1. Global Corporate Citizenship
Chapter 4
Global Corporate Citizenship
McGraw-Hill/Irwin
Copyright © The McGraw-Hill Companies, All Rights Reserved.

2. Ch. 4: Key Learning Objectives
Defining corporate citizenship and global corporate citizenship
Contrasting the structures and processes businesses use to manage their social responsibilities
Evaluating 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 the leading-edge corporate citizenship companies and how they carry out their corporate citizenship mission
4 - 2

3. Introduction to Corporate Citizenship
Refers to businesses putting corporate social responsibility into practice
Involves
Proactively building stakeholder partnerships
Discovering business opportunities in serving society, and
Transforming a concern for financial performance into a vision of integrated financial and social performance

4. Davenport Principles of Corporate Citizenship
One researcher's answer to core elements of corporate citizenship
Total of 20 Principles with 3 performance categories: ethical business behavior, stakeholder commitment, and environmental commitment
For stakeholder commitment -- principles define overall standards and specific standards for 5 stakeholder groups
Overarching definition and standard:
Good corporate citizens strive to conduct all business dealings in an ethical manner, make a concerned effort to balance the needs of all stakeholders, while working to protect the environment

5. Davenport Principles of Corporate Citizenship
Exhibit 4.Aa
Ethical Business Behavior
1) Engages in fair and honest business practices in its relationship with stakeholders.
2) Sets high standards of behavior for all employees.
3) Exercises ethical oversight of the executive and board levels.
Stakeholder Commitment
4) Strives to manage the company for the benefit of all stakeholders.
5) Initiates and engages in genuine dialogue with stakeholders.
6) Values and implements dialogue.

6. Davenport Principles of Corporate Citizenship
Exhibit 4.Ab
Community
7. Fosters a reciprocal relationship between the corporation and community.
8. Invests in the communities in which corporation operates.
Consumers
9. Respects the rights of consumers.
10. Offers quality products and services.
11. Provides information that is truthful and useful.

7. Davenport Principles of Corporate Citizenship
Exhibit 4.Ac
Employees
12. Provides a family-friendly work environment.
13. Engages in responsible human-resource management.
14. Provides an equitable reward and wage system for employees.
15. Engages in open and flexible communication with employees.
16. Invests in employee development.

8. Davenport Principles of Corporate Citizenship
Exhibit 4.Ad
Investors
17. Strives for a competitive return on investment.
Suppliers
18. Engages in fair trading practices with suppliers.
Environmental Commitment
19. Demonstrates a commitment to the environment.
20. Demonstrates a commitment to sustainable development.

9. Citizenship Profile
Research by Gardberg and Fombrun argues that corporate citizenship activities should be viewed as strategic investments (like research & 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

10. Business Commitment to Citizenship –
Examples of Corporate Citizenship Statements
Exhibit 4.Ba
ExxonMobil – “We pledge to be a good corporate citizen in all the places we operate worldwide. We will maintain the highest ethical standards, comply with all applicable laws and regulations, and respect local and national cultures. We are dedicated to running safe and environmentally responsible operations. (
Ford – “Corporate citizenship has become an integral part of every decision and action we take. We believe corporate citizenship is demonstrated in who we are as a company, how we conduct our business and how we take care of our employees, as well as in how we interact with the world at large.” (
Nike – “Our vision is to be an innovative and inspirational global citizen in a world where our company participates. Every day we drive responsible business practices that contribute to profitable and sustainable growth.” (

11. Business Commitment to Citizenship –
Examples of Corporate Citizenship Statements
Exhibit 4.Bb
Nokia – “Our goal is to be a good corporate citizen wherever we operate, as a responsible and contributing member of society.” (
Toyota – “With the aim of becoming a corporate citizen respected by international society, Toyota is conducting a wide range of philanthropic activities around the world. Its activities cover five major areas: education, the environment, culture and the arts, international exchange and local communities.” (

12. Global Corporate Citizenship
Public expectation that as companies expand internationally they will behave in ways that enhance benefits and minimize risks for all stakeholders
Companies must have an acceptable level of corporate citizenship to earn and maintain a “license to operate” in the countries where do business
Definition of Global Corporate Citizenship
Process of identifying, analyzing, and responding to the company’s social, political, and economic responsibilities as defined through law and public policy, stakeholder expectations, and voluntary acts flowing from corporate values and business strategies. Involves actual results and the processes through which they are achieved.

