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C. CSR’s Effect on the Mission Statement
1. The mission statement not only identifies what product or service a company
produces, how it produces it, and what market it serves, it also embodies what the
company believes.
a. It is essential that the mission statement recognize the legitimate claims of its
c. Customers, government, stockholders, employees, and society, in that order,
2. In developing mission statements, managers must identify all stakeholder groups and
weigh their relative rights and abilities to affect the firm’s success.
D. Social Audit
1. A social audit is an attempt to measure a company’s actual social performance
against its social objectives.
a. A social audit may be performed by the company itself; however, one conducted
b. As with a financial audit, an outside auditor brings credibility to the evaluation.
general public is to believe the company’s public relations pronouncements.
2. Careful, accurate monitoring and evaluation of a company’s CSR actions are
3. Once the social audit is complete, it may be distributed internally or both internally
and externally, depending on the firm’s goals and situation.
a. Some firms include a section in their annual report devoted to social
4. Large firms are not the only companies employing the social audit.
a. Ben & Jerry’s, a CSR pioneer, publishes a social audit in its annual report.
b. The audit is conducted by an outside consultant.
5. The social audit may be used for more than simply monitoring and evaluating firm
social performance.
a. Managers use social audits to scan the external environment, determine firm
b. Companies themselves are not the only ones who conduct social audits; public
c. These organizations include consumer groups and socially responsible investing
IV. Satisfying Corporate Social Responsibility
A. Executives face conflicting pressures to contribute to social responsibility while honoring
their duties to maximize shareholder value.
1. These days they face many belligerent critics who challenge the idea of a single-
2. They also face skeptics who contend that CSR initiatives are chiefly a convenient
3. The reality is that most executives are eager to improve their CSR effectiveness.
4. The issues are not whether firms will engage in socially responsible activities, but
how.
5. For most firms, the challenge is how best to achieve the maximum social benefit from
B. The Core of the CSR Debate
1. The proper role of CSR—the actions of a company to benefit society beyond the
a. Since steel baron Andrew Carnegie published The Gospel of Wealth in 1899, the
b. The CSR debates had been largely confined to the background for most of the
2. The debates surfaced in more positive ways in the last 30 years as new businesses set
3. More executives have come to understand the value of their companies’ reputations
4. In the past, research on the financial effect of CSR produced inconsistent findings.
a. Some studies reported a positive relationship, others a negative one, and others
no relationship at all.
b. Since the mid-1990s, improvements in theory, research designs, data, and
analysis have produced empirical research with more consistent results.
5. There is no shortage of options with which businesses can advance their CSR goals.
6. Exhibit 3.11, Continuum of Corporate Social Responsibility Commitments,
shows a simple illustration of the range of options available to corporations as they
7. Managers need a model that they can use to guide them in selecting social initiatives
C. Mutual Advantages of Collaborative Social Initiatives
1. The term social initiative describes major initiatives that take a collaborative
approach.
a. Research on alliances and networks among companies in competitive
b. These combinative capabilities allow the company to acquire and synthesize
2. While neither companies nor non-profits are well-equipped to handle escalating
a. Those cumulative offerings are vastly superior to cash-only donations, which are
b. Social initiatives involve ongoing information and operational exchanges among
3. There is strong evidence to show that CSR activities increasingly confer benefits
beyond enhanced reputation.
a. For some participants, they can be a tool to attract, retain, and develop
b. The PricewaterhouseCooper (PwC) Project Ulysses is a leadership development
D. Five Principles of Successful Collaborative Social Initiatives
1. There are five principles that are central to successful CSIs, as shown in Exhibit
3.12, Five Principles of Successful Corporate Social Responsibility
Collaboration.
2. When CSR initiatives include most or all of these elements, companies can indeed
a. Identify a Long-Term Durable Mission
(1) Companies make the greatest social contribution when they identify an
(2) Ron Alsop argues that companies that are interested in contributing to
(3) Companies that step up to tackle problems that are clearly important to
b. Contribute “What We Do”
(1) Companies maximize the benefits of their corporate contributions when
(2) Such contributions create a mutually beneficial relationship between the
(3) It is not essential that these services be synonymous with those of the
c. Contribute Specialized Services to a Large-Scale Undertaking
(1) Companies have the greatest social impact when they make specialized
(2) Those that contribute to initiatives in which other private, public, or
(3) Although it is tempting for a company to identify a specific cause that will
d. Weigh Government’s Influence
(1) Government support for corporate participation in CSIs—or at least its
(2) Tax incentives, liability protection, and other forms of direct and indirect
contribute to the success of CSIs.
(3) Endorsements can also be very valuable.
e. Assemble and Value the Total Package of Benefits
(1) Companies gain the greatest benefits from their social contributions when
(2) The valuation should include both the social contributions delivered and
(3) Positive reputation is driven by genuine commitment rather than episodic
E. Assembling the Components
1. A range of corporate initiatives lend themselves to the CSI model because they share
most of the five key attributes we have described here:
a. they have long-term objectives
b. they are sufficiently large to allow a company to specialize in its contributions
2. Of the five principles, the most important by far is the second one.
a. Companies must apply what they do best in their normal commercial operations
b. The tenet is consistent with research that argues that social activities most
F. The Limits of CSR Strategies
1. Some companies have embedded social responsibility and sustainability
commitments deeply in their core strategies.
2. Larger companies must move beyond the easy options of charitable donations but
also steer clear of overreaching commitments.
a. This is not to suggest that companies should not think big—research shows that
b. Companies need to view their commitments to corporate responsibility as one
c. By starting with a well-defined CSR strategy and developing the collaborative
3. CSR strategies can also run afoul of the skeptics, and the speed with which
G. The Future of CSR
1. CSR is firmly and irreversibly part of the corporate fabric.
a. Managed properly, CSR programs can confer significant benefits to participants
b. The benefits extend well beyond the boundaries of the participating
2. The prickly aspect of CSR is that for all of their resources and capabilities,
3. The challenge for management is to know how to meet the company’s obligations to
V. Management Ethics
A. The Nature of Ethics in Business
1. Central to the belief that companies should be operated in a socially responsive way
2. The term ethics refers to the moral principles that reflect society’s beliefs about the
3. The values of one individual, group, or society may be at odds with the values of
4. Ethical standards reflect not a universally accepted code, but rather the end product of
7. Exhibit 3.14, Strategy in Action, presents the findings of a major survey of HR
managers.
8. Even when groups agree on what constitutes human welfare, the means they choose to
9. Global Strategy in Action 3.15, discusses the powerful lessons that Toyota learned
B. Approaches to Questions of Ethics
1. Managers report that the most critical quality of ethical decision making is
2. Managers who adopt the utilitarian approach judge the effects of a particular action
a. This approach focuses on actions rather than motives.
3. Managers who subscribe to the moral rights approach judge whether decisions and
rights and privileges.
a. The moral rights approach (also called deontology) includes the rights of human
4. Managers who take the social justice approach judge how consistent actions are
b. The liberty principle states that individuals have certain basic liberties
5. In addition to these defining principles, three implementing principles are essential to
the social justice approach.
a. According to the distributive-justice principle, individuals should not be treated
b. The fairness principle means that employees must be expected to engage in
c. The natural-duty principle points up a number of general obligations, including
VI. Code of Business Ethics
A. To help ensure consistence in the application of ethical standards, an increasing number of
professional associations and businesses are establishing codes of ethical conduct.
1. Associations of chemists, funeral directors, law enforcement agents, migration
B. Major Trends in Codes of Ethics
1. The increased interest in codifying business ethics has led to both the proliferation of
2. Such codes used to be found solely in employee handbooks, for the most part.
3. Companies are adding enforcement measures to their codes.
