3-4 pg Paper on 21st Century Corporate Social Responsibility

21st Century Corporate Social ResponsibilityPrior to beginning your assignment, read Chapter 2 of the textbook and Corporate social responsibility in the 21st century: A view from the world’s most successful firms. Using the Fortune 100 List, choose an organization that has their corporate social responsibility (CSR) statement, vision, and mission statements available on their website. Quote the statement and describe what this means in your own wordsResearch a recent article on the organization that is related to their current and/or future CSR activities.Describe how the new plans will affect the organization, both internally and externally. Develop an idea for a new CSR endeavor for the organization based on the organization’s mission and vision.The paperMust be three to four double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in the Ashford Writing Center (Links to an external site.)Links to an external site..Must include a separate title page with the following:Title of paperStudent’s nameCourse name and numberInstructor’s nameDate submittedMust use at least one scholarly source in addition to the course text and the article by Snider, Hill, and Martin (2003).Must document all sources APA style as outlined in the Ashford Writing Center (Links to an external site.)Links to an external site..Must end with a conclusion that clearly summarizes what was presented in the paper.Must include a separate references page that is formatted according to APA style

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Social Responsibility
and Stakeholders
.Jonathan Alcorn/ZUMA Press/Corbis
Learning Outcomes
After reading this chapter, you should be able to do the following:
• Examine strategic approaches to social responsibility.
• Analyze the value of corporate social responsibility.
• Evaluate the stakeholder’s role in business ethics and social responsibility and identify the steps required
for stakeholder engagement.
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Patagonia: The Responsible Company
Specializing in outdoor clothing in a niche market, Patagonia, Inc. has long been considered
a responsible company. Top executives make it a priority to convey the message that they
care about their employees, their customers, and the environment. What does it mean to be
a responsible company? The founder and owner of Patagonia, Yvon Chouinard, has admitted that he did not intend for Patagonia to be an industry leader in social and environmental
responsibility when he started the company in 1972. Only after addressing a series of decisions in product design, supply, and marketing did Patagonia executives realize that every
business has responsibilities beyond profit. Chouinard decided that he wanted to make a difference in the world by offering quality products that had minimal environmental impact and
providing employees with meaningful work.
In 1988, staff at one of the Patagonia stores began to experience headaches due to a malfunctioning ventilation system that was recirculating formaldehyde into the air. The source of
formaldehyde was linked to the finishing process of the cotton used in the company’s products. By exploring the issue in detail, Patagonia discovered that formaldehyde in clothing could
create adverse reactions for customers, including cancers and other illnesses. In response, the
company investigated the environmental impact of the materials in their clothing. Based on
their findings, they initiated a switch to organic cotton that was not readily available. Working
with suppliers in the United States and later internationally, Patagonia was able to secure a
greater supply of organic cotton that is free from the harmful chemicals that can affect customers and employees as well as the environment. These types of situations have shown that
being a responsible company entails focusing on a broad range of stakeholders and provides
for a viable and sustainable business.
Patagonia has since become a leader in social responsibility. In their book, The Responsible
Company (2012), Chouinard and Vincent Stanley, the company’s chief storyteller and editor
of the Footprint Chronicles (the company’s website that provides transparency to the public
by showing the social and environmental impact of Patagonia products), share five elements
of business responsibility as a model for other companies. These are responsibilities to:
1. The health of the business, including the obligation of a company to stay financially
2. The workers, including caring for the people who make and sell its products.
3. Customers, focusing on the value of the products and services that satisfy the customers through truthful and honest relationships.
4. The community, which incorporates the varied interests of the neighborhoods and
cities where they conduct business, including the virtual community of blogs and
social media.
5. Nature, by recognizing that our economy depends on nature and the resources that it
provides. The authors call on businesses to be more humble and learn to live on the
planet without destroying it.
A major theme in the responsibility strategy of Patagonia is to do no harm, which is based on
ethical and responsible business practices.
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Foundations of Corporate Social Responsibility
Section 2.1
What is the difference between business ethics and corporate social responsibility (CSR)?
