1. BUSINESS & SOCIETY Ethics and Stakeholder Management
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BUSINESS & SOCIETY Ethics and Stakeholder Management
Carroll & Buchholtz 6e
CORPORATE CITIZENSHIP: SOCIAL RESPONSIBILITY, RESPONSIVENESS, and PERFORMANCE
Prepared by Deborah Baker Texas Christian University
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Business and Society: Ethics and Stakeholder Management, 6e • Carroll & Buchholtz Copyright ©2006 by South-Western, a division of Thomson Learning.  All rights reserved

2. Business Allegations…
Little concern for the consumer
Cares nothing about the deteriorating social order
Has no concept of ethical behavior
Indifferent to the problems of minorities & the E.
1. Does business have a responsibility to society?
2. How much? What kind?
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3. Corporate Social Responsibility
Began as-
Consideration of the impact of a
company’s actions on society.
Evolved into-
The social responsibility of B. to meet
the economic, ethical, legal, &
philanthropic expectations society has
of organizations at a given point in time.
Other definitions in text.
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4. Since the 1950’s, the concept of CSR has gained considerable acceptance & the meaning has been broadened to include specific issues:
product safety
honesty in advertising
employee rights
affirmative action
environmental sustainability
ethical behavior (precedes laws)
global CSR- how to behave abroad
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5. Definition of CSR The Four Components Responsibility Societal
Expectation
Examples
Economic
Required
Be profitable. Produce valuable
G/S at fair price
Legal
Obey laws & regulations
(that represent society’s values)
Ethical
Expected
Do what is right, fair, & just
Philanthropic
Desired/ Expected
Be a good corporate citizen
How?
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6. The Pyramid of CSR Components are inseparable & cause conflict
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The Pyramid of CSR Components are inseparable & cause conflict
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.
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7. Stakeholder View of CSR
Stakeholder Group Addressed & Affected
CSR Component
Owners
Con- sumers
Employees
Community
Others
Economic 1 4 2 3 5
Legal
Ethical
Philanthropic
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8. They withdraw their support!
If society (SH) do not view business at legitimate, what happens?
They withdraw their support!
--What makes a B. legitimate?
Create value for SH
Follow the ‘rules’ set forth by society
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9. Arguments Against CSR Restricts profit maximization
Business is not equipped to handle social activities
Dilutes the primary aim of business
Business already has enough power
Limits the ability to compete in a global marketplace (CSR increases costs).
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10. Arguments For CSR
Business caused the social problems & should be responsible for the solution
Limits future government intervention & regulation
Better to be proactive than reactive
Addresses issues only business has resources & expertise to control
Safe product
Safe working conditions
Protects business self-interest
Healthy climate
Reputation
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11. Ways Firms Respond to CSR Pressure
Cost-benefit approach
Do it if benefits > costs
Strategic approach
Recognize E. changing; build ethics into strategy
Innovation & learning approach
Look for CSR opportunities to gain competitive advantage
Defensive approach
Do bare minimum to avoid pressure
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12. CSR in the 21st Century Corporations are expected to:
Demonstrate commitment to society’s values & contribute to society
Insulate society from the negative impacts of company operations & G/S.
Share benefits of company activities with SH
Demonstrate that the company can make more money by doing the right thing.
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13. Corporate Citizenship
Corporate Social…
Responsibility (CSR)
Performance (CSP)
Responsiveness (CSR2)
Emphasizes…
Obligation to society, accountability
Accomplishments, outcomes, results
(of adopting CSR/CSR2 philosophy)
Willingness to take action
(in response to society’s demands)
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14. Corporate Social Performance
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15. Corporate Citizenship
…combination of CSR, CSR2, CSP
…commitment to ethical business practices, protecting
the environment & balancing the needs of SH
 Triple Bottom Line
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16. Benefits of Good Corporate Citizenship
Improved employee relations
Improved customer relations
Improved business performance
Enhanced marketing.
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17. Relationship Between CSP & Financial Performance
Perspective 1: Socially responsive firms are more profitable
Perspective 2: The financial performance of a firm drives its social performance
Perspective 3: Social performance, financial performance & reputation are interrelated & we can’t determine what drives what.
Virtuous circle
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18. Socially Responsible Investing
Social Screening
Investors screen firms’ levels of CSR,
CSR2 and CSP before making
investment decisions
Why now more than ever?
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19. For next class Read Martha Stewart Case Make a list of stakeholders
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