1. Corporate Social Responsibility
Chapter 3
Corporate Social Responsibility

2. Ch. 3: Key Learning Objectives
Understanding the role of big business and its responsible use of corporate power in a democratic society
Knowing where and when the idea of social responsibility originated
Assessing how business meets its economic and legal obligations while being socially responsible
Evaluating the limits of corporate social responsibility while maximizing social benefits
Examining the critical arguments for and against corporate social responsibility
Recognizing socially responsible best practices

3. Corporate Social Responsibility
The idea that businesses interact with the organization’s stakeholders for social good while they pursue economic goals.
Both market and nonmarket stakeholders expect businesses to be socially responsible. Many companies have responded by making social goals a part of their overall business operations.

4. Corporate Power and Responsibility
Corporate power refers to the capability of corporations to influence government, the economy, and society, based on their organizational resources
The tremendous power of the world's leading corporations has both positive and negative effects
Positives include commanding more resources, producing at lower costs, planning further into the future, and bring new products, technologies, and economic opportunities to developing societies
Negatives include disproportionate influence on politics, shape tastes, dominate public discourse, divide markets, and squash competition

5. Corporate Power and Responsibility
Iron law of responsibility says that in the long run, those who do not use power in ways that society considers responsible will tend to lose it
Given the virtually immeasurable power in the hands of the leaders of large, global corporations, stakeholders throughout the social system expect business to take great care in wielding its power responsibly for the betterment of society

6. The Meaning of Corporate Social Responsibility
A corporation should act in a way that enhances society and its inhabitants and be held accountable for any of its actions that affect people, their communities, and their environment
It implies that harm to people and society should be acknowledged and corrected if at all possible
It may require a company to forge some profits if its social impacts seriously hurt some of its stakeholders or if its funds can be used to have a positive social impact

7. Corporate Social Responsibility Principles
The charity principle is the idea that the wealthiest members of society should be charitable toward those less fortunate
The stewardship principle is the idea that business leaders have an obligation to see that everyone, particularly those in need or at risk, benefits from their firms’ actions
According to this view, corporate managers have been placed in a position of public trust

8. Phases of Corporate Social Responsibility
Frederick provides expanded framework for understanding the evolution of CSR concept
Divided into 4 phases:
Corporate social stewardship, 1950s – 1960s
Corporate social responsiveness, 1960s – 1970s
Corporate/business ethics, 1980s – 1990s
Corporate/global citizenship, 1990s – 2000s

9. Balancing Multiple Responsibilities
Multiple responsibilities of business include
Economic responsibilities
Social responsibilities
Legal responsibilities
Challenge is to balance all three
Successful firm is one which finds ways to meet each of its critical responsibilities and develops strategies to enable the obligations to help each other

10. Enlightened Self-Interest
Economic and social goals come together in companies that practice enlightened self-interest
Means firm leadership can see it is in the company’s self-interest in the long term to provide true value to its customers, to help its employees grow and behave responsibility
Scholars have debated the related question: Do socially responsible companies sacrifice profits by promoting the social good?
Studies comparing CSR with firm performance shows there is a moderately positive association between the two factors
Corporate social and environmental responsibility is likely to pay off

11. Legal Requirements Versus Corporate Social Responsibility
A firm must abide by laws and regulations governing society
Legal rules set the minimum standard for business
Current legal standards for corporate social responsibility are minimum public expectations
Companies can choose to go beyond the legal standard and strive for higher levels of social responsibility

12. Stockholder Interests Versus other Stakeholder Interests
Corporate executives and board members are constantly under pressure to produce value for owners/investors
Management’s central goal is to promote the interests of the entire company, not any single stakeholder group
Challenge is to put emphasis on long-run profits rather than focus on immediate returns
An enlightened self-interest approach helps reconcile these challenges
Is acceptable to incur short term costs for socially responsible activities that benefit both the company and the public in the long term