8.1 The responses to Corporate Social responsibility
Approaches
Corporate giving Voluntarism Corporate sponsorship Social venture philanthropySocial
enterprise Community investment
Responses to CSR
(Acceptance of CSR)
Social enterprise-non-profit  Businesses that operate with a social mission but with the intention of
operating on a non-profit basis i.e. Habitat for Humanity (High)
Social enterprise-for profit  Businesses that operate with a social mission but with the intention of
making profit. “doing it well but doing it good” i.e. Body shop (social paradigm) (High)
CSR recognition Most likely larger corporation and traded on stock exchanges. Corporate giving and
citizenship are involved. Publish “social reports” on their initiatives. “doing good by doing well”
(economic paradigm) (above average)
Tokenism or green wash Corporations are not serious about CSR, but believe they should respond.
Might be forced into initiatives by NGO’s, the media, or competitors. NGOs allege many multi-national
corporations are responding this way. (low commitment)
Amoral  Corporations, and their managers, simply ignore CSR, intentionally or unintentionally. Difficult
to identify and measure numbers. (very little, by chance or legal requirement)
Anti-CSR  as CSR is widely accepted and practiced, it is unlikely that these corporations will identify
themselves as being anti CSR. Difficult to identify numbers. (very little, most likely as required by law)
Unknown  Businesses about which not much is known about their CSR initiatives, including small
business enterprises and privately held companies. There is a modest literature on CSR in small business
enterprises and no known materials on CSR in privately held corporations. (Low, but not documented)
Risks of Not Practicing CSR
Damaged reputation
 Negative media coverage
 Consumer boycotts
 Lost sales and revenues
 Labor disruptions
 Blockages, attacks against assets
 Decrease in share value
 More onerous financing or insurance terms
Increased spending to remedy pas damage for core activities
 Increased shareholder activism
 Failure to attract and retain quality employees
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
Civil lawsuits, including class action initiatives
Criminal and regulatory prosecution
Suspending operating permits
 Liability for the conduct of subsidiaries and arms-length affiliates (suppliers)
 Increased and onerous government regulation
8.2 Planning for CSR
1. Conduct a CSR assessment
i.
Assemble a CSR leadership team
ii.
Develop a working definition of CSR
iii.
Review corporate documents, processes and activities
iv.
Identify and engage key stakeholders
2. Develop a CSR strategy
i.
Build support with senior management
ii.
Research what others are doing
iii.
Prepare a matrix of proposed CSR actions
iv.
Develop ideas for proceeding and the business case for them
v.
Decide on direction, approach and focus areas
3. Develop CSR commitments
i.
Do a scan of CSR commitments
ii.
Hold discussions with major stakeholders
iii.
Create a working group to develop the commitments
iv.
Prepare a preliminary draft
v.
Consult with stakeholders
4. Implement CSR commitments
i.
Develop an integrated CSR decision-making structure
ii.
Prepare and implement a CSR business plan
iii.
Set measureable targets and identify performance measures
iv.
Engage employees and others to whom CSR commitments apply
v.
Design and conduct CSR training
vi.
Establish mechanisms for addressing problematic behavior
vii.
Create internal and external communications plan
5. Verify and report on progress
i.
Measure and verify performance
ii.
Engage stakeholders
iii.
Reports on performance
6. Evaluate and improve
i.
Evaluate performance
ii.
Identify performance
iii.
