Download BUSS1002 CSR Iron law: Whoever does not use his social

BUSS1002 CSR  Iron law: Whoever does not use his social responsibility will loose it. In the long run, those who do not use their power in the manner which society considers responsible will loose it because other groups will step in and assume those responsibilities.  Definition: CSR is the notion that corporations have the obligation to society to take into account not just their economic impact but also their social and environmental impact.  CSR theories: Instrumental theories: achieving economic goal (maximizing shareholders’ value, strategies for achieving competitive advantages, cause related marketing)  Political theories: focus on the relationship between society and organizations and its responsibilities. (Corporate constitutionalism‐‐‐business social institution and must use power responsibly, integrative social contract theory, corporate citizenship)  Integrative theories: looks at organizations response to social demands. Business needs society for existence, continuity and growth. (Issues management—management social issues, the principal of public responsibility, stakeholder management—specific issues/stakeholder management, corporate social performance)  Ethical theories: based on the ethical contract between business and society. (Universal rights—human rights, labor and environment, sustainable development, the common good approach) Five dimensions: environmental, social, economic, stakeholder, voluntariness. Economic environment 1. Output and GDP: component of output: consumption, investment, government spending, net exports (exports‐imports). 2. Investment: Monetary expansion: central bank decrease interest rate to encourage investment and consumption instead of saving, which will boost economic activities. Monetary contraction: central bank increases interest rate to encourage saving instead of investment and consumption, which will slow economic activities. 3. Fiscal expansion: government increases spending to boost GDP. Fiscal consolidation: government cut back its spending program. 4. Trade and trade barriers: Free trade: efficient competitive firms gain access to bigger markets while 5.
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inefficient firms are exposed to greater competition Trade barriers: tax, subsidies, politicking (政治活动，竞选活动). Threats to free trade: recession, tit‐for‐tat protectionism….. Price and inflation: Demand pull inflation: increasing demand shifts AD right. Cost push inflation: increasing cost shifts AS left. Monetary inflation: printing too much money. Government can cause inflation as well as cure inflation Purchasing power parity Unemployment: Structural unemployment: mismatched skills set Frictional unemployment: arise from job search. Cyclical unemployment: deficient aggregate demand. Hidden unemployment: discouraged job seekers, underemployment, mismatched employment, withdrawal from the labor market High unemployment will: drives down wages, lead to skill atrophy, lower the unemployment level (as people stop search), lead to social‐political unrest Low unemployment will: drive up wages, draws people into the labor market, cause inflation if below the natural level (economy producing above capacity) Exchange rate: central bank buys and sells currency to maintain a fixed exchange rate. Fixed exchange rate: a) Dollarization: adopt another country’s currency (usually US dollar). Gain policy credibility (little inflation risk) and give up control over interest rates. b) Common currency: give up national currency for a supranational currency. Beneficial stability in trade between member states. Member states cannot set interest rates to suit their economic situation. Floating exchange rates: Clean floats: no central bank intervention, entirely decided by the market. Economic systems a) The planned/command economy: prices and production are centrally controlled, significant barriers to entry. Centralized ownership of the means of production. (the great leap forward) b) The transitional economy: shifting form a planned economy to a free market economy. (soviet union in the 1980s) c) The socialist market economy: locus of market power shifts, political power still firmly centralized. (China’s reform and opening up) d) The social market economy: state ownership in ‘key industries’ like utilities and transport. (European countries) e) The free market economy/market economy/capitalist economy: prices and quantities set by interplay of supply and demand with minimal government intervention and barriers to entry. 10. Least developed economies, developing economies, developed economies. Political environment Political environment: is about power and how it is exercised to deliver outcome which is a negotiated process. 1. States: are the institutions governing people within defined territorial boundaries. 2. Features: government: the institutions responsible for making collective decisions for society including legislature, bureaucracy, judiciary, legitimate means of enforcing laws. 3. Activities of government/state: Develop and enforce laws, manage economy, social protection 4. Rule of law: is characterized by the principles of supremacy of the law, equality before law, accountability to the law, legal certainty, procedural and legal transparency, equal and open access to justice for all, irrespective of gender, race, religion, age, class, creed or other status, avoidance of arbitrary application of the law and eradication of corruption. Importance for business: Improve transactional trust, minimize the potential expense of arbitration clauses, and follow procedures before enacting policies that affect business, a particular concern for those engaging in FDI. 5. Expropriation: what’s mine is mine and what’s yours is mine. 6. Failed states: a) Lose physical control of its territory or monopoly on the legitimate use of force. b) Erosion of legitimate authority to make collective decisions c) An inability to provide reasonable public services d) The inability to interact with other states as a full member of the international community Indicators: a) Socio‐cultural: demographic pressures, massive movement of refugees or internally displaced peoples, group grievance, human flight. b) Economic: uneven development on group lines, economic decline c) Political: de‐legitimization of the state, deterioration of public services, human rights violations, security apparatus as ‘state within a state’, factionalized elites, external intervention. 