1. 1
Introduction to
Corporate Social Responsibility
Module Eight | Lesson One

2. 2
CSR is both critical and controversial
 It is critical because the for-profit sector is
the largest and most innovative part of
any free society’s economy.
 It is controversial because some see CSR
as a distraction from the economic
purpose of a business.
Lesson One | Introduction

3. 3
Business & Society
People create organizations to leverage
their collective resources in pursuit of
common goals.
As organizations pursue these goals, they
interact with others inside a larger context
called society.
Lesson One | Introduction

4. CSR is controversial
 Do companies have obligations beyond
the benefits their economic success
already provides?
 Two opposing views
Lesson One | Introduction

5. The Business View
 Milton Friedman
 “the only social responsibility of business
is to increase its profits”
Lesson One | Introduction

6. Social responsibility: A corporate
responsibility?
 Friedman:
 “Profit, as a result of the actions of the firm, is
an end in itself.”
 “A firm does not need to have any additional
justification for existing.”
 “Social value is maximized when a firm focuses
on pursuing its self-interest in attempting to
maximize profits.”
Lesson One | Introduction

7.  Friedman:“Few trends could so
thoroughly undermine the very
foundations of our free society as the
acceptance by corporate officials of a
social responsibility other than to make as
much money for their stockholders as
possible.”
Lesson One | Introduction

8. Friedman’s arguments
 CSR is against capitalism: a “fundamentally
subversive doctrine in a free society”
 CSR is a waste of the firm’s resources, which
legally belong to the firm’s owners, its
shareholders, and the executives.
 Social matters are not the concerns of business
people and that problems should be resolved by
the other social actors.
Lesson One | Introduction

9. The Societal View
 No one group of stakeholder has a priority over
other groups, and that corporations must
balance the interests of all stakeholders.
9
Lesson One | Introduction

10. 10
Stakeholders defined
 As Freeman defined them, a firm’s
stakeholders include those who affect or
are affected by the firm’s goals
 Simply put, they include those groups that
have a stake in the firm’s operations
Lesson One | Introduction
Lesson One | Introduction

11. 11
“CSR includes all stakeholder and constituent
groups that maintain an ongoing interest in
the organization’s operations.”
11
Lesson One | Introduction

12. 12
 The success of a firm is directly related to its
ability to incorporate stakeholder/constitute
concerns into its business model.
 Conflicting/competing stakeholder interests
12
CSR = A company's relationships
with its stakeholders
Lesson One | Introduction

13. 13
Underlying Arguments for CSR
 Moral
 Ethical
 Rational
 Economic
13
Lesson One | Introduction

14. 14
A Moral Argument for CSR
 CSR = the relationship/interdependence
between a company & the wider society
within which it operates.
 ‘for profit’ entities do not exist in a vacuum:
they need to be congruent with societal
values
Lesson One | Introduction

15. 15
A Rational Argument for CSR
Businesses seek to maximize their performance
by minimizing restrictions on operations.
In today’s globalizing and wired world, CSR is a
means of anticipating and reflecting societal
concerns to minimize operational and financial
limitations on business
 “The Iron Low of Social Responsibility”
– If you abuse your power, you will face societal sanctions—such as laws,
fines, prohibitions, boycotts, or social activism—impact the firm’s
strategic goals.
Lesson One | Introduction

16. 16
An Economic Argument for CSR
 Economic self-interest for business
 CSR provides
– a point of differentiation
– competitive market advantage and avoid moral, legal and other
sanctions
– a reflection of the needs and concerns of their various stakeholder
groups
 By doing so, a company is more likely to
retain its societal legitimacy, and maximize
its financial viability, over the long term.
Lesson One | Introduction

17. 17
Case Study: An Ethical Perspective to
Competing Stakeholder Interests
The Case: Howard Schultz Responds to Anti-
Gay-Marriage Starbucks Shareholder
Lesson One | Introduction

18. 18

19. 19

20. 20

21. 21
“If you feel, respectfully, that
you can get a higher return
than the 38 percent you got
last year, it’s a free country.
You can sell your shares of
Starbucks and buy shares in
another company. Thank you
very much.”
Lesson One | Introduction

22. 22
What is CSR?
“A responsibility among firms to pursue goals
in addition to profit maximization and a
responsibility among a firm’s stakeholders
to hold the firm accountable for its actions.”
Lesson One | Introduction

23. 23
Archie B. Carroll, 1979
“The social responsibility of business
encompasses the economic, legal, ethical, and
discretionary expectations that society has of
organizations at a given point in time.”
Lesson One | Introduction

24. The Pyramid of CSR
Economic
Responsibilities
Legal
Responsibilities
Discretionary
Responsibilities
Ethical
Responsibilities
to produce acceptable
returns on investments
to act within legal
framework
to do no harm
to its
stakeholders/
environment
to benefit the firm & society
more proactive & strategic
Source: Archie B. Carroll, (1991) The Pyramid of Corporate Social Responsibility
Lesson One | Introduction

25. 25
Relationships & Responsibilities
Relationships affect future success of the
business:
Good leadership
Developing key relationships
Pro-active engagement in emerging
issues
The establishment of understanding
and trust
Lesson One | Introduction

26. 26
In Summary: CSR is. . .
 A dynamic, fluid concept
 An integral element of ethics
 Both a means and an end
– How a firm operates to gain societal legitimacy
– How well a firm has been able to navigate stakeholder
concerns while implementing its business model
Lesson One | Introduction