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CHAPTER

4

Corporate Social Responsibility,

Citizenship, and Diversity

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© 2014 Routledge, Inc., Taylor and Francis Group. All rights reserved.

Learning Outcomes

After studying this chapter, you should be able to:

1.

Compare and contrast corporate social responsibility, citizenship, and social performance

2.

List the reasons for and against corporate social responsibility

3.

Characterize the three levels of corporate social responsibility

4.

Describe the five stages of corporate citizenship

5.

Compare the motivation and activity for corporate social responsibility

(CSR) and corporate social performance (CSP) and the social audit

6.

Describe the Equal Employment Opportunity Commission (EEOC)

7.

Define key terms in the chapter.

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Corporate Social Responsibility and Citizenship

Corporate Social

Responsibility (CSR)

The firm’s conscious effort (enlightened self-interest) to operate in a manner that balances all stakeholder interests.

Corporate

Citizenship

Includes the firm’s social responsibility, responsiveness, and performance.

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Corporate Social Responsibility (CSR)

Arguments for

Social Responsibility

1. Being socially responsible promotes business long-term self-interest.

2. CSR improves business value and reputation —public sentiment.

3. Society expects business to be socially responsible.

4. Business is responsible for correcting the social problems it causes.

5. CSR discourages government regulation.

Arguments against

Social Responsibility

1.

A firm’s sole responsibility is to maximize profits while obeying the law.

2. The cost of CSR is passed on to stakeholders.

3. Less socially responsible competitors may gain a cost advantage.

4. A firm involved in social issues can lose focus on operating as effectively as possible.

5. Dealing with social problems is the job of the government, not business.

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Figure 4.1

Arguments For and Against Corporate Social Responsibility

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Figure 4.2

Levels of Corporate Social Responsibility

Benevolent

CSR

Focus on profitability and helping society through philanthropy.

Ethical

CSR

Focus on profitability and going beyond the law to do what is right, just, and fair.

Legal

CSR

Focus on maximizing profits while obeying the law.

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An Overall Approach to CSR

The Situational

Approach to CSR

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Legal

CSR

Ethical

CSR

Benevolent

CSR

Figure 4.3

Stages of Corporate Citizenship

Stage 5. Transform

Change the game (Unilever)

Stage 4. Integrated

Partnerships, triple bottom line

(AT&T)

Stage 3. Innovative

Stakeholder management (Baxter and ABB)

Stage 2. Engaged

Philanthropy, social issues

(Chiquita and Nestlé)

Stage 1. Elementary

Profit (GE)

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Benefits of Corporate Citizenship

Advantages of CSR

Enhanced reputation

Customer loyalty

Better employee relations

Awards and recognition

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Stakeholders and the Triple Bottom Line

Social

Performance

Financial

Performance

Environmental

Performance

Overall

Performance of the Firm

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Corporate Social Performance (CSP)

Assessing CSR and responsiveness

CSP reporting and social audits

Global social audit standards

Socially responsible investing

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Diversity

Diversity

 The degree of differences among members of a group or an organization.

Protected classes/groups

 Groups legally protected by EEO laws from workplace discrimination include: race/ethnicity, gender, age, ability, religion, and others.

The Equal Employment Opportunity

Commission (EEOC)

 Created in 1964 as the major federal agency to administer and enforce job discrimination laws to provide equal employment opportunity for all.

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Discrimination in the Workplace

Workplace

Harassment

Includes slurs, derogatory comments, or other verbal or physical abuse that creates an intimidating, hostile, or offensive work environment or interferes with an employee’s work performance.

Sexual

Harassment

Occurs when any employee experiences unwelcome sexual advances or when on-the-job conditions are hostile or threatening in a sexual way.

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Figure 4.4

Employment Laws and Executive Orders

Law or Executive Order Description

Equal Employment Opportunity

Title VII of the Civil Rights Act of 1964

Civil Rights Acts of 1972, 1991

Equal Employment Opportunity

Act of 1972

Executive Order 11246 of 1965 —

Affirmative Action

Prohibited discrimination in all areas of the employment relationship (hiring, compensating, promoting, discharging, and other aspects) based on race, religion, color, sex, or national origin. It also made racial and sexual harassment illegal.

Civil Rights Amendments provided possible compensation and punitive damages for discrimination.

Gave greater power to the Equal Employment

Opportunity Commission (EEOC) to combat discrimination.

Mandated affirmative action for all federal contractors and subcontractors to accelerate the movement of minorities into the workforce.

Companies doing business with the government were given preferential treatment if they had set employment percentages and quotas for minorities.

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Figure 4.4

Employment Laws and Executive Orders

Law or Executive Order Description

Equal Employment Opportunity (cont’d)

Age Discrimination in

Employment Act of 1967

Rehabilitation Act of 1973

Americans with Disabilities Act of 1990 (ADA)

Prohibited age discrimination against people older than 40 and restricted mandatory retirement.

Prohibited discrimination based on physical or mental disability.

Strengthened the Rehab Act to require employers to provide “reasonable accommodations” to allow disabled employees to work and to provide access to facilities (ramps, elevators, rest rooms). ADA also required transportation systems and communication systems to facilitate access for the disabled.

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Figure 4.4

Employment Laws and Executive Orders

Law or Executive Order Description

Compensation (salary and benefits)

Equal Pay Act of 1963

Pregnancy Discrimination Act of 1978

Family and Medical Leave Act of 1993

Required that men and women be paid the same for substantially equal work.

Prohibited discrimination against women because of pregnancy and childbirth. Prior to the act, employers could exclude health coverage to pay the cost of prenatal care and childbirth.

Required employers (with 50 or more employees) to provide up to 12 weeks unpaid leave for family

(childbirth, adoption, eldercare) or medical reasons.

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Diversity and Minority Progress

Work and Jobs

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

70%

85%

80%

14%

11%

5%

Percentage of Workforce

African American

7%

5%

4%

8%

4%

9%

Management Jobs

Hispanic Asian/Pacific

Professional Jobs

Caucasian

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Benefiting from CSP

Business Nonmarket and Market Strategies

Information strategies that foster a positive view of the firm

Societal strategies that will gain a strategic advantage for the firm

Political and legal strategies that help the firm avoid legal and ethical problems

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Key Terms

benevolent CSR cause-related marketing corporate citizenship corporate reputation corporate social performance (CSP) corporate social responsibility (CSR) diversity ethical CSR harassment legal CSR levels of CSR protected groups sexual harassment social audit triple bottom line

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