Corporate Social Responsibility

1. Corporate Social Responsibility • A corporation should be held accountable for any of its actions that affect people, their communities, and their environment. • Requires companies to balance the benefits to be gained against the costs of achieving those benefits. • Iron Law of Responsibility: In the long run, those who do not use power in ways society considers responsible will lose it.

2. Figure 3.1 Foundation principles of corporate social responsibility

3. Figure 3.3 The pros and cons of corporate social responsibility .

4. “Should Companies Care?” • Colvin asserts companies today are doing more of what corporate-citizenship activists want than they have ever done before, because they’re listening to markets • Product-market decisions by consumers • Labor-market decisions by employees • Q: To what extent do consumers or employees make decisions based on corporate social responsibility? • Source: Fortune, 6/11/01

5. Two views of corporate social responsibility • The shareholder view • The only social responsibility of business is to create shareholder wealth legally and with integrity. • Corporate management cannot decide what is in the social interest. • The costs of social responsibility which do not increase the value of stock, will be passed on to consumers by way of higher prices, or to employees as lower wages, or to shareholders as lower returns. • The multiple stakeholders view • All customers and employees are treated with dignity. • Investor trust must be honored. • Relationships with suppliers must be based on mutual respect. • Belief in fair economic competition. • Business can contribute to social reform and honor human rights.

6. Evolving Phases of Corporate Social Responsibility Figure 3.5