Engage stakeholders
Cross check: One cycle completed  Return to plan and start the next cycle
8.7 Social enterprise and entrepreneurship
Social enterprise: A model of business operation where some or all profits are deliberately used to
further social aims. Non-profit and profit organizations. (Value Village& The Body Shop)
Social entrepreneur: an innovative, visionary leader of a non-profit with real;-world-problem-solving
creativity and a high awareness to ethical considerations
8.8. Small Business and CSR
Philanthrocapilalism: Draws upon modern business practices and an entrepreneurial spirit to get more
from corporate social responsibility
Differences in CSR in Large Corporations Versus Small Businesses
Large Corporations
 Accountable to a large number of
stakeholders
 Responsible to society at large
 Concerned with brand image and reputation
Small Business
 Accountable to fewer stakeholders
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Responsible to local communities
Concerned about retaining business
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Shareholder pressure; ethical investing
Based on corporate values
Formal planning for CSR
Emphasis on standards and indices
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Pressure from lenders
Based on owner values
Unlikely to be formal planning
Emphasis on intuition and ad hoc processes
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Involvement of CSR professionals
Prominent campaign; cause related
marketing
Awareness through CSR reporting, publicity
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No dedicated personnel
Small scale activities; sponsoring local sports
team
Often unrecognized as CSR activities
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Chapter 10 Regulating Business
10.1 The Spectrum of Regulation

Based on:
 Market forces
 Self-regulation
 Government
Spectrum of regulation
Total reliance on the market
Laissez-faire regulation
Corporate self-discipline
Industry self-regulation
Self-regulation involving stakeholders
Negotiated self-regulation
Mandated self-regulation
Quasi-government regulation
Government legislates regulation
Government regulation
Self-regulation: Regulation imposed by the corporation or industry and not by the government or
marketing forces
10.2 Forms of Market Regulation, Self-regulation, and Government Regulation
Laissez –Faire Market Regulation
Occurs in rigorous competitive market, as a result of less demand for government imposed laws or
regulations as the corporation is influence or regulated by market forces. The government does not
interfere with business. Consumers are involved as they can take action to force the corporation to
behave in particular ways by refusing to purchase goods or services, or through organized action such as
boycott. There also may or may not be a connection between private and public, or societal demands.
Abuses are possible, but are corrected by the market or stakeholder pressure.
Corporate Self-Discipline Regulation
Norms or standards are developed, used, and enforced by the corporation itself, accomplished through
mission and value statements, code of conducts or ethics, or other guidelines. The acceptance and
practice of CSR is the most general form of self-regulation. Even though it has received substantial
attention recently, CSR is still criticized. It has failed to live up to its promise, and some corporations
have failed to live up to its promise, and some corporations have been accused of participating only for
appearances or on a token basis. The desire for profit maximization still exists, and the corporation’s
behavior is a function of market imperatives rather than management’s values or corporate structures.
There is no assurance that all corporations will participate, and enforcement is a problem. On the other
hand, measures of CSR are being increasingly used and pressures are being applied by various
stakeholders advocating socially responsible behavior.
Industry Self-Regulation
Members of an industry can attempt to influence corporate behavior and even enforce standards.
Industry or trade associations often facilitate this type of regulation, and initiatives are undertaken to
address industry issues that, if not addressed, may lead to government regulation. Advertising Standards
Canada addresses industry is an industry organization committed to the integrity of advertising through
industry self-regulation with the Canadian Code of Advertising Standards. The Retail Council of Canada
attempts to influence its member’s behavior in various ways, one of which is Code Practice: Scanner
Price Accuracy Voluntary Code. One of the most widely recognized self-regulation initiative is
Responsible Care by the chemical producing industry.
The power to prevent abuses is usually limited as the potential for anti-competitive behavior limits the
effectiveness of this type of regulation. In most industries participation is voluntary, and even when a
member violates the standards enforcement and remedial action is limited.
Self-Regulation Involving Stakeholders
The industry includes non-industry stake holders by its own volition in the development, application,
and enforcement of standards. The stakeholders would include representation from consumer and
government, or some independent member of society, including non-governmental organizations
(NGOs). An example of this type of regulation is the Canadian Standards Association, a nonprofit,
membership-based organization serving business, industry, government, and consumers. Its standards
committees comprise various stakeholders and about one third of their membership is consumers. The
problem identified for “industry self-regulation” apply in addition to the fact that appropriate non
industry representatives are sometimes difficult to identify and, when they are, often are co-opted.
Negotiated Self-regulation
With negotiated self-regulation, some outside body voluntarily negotiates regulatory standards- for
example an NGO, a government agency or separate agency, or a separate entity established by industry.
An example of such a self-regulation organization is the Canadian Motor Vehicle Arbitration Plan
established to resolve disputes between consumers and vehicle manufacturers relating to defects and
warranty programs for new cars. Neutral third parties or arbitrators are used to resolve disputes, and
consumer and industry representatives govern the organization. This type of self-regulation is not
common, as it is difficult to establish and can be expensive to operate.
