Business & Society
Ethics, Sustainability, and Stakeholder
Management
Eighth Edition
Archie B. Carroll
Ann K. Buchholtz
© 2012 South-Western, a part of Cengage Learning
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Chapter 16
Business and
Community
Stakeholders
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Learning Outcomes
1.
2.
3.
4.
5.
6.
7.
Identify and discuss two basic ways of business giving.
Discuss reasons for community involvement, various types of
community projects, and management of community
stakeholders.
Explain the pros and cons of corporate philanthropy, provide a
brief history of corporate philanthropy, and explain why and to
whom companies give.
Differentiate between strategic philanthropy, cause-related
marketing, and cause branding.
Characterize the nature of, magnitude of, reasons for, and
impacts of offshore outsourcing and business or plant closings.
Address steps that a business or plant might take before a
decision to close is made.
Identify strategies that a business or plant might employ after a
decision to close has been made.
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Chapter Outline
• Community Involvement
• Corporate Philanthropy or Business Giving
• The Loss of Jobs
• Summary
• Key Terms
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A Company’s Positive Impact
Community involvement
• Voluntary activities in the community
• Company contributions
• Support of programs in:



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
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Education
Culture
Urban development
The arts
Civic activities
Health and welfare
Corporate philanthropy
• Business giving
• Enlightened self-interest and moral reasons
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Standards of Excellence in
Corporate Community Involvement
1. Leadership
2. Issues Management
3. Relationship Building
4. Strategy
5. Accountability
6. Infrastructure
7. Measurement
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Benefits of Employee Volunteerism
Benefits to the
employee
Improves
performance
Increases job
satisfaction, attitude
and morale
Encourages
teamwork
Promotes leadership
and skill
development
Improves intraorganizational
communications
Benefits to the
corporation
Builds brand
awareness and
affinity
Strengthens trust and
loyalty among
consumers
Benefits to the
community
Provides skilled and
talented volunteer
pool
Offers direct cost
savings for
community service
organizations
Enhances corporate
Creates quantifiable
image and reputation social impact
Improves employee Helps bring
retention
community needs
into focus
Increases employee
productivity and
loyalty
Provides and
effective vehicle to
reach strategic goals
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Corporate Community Involvement
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Developing a Community Action
Plan
1. Get to know the community.
2. Assess the company’s resources.
3. Select projects to support; match
community needs to company resources.
4. Monitor performance of the community
actions program and make adjustments.
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Philanthropy
Philanthropy
• A desire to help mankind as indicated by
acts of charity; love of mankind.
• Business giving
 Can be difficult to assess the true motives
behind philanthropic giving.
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A Call for Transparency
• Companies need not disclose direct
donations to charities.
•
There is a debate raging over whether they
should.
•
Some fear that disclosure would result in fewer
donations.
• Concerns that nonprofits are being
established to bypass campaign financing
laws restricting the use of soft money.
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Giving to the “Third Sector”
Third sector
•
The nonprofit sector
•
Nonprofits require business giving to survive.
•
No profits
•
No tax receipts
Why do companies give?
 Charitable giving
 Community investment
 Commercial giving where businesses expect to
benefit from the donation
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Categories of Corporate
Contributions Programs
1. The Nondonor
2. The “What’s In It for Us” Donor
3. The “Company President Believes in Art
Support” Donor
4. The “We Are a Good Citizen” Donor
5. The “We Care” Donor
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To Whom Do Companies Give?
Major categories of recipients
1. Health and human services
2. Education
3. Civic and community activities
4. Culture and the arts
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Managing Corporate Philanthropy
 Base giving on business skills, resources,
and capabilities to enhance philanthropic
outcomes.
 Focus on philanthropy that will enhance
corporate profitability and also make a
difference in the community.
 Seek to align corporate philanthropy with
business objectives, reputation, and
branding.
