Chapter 4
Global Corporate
Citizenship
McGraw-Hill/Irwin
Copyright © 2008 The McGraw-Hill Companies, All Rights Reserved.
Ch. 4: Key Learning Objectives
 Defining corporate citizenship and global corporate citizenship
 Contrasting the structures and processes businesses use to
manage their social responsibilities
 Evaluating how the multiple dimensions of corporate
citizenship progress through a series of stages
 Assessing how corporate citizenship differs among various
countries and regions of the world
 Understanding how a business or social groups can audit
corporate citizenship activities and report their findings to
stakeholders
 Recognizing the leading-edge corporate citizenship companies
and how they carry out their corporate citizenship mission
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Introduction to Corporate Citizenship
 Refers to businesses putting corporate social
responsibility into practice
 Involves
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Proactively building stakeholder partnerships
Discovering business opportunities in serving society, and
Transforming a concern for financial performance into a
vision of integrated financial and social performance
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Davenport Principles of Corporate Citizenship
 One researcher's answer to core elements of corporate
citizenship
 Total of 20 Principles with 3 performance categories:
ethical business behavior, stakeholder commitment, and
environmental commitment
 For stakeholder commitment -- principles define overall
standards and specific standards for 5 stakeholder groups
 Overarching definition and standard:
 Good corporate citizens strive to conduct all business dealings
in an ethical manner, make a concerned effort to balance the
needs of all stakeholders, while working to protect the
environment
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Exhibit 4.Aa
Davenport Principles of
Corporate Citizenship
Ethical Business Behavior
1) Engages in fair and honest business practices in its relationship
with stakeholders.
2) Sets high standards of behavior for all employees.
3) Exercises ethical oversight of the executive and board levels.
Stakeholder Commitment
4) Strives to manage the company for the benefit of all stakeholders.
5) Initiates and engages in genuine dialogue with stakeholders.
6) Values and implements dialogue.
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Exhibit 4.Ab
Davenport Principles of
Corporate Citizenship
Community
7. Fosters a reciprocal relationship between the corporation and
community.
8. Invests in the communities in which corporation operates.
Consumers
9. Respects the rights of consumers.
10. Offers quality products and services.
11. Provides information that is truthful and useful.
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Exhibit 4.Ac
Davenport Principles of
Corporate Citizenship
Employees
12. Provides a family-friendly work environment.
13. Engages in responsible human-resource management.
14. Provides an equitable reward and wage system for employees.
15. Engages in open and flexible communication with employees.
16. Invests in employee development.
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Exhibit 4.Ad
Davenport Principles of
Corporate Citizenship
Investors
17. Strives for a competitive return on investment.
Suppliers
18. Engages in fair trading practices with suppliers.
Environmental Commitment
19. Demonstrates a commitment to the environment.
20. Demonstrates a commitment to sustainable development.
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Citizenship Profile
 Research by Gardberg and Fombrun argues that corporate
citizenship activities should be viewed as strategic
investments (like research & development)
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Create intangible assets that lead to improved legitimacy, reputation
and competitive advantage
Particularly true of global firms where citizenship activities overcome
nationalistic barriers and build local advantage
 Important for global firms to choose a Citizenship Profile
which matches the local setting
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Public expectations vary on factors such as environmental risk,
philanthropy and worker rights
Companies that choose the right configuration of citizenship activities
to match public expectations will reap strategic advantages
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Exhibit 4.Ba Business Commitment to Citizenship –
Examples of Corporate Citizenship Statements
ExxonMobil – “We pledge to be a good corporate citizen in all the places we
operate worldwide. We will maintain the highest ethical standards, comply
with all applicable laws and regulations, and respect local and national
cultures. We are dedicated to running safe and environmentally
responsible operations. (www.exxonmobil.com)
Ford – “Corporate citizenship has become an integral part of every decision
and action we take. We believe corporate citizenship is demonstrated in
who we are as a company, how we conduct our business and how we take
care of our employees, as well as in how we interact with the world at
large.” (www.ford.com)
Nike – “Our vision is to be an innovative and inspirational global citizen in a
world where our company participates. Every day we drive responsible
business practices that contribute to profitable and sustainable growth.”
(www.nike.com)
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Exhibit 4.Bb Business Commitment to Citizenship –
Examples of Corporate Citizenship Statements
Nokia – “Our goal is to be a good corporate citizen wherever we operate, as a
responsible and contributing member of society.” (www.nokia.com)
Toyota – “With the aim of becoming a corporate citizen respected by
international society, Toyota is conducting a wide range of philanthropic
activities around the world. Its activities cover five major areas: education,
the environment, culture and the arts, international exchange and local
communities.” (www.toyota.co.jp)
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Global Corporate Citizenship
 Public expectation that as companies expand
internationally they will behave in ways that enhance
benefits and minimize risks for all stakeholders
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Companies must have an acceptable level of corporate citizenship to
earn and maintain a “license to operate” in the countries where do
business
 Definition of Global Corporate Citizenship
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Process of identifying, analyzing, and responding to the
company’s social, political, and economic responsibilities as
defined through law and public policy, stakeholder expectations,
and voluntary acts flowing from corporate values and business
strategies. Involves actual results and the processes through
which they are achieved.
