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Sexty 5e Ch 07 FINAL

Canadian Business and Society
Fifth Edition
Corporate Social
The Concept
Prepared By:
Renée Majeau, NAIT
© 2020 McGraw-Hill Education Limited
Learning Outcomes
1. Describe corporate social responsibility (CSR).
2. Debate the pros and cons of corporate social
responsibility in Canadian business.
3. Appreciate the various foundations of social
responsibility theories.
4. Explain Carroll’s pyramid of corporate social
© 2020 McGraw-Hill Education Limited
Learning Outcomes Cont’d…
5. Define the four contemporary CSR concepts: corporate
sustainability, reputation management, social impact
management, and triple bottom line (TBL).
6. Describe corporate and business citizenship.
7. Explain the complexity of corporate social responsibility
by understanding a unifying CSR framework.
© 2020 McGraw-Hill Education Limited
Describing Corporate
Social Responsibility (CSR)
• 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
© 2020 McGraw-Hill Education Limited
Key Elements of CSR
• Five key elements found in most CSR definitions:
 Corporations have responsibilities beyond the production of
goods and services
These responsibilities involve helping to solve social problems,
especially those they have helped create
Corporations have a broader constituency than just
shareholders alone
Corporations have impacts that go beyond simple marketplace
Corporations serve a wider range of human values than can be
captured by a sole focus on economic values
© 2020 McGraw-Hill Education Limited
Describing CSR Cont’d…
• Basic idea of CSR is that business and society are
interwoven rather than distinct entities
• Expectations are placed on business due to its three roles:
 As an institution in society
 As corporation or organization in society
 As individual managers who are moral actors within corporation
• These three roles can be expressed in terms of three
principles of corporate social responsibility: legitimacy;
public responsibility; and managerial discretion
Source: Wood, 1991
© 2020 McGraw-Hill Education Limited
Wood’s Principles of CSR
Principle of Legitimacy
• External focus on
expectations of society
• Society grants the right
to business to operate
• Adherence to social
norms of society
• Pressures particularly
strong on some
corporations, e.g. large
ones or consumer
Principle of Public
Principle of Managerial
• Beyond general
expectations of society,
that is, at the
corporation level
• Determined by
uniqueness for
circumstances of the
• Resource dependence
• Involves managing
relationships with
immediate environment
• Involves individual
choice or managerial
• Individual decision
makers or managers
• Relates to latitude of
action possible by
• Focuses on range of
strategic options
available to
© 2020 McGraw-Hill Education Limited
The CSR Debate
• Case for involvement:
 Corporations are part of an interdependent “system” within
society  business must satisfy society’s needs and expectations
CSR prevents public criticism and discourages further
government involvement and regulation
Social problems can become opportunities i.e. CSR is good for
the bottom line
Businesses should be given opportunity to solve social problems
Businesspersons are concerned humans; it is not appropriate for
them to ignore social matters
© 2020 McGraw-Hill Education Limited
The CSR Debate Cont’d…
• Case against involvement:
 Profit maximization is the primary purpose of business  to
have any other purpose is not socially responsible
Corporations are responsible to shareholders and, in effect, have
no authority to operation in the social area
Social policy is role of government, not business
Business involvement in social matters increases costs
Businesses cannot be held accountable for their actions in a way
sufficient to satisfy demands for social involvement
Managers are not morally perfect and self-interest can overtake
decision making
© 2020 McGraw-Hill Education Limited
Ethical Basis for CSR
• Managers have different motivations when responding to
sustainability  results in different sustainability
management initiatives
 Four different kinds of business cases of or for sustainability:
• Reactionary – focusing on profit-seeking behaviour and minimizing
• Reputational – how the business is portrayed in media or society
• Responsible – striving for business excellence where corporation’s
success is measured by economic, environmental, and social
• Dialogue-based - engagement with broad range of stakeholders leads
to collaboration and understanding of initiatives that will have social,
environmental, and economic benefits
© 2020 McGraw-Hill Education Limited
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Social Responsibility
Theories: Three Categories
• Amoral View:
 Traditional view of business as merely profit-making entity
• Personal View:
 Corporations viewed as collectives that act as individuals; they
exist as legal persons and can be held responsible for their
• Social View:
 Corporations are social institutions in society, with social
Source: Klonoski, 1991
© 2020 McGraw-Hill Education Limited
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The Pyramid of CSR
• Carroll’s pyramid (1991):
 Four kinds of social responsibility depicted in a pyramid -
economic responsibilities at bottom, followed by legal, ethical
and philanthropic higher up
 Pyramid is basic building-block, with economic performance as
 Corporation should strive to:
Make a profit
Obey the law
Behave ethically and
Be a good corporate citizen
© 2020 McGraw-Hill Education Limited
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Contemporary CSR Concepts
• Corporate sustainability (CS)  activities demonstrating
inclusion of social, environmental, and economic
responsibilities in business operations as they impact all
stakeholders presently and in future
 Five levels of CS:
• Compliance-driven CS - following government regulations
• Profit-driven CS – some consideration given to CS provided it
contributes to bottom line
• Caring CS - beyond legal compliance and profit (right thing to do)
• Synergistic CS – well-balanced solutions sought to create value
• Holistic CS – fully integrated and embedded in corporation
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Reputation Management
• Any effort to enhance corporation’s image and good
 Several stages to successful implementation:
• Identification of desired perception of corporation
• Recognition of the significance of image with all stakeholders
• Awareness of influence of interactions with stakeholders on
corporation’s reputation
• Continuous efforts at maintaining relationships with stakeholders
 Reputations take a long time to establish and can be destroyed
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Social Impact Management
• Field of inquiry at the intersection of business needs and
wider societal concerns that reflects and respects the
complex interdependency between the two
• Evaluates three aspects of business:
Purpose: What is the purpose of a business?