Mandated Self-Regulation
Government prefers to have industry regulate itself, and grants this under legislation. An example is selfregulatory organizations, industry groups that are delegated, or designed a regulation function including
development, use, and enforcement of standards. An example is provided by the securities industry in
Canada. The provincial securities commissions have delegated some aspects of securities regulation to
the TSX. The TSX provides a market for trading equity, capital and develops, and enforces its own rules
and regulations relating to corporate listings and the protection to investors. The IIROC regulates the
activities of investment dealers in terms of both their capital adequacy and conduct of business, and
monitors trading activity on debt and equity markets. The MFDA regulates the sale of mutual funds.
Professionals such as accountants and lawyers are also regulated by SROs.
Problems with SROs include potential conflicts of interest between members and customers. SROs may
be slow to initiate corrective action, and in some cases unable to enforce standards. In Canada, financial
services industry SROs have been accused of not taking appropriate action with regard to financial
scandals and problems. Stakeholder representation is often token, as with professional associations, and
their influence is limited. It is considered a variation on corporatism where government industry
influence dominates that of other stakeholders, in particular consumer or investors.
Quasi-Government Regulation
Rather than regulate an industry directly through a government department, some regulation is
delegated to government agencies that operate at arm’s length from government. Examples are the
Standards Council of Canada and the Canadian Radio-television and Telecommunications Commission.
The SCC operates as a federal crown corporation mandated to promote efficient standardization and is
governed by representatives from governments and the private sector, including NGOs. The CRTC is an
independent agency responsible for regulating Canada’s broadcasting and telecommunications systems
and comprises commissioners appointed by government for limited terms. In some of these agencies
staff are political appointments, sometimes former industry employees. Stakeholders are challenged to
effectively make presentations before such agencies resulting in some stakeholder interests, in
particular consumers not receiving the attention they should.
Government Regulation
The government extensively regulates an industry or some aspect of business operations. Standards are
developed, applied, and enforced by government or its agents, and the standards apply to everyone. In
Canada, government with few exceptions regulates distribution and sale of alcohol beverages. The labor
collective bargaining process is almost totally regulated directly by government with few aspects
delegated to other types of regulation. Governments also are the principal regulators in competitive in
competition policy, bankruptcy laws, and intellectual property. Governments are always introducing
new regulations. In recent years they have regulated online transactions, tattoo artists, organic foods,
and ingredients and the stakeholders involved.
There is no panacea in regulation; the type of regulation should vary to suit the circumstances within an
industry. Any type of regulation should vary to suit the circumstance within the industry. Any type of
self-regulation, or shared-regulation, is likely to occur when there are shared benefits for all
stakeholders. It is sometimes difficult to clearly identify they types of regulation used, and in some
industries, it is generally recognized that some degree of regulation is necessary from outside the
corporation. The appropriateness and extent of regulation will vary and generalizations should be made
without considering the types of regulation in practice.
10.4 Legislation Corporate Social Responsibilities
There have been demands to legislate CSR and accountability, at various times. Some morality has been
legislated through the legal system. For example, there are laws against dishonest business practices, to
prevent monopolistic behavior , relating to the health and safety of employees, and conducting business
with corrupt foreign regimes. This type of legislation has provided safeguards to various stakeholders,
including investors, consumers, and employees. The demands for greater regulation in the petroleum
industry, and the recent Ponzi schemes have prompted calls for more protection of individual investors.
10.6 Business Lobbying
Lobbying: All attempts to influence directly or indirectly any government activity, and includes any
attempt to influence legislators, and their staff members, public administrators and any members of
regulatory agencies.
Attempts to influence:
1)
2)
3)
4)
The making or amending of legislation and regulations
The making or changing of government policies and programs
Government decisions in the awarding of grants, contracts, contributions, or any similar benefits
Government appointments to boards, commissions, and any other public office
Types:
1) Business corporations that attempt to influence government through lobbying performed by
business interest groups or associations. They distribute literature and information, appearing
before parliamentary committees. (Canadian Council of Chief Executives)
2) Consultants that specialize in government-business-relations and is paid by an organization or a
group of corporations, or a business association to make contact with government, or to tell
business how to influence government.
