Textbook- CH 7

• Corporate Social Responsibility (CSR) involves achieving a balance among economic, social, and environmental responsibilities to address shareholder and stakeholder expectations
• CSR is known by various names like corporate responsibility, corporate ethics, corporate citizenship, and corporate sustainability
• The ISO 26000 standard defines social responsibility as an organization's responsibility for the impacts of its decisions and activities on society and the environment
• The ISO views social responsibility as a holistic approach comprising seven core subjects: human rights, labor practices, the environment, fair operating practices, consumer issues, community involvement and development, and organizational governance
• Researchers have identified five key elements found in most definitions of CSR:

  • Corporations have responsibilities beyond profit-making
  • They should help solve social problems, especially those they have contributed to
  • Corporations have a broader constituency than just shareholders
  • Their impacts go beyond marketplace transactions
  • They serve a wider range of human values than just economic values
• According to Wood, corporate social responsibility is based on three principles: legitimacy, public responsibility, and managerial discretion
• CSR is important because the business system is the mechanism society uses to produce and distribute goods and services
• Originally, a business corporation was seen as fulfilling its social responsibility by surviving and maximizing profit, but the concept has evolved to include social goals alongside economic goals
• Corporate social responsibility involves the maximization of profits alongside attention to social goals
• Society depends on business to achieve social as well as economic goals
• The issue of social responsibility raises questions like how corporate performance in society should be judged apart from traditional economic standards
• Wood's Principles of Corporate Social Responsibility include:

  • Principle of Legitimacy: external focus on expectations of society
  • Principle of Public Responsibility: society grants the right to business to operate
  • Principle of Managerial Discretion: involves managing relationships with immediate environment
• Arguments supporting business involvement in society:

  • Business is part of a system interdependent with society
  • Social involvement fulfills society's needs and expectations, ensuring business acceptance
  • Social responsibility is in the shareholder's interest, good for profits in the long term
• Arguments against business social involvement:

  • Profit maximization is the primary purpose of business
  • Business is an economic institution, not a social one, with the responsibility to manage efficiently within the law
• Milton Friedman, a Nobel Prize winner in economics, stated that the only social responsibility of business is to make profits
• Friedman argued that in a free economy, the sole social responsibility of business is to use its resources to increase profits within the rules of open and free competition, without deception or fraud
• Business corporations are responsible to the shareholders and have no authority to operate in the social area
• When a corporation becomes involved in social matters, there is a question of legitimacy and whether such endeavors are appropriate
• Social policy is the jurisdiction of governments, not business, as business lacks training in social issues and the necessary social skills to carry out social programs
• Business involvement in social matters can increase costs, potentially leading to business failures
• There is increasing support in the business community for social involvement, with different ethical motivations influencing corporate social responsibility (CSR) or corporate sustainability
• Schaltegger and Burritt proposed four business cases based on management's view of the ethical basis for sustainability: reactionary, reputational, responsible, and collaborative
• The responsible business case for CSR involves striving for business performance excellence where the corporation's success is measured by economic, environmental, and social indicators
• The collaborative business case for CSR involves engagement with a broad range of stakeholders to solve problems or vulnerabilities confronting stakeholders, leading to social, environmental, and economic benefits for the corporation and society
• Nineteen corporate leaders participated in a Local Economic Opportunity Leadership Table to develop creative approaches to increasing economic growth in all communities
• The Table aimed to look at economic disparity through a different lens and identify roles for the private sector
• Additional funds would be raised from others interested in addressing societal problems
• Amoral-View Theories of Social Responsibility include Fundamentalism, Legal recognition, Individual agreement, Traditional shareholders model
• The "amoral" view refers to activities without a moral quality, different from immoral which denotes activities not conforming to accepted conduct
• The Personal View debates whether corporations are "moral agents" or "full-fledged" moral persons
• Supporters of corporations as persons claim they can be morally blamed similar to natural persons, while opponents argue it's not possible to impose moral sanctions on corporations
• The Social View holds that corporations have social responsibilities and exist within a social context
• Examples of Social-View Theories of Social Responsibility include Social contract, Ideological/Historical, Stakeholder, Legal creator, Social permission, Corporate citizenship, Social impact
• Business is intertwined with society in the Social View, leading to social responsibilities
• Moral gratitude/reciprocity theory suggests businesses should be socially responsible out of gratitude or moral responsibility to reciprocate benefits received from society
• Virtue-based theory focuses on developing morally virtuous people in business
• Carroll's pyramid of corporate social responsibility includes economic, legal, ethical, and philanthropic responsibilities
• Corporate Knights is a Canadian-based media company focusing on corporate responsibility
• Conference Board of Canada provides insights for business leaders on CSR and conducts research on the topic
• Canadian Business for Social Responsibility is a business-led, non-profit CSR consultancy providing advisory services to improve performance and contribute to a better world