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Chapter 12:
COMMUNITY OUTREACH AND RESPECT
CHAPTER 12 CHAPTER AND ADDITIONAL QUESTIONS
In studying this chapter, students should consider the questions below.
“CQ1” refers to “Chapter Question 1.” This question appears at the end of the textbook
chapter.
“AQ1” refers to an “Additional Question 1.” This is an “additional” question related to
the chapter. It is not listed at the end of the textbook chapter as a “Chapter Question”.
These items are numbered within the two categories based on the order in which the
answer appears in the chapter.
CQ1: What four types of social responsibilities do businesses have?
CQ2: Discuss the ethical pros and cons of doing business with a sweatshop in a developing
nation.
CQ3: What are the competitive advantages of community involvement?
CQ4: Describe the six phases of issues-driven multi-stakeholder dialogue?
CQ5: Discuss the four ways that businesses give to the community and the three strategic
approaches they can take.
CQ6: How can managers determine an optimal win-win community partner?
CQ7: Describe the steps a manager should take to develop a highly effective community
involvement program.
AQ1: How can you assess community impacts?
CHAPTER 12 LEARNING OBJECTIVES
After completing this chapter, students should be able to:
Describe four types of social responsibilities businesses have
Articulate the competitive advantages of community involvement
Understand the six phases of issues-driven multi-stakeholder dialogues
Develop a diverse portfolio of giving opportunities—money, products or services, skills,
and job opportunities
Align community outreach with the company’s mission and assets
Choose community organizations for strategic partnerships
Administer the community involvement process
Assess and report social performance
CHAPTER 12 OVERVIEW
Organizations are embedded in the communities where they operate. Ethical
organizations aspire to be model community citizens. This chapter begins with a discussion on
the extent to which businesses have social responsibilities and describes the business case for
community involvement. An organization’s reputation is critical to its success. Public criticisms
against an organization generate a negative stigma that can be very difficult to undue. Managers
can engage multiple community stakeholders on a wide variety of issues. Philanthropy and
employee volunteerism are the most common forms of community involvement. Managers must
determine how much and what to give to whom. The chapter also explores how to manage the
community involvement process, and what community impacts to assess and report.
CHAPTER 12 LECTURE OUTLINE
Teaching Objective: To teach how to be a good corporate citizen and align community outreach
with the company’s mission.
Suggested Time: Two to three hours of class time is recommended to present this chapter.
I. Chapter Question 1: What four types of social responsibilities do businesses have?
II. Chapter Question 2: Discuss the ethical pros and cons of doing business with a
sweatshop in a developing nation.
Double standard problem
III. Chapter Question 3: What are the competitive advantages of community
involvement?
IV. Chapter Question 4: Describe the six phases of issues-driven multi-stakeholder
dialogue?
Interpenetrating Systems Model
V. Chapter Question 5: Discuss the four ways that businesses give to the community
and the three strategic approaches they can take.
Philanthropy and volunteerism
Four ways to give
Giving skills
Giving job opportunities
Social entrepreneurship
VI. Chapter Question 6: How can managers determine an optimal win-win community
partner?
VII. Chapter Question 7: Describe the steps a manager should take to develop a highly
effective community involvement program.
Community involvement management process
VIII. Additional Question 1: How can you assess community impacts?
CHAPTER 12 SUPPORTING MATERIALS
Textbook Inserts
Ethical Dilemma Analysis
What would you do?
Let’s Build a Building
In the Real World: Enron
Exhibits
Exhibit 12.1: United Nation Global Compact Principles
Exhibit 12.2: Supplier Labor and Occupational Health & Safety Practices
Exhibit 12.3: Interpenetrating Systems Model
Exhibit 12.4: Key Stakeholder Attributes
Exhibit 12.5: Community Organizations that Benefit the Most from a Strategic
Partnership
Exhibit 12.6: Community Organizations that Benefit the Company the Most
Exhibit 12.7: Community Involvement Management Process
Exhibit 12.8: Top Three Indicators for Five Community Impact Topics
Thematic Boxes
Tips and Techniques
Best Practice in Use
CHAPTER QUESTION 1: WHAT FOUR TYPES OF SOCIAL RESPONSIBILITIES DO
BUSINESSES HAVE?
EXTENT OF SOCIAL RESONSIBILITIES
The Nobel Prize-winning economist Milton Friedman famously articulated the
viewpoint that the only social responsibility for business is to maximize profits within
the guidelines of the law.
