate citizenship practices and manifests its attention to the balanced scorecard and triple bottom line approaches

Opinion Question What do you think is the most important consequence of corporate global citizenship? Building consumer allegiance Building positive national image Building stakeholder relationships None of the above Answer Now

Global Corporate Citizenship Refers to putting an organization’s commitment to social and environmental responsibility into practice worldwide not only locally and regionally. Entails putting corporate social responsibility into practice by Proactively building stakeholder partnerships Discovering business opportunities in serving society Transforming a concern for financial performance into a vision of integrated financial and social performance

Global Corporate Citizenship Concept is consistent with several major themes discussed throughout this book: Managers and companies have responsibilities to all their stakeholders Corporate citizenship (CC) involves more than just meeting legal requirements CC requires that a company focus on, and respond to, stakeholder expectations Undertake those voluntary acts that are consistent with its values and business mission CC involves both what the corporation does and the processes and structures through which it engages stakeholders and makes decisions

Global Corporate Citizenship The basis for corporate citizenship does not rely on the generosity of a firm's senior management or their awareness of their role as trustees of the public's interests Global corporate citizenship refers to putting an organization's commitment to social and environmental responsibility into practice internationally Robert Civita, chairman and CEO of the Brazilian Abril Group, has defined global corporate citizenship as “capitalism with a social conscience." 

Citizenship Profile Research by Gardberg and Fombrun argues that corporate citizenship activities should be viewed as strategic investments (like research and development) Create intangible assets that lead to improved legitimacy, reputation and competitive advantage Particularly true of global firms where citizenship activities overcome nationalistic barriers and build local advantage Important for global firms to choose a Citizenship Profile which matches the local setting Public expectations vary on factors such as environmental risk, philanthropy and worker rights Companies that choose the right configuration of citizenship activities to match public expectations will reap strategic advantages

Management Systems for Global Corporate Citizenship Global corporate citizenship is more than espoused values; it requires action In order to become leading citizens of the world, companies must establish management processes and structures to carry out their citizen commitments Could be assigned to committee of the board, senior executive committee, single executive/group of executives, or departments of corporate citizenship As the practice of corporate citizenship has spread, so have professional associations and consultancies serving managers in this arena Business for Social Responsibility, Canadian Business for Social Responsibility, Asian Forum on Corporate Social Responsibility

CLASS DISCUSSION QUESTION: How do you go about learning the specific expectations of a particular country and/or culture?

Understanding how the multiple dimensions of corporate citizenship progress through a series of stages

The Stages of Global Corporate Citizenship Is a developmental change process, involving new attitudes, routines, policies, programs and relationships Mirvis and Googins of the Center for Global Citizenship proposed a five stage model of global corporate citizenship Each stage is characterized by distinct patters of: Citizenship content Strategic intent Leadership Structure Issues management Stakeholder relationships Transparency

Stages of Global Corporate Citizenship Figure 7.1

Assessing how corporate citizenship differs among various countries and regions of the world

Corporate Citizenship in Comparative Perspective How businesses interpret and act on their citizenship varies across the globe Trends from current studies Companies in Northern America and Europe are more likely than Asian companies to have written corporate citizenship policies, Asian companies however are more likely to have written ethics policies Comparative study across the Americas showed “huge gap” between the practices of companies in U.S. and Canada and Latin America and Caribbean Governments in Europe play a much more important role in promoting CSR than in the U.S.

Understanding how a business or social groups can audit corporate citizenship activities and report their findings to stakeholders

Social Performance Auditing Is a systematic evaluation of an organization’s social, ethical, and environmental performance Demand for social auditing has gained momentum in Europe and U.S. In some European countries auditing is required by law Corporate citizenship scales against which a firm’s citizenship activities can be compared include: Performance measured against a company’s own mission statement or policies Performance measured against a set of established standards Like the Davenport Principles presented in Exhibit 7B of the text, or the global standards presented on the following slides

Global Social Audit Standards Figure 7.2

Recognizing how an organization communicates its corporate citizenship practices and manifests its attention to the balanced scorecard and triple bottom line approaches

Trends in Corporate Social Reporting Figure 7.3

Other Social Reporting Methods Balanced Scorecard A focused set of key financial and nonfinancial indicators, with four quadrants or perspectives – internal business processes, learning and growth, customer, and financial Triple Bottom Line Companies report to stakeholders not just their financial results -- as in the traditional annual report to stakeholders – but also their environmental and social impacts Financial, social, and environmental results, taken together as an integrated whole, constitute a company’s triple bottom line Transparency Growing demand by stakeholders for companies to report clearly, fully, and publicly the results of their financial, social and environmental performance audits

Considerations in becoming a TNC Number of stakeholders increases geometrically Significantly greater possibility of an expectation gap Cultural differences Differing expectations Issues management becomes significantly more complex