3) Corporations develop lobbying capability “in house” often referred to as government relations
or public affairs staff.
Types of business interest groups





Umbrella Associations (peak organizations)i.e. Canadian Chamber of Commerce
Sectoral Associations (Fisheries Council of Canada)
Activity-Specific Associations (Canadian Marketing Association)
Industry-Specific Associations (Mining Association of Canada
Product-Specific Associations (Canadian Toy Association)
10.9 Ethical Implications in Business-Government Relationship

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The appropriateness of government involvement and interference in operations of business
Accessibility to government
Inappropriate conducted business (improper contracts awarded)
In giving loans, grants, or protection, choices are made that favor some corporations while
harming others and stakeholders
Businesspersons and organizations are often critical of what they perceive to be costly and
inappropriate social programs directed at individuals.
When seeking assistance, corporations will play one government off another in extracting
assistance. A corporation is seeking a location where employment is to be created.
Privatization changes the role of government and corporations of society
The financing of political parties or leadership campaigns of politicians might be considered
inappropriate
The endorsement of political candidates or parties by corporations or business organizations
might be perceived as expecting favors
The lack of transparency in the relationship (of influence) between government and business is
disadvantageous to other stakeholders
Chapter 11 Ownership and Governance of the Corporation
11.1 Introduction
Governing system: The process, structures, and relationships through which decisions are made
11.2 The Ownership of Canadian Business
a) Investors: Individuals who personally hold equity interests for investment purposes and who are
not involved in the corporation as entrepreneurs or managers
b) Entrepreneurs: Ownership of business by individuals
c) Employees: employees, including managers may own all or parts of corporations, through
employee stock purchase plan or ownership plans
d) Customers or Consumers: mostly in cooperatives and most widely recognized retail cooperatives
and financial institutions such as credit unions.
e) Producers: Producer ownership is through cooperatives of various type. (farmers)
f) Ownership through mutual funds: A pool of money from many individual investors that is
invested on their behalf usually in a specific kind of investment
g) Ownership Interest Through Pension Funds: A substantial portion of pension funds’ assets are
invested in corporate stock
h) Union sponsored Investment Funds: Labor-supported investment funds, provide venture capital
primarily to private corporations to create employment
i) Corporate Ownership: Corporations often owns shares in other enterprises
j)
Private Equity Firms: Firms that manage large pools of money acquired from wealthy individuals
or families and big institutions such as pension and mutual funds.
k) Venture Capital Economy: A type of private equity firm that usually acquires part ownership of
business enterprises for which they provide financial and management assistance
l) Non-profit Organization Ownership: church, NGOs, foundations, and universities
m) Government Ownership: Canadian federal, provincial, and municipal governments all operate a
large number of business enterprises, usually referred to as Crown corporations. Usually work
under some social objective.
n) Sovereign wealth fund: A state- or government owned pool of financial instruments including
assets such as stocks, bonds, and property that are purchased from wealth accumulated from
resource sales (usually petroleum) or government sponsored pension funds. I.e. Canada Pension
Plan Investment Board
11.3 Ethics & Responsibility Issues of Ownership
Widely held versus Concentrated ownership
Management controlled, shareholders do not make much influence in wide ownership based
organizations.
Minority versus Majority Shareholders
Wide vs. concentrated ownership issue leads to the treatment of minority shareholders by dominating,
or majority, shareholders.
Dual Class Stock: more than one type of share or stock with different voting rights and dividend
payments is issued by a single corporation
Non-voting shares: Common shares without voting privileges
Restricted shares: involve some limit on voting, for example only one vote for every 10 or 100 shares
owned.
Passive shareholders: Those who do not attempt to influence the affairs of the corporation even though
they have a right to do so
Active shareholders: Those who participate in the governance to the full extent allowed by the law
The Pros and Cons of Employee Ownership
Workers Capitalism: describes employee ownership as workers are turned into capitalists through stock
ownership
Accountability of Non-public Corporations: economic, social and environmental responsibilities
The Accountability of Government-owned Corporations
1) The newly defined, commercially oriented objectives of many government owned corporations
that may be in conflict with social objectives in the national interest
2) The consequences of evaluating performance based on criteria (profits)
3) The degree of autonomy that should be granted the corporations and management
4) Techniques for controlling and evaluating the commercial corporations
11.4 Protecting Owners and Investors
Shareholder democracy: The exercise of power by owners to ensure they are treated fairly and enjoy
equally the privileges and duties of ownership (government, self-regulatory agencies and organizations,
industry associations, and individual and institutional activists.
