Discussion and practice case

Business & Society: Ethics,Sustainability, and
Stakeholder Management,
11e
Chapter 1: The Business and
Society Relationship
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1
Icebreaker: Business and You
Do businesses exist and operate because of employees or despite of employees? What
are we to businesses? And what is business to us?
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2
Chapter Objectives (1 of 2)
By the end of this chapter, you should be able to:
1. Define and explain business and society as foundational concepts. Describe how
society is viewed as the macroenvironment.
2. Explain the characteristics of a pluralistic society. Describe pluralism and identify its
attributes, strengths, and weaknesses.
3. Clarify what is a special-interest society and how it poses special challenges for
business.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
Chapter Objectives (2 of 2)
4. Identify, discuss, and illustrate the factors leading up to business criticism and
corporate response. What is the general criticism of business? How may the balance
of power and responsibility be resolved?
5. Identify what is the changing social contract. Is it better or worse for stakeholders?
6. Make clear the major themes characterizing this book: managerial approach,
business ethics, sustainability, and stakeholder management.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4
Unit 1.1
Business and Society
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
5
Business and Society
• Business – the collection of private, commercially oriented organizations ranging in size
from one-family proprietorships to multinational corporations.
• Society – a community, nation, or broad grouping of people with common traditions,
values, institutions, and collective activities and interests.
• Macroenvironment – the total environment outside the firm, the comprehensive
societal context in which the organization resides.
• Society – is the macroenvironment in which businesses operate.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
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6
Discussion Activity 1.1.1
In discussion of business and society, why is there a tendency to focus on large-sized
rather than small- or medium-sized firms? Have the corporate ethics scandals of the past
decade affected small- and medium-sized firms? If so, in what ways have these firms
been affected?
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7
Unit 1.2
Society as the Macroenvironment
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8
Society as the Macroenvironment (1 of 2)
• Conceptualizing the Macroenvironment
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
9
Society as the Macroenvironment (2 of 2)
• Conceptualizing the Macroenvironment
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
10
Unit 1.3
Pluralistic Societies
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
11
Pluralistic Societies
• Prevents power from being concentrated in the hands of a few.
• Maximizes freedom of expression and action and strikes a balance between monism,
on the one hand, and anarchy on the other.
• Disperses the allegiance of individuals to groups.
• Minimizes the danger that a leader of any one organization will assume full control.
• Provides a built-in set of checks and balances, in that groups can exert power over one
another with no single organization (business or government) dominating and
becoming overly influential.
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
12
Business and Stakeholder Relationships
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13
Special Interest Society
Special Interest Groups –
• Make life more complex for business and government.
• Can number in the tens of thousands in some societies.
• Pursue their own focused agendas.
• Are active, intense, diverse, and focused.
• Can attract a significant following.
• Often work at cross-purposes, with no unified goals.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
14
Unit 1.4
Business Criticism and Corporate Response
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
15
Social Environment Factors, Business Criticism and
Corporate Response
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
16
Factors in the Social Environment
Affluence and Education
• Create higher expectations of major institutions.
• Growing public awareness through television, movies, the Internet, and social media.
Rising expectations
• Create a social problem, a gap between societal expectations for firm’s social
performance and social realities. This can lead to:
• Entitlement mentality
• Rights movement
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
17
Society’s Expectations versus Business’s Actual
Social Performance
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
18
A General Criticism of Business: Use and Abuse of
Power.
Business Power-
• The capability or ability to produce an effect, have impact, or to bring influence to bear
on a situation or people.
Iron Law of Responsibility-
• In the long run, those who do not use power in a manner society considers responsible
will tend to lose it.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
19
Discussion Activity 1.4.1
How will the COVID-19 pandemic alter business and society relationships? Identify and
discuss some of the major effects and impacts.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
20
Levels of Business Power
Business power exists and may be manifested at several different levels. Four such levels
include:
• Macro level
• Intermediate level
• Micro level
• Individual level
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
21
Business’s Response: A Changing
Social Contract
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
22
Discussion Activity 1.4.2
Identify and explain the major factors in the social environment that create an
atmosphere in which business criticism takes place and prospers. Provide examples. How
are the factors related to one another? Has the pattern of rising expectations run its
course? Or is it still a reality among young people today?