Managers have a fiduciary duty to always act in the best interests of shareholders.
Stay focused on your organization’s mission, Friedman instructs managers, and don’t
be distracted by activities not associated with core operations.
Friedman’s narrow conceptualization of social responsibility has been criticized by
many scholars.
Corporations can legally avoid paying taxes to maximize profits by employing
accountants well versed in tax loopholes, but doesn’t that violate a civic duty
to pay taxes in the nation where they really operate, particularly if recipients
of federal bailout money?
Professor Archie Carroll differentiates four different components of social
responsibility:
economic responsibilities
legal responsibilities
ethical responsibilities (activities and practices that society expects even
though they are not codified by law), and
philanthropic responsibilities (voluntary and discretionary activities that give
back to the community, such as corporate giving, product and service
donations, and employee volunteerism).
According to Carroll’s conceptualization, a socially responsible business is profitable,
law abiding, ethical, and a good corporate citizen.
DISCUSSION ACTIVITY
Milton Friedman argues that the only social responsibility for business is to maximize profits
within the guideline of the law. Archie Carroll argues that businesses have two additional
responsibilities beyond economic responsibility and legal responsibilities – ethical
responsibilities and philanthropic responsibilities. Who do you agree with, Friedman or Carroll?
Why?
Have students respond independently, put them on teams with people who agree with them and
prioritize reasons that support their viewpoint. Then facilitate a discussion or debate between the
two different viewpoints.
WORK-LIFE BALANCE
In Book I of Nicomachean Ethics, Aristotle surmises that "happiness is the meaning
and the purpose of life, the whole aim and end of human existence". Happiness is the
only thing human beings desire for its own sake. All others items of desire – such as
wealth, prestige, and love – are pursued in hopes of achieving happiness.
The developmental psychologist Erik Erikson complemented Aristotle’s conception
of happiness by noting that happiness is achieved through the appropriate balancing
of work, love, and play.
Employees need adequate time off from work to care for their families and participate
in civic organizations. Work-life balance refers to achieving the appropriate balance
between time spent working and one’s personal life.
No matter how enjoyable or essential work may be, employees need time
away from work to develop their personalities, replenish their energy, and
avoid burnout.
On average, Americans work 350 more hours a year, 9 full weeks more than their
European counterparts. Many women bear the extra burden because they are also
primarily responsible for family and childcare duties.
Long working hours contribute not only to poor health conditions and emotional
exhaustion, but also less time for family activities and civic engagement.
Take Back Your Time, a national coalition to reduce work hours, has been lobbying
governments for a variety of work-life balance benefits, including guaranteed paid
leave for parents after the birth or adoption of a child, one week of paid sick leave,
and three weeks of paid annual vacation leave.
Specific examples of family-friendly and community-friendly policies include
flexible time, onsite childcare, paid vacations, and paid leave.
DISCUSSION ACTIVITY
Work-life balance advocates maintain that every workday should consist of 8 hours of work, 8
hours of personal/family/community (“play”) time, and 8 hours of sleep. In a typical week, what
is the average number of hours a day you work, “play,” and sleep? If not balanced, why? Do you
want these three activities to be balanced? Why? What would it take to achieve balance? Discuss
answers in small groups.
CHAPTER QUESTION 2: DISCUSS THE ETHICAL PROS AND CONS OF DOING
BUSINESS WITH A SWEATSHOP IN A DEVELOPING NATION?
DOUBLE STANDARD PROBLEM
Corporate citizenship expectations have spread throughout the world. Every nation has
different standards and expectations based on its political, economic, regulatory, and
social historical evolution.
Social activists have long accused American businesses of unethical behavior in
Managers of these companies have adopted a “double standard” – one set of behaviors
Sweatshops in developing nations epitomize the difficulty of imposing a universal
standard on all organizations in all nations. Chinese and Indonesian sweatshops
These conditions are in clear violation of U.S. labor laws but not host country laws.
Managers and political, economic, and moral theorists defend the double standard based
on cultural relativism and utilitarianism.
But from a deontological (human rights) and virtue ethics (practicing virtues) perspective,
these working conditions are unacceptable.
DISCUSSION ACTIVITY
Have students independently answer the following questions: Are sweatshops or paying a
reduced wage to workers in offshoring situations ethical? Why? Then put students on teams with
classmates who agree with them and have them prioritize their reasons. Then facilitate a
discussion or debate between the two opposing perspectives.
