Business Finance
OMM640 Ashford 21st Century Corporate Social Responsibility Paper


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Question Description

21st Century Corporate Social Responsibility

Read Chapter 2 ATTACHED IN DILEof the textbook as well as the Snider, Hill, and Martin (2003) article on corporate social responsibility in the 21st century.

Conduct research on the Internet and select a company for which you will summarize the corporate social responsibility of the organization. In your summary, incorporate the following key words and phrases: sustainability, strategic philanthropy, cause marketing, shared value, stakeholders, and global perspective. Include definitions in your own words for these key words and phrases.

The paper

  • Must be three double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in the FSB APA guidance located in the classroom.
  • Must include a separate title page with the following:
    • Title of paper
    • Student’s name
    • Course name and number
    • Instructor’s name
    • Date submitted
  • Must 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 in APA style as outlined in the FSB APA guidance located in the classroom..
  • Must end with a conclusion that clearly summarizes what was presented in the paper.

Unformatted Attachment Preview

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). 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. 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. 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: 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. Articulate purpose, principles, and values internally and externally Promote the business case internally Engage the financial sector Enter the debate on globalization and the role of business in development DEFINE WHAT IT MEANS FOR YOUR COMPANY: Define the key issues, stakeholders and spheres of influence that are relevant for corporate citizenship in your company and industry. Define the issues Agree on company’s spheres of influence Identify key stakeholders 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. Put corporate citizenship on the board agenda Establish internal performance, communication, incentive and measurement systems Engage in dialogue and partnership Encourage innovation and creativity Build the next generation of business leaders 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. Agree what and how to measure Develop a graduated programme for external reporting 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 Rank Company Corporate Social Responsibility Index (CSRI) 1 Publix Super Markets Inc. 80.59 2 Google 77.10 3 UPS 76.16 4 Kellogg’s 76.16 5 75.93 6 Berkshire Hathaway 75.78 7 FedEx 75.73 8 Campbell Soup Company 75.40 9 Baxter International 75.18 10 3M 75.03 11 Johnson & Johnson 74.49 12 The Walt Disney Company 74.35 Rank Company Corporate Social Responsibility Index (CSRI) 13 Coca-Cola Bottlers 74.14 14 Hershey Company 74.06 15 Texas Instruments 74.05 16 Green Mountain Coffee Roasters 73.89 17 Clorox 73.88 18 Microsoft 73.87 19 Caterpillar 73.70 20 Harris Bank 73.61 Source: Boston College Center for Corporate Citizenship, 2014, retrieved from 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 the economic, environmental, and social components of society. Because of environmental issues of the 1980s, such as the 1984 Bhopal chemical release and droughts in Africa, the United Nations formed the Brundtland Commission to recommend solutions to the decline in global natural resources. Their report, “Our Common Future,” highlights that “economic and ecology can interact destructively” and calls for businesses, governments, and nonprofits to consider sustainable development, or “meeting the needs of the present generation without compromising the ability of future generations to meet their own needs” (World Commission on Environment and Development, 1987, p. 43). In response, companies have begun adopting sustainable business practices to look beyond financial profit and consider its impact on social, economic, and ecological resources of the community. Read Business Best: Blue Star Recyclers for an example of a company with a strategic focus on sustainable business. Business Best: Blue Star Recyclers Blue Star Recyclers of Colorado Springs competes in an electronics recycling industry that reclaims components or usable materials from used electronic products. In the United States, the electronics recycling industry generates more than $5 billion in revenue and employs approximately 30,000 to 45,000 people (2010 estimates) (Daoud, 2011). Electronic recyclers prevent the toxic substances in televisions, computers, computer peripherals, facsimile machines, DVD players, and videocassette recorders from contaminating landfills. Blue Star Recyclers provides electronic waste (e-waste) pickup and hard drive/data destruction services to over 400 businesses, organizations, and government entities in Colorado. It collects nearly 40% of ewaste from residential sources, which is much higher than the industry average of 25% (Daoud, 2011). To encourage residents to recycle, Blue Star Recyclers has established seven drop-off locations in southern Colorado where residents can recycle their e-waste conveniently. The business claims to have ethically recycled over 5 million pounds of e-waste since 2009. The company’s mission is to recycle electronics and other materials and create local jobs for people with autism and other disabilities. Blue Star Recyclers has 17 employees: six in management and office positions, and 11 workers with disabilities. The company has reported zero turnover, zero accidents, zero theft, and minimal employee absences amongst its workforce with disabilities. Prior to