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
23
Discussion Activity 1.4.3
Give an example of each of the four levels of power discussed in this chapter. Also, give
an example of each of the spheres of business power. Is business power excessive?
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
24
Discussion Activity 1.4.4
Explain in your own words the Iron Law of Responsibility and the social contract. Give an
example of a shared understanding between you as a consumer or an employee and a
firm with which you do business or for which you work.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
25
Unit 1.5
Focus of the Book
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
26
Focus of the Book (1 of 4)
A Managerial Approach
• Managers have begun to deal with social and ethical concerns in ways similar to those
they use to manage traditional business functions.
• As a result, managers have been able to convert seemingly unmanageable concerns
into ones that can be dealt with in a balanced and impartial fashion.
• At the same time, managers have had to integrate traditional economic and financial
considerations with ethical and social considerations.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
27
Focus of the Book (2 of 4)
Business Ethics Theme
• Ethical questions
•
inevitably and continually come into play during business operations.
• Ethics
•
refers to issues of right, wrong, fairness, and justice.
• Business Ethics
•
focuses on ethical issues that arise in the commercial realm.
• Ethical questions
•
permeate business’s activities as it attempts to interact with major stakeholder groups.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
28
Focus of the Book (3 of 4)
Sustainability Theme
• Sustainability – has become one of business’s most pressing mandates.
• Sustainable development – is a pattern of resource use that aims to meet current needs
while preserving the environment for future generations.
• Sustainability embraces criteria which are:
•
Environmental
•
Economic
•
Social
• Sustainability concerns the ability of businesses to survive and thrive over the long term.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
29
Focus of the Book (4 of 4)
Stakeholders
• Individuals or groups with which business interacts and who have a vested interest
in the firm.
• Two broad groups we consider:
• External stakeholders
• Internal stakeholders
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
30
Unit 1.6
Structure of the Book
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
31
Structure of the Book (1 of 4)
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
32
Structure of the Book (2 of 4)
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
33
Structure of the Book (3 of 4)
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
34
Structure of the Book (4 of 4)
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
35
Summary (1 of 2)
• Define and explain business and society as foundational concepts. Describe how society
is viewed as the macroenvironment.
• Explain the characteristics of a pluralistic society. Describe pluralism and identify its
attributes, strengths, and weaknesses.
• Clarify what is a special-interest society and how it poses special challenges for
business.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
36
Summary (2 of 2)
• Identify, discuss, and illustrate the factors leading up to business criticism and
corporate response.
• Identify what is the changing social contract. Is it better or worse for stakeholders?
• Make clear the major themes characterizing this book: managerial approach, business
ethics, sustainability, and stakeholder management.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
37
Business & Society: Ethics,
Sustainability, and
Stakeholder Management,
11e
Chapter 2: Corporate Social
Responsibility, Performance, and
Impact
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1
Icebreaker: Grassroots Good
Go online and visit the website of the shoe manufacturer Toms (toms.com). Click the
“Impact” link. What do you think drives a business like this to donate its profits?
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2
Chapter Objectives (1 of 3)
By the end of this chapter, you should be able to:
1. Describe some early views of corporate social responsibility (CSR). Explain how CSR
evolved and encompasses economic, legal, ethical, and philanthropic components.
Explain the Pyramid of CSR. How is it a unified whole, dynamic, and sustainable? How
does ethics permeate the pyramid? Will the pyramid vary globally?
2. Articulate the traditional arguments both against and for CSR. Explain how the
business case for CSR has strengthened the concept’s acceptance.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
Chapter Objectives (2 of 3)
3. Describe how the concept of corporate social responsiveness differs from CSR.
4. Explain how corporate social performance (CSP) became more popular. Describe how
it is different than CSR. What does corporate social impact address?
5. Describe how corporate citizenship is a valuable way of thinking about CSR. Explain its
broad and narrow views.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4
Chapter Objectives (3 of 3)
6. Summarize the three perspectives on the relationship between corporate social
performance (CSP) and corporate financial performance (CFP).
7. Define CSR Greenwashing and how it may lead to misleading reputational profiles of
companies.
