1. Prepared by Deborah Baker Texas Christian University
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Chapter 2
Prepared by Deborah Baker Texas Christian University
Business and Society: Ethics and Stakeholder Management, 7e • Carroll & Buchholtz Copyright ©2009 by South-Western, a division of Cengage Learning.  All rights reserved

2. Chapter 2 Learning Outcomes
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Chapter 2 Learning Outcomes
Explain how corporate social responsibility (CSR) evolved and now encompasses economic, legal, ethical, and philanthropic components.
Provide business examples of CSR and corporate citizenship.
Differentiate between corporate citizenship, social responsibility, responsiveness, and performance.
Elaborate on the concept of corporate social performance (CSP). 2

3. Chapter 2 Learning Outcomes
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Chapter 2 Learning Outcomes
Explain how corporate citizenship develops in stages in companies.
Describe the socially responsible investing movement. 2

4. Chapter 2 Outline The Corporate Social Responsibility Concept
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Chapter 2 Outline
The Corporate Social Responsibility Concept
Arguments Against and For Corporate Social Responsibility
Corporate Social Responsiveness
Corporate Social Performance
Corporate Citizenship
Business’s Interest in Corporate Citizenship
Social Performance and Financial Performance Relationship
Socially Responsible or Ethical Investing
Summary
Key Terms
Discussion Questions
The Corporate Social Responsibility Concept
Historical Perspective on CSR
Corporate Social Responsibility
The Four-Part Definition of CSR
Arguments Against and For Corporate Social Responsibility
Arguments Against CSR
Arguments for CSR
Corporate Social Responsiveness
Ackerman and Bauer’s Action-Orients View
Sethi’s Three-Stage Schema
Frederick’s CSR1 and CSR2
Epstein’s Process View
Other Views
Measurable Dimensions of Responsiveness
Corporate Social Performance
Carroll’s Corporate Social Performance Model
Usefulness of the Model to Academics and Managers
Wartick and Cochran’s Extensions
Wood’s Reformulated Model
Nonacademic Research on Corporate Social Performance
Social Performance and Financial Performance
Socially Conscious or Ethical Investing
Summary

5. Introduction to Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Introduction to Chapter 2
Business allegations…
Little concern for the consumer
Cares nothing about the deteriorating social order
Has no concept of acceptable ethical behavior
Indifferent to the problems of minorities and the environment
What responsibility does business have to society? @

6. Corporate Social Responsibility (CSR)
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Social Responsibility (CSR)
Corporate Social Responsibility
Seriously considering 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.

7. Corporate Citizenship Concepts
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Citizenship Concepts
Corporate Social…
Responsibility
Performance
Responsiveness
Emphasizes…
Obligation, accountability
outcomes, results
action, activity

8. Business Criticism/ Social Responsibility Cycle
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
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
(have led to)
(which has resulted in)
Figure 2-1

9. Historical Perspective on CSR
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Historical Perspective on CSR
Economic Model
Legal Model
Social Model

10. Modification of the Economic Model
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Modification of the Economic Model
Philanthropy
Community obligations
Paternalism
Motivation: Keep government at arm’s length

11. Acceptance and Broadening of Meaning
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
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:
corporate governance
product safety
honesty in advertising
employee rights
affirmative action
environmental sustainability
ethical behavior
global CSR

12. CSR: Evolving Viewpoints
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
CSR: Evolving Viewpoints
CSR considers the impact of the company’s actions on society.
CSR requires decision makers to take actions that protect and improve the welfare of society as a whole along with their own interests.

13. CSR: Evolving Viewpoints
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
CSR: Evolving Viewpoints
CSR supposes that the corporation has not only economic and legal obligations, but also certain responsibilities to society which extend beyond these obligations.

14. CSR: Evolving Viewpoints
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
CSR: Evolving Viewpoints
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.

15. Carroll’s Four-Part Definition of CSR
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Carroll’s Four-Part Definition of CSR
The social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organizations at a given point in time.

16. Carroll’s Four-Part Definition of CSR
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Carroll’s Four-Part Definition of CSR
Responsibility
Societal
Expectation
Examples
Economic
Required
Be profitable. Maximize sales, minimize costs.
Legal
Obey laws, adhere to regulations
Ethical
Expected
Avoid questionable practices. Do what is right, fair, and just
Philanthropic
Desired/ Expected
Be a good corporate citizen. Give back.
Figure 2-2

17. Legal Responsibilities
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Legal Responsibilities
Law cannot address all the topics or issues that business may face
Law often lags behind more recent concepts of what is considered appropriate behavior
Laws are made by lawmakers and may reflect the personal interests/motivation of legislators rather than appropriate ethical justifications

18. Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
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.
Figure 2-3

19. + Total Corporate CSR = The CSR Equation Economic Responsibilities
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
The CSR Equation
Economic Responsibilities
Legal Responsibilities
Ethical Responsibilities
Philanthropic Responsibilities + =
Total Corporate CSR

