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Chapter 1

MGMT 3020 Chapter Notes - Chapter 1: Corporate Social Responsibility, Profit Maximization, Sweatshop

Course Code
MGMT 3020
Ruben Burga

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Strategic Corporate Social Responsibility:
- stakeholders: individuals who have stake in the firm’s operations
> just because someone meets the definition of an interested constituent, a
firm is not compelled (legally or logically)
> affected neglected parties may have negative impact on firm
- laws only provide minimal framework
- business leaders face finding a balance between legal sanction and societal expectations
> What is the relationship between a firm and the societies within which it
> What responsibility does a firm owe society to self-regulate its actions in
suit of profit?
- CSR is critical profit sector is largest and most innovative part of an economy
- obligations beyond economic success
- wrong belief that company exists only to make profits
- make a contribution to society
- CSR: A view of the corporation and its role in society that assumes a responsibility
among firms to pursue goals in addition to profit maximization and a responsibility
among a firm’s stakeholders to hold the firm accountable for its actions.
- Economic Responsibilities – produce an acceptable return on its owners investment
Legal Responsibilities – within legal framework
Ethical Responsibilities – to do no harm to stakeholders
Discretionary Responsibilities – proactive behaviours that can benefit the firm and
- early examples – slave trade…
- CSR is not a stagnant concept  it changes over time (evolving standards)
- Polartec company example – didn’t have to rebuild but he did and sales did well as a
- Nike – reacted to sweatshop criticism
- societies differ – so does CSR  two main similarities = democracy and economics
- general social wellbeing  related to Mslow’s hierarchy of needs
> survival, safety, love and belonging, esteem and respect, self-fulfillment
- greater resources – higher CSR expectations
- ethical argument consequentialist (outcomes caused by an action)
categoriacal (process oriented)
- moral argument success from society, obligation to have a strong relationship with it
> money is means rather than end
- rational argument minimize operational and financial constratins on business
poor CSR has negative impacts on business
- economic argument economic self-interest
1. Affluence  having lots of money…obligation to give back
2. Sustainability  consider the speed at which we’re approaching the earth’s limits
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