8. Describe and characterize the socially responsible investing movement. Differentiate
between negative and positive screens that are used in investment decisions.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
5
Unit 2.1
Corporate Social Responsibility (CSR) as a Concept
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6
Business Criticism–Social Response Cycle
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7
Corporate Social Responsibility Related Concepts
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8
Evolving Meanings of CSR
• CSR means seriously considering the impact of a company’s actions on society.
• Social responsibility is the obligation of decision makers to take actions that protect and
improve the welfare of society as a whole along with their own interests.
• CSR supposes that the corporation has not only economic and legal obligations, but
also certain responsibilities to society that extend beyond these obligations.
• These definitions provide useful insights into the concept of CSR.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
9
Discussion Activity 2.1.1
Generally speaking, what does CSR mean? What are some of the earlier definitions of
CSR? Why were they sometimes ambiguous?
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
10
A Four-Part Definition of CSR
While each definition is valuable, we will focus on the types of social responsibilities
business has. At any given point in time, societal expectations included in corporate social
responsibility are:
• Economic
• Legal
• Ethical, and
• Philanthropic
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
11
The Four Components of CSR
The Four Components of CSR: Types, Expectations, Explanations, & Examples
Type of Responsibility
Societal Expectations
Explanations/Examples
Economic responsibility
REQUIRED of business by
society
Be profitable. Maximize sales, minimize costs. Make sound strategic decisions.
Be attentive to dividend policy. Provide investors with adequate and attractive
returns on their investments. Provide jobs.
Legal responsibility
REQUIRED of business by
society
Obey all laws, adhere to all regulations. Environmental and consumer laws.
Laws protecting employees. Fulfill all contractual obligations. Honor warranties
and guarantees.
Ethical responsibility
EXPECTED of business by
society
Avoid questionable practices. Respond to spirit as well as to letter of law.
Assume law is a floor on practice, operate above minimum required. Do what
is right, fair, and just. Assert ethical leadership.
Philanthropic responsibility
DESIRED/EXPECTED of
business by society
Be a good corporate citizen. Give back. Make corporate contributions. Provide
programs supporting community—education, health or human services,
culture and arts, and civic. Provide for community betterment. Engage in
volunteerism.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
12
The Pyramid of Corporate Social Responsibility
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
13
Discussion Activity 2.1.2
In what sense is the Pyramid of CSR a unified whole, dynamic, and sustainable? How is it
stakeholder inclusive?
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
14
Discussion Activity 2.1.3
Explain the Pyramid of Corporate Social Responsibility. Define each category and provide
several examples of each “layer” of the pyramid. Identify and discuss some of the
tensions among and between the layers or components. In what sense do the different
layer of the pyramid “overlap” with each other?
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
15
Top 20 Activities/ Characteristics of a Socially
Responsible Company (1 of 2)
• Makes products that are safe.
• Does not pollute air or water.
• Obeys the law in all aspects of business.
• Promotes honest or ethical employee behavior.
• Commits to safe workplace ethics.
• Does not use misleading or deceptive advertising.
• Helps displaced workers with placement.
• Employs friendly, courteous, responsive personnel.
• Utilizes only biodegradable or recyclable materials.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
16
Top 20 Activities/ Characteristics of a Socially
Responsible Company (2 of 2)
• Upholds stated policy banning discrimination.
• Utilizes “environmentally friendly” packaging.
• Protects employees against sexual harassment.
• Gives money toward charitable or educational causes.
• Recycles within company.
• Shows no past record of questionable activity.
• Responds quickly to customer problems.
• Maintains waste reduction program.
• Provides or pays portion of medical costs.
• Promotes energy conservation program.
• Tries continually to improve quality.
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17
Rise of the CSR Exemplar Firms
• Social entrepreneurship firms: Social enterprises that began their CSR initiatives at their
founding and strategically carried it forward.
• Social intrapreneurship firms: No specific social agenda as part of their initial formation
but later developed from within a highly visible social agenda or program. Often begun
by an individual within the firm.
• Mainstream adopters: other conventional businesses that have adopted, practiced, and
achieved some degree of distinction or recognition for socially responsible policies and
practices.
