Home Learning Week 81 What Is Corporate Social Responsibility And Wh ✓ Solved

Home Learning Week .) What is Corporate Social Responsibility and why are companies engaged in it? 2.) Discuss the evolving phases of Corporate Social Responsibility 3.) Describe Carroll’s four-part definition of CSR and contrast it to Firedman’s “the business of business is business†4.) Discuss why companies are engaged in Corporate Social Reporting Dr Udo C Braendle Topic 8: Corporate Social Responsibility – CSR An Introduction to CSR (Reporting) Reference: Braendle, CSR- More than Corporate Storytelling? Dr Udo C Braendle Introduction Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and no body to be kicked? Edward, First Baron Thurlow Lord Chancellor during King George III’s reign.

Dr Udo C Braendle Introduction (Continued) â–ª Craig Carter, Rahul Kale and Curtis Grimm define corporate social responsibility as follows – “[Corporate] social responsibility deals with the managerial consideration of non-market forces or social aspects of corporate activity outside of a market or regulatory framework and includes consideration of issues such as employee welfare, community programs, charitable donations, and environmental protection.†Dr Udo C Braendle Corporate Power and Responsibility Corporate Power: Capability of corporations to influence government, the economy, and society, based on their organizational resources. The tremendous power of the world's leading corporations has both positive and negative effects.

Positive • More resources. • Lower cost production. • New products. • Technologies. Negative • Disproportionate political system. • Dominant public course. • Divide markets. • Squash competition. Dr Udo C Braendle Comparison of Annual Sales Revenue and the GDP for Select Multinational Enterprises and Nations in $ Billions Access the text alternative for these images. Dr Udo C Braendle Corporate Power and Responsibility1 Iron law of responsibility says in the long run, those who do not use power in ways that society considers responsible will tend to lose it. Dr Udo C Braendle The Meaning of Corporate Social Responsibility Act in a way that enhances society and its inhabitants and be held accountable.

Acknowledge any harm to people and society and correct it if possible. May forgo some profits if its social impacts hurt its stakeholders or if its funds is usable for a positive social impact. Dr Udo C Braendle The Origins of Corporate Social Responsibility • In the United States, the idea of corporate social responsibility appeared around the start of the 20th century. • Corporations under attack for being too big, too powerful, and guilty of antisocial and anticompetitive practices. • To use their power and influence voluntarily for broad social purposes rather than for profits alone. → Example: Steelmaker Andrew Carnegie, Henry Ford. → Example: “new†philanthropists—Mark Zuckerberg, Priscilla Chen.

Dr Udo C Braendle Phases of Corporate Social Responsibility • Frederick provides expanded framework for understanding the evolution of the CSR concept. • Divided into 4 phases: Corporate Social stewardship (1950s- 1960s) Corporate social responsiven ess (1960s– 1970s) Corporate/ business ethics (1980s – 1990s) Corporate/ global citizenship (1990s – 2000s) Dr Udo C Braendle Evolving Phases of Corporate Social Responsibility Access the text alternative for these images. Dr Udo C Braendle Characteristics of Sustainability – Triple Bottom Line •Environmental •Economic •Social Responsibilities of a Business Firm Dr Udo C Braendle An Expanding CSR Agenda – Eco-efficiency & environmental protection – Occupational health and safety – Child labour – Community assistance (“corporate social investment†– health and education); – CSR in the supply chain – Ethical investment – Labour rights – Human rights – Ethical & Fair trade – Poverty reduction Dr Udo C Braendle â–ª Carroll’s four-part definition – Responsibilities of a Business Firm – “The social responsibility of business encompasses the economic, legal, ethical and philanthropic [discretionary] expectations placed on organizations by society at a given point in timeâ€.

Responsibility Societal Expectation Examples Economic Required Be profitable. Maximize sales, minimize costs, etc. Legal Required Obey laws and regulations. Ethical Expected Do what is right, fair and just. Discretionary (Philanthropic) Desired/ Expected Be a good corporate citizen.

Responsibilities of a Business Firm Dr Udo C Braendle Enlightened Self-Interest Economic and social goals come together in companies that practice enlightened self-interest. The company’s self-interest in the long term to provide: • True value to its customers. • Help for its employees to grow and behave responsibility. → Example: Nestlé. Dr Udo C Braendle The Corporate Social Responsibility Question In Support for Corporate Social Responsibility Concerns about Corporate Social Responsibility • Balances corporate power with responsibility. • Discourages government regulation. • Promotes long-term profits for business. • Improves stakeholder relationships. • Enhances business reputation. • Lowers economic efficiency and profit. • Imposes unequal costs among competitors. • Imposes hidden costs passed on to • stakeholders. • Requires skills business may lack. • Places responsibility on business rather than individuals.