One major distinction is that the primary goal of business ethics programs is to prevent harm,
whereas the objective of CSR initiatives is to do good. Societal expectations are evolving for
ethical and responsible businesses. A poll on corporate social responsibility of over 25,000
people in 23 countries shows that making a profit and obeying laws is not enough (Environics
International Ltd., 1999). In most of the countries polled, the majority of citizens expected that
companies also exhibit higher ethical standards and improve society. As we see in the Patagonia
example, responsible businesses strive to create positive impacts while avoiding harm.
An ethical business goes beyond compliance and recognizes the responsibilities to both internal and external stakeholders. Responsible companies require “leaders who care, who are
morally conscious, open towards the diversity of stakeholders inside and outside the corporation and who are aware of and understand the responsibilities of business in society” (Pless,
2007, p. 438). A global survey in 2008 found that 76% of chief executive officers (CEOs) and
senior executives believe it is important for senior executives to be able to respond to social
issues that their businesses could address, such as natural resource scarcity, poverty, corruption, and human rights violations (Gitsham, 2009). However, fewer than 8% feel that either
their organization or business schools develop the knowledge and skills to manage such social
responsibility initiatives. Executives surveyed in a 2010 study expect that employees will be
tasked with “doing their jobs in a different way, being mindful of their impact on energy and
environment” (Deloitte, 2010, p. 16).
This chapter examines the social responsibility of business and the role of ethics in responsible business. We will begin by discussing the different strategic approaches available to
responsible companies. Next, industry examples will demonstrate the value of strategic corporate social responsibility by outlining five outcomes that increase competitiveness and
foster growth. The chapter concludes with recommendations for meeting ethical and responsible obligations from a stakeholder perspective.
2.1 Foundations of Corporate Social Responsibility
Corporate social responsibility can encompass a variety of different activities, which may be
described as good neighborliness or good citizenship. Socially responsive firms actively seek
to do no harm, for example by providing a safe working environment or adopting clean production processes. Corporate social responsibility also obliges companies to create initiatives
for solving broad social problems such as urban decay, substance abuse, and poverty. There
is no consensus on a single definition of corporate social responsibility. Modern perceptions
of corporate social responsibility have evolved from initially focusing on individual manager
responsibility for social consequences of actions in the 1950s to a firm’s responsibility to
multiple stakeholders today. Regardless, a socially responsive firm monitors and assesses
environmental conditions, attends to stakeholder demands, and designs policies to respond
to changing conditions (Ackerman, 1975).
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Foundations of Corporate Social Responsibility
Section 2.1
Social Responsibility and Ethics
The premise of corporate social responsibility is the ethical duty of businesses to accept
responsibility for the consequences of their actions beyond financial performance. Howard
Bowen’s 1953 book Social Responsibilities of the Businessman describes social responsibility
as “the obligation of businessmen to pursue those policies, to make those decisions, or to
follow those lines of action which are desirable in terms of the objectives and values of our
society” (p. 60). According to DiMaggio and Powell (1983), companies operate within a social
framework of norms, values, and assumptions about what constitutes acceptable behavior,
and they fear losing the freedom to conduct business independently if they are found to be
unresponsive to social pressures for responsible business. If powerful stakeholders in society
do not accept a company’s actions, they may increase regulation or revoke a company’s legitimacy to conduct business. For example, Canadian mining companies have been under mounting pressure from African countries to address negative social and environmental impacts
and human rights violations (Campbell, 2008). The companies could lose public support for
mining operations within the region if they do not comply with international standards.
A business’s relationship with societal expectations is a social contract, or a basic agreement that defines the broad duties of a business required to retain society’s support. Laws
and regulations express the formal part of this contract. The tacit part of the social contract
encompasses stakeholders’ expectations based on their values and norms. Through legal or
stakeholder action, companies recognize that violations can seriously harm the reputation
and financial well-being of their businesses. Therefore, one view of social responsibility is
primarily a risk management strategy.