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
18
Discussion Activity 2.1.4
Explain what makes a CSR exemplar firm. Distinguish among social entrepreneurship,
social intrapreneurship, and mainstream adopters.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
19
Unit 2.2
Traditional Arguments Against and For CSR
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
20
Arguments Against CSR
• Classical Economics: The classical economic view is that business’s only goal is the
maximizing of profits for owners.
• Business Not Equipped: Business is not equipped to handle social activities.
• Dilutes Business Purpose: It dilutes the primary purpose of business.
• Too Much Power Already: Businesses have too much power already.
• Global Competitiveness: It limits the ability to compete in a global marketplace.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
21
Arguments in Support of CSR
• Enlightened self-interest: Businesses must take actions to ensure long-term viability.
• Warding off government regulations: This is one of the most practical reasons.
• Resources Available: Business has the resources and expertise. Let it try.
• Pro-action is better than Reaction: Pro-action is also less costly.
• Public supports: the public strongly supports CSR.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
22
The Business Case for CSR
Defensive approach
Cost-benefit approach
Strategic approach
Innovation and learning approach
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scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
23
Reasons and Benefits Supporting the Business Case
for CSR (1 of 2)
Six Business Reasons for Engaging in CSR
1. Customer engagement
2. Employee engagement
3. Brand differentiation
4. Long-term plans
5. Cutting costs
6. Innovation
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
24
Reasons and Benefits Supporting the Business Case
for CSR (2 of 2)
Business Benefits of CSR
1. Win new business
2. Increase customer retention
3. Develop and enhance relationships with
customers, suppliers, and networks
4. Attract, retain, and maintain a happy
workforce and be an Employer of Choice
5. Save money on energy and operating costs
and manage risk
6. Differentiate itself from competitors
7. Improve its business reputation and
standing
8. Provide access to investment and funding
opportunities
9. Generate positive publicity and media
opportunities due to media interest in
ethical business activities
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
25
Discussion Activity 2.2.1
In small groups, In your view, what is the single strongest argument against the idea of
corporate social responsibility? What is the single strongest argument for corporate social
responsibility? Briefly explain
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26
Unit 2.3
CSR Greenwashing
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CSR Greenwashing
• Some companies convey an image of responsibility when in fact they are conducting
business as usual.
• Companies attempt to make the public believe they are “green”— environmentally
friendly — when they are not.
• CSR Greenwashing is intentionally seeking to convey the image of a socially responsible
firm when the evidence of their practices does not support this conclusion.
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Unit 2.4
Political CSR
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29
Political CSR
• Gaining attention and application especially in European or similar contexts where the
government historically has assumed a larger role in providing societal benefits.
• PCSR entails those responsible business activities that turn corporations into political
actors, by engaging in public deliberations, collective decisions, and the provision of
public goods or the restriction of public ill in cases where public authorities are unable
or unwilling to fulfill this role.
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30
Unit 2.5
Corporate Social Responsiveness, Performance, and
Impact
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31
Corporate Social Responsiveness, Performance, and
Impact
Corporate Social Responsiveness –
• An action-oriented variant of CSR.
Responsibility • Implies a state or condition of having assumed an obligation.
Responsiveness • Connotes a dynamic, action-oriented condition.
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32
Carroll’s Corporate Social Performance Model
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33
Discussion Activity 2.5.1
• In small groups differentiate between corporate social responsibility and corporate
social responsiveness. Give an example of each. How does corporate social
performance relate to these terms? Where do corporate citizenship and sustainability
fit in?
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34
Unit 2.6
Corporate Citizenship
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35
Corporate Citizenship (1 of 2)
Corporate citizenship –
• Embraces all the facets of corporate social responsibility, responsiveness, and
sustainability.
• Corporate citizenship is not a new concept, but one whose time has come.
• Corporate citizenship serves a variety of stakeholders.
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Corporate Citizenship (2 of 2)
Broad View
• A reflection of shared moral and ethical principles.
• A vehicle for integrating individuals into the communities in which they work.
• A form of enlightened self-interest that balances stakeholders’ claims and enhances a
company’s long-term value.
Narrow View
• Corporate community relations
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37
Stages of Corporate Citizenship
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Global CSR and Corporate Citizenship
• …and Global CSR are topics in which there has been an explosion of interest.
• Multinational enterprises are expected to:
• be good corporate citizens in the countries in which they do business.
