Chapter
4
Corporate Citizenship
 The
Dynamic Social Climate
 Implementing Corporate Citizenship Activities
 Corporate Citizenship in Practice
 Corporate Social Performance Audits
Corporate citizenship
 Refers
to businesses acting responsibly toward their
stakeholders.
 Involves:
 proactively addressing
business and society issues,
 building stakeholder partnerships,
 discovering business opportunities through social strategic
goals, and
 transforming a concern for financial performance into a vision
of corporate financial and social performance.
Figure 4.1
Contrast between corporate social
responsibility and corporate citizenship
Corporate Social
Responsibility
Corporate
Citizenship
Origin
1920s
1990s
Basis
Principles of charity and
stewardship
Building collaborative partnerships
with stakeholder groups
Focus
Moral obligations to society at
large
Discovering business opportunities
through partnerships
Action
Philanthropy, trustee of the
public’s interests
Managing corporate social and
financial performance
Principles of corporate citizenship
Good corporate citizens strive to conduct all business
dealings in an ethical manner, make a concerned effort to
balance the needs of all stakeholders, while working to
protect the environment.
Exhibit 4.Aa
Principles of corporate citizenship
Ethical Business Behavior
1) Engages in fair and honest business practices in its
relationship with stakeholders.
2) Sets high standards of behavior for all employees.
3) Exercises ethical oversight of the executive and board levels.
Exhibit 4.Ab
Principles of corporate citizenship
Stakeholder Commitment
4) Strives to manage the company for the benefit of all
stakeholders.
5) Initiates and engages in genuine dialogue with stakeholders.
6) Values and implements dialogue.
Exhibit 4.Ac
Principles of corporate citizenship
Community
7. Fosters a reciprocal relationship between the corporation
and community.
8. Invests in the communities in which corporation operates.
Consumers
9. Respects the rights of consumers.
10. Offers quality products and services.
11. Provides information that is truthful and useful.
Exhibit 4.Ad
Principles of corporate citizenship
Employees
12. Provides a family-friendly work environment.
13. Engages in responsible human-resource management.
14. Provides an equitable reward and wage system for
employees.
15. Engages in open and flexible communication with
employees.
16. Invests in employee development.
Exhibit 4.Ae
Principles of corporate citizenship
Investors
17. Strives for a competitive return on investment.
Suppliers
18. Engages in fair trading practices with suppliers.
Environmental Commitment
19. Demonstrates a commitment to the environment.
20. Demonstrates a commitment to sustainable development.
Global corporate citizenship
The process of identifying, analyzing, and responding to the
company’s social, political, and economic responsibilities as
defined through law and public policy, stakeholder
expectations, and voluntary acts flowing from corporate
values and business strategies.
Exhibit 4.Ba
The Clarkson principles
Principle 1
Managers should acknowledge and actively monitor the concerns
of all legitimate stakeholders and should take their interests
appropriately into account in decision making and operations.
Principle 2
Managers should listen to and openly communicate with
stakeholders about their respective concerns and contributions
and about the risks that they assume because of their involvement
with the corporation.
Exhibit 4.Bb
The Clarkson principles
Principle 3
Managers should adopt processes and modes of behavior that are
sensitive to the concerns and capabilities of each stakeholder
constituency.
Principle 4
Managers should recognize the interdependence of efforts and
rewards among stakeholders and should attempt to achieve a fair
distribution of the benefits and burdens of corporate activity
among them, taking into account their respective risks and
vulnerabilities.
Exhibit 4.Bc
The Clarkson principles
Principle 5
Managers should work cooperatively with other entities, both
public and private, to insure that risks and harms arising from
corporate activities are minimized and, where they cannot be
avoided, appropriately compensated.
Principle 6
Managers should avoid altogether activities that might jeopardize
inalienable human rights or give rise to risks that, if clearly
understood, would be patently unacceptable to relevant
stakeholders.
Exhibit 4.Bd
The Clarkson principles
Principle 7
Managers should acknowledge the potential conflicts between
their own role as corporate stakeholders, and their legal and
moral responsibilities for the interests of stakeholders and should
address such conflicts through open communication, appropriate
reporting and inventive systems, and where necessary, third-party
review.
Figure 4.2
A three-stage model of corporate
social responsiveness
Degree of responsiveness to a specific issue
STAGE
High
Policy
Learning
Organizational
Commitment
• Organizational
changes
• Administrative learning
• Specialized
learning
• Formulate policy
• Identity problem
Low
Time (years)
A model for implementing corporate
citizenship strategies
The Policy Stage