Since there is no consensus on how corporate social responsibility guides firm behavior, there
are many terms to describe company initiatives for meeting societal expectations: corporate responsibility, corporate citizenship, sustainability, strategic philanthropy, and creating
shared value. Regardless of the terminology, companies adopting a responsible approach to
business tend to stress ethical behavior and responsiveness to multiple stakeholders. Three
common approaches to corporate social responsibility are based on obligations, citizenship,
and sustainability.
Social Responsibility as Obligation
Many companies view corporate social responsibility as the obligation to meet society’s
economic, legal, ethical, and discretionary expectations for the organization (see Figure
2.1). The economic and legal components refer to a business’s obligation to produce goods
and services at a profit while obeying laws. Economic and legal obligations are an inherent
part of corporate responsibility, as businesses contribute to social welfare in the form of jobs,
products, and innovation. The ethical component refers to the behaviors and norms that a
society expects, and the discretionary component encompasses voluntary and philanthropic
activities of contributions of money, time, and talent. Consensus is lacking on the degree of
responsibility that businesses have for each of the components and often varies worldwide.
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Section 2.1
Foundations of Corporate Social Responsibility
Figure 2.1: Pyramid of social responsibility
The economic, legal, ethical, and philanthropic obligations that a business must meet are viewed as
corporate social responsibility.
Source: Adapted from The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders,
by A. B. Carroll, 1991, Business Horizons, 34(4), p. 42.
A company’s economic responsibilities relate to profits realized in the production of goods
and services. A business needs to be financially viable in order to employ workers, pay taxes,
and award dividends to investors. The fulfillment of economic obligations of a business is
the basis for the company’s annual reports for the shareholders. For example, the annual
report for Harley-Davidson Inc. begins with a letter to shareholders highlighting revenue,
sales growth, and market share (Harley-Davidson, 2012). Economic obligations can focus on
internal stakeholders, such as the company’s responsibility to create shareholder value, or
external stakeholders, such as providing products for consumers, creating employment, and
stimulating an industry (Chabowski, Mena, & Gonzalez-Padron, 2011).
Legal responsibilities entail a company’s obligations to obey local, regional, national, or international laws. Regulations seek to create a fair and competitive environment for businesses,
safeguard natural resources, protect consumers, and ensure safe workplaces. Consequences
for not meeting legal obligations include fines, imprisonment of company executives, and
revoking of business permits. Companies have legal obligations toward many stakeholders.
Compliance with regulations includes protecting employees through a safe workplace free
of harassment and fair compensation. Legal obligations to customers require companies to
meet product safety requirements, pricing policies, and advertising regulations. Regulations
enforcing accurate financial records and reporting protect company investors. Environmental
laws protect natural resources.
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Foundations of Corporate Social Responsibility
Section 2.1
Companies have ethical obligations beyond those required by law. Ethical responsibilities
include concern for employees by creating a fair and equitable work culture. Ethical norms that
guide the business’s responsibility for ethical behavior can change as new issues emerge. Shifting political and economic environments can also influence a business’s ethical obligations. For
example, Chinese executives consider ethical obligations to include safeguarding social order
and creating a harmonious society; these obligations come from the Chinese government’s
emphasis on socially responsible businesses (Gonzalez-Padron, Fan, & Zhou, 2014).
Discretionary responsibilities often include voluntary and charitable activities that benefit
others and derive from society’s expectations to contribute to the well-being of the community. Voluntary programs such as on-site child care, fitness and wellness services, and company picnics improve the quality of employees’ work-life balance. Some companies refer to
discretionary activities toward external stakeholders as philanthropic responsibilities. Philanthropic activities include donations of money or talents to charities, employee volunteer
programs for community projects, cause-related marketing, and collaborations with nonprofit organizations to address social issues.
Social Responsibility as Corporate Citizenship
Corporate citizenship refers to a managerial approach to commit to responsible business
policies and practices with a strategic focus on serving communities. Business managers use
the term corporate citizenship interchangeably with corporate social responsibility with two
distinctions. First, corporate citizenship primarily describes organizational initiatives that are
not required by law, which support local communities (Gardberg & Fombrun, 2006). These
activities often relate to philanthropic initiatives such as corporate volunteerism, charitable
contributions, support for community education and healthcare initiatives, and programs to
improve the environment.