• tailor their initiatives to conform to the cultural environment.
• International academics and businesspeople around the world are now researching and
advocating CSR and corporate citizenship concepts.
• Convergence in global CSR approaches will continue as the world economic stage
becomes the common environment within which businesses function.
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39
Unit 2.7
The Social Performance and Financial Performance
Relationship
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40
The Social and Financial Performance Relationship
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41
One Bottom Line, or Many?
The stakeholder-bottom line perspective –
• Impacts or benefits of social performance cannot be fully measured or appreciated by
considering only the impact on the firm’s financial bottom line.
• CSP cannot be fully comprehended unless it includes impacts and measures on
consumers, employees, the community and other stakeholder groups.
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42
Unit 2.8
Creating Shared Value, Conscious Capitalism, and
Purpose-Driven Business
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43
Creating Shared Value, Conscious Capitalism, and
Purpose-Driven Business
CSV (Creating Shared Value)
• Business and society could be brought back together if business redefined the basic
purpose as creating shared value—generating economic value in a way that also
produces value for society.
Conscious Capitalism
• A more complex form of capitalism that reflect and leverages the interdependent
nature of life and all of the stakeholders in business.
• Pillars include: Higher purpose, stakeholder orientation, conscious leadership,
conscious culture.
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44
The CSR Evolutionary Trajectory
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Discussion Activity 2.8.1
What is unique about the following alternative frameworks to CSR: corporate citizenship,
sustainability, creating shared value, conscious capitalism, and purpose-driven business?
Why do businesspeople and academicians like to create or adopt faddish terms?
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46
Unit 2.9
Socially Responsible, Sustainable, ESG Investing
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47
Socially Responsible, Sustainable, ESG Investing (1
of 2)
Socially Responsible Investing –
• Emerged in the 1970s.
• Nearly $7 trillion in socially responsible investments in the U.S.
Social Screening –
• A technique used to screen firms for socially-responsible investment purposes.
• Includes negative social screens and positive social screens.
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48
Socially Responsible, Sustainable, ESG Investing (2
of 2)
• Total dollars invested in SRI has grown exponentially over past twenty years.
• Council on Economic Priorities suggests 3 reasons:
• More reliable research on CSP.
• Investment firms using social criteria have solid track record.
• The socially conscious 1960s generation is making investment decisions.
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49
Discussion Activity 2.9.1
• Does socially responsible investing seem to you to be a legitimate way in which the
average citizen might demonstrate concern for CSR? Why is it also called impact
investing? Discuss.
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50
Summary (1 of 2)
• Describe some early views of corporate social responsibility (CSR), explain how CSR
evolved and encompasses economic, legal, ethical, and philanthropic components;
describe and explain the Pyramid of CSR.
• Articulate the traditional arguments both against and for CSR. Explain how the business
case for CSR has strengthened the concept’s acceptance.
• Describe how the concept of corporate social responsiveness differs from CSR.
• Explain how corporate social performance (CSP) became more popular and describe
how it is different than CSR.
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Summary (2 of 2)
• Describe how corporate citizenship is a valuable way of thinking about CSR and explain
its broad and narrow views.
• Summarize the three perspectives on the relationship between corporate social
performance (CSP) and corporate financial performance (CFP).
• Define CSR Greenwashing and how it may lead to misleading reputational profiles of
companies.
• Describe and characterize the socially responsible investing movement and
differentiate between negative and positive screens used in investment decisions.
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Business & Society: Ethics,
Sustainability, and
Stakeholder Management,
11e
Chapter 3: The Stakeholder
Approach to Business, Society, and
Ethics
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1
Icebreaker: The Rights of Glaciers
In India, courts have given the status of “legal persons” to the Himalayan glaciers.
In small groups, discuss why you think this decision was made. How might business
interests and Himalayan glaciers be connected? Are the glaciers stakeholders? Explain.
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2
Chapter Objectives (1 of 2)
By the end of this chapter, you should be able to:
1. Describe stakeholder capitalism and its characteristics. How does it differ from
traditional capitalism?
2. Identify the origins of the stakeholder concept by explaining what is a stake and what
is a stakeholder.
3. Who are business’s stakeholders in primary and secondary terms? What is a
marginalized or fringe stakeholder?