finding employment at Blue Star Recyclers, all of the workers with developmental disabilities were unemployed and spent their time participating in day programs paid for by the state. By creating a vocational path for people with developmental disabilities, the company saves taxpayers and the government approximately $100,000 per year in Social Security benefits. Blue Star Recyclers donates hundreds of hours of service to supporting the community, advocating for their workforce, and creating government relations to help support both their recycling and job creation effort. The Colorado Association for Recycling recognized Blue Star Recyclers with the Outstanding Outreach Award for 2012. As a result, the company continues to grow. Questions to Consider How does the business model of Blue Star Recyclers incorporate economic, environmental, and social dimensions of a sustainable business? How might the employees with disabilities benefit from these employment opportunities? How do you think the company has been able to achieve such exceptional outcomes? Evaluate Blue Star Recyclers against the five elements of a responsible company established by Patagonia’s leadership. Would Blue Star Recyclers be considered a responsible company? Sustainable companies view their responsibilities through a triple bottom line, which incorporates economic, environmental, and social dimensions in reporting performance (see Figure 2.2) (Elkington, 1998). Each of the dimensions includes responsibilities to company stakeholders. The economic dimension represents the financial impact of the organization in the economic viability of the surrounding community through the sales of products and services, profits paid to investors or reinvested into the firm, and taxes paid. The environmental dimension centers on the company stewardship of natural resources and includes reducing waste that ends up in landfills and pollutes waterways, reducing energy use and carbon emissions, and complying with environmental regulations. Finally, the social dimension focuses on the influence the company has on people and includes encouraging an inclusive approach to employees, customers, and suppliers; respecting the human dignity of the workforce; and supporting community projects for addressing social issues. Figure 2.2: Triple bottom line dimensions Economic, environmental, and social dimensions make up the triple bottom line of sustainable companies; companies can achieve the greatest competitive advantage at the points where the dimensions overlap. Companies can achieve the greatest competitive advantage in the areas where the dimensions overlap (Gonzalez-Padron, 2013). Companies that meet responsibilities in the economic and social dimensions create wealth for communities and meet its responsibilities to employees and customers. Activities that contribute to solutions of social issues include creating jobs, employee development programs, and marketing campaigns. Companies collaborate with nonprofit organizations to address social issues for which they have no special competence. For example, Procter and Gamble Co. partners with UNICEF to combat fatal maternal and neonatal tetanus by donating the cost of one tetanus vaccine for every purchase of specially-marked Pampers diapers and wipes. The program also offers employees a threemonth paid sabbatical to volunteer with UNICEF, increasing employee commitment and retention while providing valuable knowledge to a nonprofit organization. At the intersection of the environmental and economic dimensions of the triple bottom line, organizations realize savings from greater resource efficiency, lower regulatory costs, and revenue from innovative energy efficient products. Programs may involve changes that are as simple as turning off computers nightly and using motion detectors to turn off lights in offices. The chemical company Ecolab reduced material and waste disposal costs by $320,000 annually by reusing product scraps and saved $260,000 annually by better controlling chemical use in production. Hewlett-Packard developed an innovative soldering process that eliminated lead well before a 2006 European Union’s Restriction of Hazardous Substances Directive regulating the use of lead in electronics products. Procter and Gamble offers cold-water specialty detergents to address the energy costs of heating water for laundry (Nidumolu, Prahalad, & Rangaswami, 2009). Finally, at the intersection of social ...
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21st Century Corporate Responsibility
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21st Century Corporate Responsibility
For ages, the sole aim and purpose of the majority of corporate companies and
organizations were to grow their businesses and ultimately make a profit. However, in the 21st
century, the corporate company’s priorities have shifted from solely financial performance to
surpassing the regulatory laws towards bearing social responsibility for the company’s actions.
Corporate social responsibility ensures that companies and organizations actions are those that
are favorable to their employees, environment and the society at large. Often, corporate social
responsibility is seen as a form of giving back to the society (Jamie Snilder,Ronald Paul Hill,
Diane Martin, 2003).
The Walt Disney Company remains to be the largest media and Entertainment Company
worldwide. However, their successes can not only be attributed to their quality products but also
their policy of maintaining a sustainable corporate social responsibility plan. In 2009 Walt
Disney Company was ranked by Boston College Center for Corporate Citizenship and
Reputation Institute as the leading corpora...

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