The company becomes aware of those parts of the surrounding
environment, to which it needs to respond and act on.
A company’s management may think, based on sensitivity to the
corporate social environment that it should respond to emerging
issues, concerns, or social trends.
A model for implementing corporate
citizenship strategies
The Learning Stage



Once it has identified a social problem and adopted a general
policy, the company must learn how to tackle the problem and
make the new policy work.
Specialized learning
Occurs when a sociotechnical expert is employed to advise the
company officers and managers.
Administrative learning
Occurs when a company’s supervisors and mangers become
familiar with new routines that are necessary to cope with a
social problem.
A model for implementing corporate
citizenship strategies
The Organizational Commitment Stage


When the organization institutionalizes its new social policy.
When corporate citizenship becomes part of the company and its
standard operating procedures.
Framework for corporate citizenship

Concentrate action programs on limited objectives.
 Concentrate action programs related to the firm’s products or
services.
 Begin action programs close to home.
 Facilitate employee action.
Exhibit 4.C
Significant philanthropic contributions
Background
1999-2003
Given/ Pledged
(in Millions)
Microsoft co-founder
$22,906
Intel co-founder
7,010
Investor
2,431
SunAmerica founder
1,463
American Century founder
1,345
Dell Computer founder
1,215
Family of Wal-Mart founder
750
Ted Turner
CNN founder
664
Ruth Lilly
Eli Lilly heiress
560
Real estate
402
Name
Bill and Melinda Gates
Gordon and Betty Moore
George Soros
Eli and Edythe Broad
James and Virginia Stowers
Michael and Susan Dell
The Walton Family
Donald Bren
Exhibit 4.D
American corporate conscience awards, 2003
Delta Café
 Positive impact—Community
Southwest Airlines
 Positive impact—Community
Carrefour
 Innovative partnership
Chiquita Brands International
 Innovative partnership
Westpac Banking
 Innovative partnership
Maina Panettoni
 SA8000 Responsible Workplace
Corporate social performance audits
Social performance audit
A systematic evaluation of an organization’s social and ethical
performance, examining the social and ethical impact of a
business against two benchmarks: a company’s own mission
statement and the behavior of other organizations and social
norms.
Triple bottom line
When companies report to stakeholders not just their financial
results but also their environmental and social impacts.
Financial, social and environmental results, taken together as
an integrated whole, constitute a company’s triple bottom line.
Figure 4.3a
Summary of audit standard characteristics
Global Reporting Initiative
Origin: 1997
Focus: Link economic, environmental, and social sustainability
Self-reported benefits:
1) Internal vehicle for evaluating policy versus performance
2) Structure for effective dialogue with stakeholders
3) Framework for sharing and promoting dialogue with
stakeholders
Figure 4.3b
Summary of audit standard characteristics
ISO 14001
Origin: 1996
Focus: Support environmental protection in balance with
socioeconomic needs
Self-reported benefits:
1) Identify areas for energy reduction
2) Reduce environmental risk
3) Maintain compliance with legislation and regulation
4) Receive environmental leadership rewards
5) Prevent pollution and reduce waste
6) Improve stakeholder relations
7) Receive more favorable insurance rates
8) Gain a competitive advantage
Figure 4.3c
Summary of audit standard characteristics
ISEA AA 1000
Origin: 1999
Focus: Quality social and ethical accounting, auditing, and reporting
Self-reported benefits:
1) Support effective stakeholder relations
2) Effective in diverse global operations
3) Build synergy with emerging businesses
4) Link planning tools to quality models
5) Build accountability in public sector
6) Enhance overall performance