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Global Corporate Citizenship
 Concept is consistent with themes throughout this text
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Managers and companies have responsibilities to all their
stakeholders
Corporate citizenship (CC) involves more than just meeting
legal requirements
CC requires that a company focus on, and respond to,
stakeholder expectations and undertake those voluntary acts
that are consistent with its values and business mission
CC involves both what the corporation does and the processes
and structures through which it engages stakeholders and
makes decisions
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Management Structures for
Corporate Citizenship
 2004 Business for Social Responsibility study found no
single universally accepted design for CSR (corporate
social responsibility) management systems
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Could be assigned to committee of the board, senior executive
committee, or single executive/group of executives
 Other management structure research has found
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Some companies have broadened scope of Public Affairs Offices
to include corporate citizenship (see Ch. 2)
Emerging trend is separate department
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Stages of Corporate Citizenship
 Is a developmental change process, involving new
attitudes, routines, policies, programs and relationships
 Model (shown on next slide) by Mirvis and Googins
shows sequence of 5 stages based on
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Citizenship content
Strategic intent
Leadership
Structure
Issues management
Stakeholder relationships
Transparency
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Figure 4.1
Stages of Corporate Citizenship
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Transforming Stage of Corporate Citizenship
 Is highest stage, Stage 5
 Qualities of companies at this stage
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Visionary leaders motivated by higher sense of corporate
purpose
Partner extensively across organizational, sector, and national
borders to address social problems
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Limits to Corporate Citizenship
 Despite growth in many companies and countries, are
some critics of corporate citizenship activities
 An example (excerpt from Exhibit 4.D)
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[F]or most companies, CSR [corporate social responsibility] does
not go very deep. There are many interesting exceptions—
companies that have modeled themselves in ways different from
the norm; often, particular practices that work well enough in
business terms to be genuinely embraced; charitable endeavors
that happen to be doing real good, and on a meaningful scale. But
for most conventionally organized public companies—which
means almost all of the big ones—CSR is little more than a
cosmetic treatment. The human face that CSR applies to
capitalism goes on each morning, gets increasingly smeared by
day and washes off at night.
--“The Good Company: A Survey of Corporate Social
Responsibility,” The Economist, January 22, 2005, p. 4.
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Corporate Citizenship in Comparative
Perspective
 How businesses interpret and act on their citizenship
varies across the glob
 Trends from current studies
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Companies in Northern America and Europe are more likely
than Asian companies to have written corporate citizenship
policies, Asian companies however are more likely to have
written ethics policies
Comparative study across the Americas showed “huge gap”
between U.S. and Canada and Latin America and Caribbean
Governments in Europe play a much more important role in
promoting CSR than in the U.S.
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Corporate Social Performance Audit
 Is a systematic evaluation of an organization’s social,
ethical, and environmental performance
 Demand for social auditing has grown in Europe and U.S.
 In some European countries is required by law
 Can take 2 forms
 Performance measured against a company’s own mission
statement or policies
 Performance measured against a set of established standards
• Like the Davenport Principles presented earlier, or the global
standards presented on the following slides
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Figure 4.2
Global Social Audit Standards
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Figure 4.3
Trends in Corporate Social Reporting
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Additional Social Audit Approaches
 Balanced Scorecard
 Set of key financial and non-financial indicators
 Triple Bottom Line
 Financial, social and environmental results taken together
as an integrated whole
 Transparency
 Growing demand by stakeholders for companies to report
publicly the results of their financial, social and
environmental performance audits
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Corporate Citizenship Awards
 100 Best Corporate Citizens annual ranking by
Business Ethics Magazine
 Joint initiative with scholars and KLD Research and
Analytics
 Companies that have consistently been on the list since
its inception in 2000 shown on next slide
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Exhibit 4.F
The Best Corporate Citizens for the
Past 7 Years
 These organizations have made Business Ethics’ 100 Best
Corporate Citizens list since the list began in 2000:
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Brady Corporation
Cisco Systems
Cummins Engine
Ecolab
Graco
Herman Miller
Hewlett-Packard
Intel
Modine Manufacturing
Pitney Bowes
Procter & Gamble
St. Paul Travelers Cos.
Southwest Airlines
Starbucks
Timberland
Whirlpool
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Corporate Citizenship Awards
 Corporate reputation
 Joint initiative between Reputation Institute and Harris
Interactive
 Johnson & Johnson top rated 7 years in a row
 Technology companies were rated top industry
 Fortune magazine annual “Most Admired” list
 Includes a peer rating of social responsibility
 Among companies recognized: UPS, Public Super Markets,
Starbucks, and Herman Miller
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