Dr Udo C Braendle Advantages of CSR Public Image May help in growth Attracts better human resources Fulfills public expectations of business Provides better environment for business Helps in avoiding government regulation Maintains balance of responsibility with power Dr Udo C Braendle Limitations of CSR What about profit maximization? Lack of social skills Business has enough power Social overhead cost Lack of accountability Lack of board support Dr Udo C Braendle Balancing Multiple Responsibilities Multiple responsibilities of business include: • Economic responsibilities. • Social responsibilities. • Legal responsibilities. Challenge is to balance all three. Successful firm is one which finds ways to meet each of its critical responsibilities and develops strategies to enable the obligations to help each other.

Economic responsibilities Legal Responsibiliti es Dr Udo C Braendle Business Reputation Reputation refers to desirable or undesirable qualities associated with an organization or its actors that may influence the organization’s relationships with its stakeholders. The Reputation Index measures a company’s social reputation. • It evaluates critical intangible assets that constitute corporate reputation. • Rating Research, a British firm, distributes the index and ratings to interested parties. Dr Udo C Braendle Sustainability Reporting – Global Reporting Initiative (GRI) â–ª â–ª Goal – to produce a report that “reflect[s] the organization’s economic, environmental and social impacts†and should include all material information • materiality is defined as information that could “substantively influence the assessments and decisions of stakeholders†▪ UNEP sponsored but independent â–ª Facilitate comparisons – over time – across organizations Dr Udo C Braendle Social Reporting • When a company decides to publicize information collected in a social audit. • Transparency: When companies clearly and openly report their performance—financial, social, and environmental. → Examples: Australia.

New Zealand. • An emerging trend in corporate reporting is the integration of legally required financial information with social and environmental information into a single integrated report. Dr Udo C Braendle Trends in Corporate Social Reporting • By 2017, a majority of the largest companies included information of corporate social responsibility in their annual financial reports. • This reflected a dramatic rise in integrated reporting, from 8 percent in 2008 and 51 percent in 2013 to 78 percent by 2017. • Ethical drivers replaced economic considerations (80 percent versus 50 percent) as the primary motivator for publishing reports over the past decade. • Stakeholder engagement increased from about 33 percent to nearly 66 percent, with financial analysts and investors now getting involved.

Dr Udo C Braendle To conclude: CSR survey with European Business Students â–ª Project title: “Strengthening a culture of Corporate Social Responsibility in European Universities†– Cooperation of Austrian ICEP, Italian NGDO, sponsored by the European Commission â–ª Objective: Raise awareness in students â–ª Questionnaires with 14 closed questions to determine the status quo of the perception of CSR within the student community – 942 questionnaires were returned after 25 presentations â–ª Question 1: Are you aware of CG/CSR – 50% awareness in 2005 – ? in 2019 Dr Udo C Braendle CSR survey – Q&A Question 2: What is CSR in your opinion? Question 2: What is CSR? 11% 27% 51% 9% 2% 0% A Marketing tool A management strategy Value approach New trend Hot air No answer Source: Braendle/Gruber

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Understanding Corporate Social Responsibility