4. Differentiate among the three stakeholder approaches: strategic, multifiduciary, and
synthesis.
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3
Chapter Objectives (2 of 2)
5. Identify and explain the three values of the stakeholder model. Which combination of
these values makes the most sense for stakeholder management?
6. Name and describe the five key questions that capture the essence of stakeholder
management.
7. Explain major concepts in effective stakeholder management to include stakeholder
thinking, stakeholder culture, stakeholder management capability, and stakeholder
engagement.
8. Describe the three strategic steps toward global stakeholder management.
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4
Unit 3.1
Origins of the Stakeholder Concept
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Origins of the Stakeholder Concept
Stake –
• An interest or a share in an undertaking.
• Can be categorized as:
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Stakeholders
Stakeholder –
Any individual or group who can affect or is affected by the actions, decisions, policies,
practices, or goals of the organization.
Stakeholder is a variant of the concept of stockholder—an investor/owner of businesses.
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Discussion Activity 3.1.1
Explain how stakeholder capitalism has evolved to be a governing system in many
advanced nations of the world. Have business firms adapted to this evolving system?
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Discussion Activity 3.1.2
Explain the concepts of stake and stakeholder from your perspective as an individual.
What kinds of stakes and stakeholders do you have? Discuss.
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Unit 3.2
Who Are Business’s Stakeholders?
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Who Are Business’s Stakeholders?
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11
Three Views of the Firm:
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Production and Managerial Views of the Firm
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13
The Stakeholder View of the Firm
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Primary & Secondary Stakeholders
Primary stakeholders –
Have a direct stake in the organization and its success.
Secondary stakeholders Have a public or special interest stake in the organization that is more indirect.
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Social Stakeholders
Primary social stakeholders
Secondary social stakeholders
Shareholders and investors
Government regulators
Employees and managers
Civic institutions
Customers
Social pressure groups
Local communities
Media and academic commentators
Suppliers and other business partners
Trade bodies
Competitors
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16
Nonsocial Stakeholders
Primary nonsocial stakeholders
Secondary nonsocial stakeholders
Natural environment
Environment interest groups
Future generations
Animal welfare organizations
Nonhuman species
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17
Important Stakeholder Attributes:
Legitimacy, Power, Urgency
Legitimacy • Refers to the perceived validity or appropriateness of the stakeholder’s claim to a
stake.
Power • Refers to the ability or capacity of a stakeholder to produce an effect.
Urgency • Refers to the degree to which the stakeholder’s claim demands immediate attention
or response.
Proximity • The spatial distance between the organization and its stakeholders.
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18
A Three Attribute Stakeholder Typology
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Discussion Activity 3.2.1
Explain in your own words the differences between the production, managerial, and
stakeholder views of the firm. Which view is best and why?
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Discussion Activity 3.2.2
Differentiate between primary and secondary social and nonsocial stakeholders in a
business situation. Give examples of each.
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Unit 3.3
Strategic, Multifiduciary, and Synthesis: Three
Stakeholder Approaches
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Three Stakeholder Approaches
• Strategic approach –
• Views stakeholders primarily as factors managers should manage in pursuit of
shareholder profits.
• Multifiduciary approach • Views stakeholders as a group to which management has a fiduciary responsibility.
• Stakeholder synthesis approach • Considers stakeholders as a group to whom management owes an ethical, but not a
fiduciary, obligation.
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Unit 3.4
Three Values of the Stakeholder Model
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Three Values of the Stakeholder Model
Descriptive Value
Instrumental Value
Normative Value
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Unit 3.5
Stakeholder Management: Five Key Questions
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Stakeholder Management: Five Key Questions (1 of
2)
1. Who are the organization’s stakeholders?
2. What are our stakeholders’ stakes?
3. What opportunities and challenges do our stakeholders present to the firm?
4. What responsibilities (economic, legal, ethical, and philanthropic) does the firm have
toward its stakeholders?
5. What strategies or actions should the firm take to best address stakeholder
challenges and opportunities?
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Stakeholder Management: Five Key Questions (2 of
2)
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Who are our stakeholders?
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What Are Our Stakeholders’ Stakes?
To identify them, consider –
• the nature and legitimacy of a group’s stakes.
