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Chapter 1-2

MGMT 3020 Chapter 1-2: CSR notes Chapter 1:2


Department
Management
Course Code
MGMT 3020
Professor
Davar Rezania
Chapter
1-2

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MGMT*3020 Chandler Textbook Chapter Readings
Chapter 1
People create organizations to leverage their collective resources in pursuit of common goals.
Organizations pursue these goals by interacting with others inside a larger context called society.
For-profits seek to make money or a profit
Governments exist to define the rules and structures of society within which all organizations must
operate
Non-pofits NGO’s emerge to do social good when the political will or the profit motive is insufficient to
addess soiet’s eeds.
Each performs different roles, but also depends on the others to provide the complete patchwork
of exchange interactions that constitute a well-functioning society
Each of these groups can claim to have a stake in the operations of the firm and some benefit more, or
ioled oe dietl ad othes a e haed  the fi’s atios, ut the ae all oeted i soe
way to what the firm does on a day-to-day basis
A fi’s stakeholdes ilude all those ho ae elated i soe a to the fi’s atiities.
Deciding which demands to prioritize and which to ignore, can be a challenge even more so as social
media provides individuals with the power to disseminate their grievances worldwide. If ignored long
enough, affected parties may act against the firm, such as a product boycott or turn government for
redress, or even write a song and post it to YouTube.
In democratic societies, laws, regulations and judicial decisions provide a minimal framework for business
operations that reflects a rough consensus of the governed.
CSR is critical:
For-pofit seto is the lagest ad ost ioatie pat of a fee soiet’s eoo
Companies intertwine with society in mutually beneficial ways, driving progress and affluence
creating most of the jobs, wealth and innovations that enable society to prosper
Primary delivery system for food, housing, healthcare and other necessities of life
Without modern corporations, the jobs, taxes, donations and other resources that support
governments and non profits would decline significantly further diminishing general well being
Businesses are the engines of society that propel us toward a better future
CSR is controversial:
People who have thought deeply about why does a business exist or what is the purpose of the
for-profit firm they do not agree on answers
Society benefits most when firms focus purely on their own financial success
Others, in contrast look to the views of business leaders who have argued for a roader
perspective
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A New Definition of CSR
Covers the relationships between corporations and the societies with which they interact
Includes the responsibilities that are inherent on both sides of these ties
CSR defines society in its widest sense and on many levels to include all stakeholder and
ostituet goups that aitai a ogoig iteest i the fi’s opeatios
Stakeholder groups range from clearly defined consumers, employees, suppliers, creditors and
regulating authorities to other, more amorphous constituents, such as the media and local
communities
Tradeoffs must be made among these competing interests
Each firm must identify those stakeholders that constitute its operating environment and then
prioritize their strategic importance
CSR provides a broad framework that helps firms embrace these decisions and adjust the internal
strategic planning process to maximize the long-term viability of the organization
Yesteda’s ethial esposiilities a uikl eoe toda’s eooi ad legal eessities
CSR is a fluid concept
CSR is both a process and an outcome
o Describes the process by which firms react to their stakeholders collective set of needs
o Also is the set of atios that ae defied  hat the stakeholdes’ deads euie.
A fi’s suess is dietl elated to its ailit to iopoate stakeholde oes ito its
business model
o Provides a means to do this by valuing the interdependent relationships that exist among
businesses, their stakeholder groups, the economic system, and the communities within
which they exist
CSR covers an uneven blend of different issues that rise and fall in importance from firm to firm
over time
Stakeholders stay the same, but issues that motivate them change
Firms should comply with the legal or regulatory requirements that relate to day-to-day
operations
The Evolution of CSR
Not a new concept
Evidence of social activism in attempts to influence organizational behavior also stretches back
across the centuries
o Mirrored the legal and commercial development of companies as they established
themselves as the driving force of market-based societies
o Wealthy industrialists have long sought to balance the mercantile actions of their firms
with personal or corporate philanthropy, CSR is strongest when leaders view their role as
stewards of resources owned by others
When specific elements of society view leaders and their firms as failing to meet societal needs,
activism results
CSR has become an increasingly relevant topic in recent decades in corporate boardrooms,
businesses and school classrooms
Widespread long-term industry practices, which were previously considered discretionary or
ethical concerns can be deemed illegal or socially unacceptable due to aggressive legal
prosecution or novel social activism
Firms operate against an ever-changing background of what is considered socially responsible
CSR does not repeal the laws of economics under which for-profit firms must operate
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Companies now want to be closer to their customers so that they can respond more quickly to
changes in demand
all business decisions have both economic and social consequences
o trick to successs is managing the conflicting interests of stakeholders in order to meet
their ever-evolving needs and concerns
Culture and Context
a CSR perspective allows firms to manage their stakeholder interactions in a way that maintains
their societal legitimacy
different societies define the relationship between businesses and society in different ways
as societies advance, expectations change and general well-being is redefined
different expectations among rich and poor societies are a matter of priorities
as society prospers, new expecations compel producers to make vehicles that pollute less a
shift in emphasis
Foundations of CSR
CR“ epesets a aguet fo a fi’s eooi iteests hee satisfig stakeholde eeds
becomes central to retaining societal legitimacy
Much debate comes from well intentioned parties who argue the same facts from different
perspectives, breaking down along philosophical and ideological ines
Ethical Argument for CSR
Focuses primarily on tis strategic value to the firm
Advantage of making the business case for CSR is that it is more convincing to those most
skeptial of oadeig the fi’s esposiilities ad is oe likel to e implemented
Offers the greatest potential gain because it will appeal to the widest possible audience
Danger in downplaying an ethical or moral component to CSR is that doing so ignores an
intellectual philosophical foundation that many believe is essential to fully understand CSR
o Normative Ethics draws on moral philosophy to categorize individual actions as either
right or wrong in specific situations
o Descriptive ethics explains why individualsmake these right or wrong decisions
o Practical ethics applies ethical principles that determine right and wrong actions to day-
to-day decision making
Underpinning each of these three core components is the assumption that right and wrong can
be determine
o Glosses over the issue of whether ethical values are relative or absolute
An ethical argument for CSR essentially rests on one of two philosophical approaches
consequentialist reasoning or categorical reasoning
o Consequential reasoning located ethicality in terms of the outcomes caused by an action
o Categorical moral reasoning is defined as embodying those activities which reflect a
osideatio of oe’s dut o oligatio
Moral Argument for CSR
Firms are only able to obtain those profits because of the society in which they operate
All of the fi’s stakeholdes eist piail as ees of a soiet
Without that social context, there is no marketplace in which the business can compete
CSR emerges from this interdependent relationship between business and society
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find more resources at oneclass.com
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