UNITED NATIONS GLOBAL COMPACT PRINCIPLES
oThe United Nations (UN) has developed guiding principles for conducting business
anywhere in the world.
oIn 1999, UN Secretary-General Kofi Annan presented the UN Global Compact
Principles to business leaders attending the World Economic Forum in Davos,
Switzerland.
oAs of 2010, more than 7,700 businesses from over 130 countries have officially
committed to the principles.
oThe ten principles are in the areas of human rights, labor, environment, and corruption
(see Exhibit 12.1 “United Nations Global Compact Principles).
DISCUSSION ACTIVITY
Have students review the “United Nations Global Compact Principles” in Exhibit 12.1. Should
businesses be working for the effective abolition of child labor or is not employing child laborers
sufficient action? If you knew that a competitor operating in another nation paid a bribe, would
you inform federal authorities? Why?
SUPPLIER ASSESSMENTS
oHewlett-Packard requires its suppliers to submit a self-assessment questionnaire
developed in partnership with the Global e-Sustainability Initiative Supply Chain
Working and the Electronic Industry Code of Conduct Implementation Group, and
copyrighted by the United Nations Environment Programme.
oReview the questions to ask suppliers about their labor and health & safety practices
appear in Exhibit 12.2 “Supplier Labor and Occupational Health & Safety Practices”
DISCUSSION ACTIVITY
Have students read Exhibit 12.2 “Supplier Labor and Occupational Health & Safety Practices”.
Is it asking too much of business to have them gather all this information about their suppliers?
What percentage of the 13 questions should have socially acceptable responses before you would
be willing to do business with the supplier? Why? Should all questions count equally, or are
some questions more important than others? Why? Which of the 13 questions do you think are
more important?
CHAPTER QUESTION 3: WHAT ARE THE COMPETIVE ADVANTAGES OF
COMMUNITY ENGAGEMENT?
oA very strong business case supports being a model corporate citizen.
oA company’s reputation as a good citizen favorably impacts employee, customer,
community, and investor relations in the following ways:
oBenefits to Customer Relations
oBenefits to Community Relations
oBenefits to Investor Relations
oThe Socially Responsible Investment (SRI) financial market is huge.
oSRI funds screen companies for (1) financial performance – meets financial goals, solid
return on investment, and (2) social performance – generates social benefits through good
oThe FTSE KLD 400 Social Index firms are selected by a committee for having met
financial screens (such as earnings, liquidity, stock price, and debt to equity ratio) and
DISCUSSION ACTIVITY
The FTSD KLD 400 Social Index does not include companies or industries that produce unsafe
products, violate human rights, or are considered to be socially irresponsible. Below is a list of
criteria used to eliminate companies from the SRI fund. For each criterion, do you believe it
should be used to eliminate companies from the fund? Why?
1. alcohol
2. tobacco
3. firearms
4. gambling
5. nuclear power
6. military weapons
Have students discuss their answers in small groups and/or facilitate a class discussion or debate
on these criteria.
CHAPTER QUESTION 4: DESCRIBE THE SIX PHASES OF ISSUES-DRIVEN
MULTI-STAKEHOLDER DIALOGUE.
INTERPENTRATING SYSTEMS MODEL
oReview EXHIBIT 12.3 “Interpenetrating Systems Model,”, which segments human
activities into four major subsystems: Government, Business, Nonprofits, and
Personal-Communal, each with its own purpose.
oThe four subsystems impact each other. What happens in the business subsystem often
impacts the other three subsystems.
MULTIPLE STAKEHOLDER DEMANDS
oIt is very challenging for managers to respond appropriately to multiple stakeholders
making simultaneous demands. All stakeholders matter. But from a practical perspective,
managers cannot address all, and sometimes conflicting, stakeholder demands.
oSecondary stakeholders are those who indirectly affect or are affected by the company’s
activities, such as community members, nonprofits, the media, and the government.
oManagers need to scan their environment to determine when these three stakeholder
characteristics – power, legitimacy, and urgency – exist.
DISCUSSION ACTIVITY
Have students read the Kate Hanni and the “Passenger Bill of Rights” summary in the
“Interpenetrating Systems Model” section. Do you believe the federal government over-reacted
by approving the “Passenger Bill of Rights” regulations? Why? If you were an airline executive,
what strategies could you have pursued to reach an agreement with Hanni independent of
government regulation? Discuss answers in small groups or with the entire class.
