Chapter 2 Corporate Citizenship: Social Responsibility, Responsiveness, and Performance © 2012 South-Western, a part of Cengage Learning 1

Business Allegations Little concern for the consumer Cares nothing about the deteriorating social order Has no concept of ethical behavior Indifferent to the problems of minorities and the environment  What responsibility does business have to society? Business for Social Responsibility (BSR) is a consulting firm and global business network helping organizations to develop sustainable business strategies and solutions. 2 © 2012 South-Western, a part of Cengage Learning

Corporate Social Responsibility Seriously considering the impact of a company’s actions on society.  Requires the individual to consider his or her acts in terms of a whole social system, and holds him or her responsible for the effects of his or her acts anywhere in that system. 3 © 2012 South-Western, a part of Cengage Learning

Historical Perspective on CSR 4 Economic Model Legal Model Social Model © 2012 South-Western, a part of Cengage Learning Stakeholder Model

The Four Components of CSR © 2012 South-Western, a part of Cengage Learning 5 Responsibility Societal Expectation Societal Expectation Examples Economic Required Be profitable. Maximize sales, minimize costs. Legal Required Obey laws, adhere to regulations Ethical Expected Avoid questionable practices. Do what is right, fair, and just Philanthropic Desired/ Expected Be a good corporate citizen. Give back.

The CSR Equation 6 Economic Responsibilities Legal Responsibilities Ethical Responsibilities Philanthropic Responsibilities Total Corporate CSR = © 2012 South-Western, a part of Cengage Learning A stakeholder perspective focuses on the CSR pyramid as a unified whole.

Arguments Against CSR The classical economic view that business’ only goal is the maximize profits for owners. Business is not equipped to handle social activities. It dilutes the primary purpose of business. Businesses have too much power already. It limits the ability to compete in a global marketplace. 7 © 2012 South-Western, a part of Cengage Learning

Arguments For CSR It addresses social issues brought on by business, and allows business to be part of the solution. Enlightened self-interest: businesses must take actions to ensure long-term viability. Wards off future government intervention. It addresses issues by using business resources and expertise. It addresses issues by being proactive. The public supports CSR. 8 © 2012 South-Western, a part of Cengage Learning

The Drivers of Corporate Citizenship 9 © 2012 South-Western, a part of Cengage Learning

Benefits of Corporate Citizenship Improved employee relations Improved customer relationships Improved business performance Enhanced marketing efforts 10 © 2012 South-Western, a part of Cengage Learning

“Triple Bottom Line” Perspective Key Spheres of Sustainability 1.Economic 2.Social 3.Environmental  Corporate sustainability is the goal. 11 © 2012 South-Western, a part of Cengage Learning

Reasons for the Upsurge in Socially Responsible Investing 1.More reliable research on CSP 2.Investment firms using social criteria have solid track record 3.The socially conscious 1960s generation is making investment decisions 12 © 2012 South-Western, a part of Cengage Learning