11.5 Responsible Investing
Responsible investing: Screening investments in corporations or mutual and pension funds for the
response to social or ethical responsibilities as well as their financial or economic performance
Responsible investing Criteria

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Poor employee/labor relations
Failure to promote racial and sexual equality and affirmative programs
The manufacture process
Involvement in the nuclear industry
The manufacture of ‘sin’ products (alcohol, tobacco)
Conducting of business in repressive regimes
The violation of human rights
Environmentally damaging operations
Unsafe goods and services, questionable marketing practices
Use of animals in product testing
Involvement in gambling and pornography
Factory farm production of animals
Generating modified products
Critiques

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
Data is sketchy and highly selective
Ratings aren’t completely objective and misrepresent the complexity of the modern corporation
Screenings are tainted
Claims of the growth financial impact are questionable
No coherent case has been made for why criteria used for social responsibility is better at
effecting social change
General approach of social investment advocates one of vindication of the true believer, not
investigation
11.6 Defining Corporate Governance
Corporate governance: The processes, structures and relationships through which the shareholders, as
represented by a board of directors, oversee the activities of the corporation. The processes and
structures used to direct and manage the business and affairs of the corporation with the objective of
enhancing long-term value for shareholders and financial viability of the business.
11.7 The Rights of Shareholders and Responsibilities of the Board
The OECD has identified shareholder rights as:
1)
2)
3)
4)
5)
6)
7)
8)
9)
Secure ownership registration
Capability to transfer ownership
Access relevant corporate information in a timely manner
Participation and voting at shareholder meetings
Election and removal of board members
Share in profits of the corporation
Knowledge of extraordinary transactions or decisions
Disclosure of dual-class shares
Rules and regulations ensuring the efficient and transparent functioning of the capital markets
for the corporation’s securities
10) Capability to exercise ownership rights
11) Ability to consult other shareholders relating to their rights
Responsibilities of the Board
Board of directors: a group of individuals elected by shareholders to govern or oversee the corporation’s
affairs
Fiduciary duties: obligations owed by directors to shareholders that are prescribed by laws or
regulations
11.8 Corporate Governance Issues
Board Membership
Independent (or unrelated) director: A director who is free from any interest and any business or other
relationship which could reasonably be perceived to, materially interfere with the director’s ability to act
in the best interest of the corporation
Disclosure and Transparency
Audit committee: comprises members of the board of directors, and oversees the internal and external
accounting auditing function to ensure that financial statements accurately and appropriately represent
the condition of the corporation and regulated disclosures are made
Evaluating Board of Director Performance
Possible Board criteria:
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Legal, protects interest of shareholders & ensures compliance
Strategic and social
Financial
Business
Human resources
Governance
Criteria for directors’ evaluation:

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
Control
Strategy and social
Shareholder interest
Ethical Issues in the Marketplace
2.8 Consumer Sovereignty: The assumption existing in an economy that consumers have and exercise
power over producers through decisions they make in purchasing goods and services provided by
corporations
12.3 Consumers and Consumption
Defining Consumer Sovereignty
Essential characteristics

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

Consumers, not producers or governments, dictate the type, quality, and quantity of goods and
services to be provided
Elements of democracy are present, including the idea of voting through purchase decisions and
that these decisions are made based upon the preferences of a majority
Consumers are free to make their own choices and are not unduly influenced by producers or
governments
An economic system operates more efficiently when consumers determine production
Consumers and the Marketplace
Consumerism: A social movement seeking to protect and augment the rights and powers of buyers in
relation to sellers (high pressure sales tactics and misleading advertisements)
14.8 The greening of Business Functions

Financial management now includes consideration of environmental factors. Regulators also
recommend greater disclosure of environmental information such as:
1) Environmental liabilities
2) Asset retirement obligations (hazardous waste)
3) Financial and Operational Effects of Environmental Protection Requirements
4) Environmental Policies Fundamental to Operations
5) Environmental Risks

Marketing
Green marketing: Selling environmentally friendly goods and services to consumers


Human Resources: influences the recruitment and retention of employees.
Operations: friendly processes and technologies into all aspects of operations (pollution,
reduction, waste management and recycling, and energy conservation
12.1 Employees in the workplace
Issues relating to employees in the workplace
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Working conditions
Workforce reduction
Privacy
Unions
Fair compensation
Employee loyalty and duties
Diversity management
Right to due process
Employee participation
Right to work
Work Ethic: A set of values that holds that work is important to members of society insofar as work
influences the qualities or character of individuals, that work is a purposeful activity requiring an
expenditure of energy with some sacrifice of leisure, that some gain, usually monetary, is involved, and
that through work a person not only contributes to society but becomes a better individual
Employee Loyalty: creates extra effort and extra drive in employees to perform.
Managing Employment Diversity
Discrimination: The preferential (or less) treatment on bases no directly related to qualifications of the
job or performance on the job
Employment equality: the fair and equal treatment of employees
Diversity management: a voluntary initiative that goes beyond what is required by law to eliminate
workplace discrimination
Chapter 14 The Environment and Business responsibilities
14.1 Business, Its Stakeholders, and The Natural Environment
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Shareholders
Directors
Employees
Customers/consumers
Lenders/creditors
Suppliers
Service professionals
Competitors
NGOs
Media
Government
14.2 Defining the Environmental Ethic and Sustainable Development
Environmental ethic: the set of values or principles that govern a corporation’s practices relating to the
environment
Sustainable development: development ensuring that the use of resources and the impact on the
environment today does not damage prospects for the use of resources or the environment by future
generations
Business sustainable development: ‘adopting business strategies and activities that meet the needs of
the enterprise and its stakeholders today while protecting, sustaining, and enhancing the human and
natural resources that will be needed in the future
14.3 Environmental Concerns in Business and Society
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Acid rain: precipitation that contains abnormally high concentration of sulphuric and nitric acid
Air pollution
Ecosystem: a biological community of interacting organisms and their physical environment
Energy production and consumption
Nature and wildlife
Ozone: naturally occurring gas, formed from normal oxygen, that protects the earth by filtering
out the ultra violet radiation from the sun.
Pollution/contamination
Waste management: Disposal, processing, controlling, recycling, and reusing the solid, liquid,
and gaseous wastes of plants, animals. Humans and other organisms
Water quality
Climate change: The result of human activities altering the chemical composition of the
atmosphere through the build- up of greenhouse gases and trap heat and reflect it back to the
earth’s surface
14.4 Government’s Influence

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Policy formation/regulation
Forming legislations
Established agencies
Perform audits
Kyoto Protocol: an agreement formulated by the UN Framework Convention on climate change,
where countries agreed to reduce emissions of carbon dioxide gases to 6% below 1990 levels by
2012
14.5 Environmental NGO Influence
Environmental non-governmental organizations (ENGOs): groups that hold shared values or attitudes
about the challenges confronting the natural environment and advocate for changes to improve the
condition of the environment. I.e. Greenpeace Canada, Energy Probe, World Wildlife Fund Canada
14.6 Market-Driven Environmentalism
Standard environmentalism: occurs when government regulation is a necessary remedy for the market’s
failure to provide enough environmental amenities
Market environmentalism: exists where economic incentives created by the market are more effective
at protecting the environment than is government intervention.
