Download value RESOURCES AND CORPORATE SOCIAL

Chapter 17
Corporate Social Responsibility
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Articulate a stakeholder view of the firm
2. Apply the institution based view to analyze corporate social
responsibility
3. Use the resource based view to better understand corporate
social responsibility
4. Participate in three leading debates concerning corporate
social responsibility
5. Draw implications for action
STAKEHOLDER VIEW OF THE FIRM
stakeholder - group or individual who can affect or is
affected by the achievement of the organization’s
objectives
corporate social responsibility (CSR) -
consideration of, and response to, issues beyond the
narrow economic, technical, and legal requirements of
the firm to accomplish social benefits along with the
traditional economic gains which the firm seeks
BIG PICTURE PERSPECTIVE
global sustainability - ability “to meet the needs
of the present without compromising the ability of future
generations to meet their needs”
BIG PICTURE PERSPECTIVE
primary stakeholder groups
- constituents on
which the firm relies for its continuous survival and
prosperity
secondary stakeholder groups -
those who
influence or affect, or are influenced or affected by, the firm,
but are not engaged in transactions with the firm and are
not essential for its survival
triple bottom line
- economic, social, and
environmental performance that simultaneously satisfies
demands of all stakeholders
INSTITUTIONS AND CORPORATE
SOCIAL RESPONSIBILITY
reactive strategy - response to relatively little or no
support of top management to CSR causes
defensive strategy - focus on regulatory compliance
with little involvement by top management
accommodative strategy - characterized by some
support from top managers, who may increasingly view
CSR as a worthwhile endeavor
proactive strategy - being responsible and
endeavoring to do more than is required
INSTITUTIONS AND CORPORATE
SOCIAL RESPONSIBILITY
codes of conduct (codes of ethics) - tangible
action firms often take to indicate their willingness to
accept CSR
RESOURCES AND CORPORATE
SOCIAL RESPONSIBILITY
VRIO framework
social issue participation - actions not
directly related to management of primary
stakeholders – may reduce value
expertise, techniques, and
processes associated with the direct
management of primary stakeholder groups
are likely to add value
RESOURCES AND CORPORATE
SOCIAL RESPONSIBILITY
VRIO framework
complex processes require strong management
capabilities, such as negotiating with local suppliers,
undertaking internal verification, coordinating with NGOs
for external verification, and disseminating such
information to stakeholders - valuable but common (not
rare) resources
RESOURCES AND CORPORATE
SOCIAL RESPONSIBILITY
VRIO framework
pollution-prevention technologies are more
complex and integrated with the entire production chain competitors often have a harder time imitating these
complex capabilities
pollution-reduction technologies may offer
no such advantage because relatively simple, “end-ofpipe” pollution-reduction technologies can be more easily
imitated
RESOURCES AND CORPORATE
SOCIAL RESPONSIBILITY
VRIO framework
process-focused best practices of pollution
prevention are not in isolation and are often difficult to
separate from a firm’s other organizational activities
DOMESTIC vs. OVERSEAS SOCIAL
RESPONSIBILITY
Given that corporate resources are limited, resources
devoted to overseas CSR, unfortunately, often mean
fewer resources devoted to domestic CSR.
When companies have enough resources, it would be nice
to take care of domestic employees and communities.
However, when confronted with relentless pressures for
cost cutting and restructuring, managers have to
prioritize.
Paradoxically, in this age of globalization, while the CSR
movement is on the rise, the great migration of jobs
away from developed economies is also accelerating.
RACE TO THE BOTTOM (“Pollution Haven”) vs.
RACE TO THE TOP
Because of heavier environmental regulation in developed
economies, MNEs may have an incentive to shift pollution-intensive
production to developing countries, where environmental standards
may be lower.
To attract investment, developing countries may enter a “race to
the bottom” by lowering (or at least not tightening) environmental
standards, and some may become “pollution havens.”
Many MNEs’ voluntary adherence to environmental standards are
higher than those required by host countries.
Although it is difficult to suggest that the race to the bottom does
not exist, MNEs as a group do not necessarily add to the
environmental burden in developing countries.
ACTIVE vs. INACTIVE CSR
ENGAGEMENT OVERSEAS
Active CSR engagement is now increasingly
expected of MNEs. MNEs that fail to do so are
often criticized by NGOs.
The nonintervention principle originated from
concerns that MNEs might engage in political
activities against the national interests of the
host country.
What exactly is the “legitimate role” of CSR
initiatives in host countries?