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dian Business and Society:

Ethics & Responsibilities

Chapter
Seven
 Chapter Outline
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Corporate Social Responsibility

Debate: The role of business is to make
money vs. Its more than that
Social Responsibility Theories
Pyramid of Corporate Social Responsibility
Corporate Sustainability (CS)
Reputation Management
Social Impact Management
Triple-E Bottom Line (TBL)
Good Corporate Citizenship

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 Corporate Social Responsibility:
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Definition
The way a corporation achieves a
balance among it economic, social, and
environmental responsibilities in its
operations so as to address shareholder
and other stakeholder expectations.

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 Key Elements of CSR
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Corporations have responsibilities beyond the

production of goods and services.
These responsibilities involve helping to solve
social problems.
Corporations have a broader constituency
than just stockholders.
Corporations have impacts beyond simple
marketplace transactions.
Corporations serve a wider range of human
values than just economic values.

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 Debate: Case for
5 Involvement
Business must satisfy societys needs
and expectations.
CSR prevents public criticism and
government regulation.
McDonalds Clam Shells
Business and society are
interdependent.
Boom towns

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 Case for Involvement
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CSR is good for the bottom line.

Insurance companies
Investors and consumers support CSR.
Green mutual funds
Addressing social problems can become
financial opportunities (e.g., pollution
abatement).
Playgrounds surfaces made from recycled
tires

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 Case for Involvement
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Business should take long-term CSR

approach.
MEC
Social actions improve public image and
goodwill.
Business can solve problems as well as
government.
African countries

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 Case for Involvement
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Proactive approach is better than

reactive.
Home Depot
Businesspeople are also concerned
citizens.
Apotex Inc. (Bernard and Honey Sherman)

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 Debate: Counterarguments
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Profit maximization is the primary

purpose of business.
Milton Friedman, Nobel Prize winner in Eco
nomics
Business is responsible to shareholders.
It should be their decision

Copyright 2008 McGraw-Hill Ryerson Ltd. Chapter 7

 Counterarguments
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Social policy is role of government.

Business lacks training in social issues.
It is not competent
CSR would give too much power to
business.
Take over a community
Impose business values

Copyright 2008 McGraw-Hill Ryerson Ltd. Chapter 7

 Counterarguments
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Business involvement in social matters

increases costs.
Someone is paying for it
Mistakes can be made
No reliable guidance for business in CSR
matters.
PR vs. real action
Needed vs. waste of time
Charity accountability

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 Counterarguments
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Business cannot be held accountable

unlike social institutions.
To what standard?
Whose responsible to hold them accountable?
There is divided support in business
community for social involvement.
No competition to get involved
The concept is unclear, so business action
is uncertain.

Copyright 2008 McGraw-Hill Ryerson Ltd. Chapter 7

 Social Responsibility
13 Theories
Amoral view
Amoral (not immoral) an activity
without moral quality
Traditional view of business
profit-making entity
Laws governing incorporated businesses
make them legitimate
Milton Friedman

Source: Klonoski, 1991

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 Social Responsibility
14 Theories
Personal view
Corporations are like people and can
therefore be held accountable for their
actions.
Thereis a right thing to do and corporations
can be punished for acting immorally.
Counterarguments: Corporations are legal
entities not persons and can not be held
accountable.
Onlythe people running the organization can
be held accountable for the actions of the
corporation.
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 Social Responsibility
15 Theories
Social view
Corporations exist within a social context
Corporations are social institutions with
social responsibilities
The Amoral view is incomplete
There are many examples of the social view

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 Examples of the Social View
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 Pyramid of Corporate Social
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Responsibility

Be a good Desired
Philan-
corporate citizen thropic

Be ethical Ethical Expected

Obey the law Legal Required

Be profitable Economic Required

Source: Archie Carroll, 1991

Copyright 2008 McGraw-Hill Ryerson Ltd. Chapter 7
 Corporate Sustainability
18 (CS)
Most prominent term after CSR
Definition: Corporate Sustainability
refers to corporate activities
demonstrating the inclusion of social
and environmental as well as
economic responsibilities in business
operations as they impact all
stakeholders.

Copyright 2008 McGraw-Hill Ryerson Ltd. Chapter 7

 Corporate Sustainability
19 (CS)
Marrewijk s five levels of CS
Compliance-driven CS: follow regulations
Profit-driven CS: focus on bottom line
Caring CS: go beyond legal compliance
Synergistic CS: well balanced solutions
Holistic CS: fully integrated CS

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 Reputation Management
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Definition: Reputation management is an

effort to enhance a corporations image
Previous focus on media and public
relations as well as crisis management
Today, focus is on relationships with all
stakeholders

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 Reputation Management
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Reputation Management can:

Enhance financial performance
Improve competitive positions
Increase public approval
Reputations take a long time to be
established, but can be destroyed
quickly

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 Social Impact Management
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Field of inquiry at the intersection of

business needs and wider societal
concerns that reflects and respects the
complex interdependency between the
two.
Interdependency of business and society
Two directional:
Societys influence on corporations
Corporation's influence on society

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 Social Impact Management
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Evaluates 3 aspects of business:

Purpose of business
Social context of business
Metrics: how performance is measured

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 Triple-E Bottom Line (TBL)
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Evaluates a corporations performance

according to a summary of the
economic, social, and environmental
value the corporation adds or destroys.
Now forms the basis for corporate
reporting of economic, ethical, and
environmental responsibilities.

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 Corporate Citizenship
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Definition: The demonstration by a

corporation that it takes into account
its complete impact on society and the
environment as well as its economic
influence.

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 Good Corporate Citizenship:
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Benefits
Reputation Learning and
management innovation
Risk profile and risk Competitiveness
management and market
Employee recruitment, positioning
motivation, and Operational
retention efficiency
Investor relations and Licence to operate
access to capital Greater leeway

Source: World Economic Forum

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 New Approach to
Corporate Citizenship
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Limited
Focus on corporate giving
Equivalent
Emphasis on sustainability
Extended
Defined as a set of individual, social, civil,
and political rights

Source: Matten and Crane, 2005

Copyright 2008 McGraw-Hill Ryerson Ltd. Chapter 7