13. Global Corporate Citizenship
Concept is consistent with themes throughout this text
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 and 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

14. Management Structures for Corporate Citizenship
2004 Business for Social Responsibility study found no single universally accepted design for CSR (corporate social responsibility) management systems
Could be assigned to committee of the board, senior executive committee, or single executive/group of executives
Other management structure research has found
Some companies have broadened scope of Public Affairs Offices to include corporate citizenship (see Ch. 2)
Emerging trend is separate department

15. Stages of Corporate Citizenship
Is a developmental change process, involving new attitudes, routines, policies, programs and relationships
Model (shown on next slide) by Mirvis and Googins shows sequence of 5 stages based on
Citizenship content
Strategic intent
Leadership
Structure
Issues management
Stakeholder relationships
Transparency

16. Stages of Corporate Citizenship
Figure 4.1

17. Transforming Stage of Corporate Citizenship
Is highest stage, Stage 5
Qualities of companies at this stage
Visionary leaders motivated by higher sense of corporate purpose
Partner extensively across organizational, sector, and national borders to address social problems

18. Limits to Corporate Citizenship
Despite growth in many companies and countries, are some critics of corporate citizenship activities
An example (excerpt from Exhibit 4.D)
[F]or most companies, CSR [corporate social responsibility] does not go very deep. There are many interesting exceptions—companies that have modeled themselves in ways different from the norm; often, particular practices that work well enough in business terms to be genuinely embraced; charitable endeavors that happen to be doing real good, and on a meaningful scale. But for most conventionally organized public companies—which means almost all of the big ones—CSR is little more than a cosmetic treatment. The human face that CSR applies to capitalism goes on each morning, gets increasingly smeared by day and washes off at night.
--“The Good Company: A Survey of Corporate Social Responsibility,” The Economist, January 22, 2005, p. 4.

19. Corporate Citizenship in Comparative Perspective
How businesses interpret and act on their citizenship varies across the glob
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 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.

20. Corporate Social Performance Audit
Is a systematic evaluation of an organization’s social, ethical, and environmental performance
Demand for social auditing has grown in Europe and U.S.
In some European countries is required by law
Can take 2 forms
Performance measured against a company’s own mission statement or policies
Performance measured against a set of established standards
Like the Davenport Principles presented earlier, or the global standards presented on the following slides

21. Global Social Audit Standards
Figure 4.2

22. Trends in Corporate Social Reporting
Figure 4.3

23. Additional Social Audit Approaches
Balanced Scorecard
Set of key financial and non-financial indicators
Triple Bottom Line
Financial, social and environmental results taken together as an integrated whole
Transparency
Growing demand by stakeholders for companies to report publicly the results of their financial, social and environmental performance audits

24. Corporate Citizenship Awards
100 Best Corporate Citizens annual ranking by Business Ethics Magazine
Joint initiative with scholars and KLD Research and Analytics
Companies that have consistently been on the list since its inception in 2000 shown on next slide

25. The Best Corporate Citizens for the Past 7 Years
Exhibit 4.F
These organizations have made Business Ethics’ 100 Best Corporate Citizens list since the list began in 2000:
Brady Corporation
Cisco Systems
Cummins Engine
Ecolab
Graco
Herman Miller
Hewlett-Packard
Intel
Modine Manufacturing
Pitney Bowes
Procter & Gamble
St. Paul Travelers Cos.
Southwest Airlines
Starbucks
Timberland
Whirlpool

26. Corporate Citizenship Awards
Corporate reputation
Joint initiative between Reputation Institute and Harris Interactive
Johnson & Johnson top rated 7 years in a row
Technology companies were rated top industry
Fortune magazine annual “Most Admired” list
Includes a peer rating of social responsibility
Among companies recognized: UPS, Public Super Markets, Starbucks, and Herman Miller