20. A Stakeholder View of CSR
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
A Stakeholder View of CSR
Stakeholder Group Addressed and Primarily Affected
CSR Component
Owners
Con- sumers
Employees
Community
Others
Economic 1 4 2 3 5
Legal
Ethical
Philanthropic
Figure 2-4

21. Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Arguments Against CSR
Restricts the classic economic goal of profit maximization
Business is not equipped to handle social activities
Dilutes the primary purpose of business
Increases the power of business
Limits the ability to compete in a global marketplace

22. Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Arguments For CSR
Addresses social issues brought on by business, and allows business to be part of the solution
Protects business self-interest
Wards off future government intervention
Addresses issues by using business resources and expertise
Addresses issues by being proactive
The public supports CSR

23. Ways Firms Respond to CSR Pressure
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Ways Firms Respond to CSR Pressure
Cost-benefit approach
Strategic approach
Innovation and learning approach
Defensive approach
The Civil Corporation, Simon Zadek

24. Corporate Responsibility in the 21st Century
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Responsibility in the 21st Century
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 and its 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.

25. Corporate Social Responsiveness
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Social Responsiveness
Responsibility
Implies more of a state or condition of having assumed an obligation
Responsiveness
Connotes a dynamic, action-oriented condition

26. Corporate Social Responsiveness
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Social Responsiveness
Alternative Views
Sethi’s Three-Stage Schema
Frederick’s CSR1, CSR2, and CSR3
Epstein’s Process View
Figure 2-7

27. Corporate Social Performance
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Social Performance
Figure 2-8

28. Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Social Performance: Extensions, Reformulations, Reorientations
Wartick and Cochran’s CSP Extensions
Wood’s Reformulated CSP Model
Swanson’s Reorientation of CSP
Figure 2-9

29. Corporate Social Performance
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Social Performance
Figure 2-10

30. Corporate Citizenship
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Citizenship
Corporate Citizenship…
…embraces all the facets of corporate social responsibility, responsiveness, and performance.
…serves a variety of stakeholders.

31. Corporate Citizenship
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Corporate Citizenship
A reflection of shared moral and ethical principles
A vehicle for integrating individuals into the communities in which they work
A form of enlightened self-interest that balances stakeholders’ claims and enhances a company’s long-term value
Charles J. Fombrum, “Three Pillars of Corporate Citizenship”

32. Drivers of Corporate Citizenship
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Drivers of Corporate Citizenship
Internal Motivators
External Pressures
Traditions and values
Reputation and image
Business strategy
Recruiting and retaining employees
Customers and consumers
Expectations in the community
Laws and political pressures

33. Benefits of Corporate Citizenship
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Benefits of Corporate Citizenship
Improved employee relations
Improved customer relationships
Improved business performance
Enhanced company’s marketing efforts

34. Stages of Corporate Citizenship
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Stages of Corporate Citizenship
Figure 2-11

35. Development Challenges of Corporate Citizenship
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Development Challenges of Corporate Citizenship
Figure 2-12

36. Business’s Interest in Corporate Citizenship
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Business’s Interest in Corporate Citizenship
Nonacademic Research
Fortune's ranking of “Most Admired” and “Least Admired” corporations
Conference Board’s Ron Brown Award for Corporate Leadership
CRO Magazine Awards

37. Social and Financial Performance Relationship
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Social and Financial Performance Relationship
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
Figure 2-13

38. “Multiple Bottom Line” Perspective
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
“Multiple Bottom Line” Perspective
Consumer Stakeholders’ “Bottom Line”
Employee Stakeholders’ “Bottom Line”
Community Stakeholders’ “Bottom Line”
Owner Stakeholders’ “Bottom Line”
Other Stakeholders’ “Bottom Line”
Corporate Social Performance
Figure 2-14

39. “Triple Bottom Line” Perspective
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
“Triple Bottom Line” Perspective
Key Spheres of Sustainability
Economic
Social
Environmental

40. Socially Responsible or Ethical Investing
A technique used to screen firms for socially-responsible investment purposes
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Socially Responsible or Ethical Investing
Social Screening

41. Reasons for Upsurge in Socially Responsible Investing
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Reasons for Upsurge in Socially Responsible Investing
More reliable research on CSP
Investment firms using social criteria have solid track record
The socially conscious 1960s generation is making investment decisions

42. Selected Key Terms Business for Social Responsibility
Chapter 2
Corporate Citizenship: Social Responsibility, Responsiveness, and Performance
Selected Key Terms
Business for Social Responsibility
corporate social responsibility
philanthropy
community obligations
paternalism
economic responsibilities
legal responsibilities
ethical responsibilities
philanthropic responsibilities
Pyramid of CSR
corporate social responsiveness
corporate social performance (CSP)
corporate social performance model
corporate citizenship
Triple Bottom Line
sustainability
corporate sustainability
socially responsible
ethical investing