140 likes | 301 Views
Emerging Issues in Management (Mgmt 440). Corporate Social Responsibility (Chapter 19) Professor Charles H. Smith Fall 2011. Introduction to Corporate Social Responsibility. Also known as CSR, corporate citizenship, stakeholder management, and sustainability.
E N D
Emerging Issues in Management (Mgmt 440) Corporate Social Responsibility (Chapter 19) Professor Charles H. Smith Fall 2011
Introduction to Corporate Social Responsibility • Also known as CSR, corporate citizenship, stakeholder management, and sustainability. • Study of CSR usually involves company’s obligation to do something beyond the minimum legal requirement. • However, much debate as to what “something beyond” means or even if company should be doing “something beyond.”
Early History of CSR in the United States • In the 19th Century, great fortunes were made by individuals who were very charitable; e.g., John Rockefeller, Andrew Carnegie. • But, charity often influenced by “Social Darwinism” (Herbert Spencer) – best to donate to large institutions or grand projects (e.g., universities, concert halls) instead of giving to poor individual directly • Example – Carnegie once upbraided friend who gave a quarter to a beggar on the street; what is your opinion/practice when asked for money by panhandlers?
Competing Theories of CSR • Milton Friedman – “profit maximization.” • Business Roundtable – “existence [of a company] depends on society’s approval.” • Both theories look at “stakeholders” but in different ways.
Friedman’s Profit Maximization • The goal of management is to maximize the company’s profits • In other words, management is charged with working for the shareholders’ interests which makes shareholders the company’s leading stakeholder. • Engaging in CSR must be viewed through lens of how it will benefit shareholders. • Government is also a stakeholder in that the legislature levies taxes and the judiciary resolves disputes.
Business Roundtable • Management must balance legal and ethical obligations owed to stakeholders such as shareholders, employees, creditors, vendors, communities, customers, and the general public. • CSR is advocated for a variety of reasons • Some objectives can be achieved only through private enterprise; e.g., business may be more efficient at job training than public or educational institutions. • “Voluntary” restraint in seeking profits may prevent or influence government regulation; e.g., Title IX and college sports.
Stakeholder Theory • Definition of a stakeholder – “A person, group, or organization that has direct or indirect stake in an organization because it can affect or be affected by the organization’s actions, objectives, and policies” (http://www.businessdictionary.com/definition/stakeholder.html).
Primary Stakeholders • Stockholders (owners). • Customers. • Employees. • Communities. • Governments.
Secondary Stakeholders • Media. • Competitors. • Suppliers (vendors). • Trade associations. • Political interest groups. • Creditors. • Unions.
Secondary Stakeholders cont. • Political parties. • Religious groups. • Earth’s biosphere. • Future generations. • The poor. • Educational institutions.
Who are the Stakeholders? • Start with the people/entities on the previous slides – one of the big issues with this model is identifying stakeholders. • Which stakeholders on these lists are more important to you generally? To the majority generally? Why? • Should any stakeholders on these lists be disregarded? Why?
Stakeholder Theory Case Studies • To be reviewed with small groups – who/what are the stakeholders as to Cal State Fullerton? • Would the stakeholders be different for issues such as • Class cutbacks. • Addition of academic programs. • Campus construction projects. • Bringing back Titan football.
One More Thing About the Stakeholder Theory • It will be the subject of the essay question on next week’s exam! • You will be called upon to identify all possible stakeholders and provide an explanation – truly a “volume” answer since more credit given for more stakeholders correctly identified and described. • Also, it might provide guidance for your group paper.