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Chapter 15: Managing Corporate Social Responsibility Globally
Chapter Outline
LO1: Articulate a stakeholder view of the firm.
1. Key Concepts
A stakeholder view of the firm represents a big picture. A key proposition of the stakeholder
view is that firms should not simply pursue the economic bottom line. Instead, firms should
pursue a more balanced triple bottom line. To the extent that some competing demands
obviously exist, it seems evident that the CSR proposition represents a dilemma. In fact, it
has provoked a fundamental debate. The CSR debate centers on the nature of the firm in
society.
2. Key Terms
3. Discussion Exercises
Though hybrid technology promises to cut oil consumption, it poses other environmental
hazards. Many of the batteries, for example, are composed of nickel, which is toxic. There
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Chapter 15: Managing Corporate Social Responsibility Globally
are few programs to dispose the batteries properly. Additionally, hybrid motors require the
use of several rare earth elements that are mined in China. This not only raises the issue of
the environmental impact of mining but also the environmental cost of transporting these
materials around the world.
As the manager of an automobile manufacturer, how would you tackle this issue? Would you
ignore the other environmental effects, hoping that they don’t become an issue during your
tenure? Would you institute recycling policies to minimize the environmental hazards?
Would you invest in alternative technologies or production methods that would avoid these
hazards?
LO2: Apply the institution-based and resource-based views to analyze corporate social
responsibility.
1. Key Concepts
2. Key Terms
3. Discussion Exercise
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Chapter 15: Managing Corporate Social Responsibility Globally
Ethos water is a brand of bottled water that makes a specific claim of how it fulfills CSR.
According to its website, “Ethos water is a brand with a social mission—helping children
around the world get clean water and raising awareness of the World Water Crisis”
(http://www.ethoswater.com/). To accomplish this goal, the company donates 5 cents for
every bottle sold to fund water programs in developing countries. As many critics have
pointed out, however, all is not what it appears to be. While Ethos donates 5 cents per bottle
sold, the average price of a bottle is $1.80, 45 cents more than the national average price of a
bottle of water (Source: http://online.wsj.com/article/SB125167502443470973.html). In
addition, the manufacturer of Ethos water, PepsiCo, does not make use of recycled plastic, in
contrast to its other products.
How would you characterize Ethos’s approach to CSR? In your view, has it struck an ideal
balance between earning profits and acting responsibly? Does its marketing campaign or its
donation policy need to change?
LO3: Identify three ways you can manage corporate social responsibility.
1. Key Concepts
Debate: Ethical Dilemma/Emerging Markets
Race to the Bottom (“Pollution Haven”) versus Race to the Top
1. Key Concepts
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Chapter 15: Managing Corporate Social Responsibility Globally
Closing Case Discussion Guide
The Ebola Challenge
First reported in 1976 in Sudan and Zaire (now called the Democratic Republic of the Congo
[DRC]), Ebola has been a known virus for four decades. The reason that until recently,
pharmaceutical firms had been reluctant to apply their significant resources to find a cure for
Ebola was simple. Even if successful, these efforts, which would mostly benefit African
countries, would not be profitable. Now that the disease came to the United States (and a few
Western European countries), firms felt compelled to move.
Debates continued to rage. One side argued that pharmaceutical firms only focused on markets
and products from which they could profit. Another side argued that given limited resources,
pharmaceutical firms rightly and strategically ignored (relatively) smaller scale diseases such as
Ebola, because there were other diseases such as HIV/AIDS that impact a lot more people than
does Ebola.
A number of pharmaceutical firms jumped onto the “Ebola bandwagon” simply to earn kudos for
corporate social responsibility. Or they were simply driven to do so due to public pressure. Given
the long lead time to develop any effective vaccine and the urgency to have a vaccine at hand,
how pharmaceutical firms proceed remains one of the leading strategic challenges they face.
Video Case
Watch “The Importance of Follow-Through with CSR” by Andrew Kakabadse of
Cranfield University, School of Management.
1. In Kakabadse’s food company example, to what extent was lack of communication (from
the organizations’ top to bottom and bottom to top) causing a CSR problem?
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Chapter 15: Managing Corporate Social Responsibility Globally
2. In the food company example, to what extent was lack of penalties and incentives for CSR
compliance causing a CSR problem? What would you recommend be done to deal with the
problem?
3. In the food company example, to what extent was cost competition from competitors
causing a CSR problem? If competitors are in different countries around the world and thus
not subject to any given government regulation, what would you suggest be done for a
given company to compete while demonstrating CSR for growers?
4. As Kakabadse pointed out, Africans were abusing Africans and poor families would be
even poorer without child labor. Does that suggest that CSR is impossible in that situation?
What about avoiding the CSR problem in Africa by shifting production to India?
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Chapter 15: Managing Corporate Social Responsibility Globally
Additional Discussion Material
(From Prep Cards)
Critical Discussion Questions
1. In the landmark Dodge v. Ford case in 1919, the Michigan State Supreme Court decided
whether or not Henry Ford could withhold dividends from the Dodge brothers (and other
shareholders of the Ford Motor Company) to engage in what today would be called CSR
activities. Returning a resounding “No,” the court opined that “a business organization is
organized and carried on primarily for the profits of the stockholders.” If the court in your
country were to decide on this case this year (or in 2019), what do you think would be the
likely outcome?
2. On Ethics: Some argue that investing in emerging economies greatly increases the
economic development and standard of living at the base of the global economic pyramid.
Others contend that moving jobs to low-cost countries not only abandons CSR for
domestic employees and communities in developed economies but also exploits the poor in
emerging economies and destroys the environment. If you were (1) the CEO of a
multinational enterprise (MNE) headquartered in a developed economy moving production
to a low-cost country or (2) the leader of a labor union in the home country of the same
MNE and about to lose lots of jobs, how would you participate in this debate?
3. On Ethics: Hypothetically, your MNE is the largest foreign investor in the following
locations: (1) Vietnam, where religious leaders are reportedly being persecuted; or (2)
Estonia, where ethnic Russian citizens are being discriminated against by law. As the
country manager there, you understand that the MNE is being pressured by
nongovernmental organizations (NGOs) of all stripes to help the oppressed groups in these
countries. But, you also understand that the host government could be upset if your firm is
found to engage in local political activities deemed inappropriate. These alleged activities,
which you personally find distasteful, are not directly related to your operations. How
would you proceed?
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Chapter 15: Managing Corporate Social Responsibility Globally
Students’ answers will vary. They must explain their thought process and clearly articulate
themselves.
Review Questions
1. How do the concerns for primary stakeholders differ from those for secondary
stakeholders?
2. What does triple bottom line mean?
3. What are four types of strategies underpinning CSR decisions?
4. Using a resource-based view, explain why some firms improve their economic
performance by adopting a CSR-intensive strategy, whereas others achieve no or damaging
results.
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Chapter 15: Managing Corporate Social Responsibility Globally
5. Do you think “green” practices should be voluntary or mandatory for businesses? Why?
6. Give an example of global sustainability that demonstrates your understanding of the
concept.
7. Describe at least three topics or issues you would expect to see addressed in a code of
conduct by a corporation from your home country.
8. Devise two examples: one in which a corporation’s participation in a social issue adds
value to the firm and one in which it decreases value in the eyes of the stakeholders.
9. Many have criticized offshoring, but how might this activity be seen as part of an overseas
CSR strategy?
10. In your opinion, do you think an MNE should remain politically neutral and adopt
practices and laws of the host country?
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Chapter 15: Managing Corporate Social Responsibility Globally
11. As a manager, what are some of the considerations you would take into account before
adopting any CSR-related policy?