Corporate Social Responsibility. Prepared by:Dr. Olufemi A. Akintunde

2 Study Question 4: What is corporate social responsibility?  Corporate social responsibility: – Looks at ethical issues on the organization level. – Obligates organizations to act in ways that serve both its own interests and the interests of society at large.

3 Study Question 4: What is corporate social responsibility?  Organizational stakeholders – Those persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance.  Typical organizational stakeholders – Employees – Customers – Suppliers – Owners – Competitors – Regulators – Interest groups

4 Figure 3.4 Multiple stakeholders in the environment of an organization.

5 Study Question 4: What is corporate social responsibility?  Beliefs that guide socially responsible business practices: – People do their best with a balance of work and family life. – Organizations perform best in healthy communities. – Organizations gain by respecting the natural environment. – Organizations must be managed and led for long-term success. – Organizations must protect their reputations.

6 Study Question 4: What is corporate social responsibility?  Perspectives on corporate social responsibility: – Classical view— Management’s only responsibility is to maximize profits. – Socioeconomic view— Management must be concerned for the broader social welfare, not just profits.

7 Study Question 4: What is corporate social responsibility?  Arguments against social responsibility: –Reduced business profits –Higher business costs –Dilution of business purpose –Too much social power for business –Lack of public accountability  Arguments in favor of social responsibility: –Adds long-run profits –Improved public image –Avoids more government regulation –Businesses have resources and ethical obligation

8 Study Question 4: What is corporate social responsibility?  Criteria for evaluating corporate social performance: –Is the organization’s … Economic responsibility met? Legal responsibility met? Ethical responsibility met? Discretionary responsibility met?

9 Figure 3.5 Criteria for evaluating corporate social performance.

10 Study Question 4: What is corporate social responsibility?  Strategies for pursuing social responsibility: – Obstructionist — meets economic responsibilities. – Defensive — meets economic and legal responsibilities. – Accommodative — meets economic, legal, and ethical responsibilities. – Proactive — meets economic, legal, ethical, and discretionary responsibilities.

11 Figure 3.6 Four strategies of corporate social responsibility—from obstructionist to proactive behavior.

12 Study Question 5: How do organizations and governments work together in society?  How government influences organizations: – Common areas of government regulation of business affairs: Occupational safety and health Fair labor practices Consumer protection Environmental protection

13 Study Question 5: How do organizations and governments work together in society?  How organizations influence governments: –Personal contacts and networks –Public relations campaigns –Lobbying –Political action committees –Sometimes by illegal acts, such as bribery or illegal financial contributions to political campaigns

14 Figure 3.7 Centrality of ethics and social responsibility in leadership and the managerial role.

15 Study Question 5: How do organizations and governments work together in society?  Corporate governance: – The oversight of the top management of an organization by a board of directors.  Corporate governance involves: – Hiring, firing, and compensating the CEO. – Assessing strategy. – Verifying financial records.

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