© 2013 Cengage Learning. All rights reserved. CHAPTER 14 GLOBAL2  PENG © KAZUHIRO NOGI/AFP/Getty Images

© 2013 Cengage Learning. All rights reserved. CHAPTER 14 LEARNING OBJECTIVES After studying this chapter, you should be able to: 1. Articulate a stakeholder view of the firm. 2. Apply the institution-based and resource- based views to analyze corporate social responsibility. 3. Identify three ways you can manage corporate social responsibility.

© 2013 Cengage Learning. All rights reserved. CORPORATE SOCIAL RESPONSIBILITY (CSR) Corporate social responsibility (CSR) - the consideration of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm to accomplish social benefits. At the heart of CSR is the stakeholder – any group or individual who can affect or is affected by the achievement of the organization’s objectives.

© 2013 Cengage Learning. All rights reserved. LO1: STAKEHOLDER VIEW OF THE FIRM

© 2013 Cengage Learning. All rights reserved. LO1: STAKEHOLDER VIEW OF THE FIRM Key goal: global sustainability – meet the needs of the present without compromising the ability of future generations to meet their needs.

© 2013 Cengage Learning. All rights reserved. LO1: STAKEHOLDER VIEW OF THE FIRM  Firms should pursue a triple bottom line: Economic Social Environmental

© 2013 Cengage Learning. All rights reserved. LO2: INSTITUTIONS AND RESOURCES AND CORPORATE SOCIAL RESPONSIBILITY

© 2013 Cengage Learning. All rights reserved. LO2: STRATEGIES FOR CSR Reactive strategy: relatively little or no response to CSR causes; denial usually first line of defense.

© 2013 Cengage Learning. All rights reserved. LO2: STRATEGIES FOR CSR Defensive strategy: focuses on regulatory compliance. Firms admit responsibility but fight it.

© 2013 Cengage Learning. All rights reserved. LO2: STRATEGIES FOR CSR Accommodative strategy: some support from top managers who may increasingly view CSR as a worthwhile endeavor.

© 2013 Cengage Learning. All rights reserved. LO2: STRATEGIES FOR CSR Proactive strategy: being responsible and endeavoring to do more than is required.

© 2013 Cengage Learning. All rights reserved. LO2: STRATEGIES FOR CSR Sources: Adapted from A. Hoffman, “Institutional evolution and change: Environmentalism and the US chemical industry,” Academy of Management Journal 42 (1999): 351–371 for the phases and statements. Hoffman’s last phase ended in 1993; its extension to the present was done by the present author.

© 2013 Cengage Learning. All rights reserved. LO2: CODE OF CONDUCT Set of written policies and standards outlining the proper practices for a firm. Adopting one tangible indication of firm’s willingness to accept CSR.

© 2013 Cengage Learning. All rights reserved. LO2: THREE VIEWS ON CSR  Negative view – interest in CSR may be only window dressing.  Instrumental view – CSR activities are instruments for making profit.  Positive view – some firms self-motivated to take on CSR activities.

© 2013 Cengage Learning. All rights reserved. LO2: RESOURCES AND CORPORATE SOCIAL RESPONSIBILITY  Do CSR-related resources and capabilities add value?  Are CSR-related resources always rare?  Are CSR resources imitable?  Does the firm have organizational capabilities to do a good job on CSR?

© 2013 Cengage Learning. All rights reserved. LO2: VALUE  A firm’s resources can be applied to CSR causes in what is known as social issue participation.  Research suggests that these activities may reduce shareholder value.

© 2013 Cengage Learning. All rights reserved. LO2: RARITY  Example: Home Depot and Lowe’s have similar NGOs concerning lumber sources.

© 2013 Cengage Learning. All rights reserved. LO2: IMITABILITY  At some firms, CSR activities are embedded in idiosyncratic skills, attitudes, and interpretations.

© 2013 Cengage Learning. All rights reserved. LO2: ORGANIZATION  Does the firm have organizational capabilities to do a good job on CSR?  Is the firm organized to exploit the full potential of CSR?

© 2013 Cengage Learning. All rights reserved. LO2: CSR ECONOMIC PERFORMANCE PUZZLE The resource-based view helps solve the CSR-economic performance puzzle. According to puzzle, there is no conclusive evidence for direct, positive link between CSR and economic performance. According to the resource-based view, since each firm is different, not every firm’s economic performance is likely to benefit from CSR.

© 2013 Cengage Learning. All rights reserved. LO3: THREE WAYS TO MANAGE CSR

© 2013 Cengage Learning. All rights reserved. DEBATE: DOMESTIC vs. OVERSEAS SOCIAL RESPONSIBILITY MNEs increase employment in host countries and help developing economies. However, this expansion often comes at the cost of domestic employees and communities. MNE may shirk their CSR by increasing social burdens in their home countries.