1. Introduction to Corporate Social Responsibility Module Eight | Lesson One1

2. CSR is both critical and controversial
Lesson One | Introduction
CSR is both critical and controversial
It is critical because the for-profit sector is the largest and most innovative part of any free society’s economy.
It is controversial because some see CSR as a distraction from the economic purpose of a business. 2

3. Business & Society
Lesson One | Introduction
People create organizations to leverage their collective resources in pursuit of common goals.
As organizations pursue these goals, they interact with others inside a larger context called society. 3

4. CSR is controversial
Lesson One | Introduction
Do companies have obligations beyond the benefits their economic success already provides?
Two opposing views

5. The Business View Milton Friedman
Lesson One | Introduction
Milton Friedman
“the only social responsibility of business is to increase its profits”

6. Social responsibility: A corporate responsibility?
Lesson One | Introduction
Friedman:
“Profit, as a result of the actions of the firm, is an end in itself.”
“A firm does not need to have any additional justification for existing.”
“Social value is maximized when a firm focuses on pursuing its self-interest in attempting to maximize profits.”

7. Lesson One | Introduction
Friedman:“Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.”

8. Friedman’s arguments
Lesson One | Introduction
CSR is against capitalism: a “fundamentally subversive doctrine in a free society”
CSR is a waste of the firm’s resources, which legally belong to the firm’s owners, its shareholders, and the executives.
Social matters are not the concerns of business people and that problems should be resolved by the other social actors.

9. The Societal View
Lesson One | Introduction
No one group of stakeholder has a priority over other groups, and that corporations must balance the interests of all stakeholders.

10. Stakeholders defined
Lesson One | Introduction
Lesson One | Introduction
As Freeman defined them, a firm’s stakeholders include those who affect or are affected by the firm’s goals
Simply put, they include those groups that have a stake in the firm’s operations 10

11. Lesson One | Introduction
“CSR includes all stakeholder and constituent groups that maintain an ongoing interest in the organization’s operations.” 11

12. CSR = A company's relationships with its stakeholders
Lesson One | Introduction
CSR = A company's relationships with its stakeholders
The success of a firm is directly related to its ability to incorporate stakeholder/constitute concerns into its business model.
Conflicting/competing stakeholder interests 12

13. Underlying Arguments for CSR
Lesson One | Introduction
Moral
Ethical
Rational
Economic 13

14. A Moral Argument for CSR
Lesson One | Introduction
CSR = the relationship/interdependence between a company & the wider society within which it operates.
‘for profit’ entities do not exist in a vacuum: they need to be congruent with societal values 14

15. A Rational Argument for CSR
Lesson One | Introduction
Businesses seek to maximize their performance by minimizing restrictions on operations.
In today’s globalizing and wired world, CSR is a means of anticipating and reflecting societal concerns to minimize operational and financial limitations on business
“The Iron Low of Social Responsibility”
If you abuse your power, you will face societal sanctions—such as laws, fines, prohibitions, boycotts, or social activism—impact the firm’s strategic goals. 15

16. An Economic Argument for CSR
Lesson One | Introduction
An Economic Argument for CSR
Economic self-interest for business
CSR provides
a point of differentiation
competitive market advantage and avoid moral, legal and other sanctions
a reflection of the needs and concerns of their various stakeholder groups
By doing so, a company is more likely to retain its societal legitimacy, and maximize its financial viability, over the long term. 16

17. Case Study: An Ethical Perspective to Competing Stakeholder Interests
Lesson One | Introduction
Case Study: An Ethical Perspective to Competing Stakeholder Interests
The Case: Howard Schultz Responds to Anti- Gay-Marriage Starbucks Shareholder 17

18. 18

21. Lesson One | Introduction
“If you feel, respectfully, that you can get a higher return than the 38 percent you got last year, it’s a free country. You can sell your shares of Starbucks and buy shares in another company. Thank you very much.” 21

22. What is CSR?
Lesson One | Introduction
“A responsibility among firms to pursue goals in addition to profit maximization and a responsibility among a firm’s stakeholders to hold the firm accountable for its actions.” 22

23. Archie B. Carroll, 1979
Lesson One | Introduction
“The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time.” 23

24. The Pyramid of CSR Discretionary Responsibilities
Lesson One | Introduction
The Pyramid of CSR
Economic Responsibilities
Legal Responsibilities
Discretionary Responsibilities
Ethical Responsibilities
to benefit the firm & society
more proactive & strategic
to do no harm to its stakeholders/
environment
to act within legal framework
If your not proactive in discretionary they become ethical issues. Then legal law and regulations then will harm economy.
Consider race and gender history.
to produce acceptable returns on investments
Source: Archie B. Carroll, (1991) The Pyramid of Corporate Social Responsibility

25. Relationships & Responsibilities
Lesson One | Introduction
Relationships & Responsibilities
Relationships affect future success of the business:
Good leadership
Developing key relationships
Pro-active engagement in emerging issues
The establishment of understanding and trust 25

26. In Summary: CSR is. . . A dynamic, fluid concept
Lesson One | Introduction
A dynamic, fluid concept
An integral element of ethics
Both a means and an end
How a firm operates to gain societal legitimacy
How well a firm has been able to navigate stakeholder concerns while implementing its business model 26