These ideals are often reflected in corporate citizenship statements, such as that of The Boeing Company: “The enduring strength of our business depends on healthy and vibrant communities. Giving back to communities is important to our employees and a core value of The
Boeing Company” (Boeing, 2012, p. 2); and Microsoft: “Our citizenship mission is to serve
globally the needs of communities and fulfill our responsibilities to the public” (Microsoft,
2013, p. 4).
Second, many company statements of corporate citizenship refer to business conduct, ethical
standards, and responsible business practices (Matten & Crane, 2005).
Headquartered in Geneva, Switzerland, the World Economic Forum is an international institution that strives to improve the state of the world by engaging business, political, academic,
and other leaders of society to address responses to economic, social, and political changes
(World Economic Forum, 2014a). It offers the Framework for Action for organizations that
strive to exemplify global corporate citizenship:
A. PROVIDE LEADERSHIP: Set the strategic direction for corporate citizenship in your company and engage in the wider debate on globalization and
the role of business in development.
(i.) Articulate purpose, principles, and values internally and externally
(ii.) Promote the business case internally
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Section 2.1
Foundations of Corporate Social Responsibility
(iii.) Engage the financial sector
(iv.) Enter the debate on globalization and the role of business in development
stakeholders and spheres of influence that are relevant for corporate citizenship in your company and industry.
(i.) Define the issues
(ii.) Agree on company’s spheres of influence
(iii.) Identify key stakeholders
C. MAKE IT HAPPEN: Establish and implement appropriate policies and procedures, and engage in dialogue and partnership with key stakeholders to
embed corporate citizenship into the company’s strategy and operations.
(i.) Put corporate citizenship on the board agenda
(ii.) Establish internal performance, communication, incentive and measurement systems
(iii.) Engage in dialogue and partnership
(iv.) Encourage innovation and creativity
(v.) Build the next generation of business leaders
D. BE TRANSPARENT ABOUT IT: Build confidence by communicating consistently with different stakeholders about the company’s principles, policies and practices in a transparent manner, within the bounds of commercial confidentiality.
(i.) Agree what and how to measure
(ii.) Develop a graduated programme for external reporting
(iii.) Be realistic about what is possible in a given timeframe and when
building expectations (World Economic Forum, 2002/2013, p. 6)
The Center for Corporate Citizenship at Boston College publishes a Corporate Social Responsibility Index that ranks companies based on public perceptions of their citizenship, governance, and workplace culture (Boston College Center for Corporate Citizenship, 2011). The
citizenship dimension relates to how the company contributes positively to its surrounding
community in a socially and environmentally responsible fashion. Governance refers to the
degree that the company manages its business fairly and transparently with high ethical business standards. The workplace dimension focuses on fair treatment of employees through
wages and training. Table 2.1 lists the top 20 companies ranked by Boston College’s Corporate
Social Responsibility Index in 2011.
Table 2.1: Boston College Center for Corporate Citizenship’s Top 20
Ranked Companies
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Corporate Social Responsibility
Index (CSRI)
Publix Super Markets Inc.
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Section 2.1
Foundations of Corporate Social Responsibility
Table 2.1: Boston College Center for Corporate Citizenship’s Top 20
Ranked Companies (continued)
Corporate Social Responsibility
Index (CSRI)
Berkshire Hathaway
Campbell Soup Company
Baxter International
Johnson & Johnson
The Walt Disney Company
Coca-Cola Bottlers
Hershey Company
Texas Instruments
Green Mountain Coffee Roasters
Harris Bank
Source: Boston College Center for Corporate Citizenship, 2014, retrieved from www.BCCorporateCitizenship.org.
Social Responsibility as Sustainability
In recent decades, it has become increasingly common for businesses to frame their social
responsibilities in terms of sustainability. The concept of sustainability reflects the recognition of the finite limits of nature, propagating the need for businesses to optimize …
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