7. Institutional capacity: a country might have an institution for enacting the government’s policies, but they are so weak as to lead to development failures. (Corruption, lack of training, insufficient personnel or resources, poor management, absence of rule of law…) institution building is key to this: Enhance governance, improve public administration and regulatory systems, have more efficient and equitable provision of public goods and services, provision of technical assistance to nations with weal institutional capacity. 8. Political uncertainty VS regulatory uncertainty Stability: strong states, weak states/weak regimes, weak states/strong regimes, failed states 9. Size of government: measured by calculating spending as a percentage of GDP. Small government: less taxation, less spending, less extent of government oversight, more deregulation. Regulatory environment: Regulatory environment: is the resolution of political struggles in the political environment to produce binding rules. 1. Regulation can be defined as the collection of forces which serve to define, constrain and enable the activities of businesses. Constraints: tax, competition, employee relations, market restriction. Enabler: subsidies and industry policies, competition, deregulation and liberalization, market creation/stimulus, trust (ASIC), safety (CASA) 2. Catching tax evaders: tax income recovered, criminal fines, and deterrent effect. 3. Minimum wage: set annual wage review, takes inflation, unemployment forecasts into consideration, unions and business groups and government make submissions…. 4. Retirement age. If it is high, is will be bad for business. 5. Competition ACCC: (is also an enabler) Goals: maintain and promote competition and remedy market failure, protect the interests and safety of consumers and support fair trading in the markets, promote the economically efficient operation of, use of and investment in monopoly infrastructure, increase our engagement with the broad range of groups affected by what we do. 6. Market restriction: limiting ‘vice’ (age restrictions, licensing, taxes, advertising, health warnings) 7. Types of regulation: a) Information provision: a strategy to avoid regulation or the first layer in a hierarchy of regulatory forces which act on organizations (lower cost, higher transparency, enhanced market operation without distortions which often accompany more explicit regulatory intervention) b) Self‐regulation: due to the high cost for government, choose self‐regulation (accounting profession, legal profession) c) Standards: set out specifications or procedures designed to ensure that a product or service is fit for purpose and consistently performs in the way that was intended. Some mandatory and some voluntary. Enhance the quality and transparency, benefit trade, safety and customer protection and improve business neutrality. d) Quasi/Co‐regulation: codes developed by industry or professional bodies with the help of government but where enforcement is undertaken by industry/professional bodies. Industry can take the lead in the regulation of its members. e) Legislation: the most explicit and potentially the most potent vector for regulation. 8. Cost of regulation: administration cost to regulator, administrative cost to business, substantive compliance cost, economic costs to business, other distortions Socio‐cultural environment 1. Institutional and non institutional factor: family, religion, education, state, mass communication media, multinational companies 2. Role of states: a) Political regimes: democracy, communism, socialism, republic, dictatorship b) Economic decisions: monetary policy, fiscal policy, big government, small government c) Social decisions: healthcare, welfare, education levels, immigration policy 3. National culture: a system of beliefs, values and assumptions which are shared and learned by a group of people (society) and transmitted from generation to generation. 4. Values are important to learn because they shape the language, behavior, economic systems, political systems, environment and other ways of being. 5. Culture will be learned by enculturation, primary socialization, and secondary socialization. 6. Hofstede, globe study, Chinese value survey, Hall (high context, low context) 7. Demographics, population growth…. Technological environment Technology: the application of scientific knowledge for practical purposes, especially in industry. Innovation is a product of many actors‐‐‐government and business 1. Technological regime: a set of rules embedded in engineering practices, production process technologies, product characteristics and how problems are defined and understood. (collection of practices standards and ideas) It produces incremental innovation. 2. Technological niche (often happen in university): small group of actors within which radical innovation happens that is shielded from predominant views of the regime. It produces radical innovation. 3. Technological niches disrupt existing regimes through radical innovation, leading to technological regimes. Then radical and incremental innovation changes the technological environment, leading to the technological landscape. 4. Critical mass of regime changes lead to an overarching change within the technological landscape ‐‐‐ a technological transition, which is a major technological transformation in the way societal functions such as transportation, communication, housing, feeding are fulfilled. (long term) 5. Disruptive innovation: create an entirely new market through introduction of new kind of product or service, one that’s actually worse, initially, as judged by the performance metrics that mainstream customers’ value. Industrial change