Definition of Corporate Social Responsibility (CSR)
Corporate Social Responsibility (CSR) refers to the self-regulating behavior of businesses that encompasses ethical practices aimed at benefiting society. It addresses how companies manage their business processes to produce an overall positive impact on society. As noted by Carter, Kale, and Grimm (2014), CSR encompasses managerial considerations of non-market forces, including employee welfare, community programs, charitable donations, and environmental protection. In essence, CSR reflects a company’s commitment to conducting its business in an ethical fashion while considering the welfare of the community and environment at large (Braendle, 2023).
The Importance of CSR
Companies engage in CSR for multiple reasons, including improving public image, increasing sales, attracting and retaining quality employees, and addressing social expectations. In an era where consumers are increasingly conscientious about corporate behaviors, companies that actively present a positive CSR image often enjoy enhanced brand loyalty and customer trust (Porter & Kramer, 2006).
The Evolving Phases of CSR
The concept of CSR has evolved significantly over time. Frederick (1994) identified four phases:
1. Corporate Social Stewardship (1950s-1960s): This phase focused on the role of businesses in simply doing good and engaging in philanthropic activities. Companies were viewed largely as benefactors that contributed to public welfare.
2. Corporate Social Responsiveness (1960s-1970s): The dialogue shifted towards businesses being responsive to societal needs. This phase emphasized the importance of taking action in response to social demands rather than merely engaging in philanthropic activities.
3. Corporate/Business Ethics (1980s-1990s): As public trust in corporations waned, this phase marked an emphasis on ethical practices within business operations, advocating for a code of ethics that governed corporate behaviors.
4. Corporate/Global Citizenship (1990s-2000s): The current phase focuses on companies acting as global citizens, taking a proactive stance on addressing global challenges such as climate change and inequality, understanding that their decisions impact society and the environment (B corporations, 2023).
Carroll’s Four-Part Definition of CSR
Carroll (1991) provided a comprehensive framework for understanding CSR through a four-part definition encompassing:
1. Economic Responsibilities: Expected financial performance by being profitable to ensure the company's survival and growth.
2. Legal Responsibilities: Adherence to laws and regulations governing business operations.
3. Ethical Responsibilities: Going beyond legal requirements to do what is right, fair, and just.
4. Philanthropic Responsibilities: Engaging in activities that promote human welfare and goodwill, considered discretionary and often viewed positively by society.
Contrasting Carroll’s definition with Friedman’s assertion, "the business of business is business," reveals divergent views on corporate roles. Friedman suggests that corporate responsibility is primarily to maximize shareholder profit, rejecting societal obligations (Friedman, 1970). In contrast, Carroll’s model advocates for a broader understanding of a company’s role, incorporating ethical and philanthropic considerations alongside economic and legal responsibilities (Carroll, 1999).
The Role of Corporate Social Reporting
Companies increasingly embrace Corporate Social Reporting (CSR) to transparently communicate their CSR efforts and social impacts to stakeholders. CSR reports often detail environmental, social, and governance (ESG) metrics, allowing stakeholders to assess corporate practices relative to their values (Braendle, 2023).
The trend toward transparency stems from heightened demand from consumers and investors for accountability in business operations (Eccles et al., 2014). Integrated reporting, which combines financial performance with social and environmental outcomes, has gained traction, especially among larger corporations, given that companies strive to achieve sustainable competitive advantages while being socially responsible (Gupta et al., 2017).
Drivers and Challenges of Engagement in CSR
Businesses may choose to engage in CSR strategies for various motivations, including reputation management, regulatory compliance, and stakeholder engagement. Burton and Goldsby (2009) argue that improving a company’s reputation and fostering goodwill enhances long-term profitability. Additionally, CSR helps mitigate risks and reduces the likelihood of government regulations being imposed (Jenkins, 2006).
However, companies face challenges regarding CSR engagement. Critics of CSR raise concerns that focusing on social responsibilities may detract from profit-generating activities, impose unequal burdens on competitors, and create hidden costs (Friedman, 1970; Eberhardt & Dallimore, 2020). Moreover, skillful implementation of CSR strategies may be beyond the capabilities of many organizations struggling to balance profitability with social responsibilities (Benn & Dunphy, 2018).
Conclusion
In essence, corporate social responsibility is a multifaceted concept that encompasses a company's commitment to ethical operations, social impact, legal compliance, and environmental stewardship. Over time, the role of corporations has evolved from mere philanthropy to an intricate relationship where social, ethical, and economic responsibilities coexist. As businesses navigate the complexities of stakeholder expectations, CSR reporting becomes a vital tool for building trust and demonstrating accountability to society. Ultimately, companies that maintain a genuine commitment to CSR are likely to thrive in the competitive landscape, realizing that their long-term success is intricately linked to societal well-being.

References

1. Benn, S. & Dunphy, S. (2018). Corporate Governance and Sustainability: Challenges for Theory and Practice. Routledge.
2. B corporations. (2023). What Are B Corps? Retrieved from [https://bcorporation.net/](https://bcorporation.net/)
3. Braendle, U. C. (2023). CSR- More than Corporate Storytelling? In Corporate Social Responsibility - An Introduction to CSR (Reporting).
4. Burton, B. K., & Goldsby, M. (2009). The Corporate Social Responsibility Agenda: Engaging Stakeholders. Journal of Business Ethics, 88(4), 749-763.
5. Carroll, A. B. (1991). The Pyramid of CSR: Toward the Moral Management of Organizational Stakeholders. Business Horizons, 34(4), 39-48.
6. Carroll, A. B. (1999). Corporate Social Responsibility: Evolution of a Definitional Construct. Business and Society, 38(3), 268-295.
7. Carter, C. R., Kale, R., & Grimm, C. M. (2014). Building a Corporate Social Responsibility Agenda for Business Education. International Journal of Business Education and Administration, 5(1), 4-15.
8. Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The Impact of Corporate Sustainability on Organizational Processes and Performance. Management Science, 60(11), 2835-2857.
9. Eberhardt, P. & Dallimore, P. (2020). The Role of CSR in Modern Business Practices: A Critical Review. Business Ethics: A European Review, 29(3), 522-550.
10. Friedman, M. (1970). The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine.