1 - Background

• Non-consequentialist (categorical) moral theories focusses on process & intention from theories to action
• Consequentialist moral theories focus on the outcomes of actions
• Corporate Social Responsibility definitions:

  ▪ “Actions that appear to further some social good, beyond the

  interests of the firm and that which is required by law” (McWilliams, Siegel & Wright, 2006)

  ▪ A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis and in a context specific way. (Adapted from European Commission 2001 and Aguinis & Glavas, 2012)

  ▪ “The responsibility of enterprises for their impacts on society” (European Commission 2011)
• Corporate Sustainability definitions:

  ▪ CS means managing a firm in such a way that its activities meet

  the needs of the present, without compromising the ability of

  future generations to meet their needs”. (‘Our Common Future’ report)

  ▪ “CSR and CS refer to company activities – voluntary by definition

  – demonstrating the inclusion of social and environmental

  concerns in business operations and in interactions with

  stakeholders” (van Marrewijk, 2003).
• Main elements of CSR and CS definitions:

  1. Triple Bottom Line: economic, social & environmental dimensions

  2. Stakeholder

  3. Voluntary

  4. Context specificity

  5. Managing externalities/ impacts

  6. Rooted in values and ethics
• Ecological responsiveness: “a set of corporate initiatives aimed at mitigating a firm’s impact on the natural environment”. (Bansal & Roth 2000)
• Motivations for Ecological responsibility:

  1. Competitiveness
  2. Legitimisation
  3. Social responsibility
• Friedman (1970) argument:

  The social responsibility of business is to increase its profits!

  That means:

  • Use resources/capabilities to increase profits for shareholders

  • Stay within the rules of the game

  • Fiduciary responsibility of managers to owners, i.e. shareholders
• Friedman 1970: Criticisms on legal basis:

  • Shareholders are beneficiaries, but they do not have "dominion" over firms
  • Shareholders are considered "residual claimants"
  • Managers are expected to make discretionary decisions
• Friedman 1970: Criticisms on Incentives alignment:

  • Shareholders can sell at any point, indicating no long-term interest
  • Shareholders are shielded by limited liability for debts and wrongdoings
  • Good for the stock price does not necessarily mean good for the company
• Friedman 1970: Criticisms on stakeholders inclusion:

  • Friedman's theory does not consider the impact on other stakeholders or broader society
• Friedman 1970: Criticism on implausible assumptions:

  • Relies on perfect markets with no externalities and full information
  • Relies on the assumption of "rationality"
• Porter & Kramer (2006) new perspective: Corporations need healthy

  societies, societies need healthy corporations. -> Should strategically focus on shared value
• Strategic options (Porter & Kramer, 2006):

  • Responsive CSR: (Good corporate citizenship) Generic social impacts + Value chain social impacts
  • Strategic CSR: (Unique social agenda leads to competitive advantage) Value chain social impacts + Social dimensions of competitive contexts
• Normative Stakeholder Theory (Freeman & Elms, 2008): “The social responsibility of business is to create value for stakeholders”

  • The stakeholder approach sets forth a new conceptualization of business, in which business is understood as a set of relationships and management’s job is to help shape these relationships.
  • Stakeholders need to respond to these options. Responsible capitalism depends on responsible behavior from both business and its stakeholders.
• Social Dimensions of Competitive Context: Social issues in the external environment that significantly affect the underlying drivers of a company's competitiveness in the locations where it operates. eg: strategic philanthropy
• Value Chain Social Impact: Social issues that are significantly affected by a company's activities in the ordinary course of business.