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2.docx

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Department
Management
Course Code
MGMT 1040
Professor
William(bill) Woof

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Chapter 2 – Corporate Citizenship, Social Responsibility, Responsiveness, and Performance • The corporate social responsibility concept ( CSR) “ consider your actions not just as a self-interest but also actions that will affect society as a whole because your actions should reflect the way society is affected by it” • The growth of CSR concept performs by looking at the obligations, actions and outcomes) • Businesses don’t only have to purse their own self-interest to make a profit; they should consider CSR as well • Historically; Adam Smith viewed CSR as “the invisible hand” your self-interest could benefit society as a whole • Presently; we look at the stakeholder model and the more stakeholders we analyze ( primary and secondary) the more we realize that we have CSR Modification of the Economic Model • The CSR MODEL was seen in practice in these 3 areas ( philanthropy, community obligation and paternalism) • Before mention “CSR” in the economy ; corporations still showed some characters of CSR by philanthropy – which was about given charity and other causes • Community obligation: to improve the economy example: during or after war everyone got involved in the community to make it a better place to be in • In the 1920’s starting to grow non profit business groups; doing things that are not meant for just profit but doing them and organizing them in a sake of social- interest • 1950’s to now modern area towards CSR gained more acceptance in corporations (social and moral concerns) So, what does CSR Really Mean? • The idea of social responsibility suppose that the corporation has not only economic and legal obligations, but also certain responsibilities to society in which extend beyond the obligation  this statement is attractive and detailed (pg.71) • This statement The social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organizations at a given point of time The Economic responsibilities: REQUIRED BY SOCIETY • Business have responsibility in the economy • All businesses are in the economic system and therefore have economic responsibility • Companies think of product / services that could benefit society as a whole • Think of long-term financial investment – revenue, profit, investors, employees • We aim for a strong economic sustainability by making the right economic decisions that should benefit consumers / producers as a whole Legal Responsibilities: REQUIRED BY SOCIETY • Legal responsibilities for business are based on what society views as “code of ethics” • Businesses should accept the law and keep aware that law can change over time and as long as the business is aware of what is going on than they should be okay • Laws are mandatory but not adequate Ethical Responsibility: EXPECTED BY SOCIETY • About the norms, standards and values consider what consumers, communities, employees consider what is to be fair and at same time protects rights • Ethical responsibility will always continue to grow and more value will be put into it • There is always going to be a high ethical expectations that companies need to perform • Business need to understand different norms and business practices • Look at different moral philosophies that can be applied to ethical business Philanthropic Responsibilities: EXPECTED FOR BUSINESS TO DO • Is additional behaviors and activities that society finds desirable and that the values of the business supports. Like giving support to charities or community projects • Companies that are “ doing well by doing good” • You can research companies that are giving back to the communities • Example of a company that do good: is when they give away money, offer services, volunteer time to education, youth, health organizations, arts & culture, neighbourhood improvements, programs etc. • Corporations always participate in fundraising • There is always an ethical motivation for companies to be involved and sometimes they do it just so show society that they are Good Corporation and therefore people should give back to the company by buying their products etc. The pyramid of Corporate Social Responsibility: • Just looked at the 4 aspects of CSR and now you could learn how to make a pyramid on pg ( 76.) • There is a specific order of the 4 aspects when drawing the pyramid • On the base (bottom) a) economic responsibilities b) legal responsibilities (its also required to conduct what is right/wrong c) Ethical Responsibilities ( obligation to do what is fair) d) philanthropic ( be good)  this pyramid helps managers make decisions and see their responsibilities to all 4 aspects • Look at critical issues you can connect different issues in the pyramid example: “ economic and ethic” • In order the 4 aspects can also be said: Make a profit, Obey the law, be ethical and be a good corporate citizen • Listed below are some examples; of how to find companies that are socially responsible  Make products that are safe  Commit to safe work practices  Recycle with the company  Protect employees rights  Promote energy conversation programs Pgs. 78-88 Arguments against and for Corporate Social Responsibility - Those who argue against CSR are not using the four-part definition presented earlier in text, but they’re viewing it through a narrow view (i.e. the pursuit of merely social goals) Arguments against CSR Classical Economics - Corporation has one responsibility: maximizing profits - Milton Friedman: social issues are not concern of businesspeople - If free market cannot solve social problem, it is up to government/legislation Business Not Equipped - Managers oriented towards finance/operations do not have expertise to make social decisions Dilutes Business Purpose - Puts business into fields not related to its goals; dilutes purpose Too Much Power Already - Business has too much power already: economic, environmental, technological Global Competitiveness - Business must internalize costs that it normally passed on to society (such as pollution), costs of products will rise, making them less competitive in the international market Arguments for CSR Enlightened Self-Interest - In order to survive in the long-term, a business must be responsive to society’s expectations Warding Off Government Regulation - If business is socially responsible, this would avert future government intervention Resources Available - Business is a reservoir of management talent, functional expertise; capable of making changes Proacting vs. Reacting - Anticipating and initiating is more practical and less costly than reacting to problems that have already occurred Public Support - Public strongly supports CSR The Business Case for CSR - Four ways firms respond to CSR pressure: 1. Defensive approach: designed to alleviate pain, avoid pressure that makes them incur costs 2. Cost-benefit approach: undertaking activities if benefits > costs 3. Strategic approach: recognize changing environment and engage with CSR 4. Innovation and learning approach: active engagement with CSR provides new opportunities to understand marketplace, and enhance organizational learning ; leads to  competitive advantage ETHICS IN PRACTICE CASE Who: Blake Mykosie (founder of TOMS shoes) What: Founded the company Toms Why: While visiting poor villages in Argentina, wearing light slip-on shoes, he formulated plan to start a shoe company where they would give away one pair of shoes to a needy person for every shoe the company sells Where: Argentina (where he thought of the idea) Entered markets in USA, Japan, Australia, Canada, France by 2008 summer When: 2006 Corporate Social Responsiveness - Corporate social responsiveness: action-oriented variant of CSR - “Responsibility” is not dynamic enough; only the process of assuming an obligation - “Responsiveness” creates dynamic, action-oriented condition - Action phase of management’s response in the social sphere Corporate Social Performance - Performance focus is to suggest what really matters is what companies are trying to accomplish - To develop framework of CSP, nature of responsibility and particular philosophy/strategy must be identified - As times change, so does emphasis on range of ethical issues Carroll’s CSP Model - Brings together three dimensions: 1. Social responsibility categories: economic, ethical, legal, philanthropic 2. Philosophy of social responsiveness: reaction, defense, accommodation, proaction 3. Social (stakeholder) issues involved: consumers, environment, employees, etc. - Conceptual model helps in understanding that social responsibility is not separate or distinct from economic performance Corporate Citizenship - Think about companies as “citizens” who have certain responsibilities to fulfill in order to be perceived as good corporate citizens Broad views - Corporate citizenship: “serving a variety of stakeholders well” - Three part view (Fomburn): 1. Reflection of shared moral and ethical principles 2. Vehicle for integrating individuals into the communities in which they work 3. Form of enlightened self-interest that balances all stakeholders’ claims and enhances a company’s long-term value - Davenport: includes commitment to ethical business behaviour, and balancing needs of stakeholders while working to protect environment Narrow Views - Altman: corporate citizenship = corporate community relations - Embraces functions through which business intentionally interacts with non-profit organizations, citizen groups, and other stakeholders at community level Drivers of Corporate Citizenship - Internal motivators: traditions/values, reputation/image, business strategy, recruiting/retaining employees - External pressures: customers/consumers, community expectations, laws and political pressures Benefits of Corporate Citizenship - Improved employee relations - Improved customer relations - Improved business performance
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