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Page 3-1
CHAPTER 3
CORPORATE SOCIAL RESPONSIBILITY AND
CITIZENSHIP
INTRODUCTION
The idea that businesses bear broad responsibilities to society as they pursue economic
goals is an age-old belief. Both market and nonmarket stakeholders expect businesses to
act responsibly, and many companies have responded by making social goals a part of
their overall business operations and adopting the goal of being a good corporate citizen.
PREVIEW CASES
Starbucks Helps Coffee Farmers
Toyota’s Ideas for Good Partners with Carnegie Mellon University’s CREATE Lab
Are the efforts described above examples of social responsibility and citizenship
practiced by a corporation and social entrepreneurs? Do they represent a successful
merger of social and economic objectives, or should these programs be questioned as
inappropriate uses of business assets—finances, personnel, and products? How far should
an organization or entrepreneur go to help those in society in need of their support? How
much is too much?
CHAPTER OUTLINE
I. CORPORATE POWER AND RESPONSIBILITY
Teaching Tip: Socially Responsible Companies
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II. CORPORATE SOCIAL RESPONSIBILITY AND CITIZENSHIP
A. The Origins of Corporate Social Responsibility
B. Balancing Social, Economic, and Legal Responsibilities
III. THE CORPORATE SOCIAL RESPONSIBILITY QUESTION
A. In Support of Corporate Social Responsibility
Balances corporate power with responsibility
Discourages government regulation
Teaching Tip: Iron Law of Responsibility
Students could look through local or national business periodicals or
the long term because they have used their power for social good?
Teaching Tip: Corporate Social Responsibility and Citizenship
The CEO at UBS sees it “as a duty to understand the scope and scale of
societal challenges.” Do other executives share this vision or are they
opposed to this view?
Teaching Tip: The CSR Question
Students could be divided into teams and assigned one side of the CSR
question or be in support of or have concerns about each issue in the
Page 3-3
Promotes long-term profits for business
Improves stakeholder relationships
Enhances business reputation
B. Concerns About Corporate Social Responsibility
Lowers economic efficiency and profits
Imposes unequal costs among competitors
Imposes hidden costs passed on to stakeholders
Requires skills business may lack
Places responsibility on business rather than individuals
IV. SOCIAL ENTREPRENEURS AND B CORPORATIONS
V. MANAGEMENT SYSTEMS FOR CORPORATE SOCIAL
Teaching Tip: Introducing the B Corporation
The B Corporation is intended to be somewhat controversial given the
newness of this phenomenon and the few organizations that have
received this certification. It is an effort to provide some sort of license
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VI. STAGES OF CORPORATE CITIZENSHIP
A. Elementary Stage
B. Engaged Stage
C. Innovative Stage
D. Integrated Stage
E. Transforming Stage
VII. ASSESSING AND REPORTING SOCIAL PERFORMANCE
A. Social Audit Standards
Teaching Tip: Corporate Social Responsibility and Citizenship
Professional Associations
Groups of students could be assigned each of the associations listed in
Exhibit 3.A and compare how each association serves the interests of
Teaching Tip: Corporate and Individual Philanthropy
The Boston College Center’s stage model, Figure 3.5, provides an
array of possible assignments for students to explore firm’s corporate
citizenship activities. It might be interesting for students to identify
Teaching Tip: Corporate Social Audits
Locate, using the Internet, examples of firms that conduct social audits.
Assess their audit evaluations. Do they consider the “right elements”
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B. Social Reporting
GETTING STARTED
KEY LEARNING OBJECTIVES
LO 3-1: Understanding the role of big business and the responsible use of corporate
power in a democratic society.
LO 3-2: Knowing when the idea of social responsibility originated and investigating
how a company’s purpose or mission can integrate social objectives with
economic and legal objectives.
LO 3-3: Examining the key arguments in support of and concerns about corporate
social responsibility.
Corporate social responsibility is a controversial notion. Some argue that its benefits
Teaching Tip: Global Reporting Initiatives
Students may also want to explore the Global Reporting Initiatives at
GRI provide to firms?
Teaching Tip: Social Reporting
Social reports are easily available in most global corporation’s
websites. Students could compare and contrast reports, determine the
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the
prior written consent of McGraw-Hill Education.
LO 3-4: Defining global corporate citizenship and recognizing the rapidly evolving
management practices to support global citizenship.
LO 3-5: Examining businesses with an explicitly social mission, such as social
ventures and B corporations.
LO 3-6: Distinguishing among the sequential stages of global corporate citizenship.
Companies progress through five distinct stages as they develop as global corporate
LO 3-7: Understanding how businesses assess and report their social performance.
Many companies have created systemic audits of their social, ethical, and
KEY TERMS
B Corporation
corporate citizenship
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the
prior written consent of McGraw-Hill Education.
integrated reporting
iron law of responsibility
reputation
social audit
social entrepreneurs
www.unicef.org/csr UNICEF and Corporate Social Responsibility
www.globalreporting.org Global Reporting Initiative
www.unglobalcompact.org United Nations Global Compact
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DISCUSSION CASE
CORPORATE SOCIAL RESPONSIBILITY AT GRAVITY
PAYMENTS
Discussion Questions
1. Is Price demonstrating elements of corporate social responsibility by his actions
in this case, or not?
Although this is a subjective question, the chapter provides a number of tools to
assess Price’s actions in terms of corporate social responsibility:
• Is Price using his corporate power as a CEO appropriately?
• Is he demonstrating the notion of the Iron Law of Responsibility?
• Is he embracing the responsibility notion of “giving back” to his employees?
2. How is Price exhibiting the fourth Phase of Corporate Citizenship (Figure 3.2,
1990s to present: Corporate/Global Citizenship) in his actions at Gravity
Payments??
Teaching Tip: Gravity Payments
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the
prior written consent of McGraw-Hill Education.
3. What arguments in support of, or concerns about, corporate social responsibility
(referring to Figure 3.3) are relevant to this case?
4. Is Price acting like an executive of a firm that could be certified as a B
corporation?
5. What stage of global corporate citizenship (using Figure 3.5) is Gravity
Payments operating at, and why do you think so?
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the
prior written consent of McGraw-Hill Education.