Differences between standard and market environmentalism
Factors
Economic Growth
Standard
 Viewed as destructive
because producing more
creates more environmental
harm
Free trade

Prevents countries from
following own higher levels
of protection, and belief that
rich countries exploit the
poor
Property Rights VS. Regulation

Faith in government to solve
problem for the public good
Free-market
 Word is dynamic and two
forces counteract harm
1) Increased income drives
demand for more equality
2) Stimulation of innovation that
improves environmental
quality
 Forces industries to become
more competitive,
accelerating adoption of
newer, cleaner technologies,
trade restrictions, countries
open for trade grow faster
 Tool for protecting ownership
incentive
Emissions trading: a system whereby corporations set targets for greenhouse gas reduction, if one
corporations can’t meet the target it purchases credits from those corporations that have met their
targets
Offsets (emissions-reduction credits): credits purchased from other corporations or organizations to
mitigate greenhouse gases released into the environment
Carbon capture: Carbon emissions are captured and injected into underground cavities
14.7 Managing Response To Environmental Concerns
Green-washing: Occurs when the corporation does not seriously address environmental issues but
merely talks about how it does, or takes token actions rather than really solving the problem
Strategies in approaching environmental concerns:
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Token response
Compliance with laws and regulations
Comprehensive environmental management
Sustainable development
14.9 Measuring and Reporting Environmental Sustainability
Indicators used to evaluate environmental performance
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Types and amount of materials used to provide goods and services
Source of energy and efficiency of use
Source of quality of water
Impact on biodiversity, location of operations, land uses, nature and species
Reduction of emissions
Design of products and services to minimize impact
Compliance with regulations
Use of transportation mode
14.10 Dissenting View on the Environment
Critiques:
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Concept is difficult to understand
Stops, or constrains economic development
Implies capitalism is unsustainable and morally lacking
Executives are misled into responding to it as a social issue (PRs)
14.11 The Environment: Corporate Opportunities and Threats
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Reputations of corporations
Motivated staff
Costly
Lowers revenues
Legal responsibility
Chapter 15 Globalization and Business Responsibilities
15.2 Globalization and Its Implications
Globalization: process of decreasing constraints on the interactions among the nations and peoples of
the world
Economic globalization: The integration of fragmented markets into a global economy
Political globalization: The process by which world power relationships change and there is a loss of
sovereignty by the state
Social or cultural globalization: the emergence of a worldwide cultural system
Globalization increases business, economic, social, and environmental responsibilities like:
 Damage to the environment
 Business’s alleged support for oppressive governments
 Marketing practices criticism
 Arms trade
 Treatment of employees in developing countries
 Indigenous people trying to gain control of their land
 Genetic modification
 Corruption, bribery and questionable payments
15.3 The Debate Over Globalization
Globalists: Individuals/organizations that support globalization
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Efficient production
Provide better goods & services
Higher employment and standard of living in developing countries
Transfer of capital, technology, intellectual property and skilled labor occurs
Several stakeholders benefit
Anti-globalists: Individuals/organizations that oppose / are critical of it
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Decisions based on profit making or greed
Government and corporation conspiracies
Unemployment, poverty and inequality in developed countries
Periodic financial crises
Destruction of local environments
Lost/changed cultures
Violation of human rights
Questionable payments
Intellectual property is not respected
No sovereignty of nations
Worldwide organizations have too much influence
15.4 Globalization and International Non-Governmental Organizations (NGO)
International non-governmental organizations (NGOs): groups that hold shared values and attitudes
about the issues relating to globalization and advocate for changes o improve the conditions in
developing countries
15.5 Institutions of Globalization
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Supranational Institution: An international organization that transcends national boundaries,
where the member states share in decision making on particular issues pertaining to the
members
World Bank
International Monetary Fund
International Labor Organization
World Trade Organization
These organizations are viewed as being focused on economic matters, but are also social,
ethical and environmentally conscious
15.6 Globalization and Canadian Business and Society
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Availability of lower-priced goods in greater variety
 Employment adjustments
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Developing countries
Influence from other nations
15.7 Standards of Conduct and Accountability For Global Business
Standards of Conduct
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Political factors
Sociocultural factors
Disclosure of information
Competition
Financing
Employment and human resources
Science and technology
Corrupt practices
Environmental protection
Stakeholder consideration
Corporate governance
15.8 Special Challenges of Global Business
Corruption: ‘the abuse of entrusted power for private gain’
Bribery
Bribery of high-ranking politicians or political parties
Bribery of low-level public officials to ‘speed things up’
The use of personal or familiar relationships to win public contracts
Human rights: the fundamental rights and freedoms to which all individuals, groups, and societies are
entitled
Sourcing products from sweatshops
15.9 The Acceptance of Global Capitalism
Infrastructure necessary at the bottom of a pyramid:
 Creating buying power
 Shaping aspirations
 Tailoring local solutions
 Improving access
Microfinance: The provision of financial products, such as micro-credit, micro-insurance, and savings
accounts, to persons living in areas of poverty without access to banking services
Trends and drivers behind this new thinking and creating a favorable environment to start engaging the
poor include:
 Many corporations see a need to break out of mature market sectors
 Framework conditions in many developing countries are improving
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Communications are faster and cheaper, making the world a smaller place
Public expectations of corporations are changing
New and better partners available
Aid in investment are beginning to reinforce one another
Chapter 16 Ethics, Responsibilities and Strategy
Strategic management: the process through which a corporation establishes its mission and objectives,
analyzes the environment and resource capabilities in order to formulate strategy, creates the
organizational systems and processes needed to implement the strategy and devises mechanisms for
evaluating performance
CSR strategy: the portion of a corporation’s comprehensive corporate strategy, addressing major social/
ethical, environmental, and governance issues
16.2 Approaches to viewing social/ethical and environmental responsibilities
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Financial/ Shareholder View: return to shareholders
Managerial Preferences View: corporation should act in an efficient manner consistent with
values of the senior managers or their agents.
