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Canadian Business and Society:
Ethics & Responsibilities
Chapter
Seven
Chapter Outline
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Corporate Social Responsibility
Debate: The role of business is to make money vs. It’s more
than that
Social Responsibility Theories
Pyramid of Corporate Social Responsibility
Corporate Sustainability (CS)
Reputation Management
Social Impact Management
Triple-E Bottom Line (TBL)
Good Corporate Citizenship
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Corporate Social Responsibility: Definition
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
The way a corporation achieves a balance among it
economic, social, and environmental responsibilities
in its operations so as to address shareholder and
other stakeholder expectations.
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Key Elements of CSR
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Corporations have responsibilities beyond the production
of goods and services.
These responsibilities involve helping to solve social
problems.
Corporations have a broader constituency than just
stockholders.
Corporations have impacts beyond simple marketplace
transactions.
Corporations serve a wider range of human values than
just economic values.
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Debate: Case for Involvement
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Business must satisfy society’s needs and
expectations.
CSR prevents public criticism and government
regulation.
 McDonald’s

Clam Shells
Business and society are interdependent.
 Boom
towns
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Case for Involvement
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CSR is good for the bottom line.
 Insurance

Investors and consumers support CSR.
 Green

companies
mutual funds
Addressing social problems can become financial
opportunities (e.g., pollution abatement).
 Playgrounds
surfaces made from recycled tires
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Case for Involvement
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Business should take long-term CSR approach.
 MEC
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
Social actions improve public image and goodwill.
Business can solve problems as well as government.
 African
countries
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Case for Involvement
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Proactive approach is better than reactive.
 Home

Depot
Businesspeople are also concerned citizens.
 Apotex
Inc. (Bernard and Honey Sherman)
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Debate: Counterarguments
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Profit maximization is the primary purpose of
business.
 Milton

Friedman, Nobel Prize winner in Economics
Business is responsible to shareholders.
 It
should be their decision
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Counterarguments
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Social policy is role of government.
Business lacks training in social issues.
 It

is not competent
CSR would give too much power to business.
 Take
over a community
 Impose business values
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Counterarguments
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Business involvement in social matters increases costs.
 Someone
is paying for it
 Mistakes can be made

No reliable guidance for business in CSR matters.
 PR
vs. real action
 Needed vs. waste of time
 Charity accountability
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Counterarguments
12

Business cannot be held accountable unlike social
institutions.
 To
what standard?
 Whose responsible to hold them accountable?

There is divided support in business community for
social involvement.
 No

competition to get involved
The concept is unclear, so business action is
uncertain.
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Social Responsibility Theories
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
Amoral view
 “Amoral”
(not immoral) – an activity without moral
quality
 Traditional view of business
 profit-making entity
 Laws governing incorporated businesses make them
legitimate
 Milton Friedman
Source: Klonoski, 1991
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Social Responsibility Theories
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
Personal view
 Corporations
are like people and can therefore be
held accountable for their actions.
 There
is a ‘right thing to do’ and corporations can be
punished for acting immorally.
 Counterarguments:
Corporations are legal entities not
persons and can not be held accountable.
 Only
the people running the organization can be held
accountable for the actions of the corporation.
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Social Responsibility Theories
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
Social view
 Corporations
exist within a social context
 Corporations are social institutions with social
responsibilities
 The Amoral view is incomplete
 There are many examples of the social view
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Examples of the Social View
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Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Pyramid of Corporate Social Responsibility
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“Be a good
corporate citizen”
“Be ethical”
“Obey the law”
“Be profitable”
Philanthropic
Desired
Ethical
Expected
Required
Legal
Economic
Required
Source: Archie Carroll, 1991
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Corporate Sustainability (CS)
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

Most prominent term after CSR
Definition: Corporate Sustainability refers to
corporate activities demonstrating the inclusion of
social and environmental as well as economic
responsibilities in business operations as they impact
all stakeholders.
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Corporate Sustainability (CS)
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
Marrewijk ‘s five levels of CS
 Compliance-driven
CS: follow regulations
 Profit-driven CS: focus on bottom line
 Caring CS: go beyond legal compliance
 Synergistic CS: well balanced solutions
 Holistic CS: fully integrated CS
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Reputation Management
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Definition: Reputation management is an effort to
enhance a corporation’s image
Previous focus on media and public relations as well
as crisis management
Today, focus is on relationships with all stakeholders
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Reputation Management
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Reputation Management can:
 Enhance
financial performance
 Improve competitive positions
 Increase public approval

Reputations take a long time to be established, but
can be destroyed quickly
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Social Impact Management
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Field of inquiry at the intersection of business
needs and wider societal concerns that reflects and
respects the complex interdependency between the
two.
Interdependency of business and society
Two directional:
 Society’s
influence on corporations
 Corporation's influence on society
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Social Impact Management
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
Evaluates 3 aspects of business:
 Purpose
of business
 Social context of business
 Metrics: how performance is measured
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Triple-E Bottom Line (TBL)
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

Evaluates a corporation’s performance according to
a summary of the economic, social, and
environmental value the corporation adds or
destroys.
Now forms the basis for corporate reporting of
economic, ethical, and environmental responsibilities.
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Corporate Citizenship
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
Definition: The demonstration by a corporation that
it takes into account its complete impact on society
and the environment as well as its economic
influence.
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
Good Corporate Citizenship: Benefits
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Reputation management
Risk profile and risk
management
Employee recruitment,
motivation, and retention
Investor relations and access
to capital
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Learning and innovation
Competitiveness and
market positioning
Operational efficiency
Licence to operate

Greater leeway
Source: World Economic Forum
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7
New Approach to
Corporate Citizenship
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
Limited
 Focus

on corporate giving
Equivalent
 Emphasis

on sustainability
Extended
 Defined
as a set of individual, social, civil, and political
rights
Source: Matten and Crane, 2005
Copyright © 2008 McGraw-Hill Ryerson Ltd.
Chapter 7