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Factors Influencing Corporate
Giving Priorities
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
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Aligning closely with business needs
Limits on budgetary resources
Directions from the CEO and/or the Board
Strengthening the brand
Costs of responding to natural disasters
Being more responsive to stakeholders
Changes in the workforce
Employee needs/requests
Community needs
Global giving
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Community Partnerships and
Strategic Philanthropy
Community partnerships
• Occurs when a for-profit business enters
into an arrangement with a nonprofit for
their mutual advantage.
Strategic philanthropy
• An approach by which corporate giving
and philanthropic endeavors are designed
to fit with the firm’s mission, goals, or
objectives.
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Strategic Philanthropy
1. Make as direct a contribution as possible to
the financial goals of the firm.
2. Bring contribution programs into sharper
alignment with business endeavors.
3. Ensure that philanthropy is well planned
and managed.
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Implementation of Strategic
Philanthropy
1. Integrate philanthropy into strategic goals and
company mission.
2. Connect philanthropy with other community
involvement programs.
3. Budget appropriately for philanthropy.
4. Ensure effective program infrastructure.
5. Formalize policies and guidelines for funding.
6. Involve employees in philanthropy-related
activities.
7. Incorporate stakeholder communication.
8. Develop long-term business/nonprofit
partnerships.
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Cause-Related Marketing
Cause-related marketing
• Directly linking a business’s product or
service to a specified charity.
 Businesses enhance their public image and
increase sales.
 Nonprofit organizations get funding and
visibility.
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Cause Branding
Cause branding
•
A longer-term commitment than causerelated marketing.
•
Is related more directly to the firm’s line
of business and the target audience.
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Global Philanthropy
• The size of a company’s international
workforce is the greatest determinant of the
size of its charitable contributions to that
market.
• International development will be one of
the main areas that will see funding growth
in the future.
• Businesses want to protect communities in
which they operate.
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Loss of Jobs
Outsourcing
• The relocation of business processes to a
different company.
Offshore outsourcing (Offshoring)
• The relocation of business processes to a
different country.
• Affects blue collar and white collar
workers.
• Even skilled high-tech jobs are offshored.
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Best Offshore Outsourcing
Practices
1. Go offshore for the right reasons.
2. Choose your model carefully.
3. Get your people on board.
4. Be prepared to invest time and effort.
5. Treat your partners as equals.
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Plant Closings
Businesses and plants close for many
reasons
 Poor economic conditions
 Consolidation of organizations
 Moving jobs to another country with low
cost labor
 Outsourcing or offshoring
 Foreign competition
 Declining sales
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Business and Plant Closings
Diversification
Before Deciding
to Close
New ownership
New owner
Employee ownership
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Business and Plant Closings (continued)
Conduct a community impact analysis
Provide advance notice to employees/
community
After Deciding
to Close
Provide transfer, relocation, and
outplacement benefits
Phase out the business gradually
Help attract replacement industry
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Community Impact Analysis
What groups will be
affected?
What is the timing of
initial and later
effects?
How will they be
affected?
What is the duration
of the impact?
What is magnitude
of the effect?
To what extent will
the impact be
diffused in the
community?
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Advance Notice
Worker Adjustment and Retraining
Notification Act (WARN)
• Requires firms with 100 or more workers
to provide 60 days advance notice before
shutting down or conducting layoffs.
• The recent global economic crisis has
prompted some states to strengthen WARN
protections.
• WARN often falls short of its goals of
protecting workers.
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Communicating With Employees
Who are Being Laid Off
 Be complete
 Be consistent
 Inform affected employees first
 Inform retained employees
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Survivors– The Forgotten Stakeholders
Emotional support
Directional support
The Needs of
Survivors
Tactical support
Informational support
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Key Terms
• Cause branding
• Cause-related
marketing
• Community action
program
• Community
involvement
• Community
partnerships
• Employee owned
• Offshore outsourcing
•
•
•
•
•
•
•
Offshoring
Outsourcing
Philanthropy
Resource-based giving
Strategic philanthropy
Third sector
Worker Adjustment
and Retraining
Notification Act
(WARN)
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