Values: the basic assumptions about which ideals are considered desirable or worth striving for
Beliefs: the basic assumptions about the world in which and individual operates and how it
works
Corporate culture: the complex set of values, beliefs, and symbols that define the way in which
an organization conducts its business.
The basic needs of all individuals for achievement, power, security, and recognition
Circumstances in which strategist operates
Dynamics of group leadership and interactions of group members that influence preferences for
certain strategies
Stakeholder View: the corporation should act to further the quality of life of as many
stakeholders as possible without sacrificing efficiency or long-term fiduciary obligations to
shareholders
16.3 Stakeholders and Strategic Issues
Strategic issue: a point in question or a matter that is in dispute that will have a major impact on the
corporation’s performance positive or negative.
Stakeholders: owners, directors, employees, customers/consumers, lenders/creditors, suppliers, service
professionals, dealers, distributers, franchises, business organizations, society at large, educational
institutions, religious groups, charities, service, fraternal, cultural and ethnic associations, media, and
government
16.4 CSR Strategy and Purpose
Mission: an enduring statement that specifies in broad, even philosophical, terms the organization’s
reason for being and what distinguishes it from similar organizations
Vision: A statement of what the corporation wants to become or where it wants to be at some point in
the future
16.7 Business Programs and Their Influence
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Teaching ethics in business schools
Ethics programs for business schools
Student volunteerism
Service learning: a method of teaching, learning, and reflecting, combining classroom
learning with service to the community either locally or in developing countries
Pledges and oaths
16.8 Future Ethics in Canadian Business and Society
Corporate social responsibility to corporate social integration
CSR should not be thought of as a cost, a constraint, or charitable deed, but instead thought of as an
opportunity, innovation, and competitive advantage. CSR must understand the interrelationship
between the corporation and society
Justifications or Motivation for CSR
Moral Obligation: Corporations have duties to be good citizens, honoring ethical values and respect
people, communities and the environment. Though, principles don’t always provide direction when
corporate choices involve balancing values, interests, and costs.
Sustainability: environmental and community stewardship is to be emphasized, also considers long-term
consequences of activity. Though, it tends to enlighten self-interest, trade-offs between long-term
objectives and short term costs are often questioned.
License to operate: corporations require tactic permission of society to do business. Though, control
over social agenda is determined by outside stakeholders (e.g. government & NGOs)
Reputation: CSR improves image, strengthens its brand, enliven morale, and increases its stock price.
Though, focus is on external stakeholders and risk of confusing public relations with business results
Social issues priority
1) Generic
2) Value-chain
3) Social dimensions of competitive context
Redesigning The Corporation
1) The purpose of the corporation is to harness private interest to serve the public interest
2) Corporations shall accrue fair returns for shareholders, but not at the expense of the legitimate
interest of other stakeholders
3) Corporations shall operate sustainably, meeting the needs of the present generation without
compromising the ability of future generations to meet
4) Corporations shall be governed in a manner that is particularly, transparent, ethical, and
accountable
5) Corporations shall not infringe on the right of natural persons to govern themselves, nor infringe
on other universal human rights
6) Corporations shall distribute wealth equitably among those who contribute to its creation