• the power of a group’s stakes.
• subgroups within a generic group.
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30
What Opportunities and Challenges do Stakeholders
Present?
• Build productive working relationships with
stakeholders
Opportunities
• The potential for cooperation
• Representative of how the firm handles its
stakeholders
Challenges
• The potential for threat
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31
What Responsibilities Does a Firm Have to its
Stakeholders?
Apply Corporate Social Responsibility concepts –
• Responsibilities are
• Economic
• Legal
• Ethical
• Philanthropic
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Stakeholder Responsibility Matrix
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What Strategies or Actions Should Management
Take?
• Do we deal directly or indirectly with stakeholders?
• Do we take the offense or the defense in dealing with stakeholders?
• Do we accommodate, negotiate, manipulate, or resist stakeholder overtures?
• Do we employ a combination of the above strategies or pursue a singular course of
action?
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34
Four Stakeholder Types
• The Supportive Stakeholder
• High potential for cooperation, low for threat
• The Marginal Stakeholder
• Low potential for cooperation and threat
• The Nonsupportive Stakeholder
• High potential for threat, low for cooperation
• The Mixed-Blessing Stakeholder
High on potential for threat & cooperation
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35
Discussion Activity 3.5.1
What are the five key questions that must be answered for stakeholder management to
be successful?
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Unit 3.6
Effective Stakeholder Management and Engagement
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Effective Stakeholder Management
Stakeholder thinking
• The process of always reasoning in stakeholder terms throughout the management
process.
• Increases the complexity of decision-making, but most consistent with today’s business
environment.
• Is facilitated by
• Stakeholder culture
• Stakeholder management capability
• Stakeholder corporation model
• Principles of stakeholder management
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Developing a Stakeholder Culture
Stakeholder Culture embraces the beliefs, values, and practices that organizations have
developed for addressing stakeholder issues and relationships.
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Stakeholder Management Capability
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40
Stakeholder Engagement
An approach by which companies successfully implement the transactional level of
strategic management capability.
• Interaction with stakeholders must be integrated into every level of decision-making in the
organization.
• A ladder of stakeholder engagement depicts a continuum from low engagement to high
engagement.
• Transparency means working toward the open corporation.
• Sustainability is the latest emphasis on engaging stakeholders.
• Dialogue is primarily focused on exchanging communications with stakeholder groups.
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The Stakeholder Corporation
The central element: Stakeholder inclusiveness
In the future, development of loyal relationships with customers,
employees, shareholders, and other stakeholders will become one of
the most important determinants of success.
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42
The “Clarkson Principles” of Stakeholder
Management
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43
Discussion Activity 3.6.1
What are the three levels of stakeholder engagement that a company might use? Explain
each.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
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Unit 3.7
Strategic Steps toward Global Stakeholder
Management
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
45
Strategic Steps toward Global Stakeholder
Management
1. Governing Philosophy
Integrate stakeholder management into the firm’s governing philosophy.
2. Values Statement
Create a stakeholder-inclusive “values statement.”
3. Measurement System
Implement a stakeholder performance measurement system.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
46
Implementation
Indicators of successful stakeholder management include:
Survival
Avoided costs
Continued acceptance and use
Expanded recognition and adoption
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
47
Discussion Activity 3.7.1
Is the stakeholder corporation a realistic model for business firms? Will stakeholder
corporations become more prevalent in the 21st century? Why or why not?
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
48
Summary (1 of 2)
• Describe stakeholder capitalism and its characteristics and explain how it differs from
traditional capitalism.
• Identify the origins of the stakeholder concept by explaining what is a stake and what is
a stakeholder.
• Explain who are business’s stakeholders in primary and secondary terms and what is a
marginalized or fringe stakeholder.
• Differentiate among the three stakeholder approaches: strategic, multifiduciary, and
synthesis.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
49
Summary (2 of 2)
• Identify and explain the three values of the stakeholder model and explain which
combination of these values makes the most sense for stakeholder management.
• Name and describe the five key questions that capture the essence of stakeholder
management.
• Explain major concepts in effective stakeholder management to include stakeholder
thinking, stakeholder culture, stakeholder management capability, and stakeholder
engagement.
• Describe the three strategic steps toward global stakeholder management.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
50