2. Social Context: Are the rights and responsibilities of multiple
stakeholders considered?
3. Metrics: How performance and profitability measured?
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Triple Bottom Line (TBL)
• Triple-E (economic, ethical, and environmental) bottom
line  evaluates a corporation’s performance according
to a summary of the economic, social, and environmental
value the corporation adds or destroys
 Variation = triple-P bottom line: people, planet, profit
 Framework for measuring corporate performance against
economic, social, and environmental indicators
 Criticized as being of limited value i.e. provides smokescreen for
corporations to avoid ethical and environmental responsibilities
and reporting
© 2020 McGraw-Hill Education Limited
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Views on Corporate and
Business Citizenship
• Corporate citizenship  corporation demonstrates that it
takes into account its complete impact on society,
environment and economic influence
 Provides business benefits in eight areas:
Reputation management
Risk profile and risk management
Employee recruitment, motivation and retention
Investor relations and access to capital
Investor Learning and innovation
Competitiveness and market positioning
Operational efficiency
License to operate
© 2020 McGraw-Hill Education Limited
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Approaches to
Corporate Citizenship
• Three views of corporate citizenship:
 Limited  giving back to society and is considered enlightened self-
 Equivalent  concerned with what society expects are the
responsibilities of business
 Extended  shared understanding of basic social, civil, and political
Social role of the corporation in administering citizenship rights
Social rights: The corporation as a provider
Civil rights: The corporation as an enabler
Political rights: The corporation as a channel
© 2020 McGraw-Hill Education Limited
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Approaches to
Corporate Citizenship Cont’d…
• Business view:
 Business citizenship  includes the responsibilities of
corporate citizenship on a local and national basis and
extends it to a global or universal scope
 Corporations are responsible players in local environments,
involved with volunteerism, charity, and rights and duties in
and for the community
 Also responsible for global or universal actions
© 2020 McGraw-Hill Education Limited
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The VBA Model: An
Integration of CSR Concepts
• Integrates and unifies five common frameworks based
on three core concepts: value, balance, and
 Corporate Social Responsibility (CSR)
 Business Ethics (BE)
 Stakeholder Management (SM)
VBA Model
 Sustainability (SUS)
 Corporate Citizenship (CC)
Value + Balance + Accountability = Proper Role of Business in Society
© 2020 McGraw-Hill Education Limited
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• Corporate social responsibility is a reflection of the fact that
business and society are interwoven and can be expressed in
terms of three principles: legitimacy, public responsibility, and
managerial discretion. (LO 7.1)
• The debate as to whether social responsibility is an
appropriate concept is summarized in arguments for and
against corporate social involvement. Arguments for and
against corporate social involvement are provided and an
ethical basis for CSR described. (LO 7.2)
© 2020 McGraw-Hill Education Limited
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• These arguments are reflected in Klonoski’s summary of
social responsibility theories, categorized according to three
alternative views of the corporation as amoral, personal, and
social. (LO 7.3)
• A pyramid of corporate social responsibilities is presented,
based on economic, legal, ethical, and philanthropic
responsibilities. A hierarchy of responsibilities exists:
economic and legal obligations are primary and basic. In
recent years, the ethical and philanthropic responsibilities
have received more attention. (LO 7.4)
© 2020 McGraw-Hill Education Limited
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• Social responsibility has evolved and today other terminology
is being used to describe the concept, including corporate
sustainability, reputation management, social impact
management, triple bottom line, and corporate citizenship.
(LO 7.5)
• Corporate citizenship is another term used interchangeably
with CSR. It is an inclusive term to capture the economic,
social, and environmental responsibilities of the corporation
and relies on stakeholder theory. (LO 7.6)
© 2020 McGraw-Hill Education Limited
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• The VBA model is an attempt at unifying and integrating the
various frameworks within CSR around three core concepts:
value, balance, and accountability. (LO 7.7)
© 2020 McGraw-Hill Education Limited
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