1. Corporate Social Responsibility: The Many Meanings of CSR
BA 385
Corporate Social Responsibility: The Many Meanings of CSR
Chapter Two: Corporate Citizenship: Social
Responsibility, Responsiveness and Performance

2. The Pullman Story
The Pullman Town
Should business demonstrate concern for societal welfare?

3. Corporate Social Responsibility (CSR)
The impact of a company’s actions on society.
Requires the individual to consider his/her acts in terms of a whole social system, and holds him/her responsible for the effects of acts anywhere in that system.
The Gap, Inc. Social Responsibility Page

4. Corporate Citizenship Concepts
Corporate Social…
Responsibility
Performance
Responsiveness
Emphasizes…
obligation, accountability
outcomes, results
action, activity
McDonald’s and CSR

5. Business Criticism/ Social Responsibility Cycle
Factors in the Societal Environment
Criticism of Business
Increased Concern for the Social Environment
A Changed Social Contract
Business Assumption of Corporate Social Responsibility
Social Responsiveness, Social Performance, and Corporate Citizenship
A More Satisfied Society
Fewer Factors Leading to Business Criticism
Increased Expectations Leading to More Criticism

6. Historical Perspective on CSR
Legal Model
Laws developed to constrain business
Social Model
Stakeholder expectations heightened
Economic Model
Society determines wants/needs through the marketplace

7. Modification of the Economic Model
Philanthropy
Community obligations
Paternalism
Motivation: Keep government at arm’s length

8. 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:
product safety
environmental sustainability
honesty in advertising
ethical behavior
employee rights
global CSR
affirmative action
Other?

9. CSR: Evolving Viewpoints
Definitions Over Time
CSR considers the impact of the company’s actions on society. --Bauer
CSR requires decision makers to take actions that protect and improve the welfare of society as a whole along with their own interests Davis and Blomstrom

10. CSR: Evolving Viewpoints
More Definitions Over Time
CSR mandates that the corporation has not only economic and legal obligations, but also certain responsibilities to society which extend beyond these obligations McGuire

11. CSR: Evolving Viewpoints
Even More Definitions Over Time
CSR relates primarily to achieving outcomes from organizational decisions concerning specific issues or problems, which by some normative standard have beneficial rather than adverse effects upon pertinent corporate stakeholders. The normative correctness of the products of corporate action have been the main focus of CSR Epstein

12. Carroll’s Four-Part Definition of CSR – The Big One, The “King” of All CSR Definitions
The social responsibility of business encompasses the economic, legal, ethical and discretionary (philanthropic) expectations that society has of organizations at a given point in time.

13. Carroll’s Four-Part Definition of CSR
Understanding the Four Components
Responsibility
Societal
Expectation
Examples
Economic
Required
Be profitable. Maximize sales, minimize costs
Legal
Obey laws and regulations
Ethical
Expected
Do what is right, fair, and just
Philanthropic
Desired/ Expected
Be a good corporate citizen

14. The Pyramid of CSR
Philanthropic Responsibilities Be a good corporate citizen.
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.

15. Arguments Against CSR
Restricts the free market goal of profit maximization
Business is not equipped to handle social activities
Dilutes the primary aim of business
Increase business power
Limits the ability to compete in a global marketplace

16. Arguments For CSR Limits future government intervention
Addresses issues by using business resources and expertise
Addresses issues by being proactive
Addresses social issues business caused and allows business to be part of the solution
Protects business self-interest

17. Ways Firms Respond to CSR Pressure
Cost-benefit approach
Strategic approach
Innovation and learning approach
Defensive approach
Alleviates pain – do what it takes to avoid problems
Only do things for which you identify direct benefit
Recognize changing environment and engage CSR as strategy
CSR involvement provides new opportunities for learning and understanding the marketplace and this brings competitive advantage.
The Civil Corporation, Simon Zadek

18. Corporate Responsibility in the 21st Century
1000 Global Business Leaders surveyed in 2000 said the following will be necessary for 21st century companies:
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, 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.

19. Corporate Social Responsiveness
TWO Alternative Views
Frederick’s CSR1, CSR2, and CSR3
Sethi’s Three-Stage Schema

20. Sethi’s Three Stage Schema
Three ways to classify corporate behavior:
Social obligation – stage one: respond to market forces
Example: McDonald’s offers apples because parents complain
Social responsibility – stage two: bring behavior up to general norms of society
Example: McDonald’s gives out pedometers because “fit is in”
Social responsiveness – stage three: see below
Example: You tell me….
Responsiveness suggests corporations be “anticipatory” and “preventive”.
Obligation and responsibility alone are not enough.
The final stage in CSR is business taking a long-term role in the social context in which it operates.

21. Frederick’s CSR1, CSR2 and CSR3
CSR1 – corporate social responsibility
Example: We acknowledge many families dine regularly at McD’s. We have an obligation to offer some options that are healthier.
CSR2 – corporate social responsiveness
Capacity to respond to social pressures
Literal act of responding or being poised to respond
Example: We offer tasty sliced apples as an alternative to fries (response) because we already have apple suppliers for our pies (capacity).
CSR3 – corporate social rectitude
The moral correctness of the actions taken
Example: You tell me….

22. Corporate Social Performance (CSP)

23. Carroll’s Corporate Social Performance Model – 3D
Plane One: Social Responsibility:
economic, legal, ethical and discretionary/philanthropic
Plane Two: Philosophy of Social Responsiveness (or mode of responding):
reaction, defense, accommodation and proaction
Plane Three: Stakeholder Issues Involved: consumers, environment, community, government, employees, etc.

24. Corporate Citizenship
…embraces all the facets of corporate social responsibility, responsiveness, and performance.
…embraces the functions of business interaction with nonprofit organizations, citizen groups, and other community stakeholders.

25. Research-based Benefits of Good Corporate Citizenship
Improved employee relations
Improved customer relations
Improved business performance
Enhanced company’s marketing efforts

26. Social and Financial Performance
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

27. A Multiple Bottom-Line Perspective economic, social, environmental, other?
Consumer Stakeholders’ “Bottom Line”
Employee Stakeholders’ “Bottom Line”
Community Stakeholders’ “Bottom Line”
Owner Stakeholders’ “Bottom Line”
Other Stakeholders’ “Bottom Line”
Corporate Social Performance

28. Socially Responsible or Ethical Investing
Social Screening
A technique used to screen firms for socially-responsible investment purposes
Portfolio 21: Global Fund using Sustainability SRI (socially responsible investing) Principles

29. Reasons for Upsurge in Socially Responsible Investing
More reliable research on CSP (corporate social performance)
Investment firms using social criteria have solid track record
The socially conscious 1960s generation is making investment decisions

30. For Next Class (1/28) Read chapters three and six
Complete and Hand-In Best Practices Report Assignment by start of class
Read online or print newspaper(s) of choice to find stories of businesses challenged by issues relating to CSR