2 CSR on an Institutional Level Flashcards
In which way was the profit-motive viewed in the Christian tradition and in texts of medieval philosophers like Thomas Aquinas?
Christian tradition:
- materialism is superficial and it should not be worried about
- god’s kingdom should be seeked first
Thomas Aquinas:
- prosperity is necessary for befitting the human being’s social standing
- exceeding this extent is a sin and it pertains to be greed
- donatiing everything not necessary is a duty
Why did Mandeville’s fable of the bees represent such a strong contrast to this ascetic morale? What was Mandeville’s basic proposition in the fable?
Mandeville’s fable of the bees tries to say that not the virtues,, but in fact the vices lead to public welfare.
“The economy thrives to the same extent to which morale is corrupt.”
He also disagreed with the idea that education adds virtue, in fact he said that educating the poor increased their desires for material things, defeating the purpose of the school and making it more difficult to provide for them.
What is the basic idea behind Adam Smith’s invisible hand and how does it relate to Mandeville’s fable of the bees?
- based on Mandeville’s ideas, they form the classic enomic liberalism
“The rich divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and aford means to the ultiplication of the species.”
How can self-interest and greed be differentiated?
- Self-interest: generally refers to a focus on the needs or desires (interests) of the self
- Greed: desire to acquire or possess more than one needs
Why can greed be viewed as a destructive force for human societies?
- Because greed is stopping the human evolution
- cooperation would be an evolutionary advantage
What does enlightened self-interest mean?
- this is a philosophy in ethics which states that persons who act to further the interests of others, ultimately serve their own self-interest
- advocates of this believe that companies will increase in value it they identify and respond to the needs of the society
- it recognizes that a company’s prime purpose is to make profits, but that this goal can be achieved by fulfilling its social and environmental responsibilities
- Enlightened self-interest increases company value by:
- securing and maintaining market share
- attracting and retaining a skilled workforce
- ensuring that natural resources and raw materials are available for the future
How can CSR benefit the company? and what are boundary conditions for its effectiveness?
- Benefits: willingness to pay, trust signal, enhanced reputation, unique selling proposition, moral capital, enhanced stakeholder relationships, war for talent, improved investor relations, customer satisfaction
- Boundary conditions:
- source of information is thought to be biased, e.g. issued by the company itself
- the company fails to live up to its CSR image, communications and actions are inconsistent
- CSR is only reactive
- CSR advertising spending is higher than the CSR spending itself, hence “propaganda with little real benefit to society”
- the fit between cause and company is low
- the company’s motivation to engage is perceived to be extrinsic
What are moral arguments for CSR?
- Imagine a world, in which all things that are produced by companies disappear
- companies exist in a complex, reciprocal system
- profit for a company is like oxygen for a person
*
What are the main arguments of Porter & Kramer’s (2006, 2011) Creating Shared Value (CSV) approach? How do the authors define shared value?
- The competitiveness and the health of a community around it are mutually dependent. => Unleash the next wave of global growth
- CSR only works if it benefits both, company and society => It is not a one-way street => social policies and business decisions must follow the principal of shared value
- Existing CSR do not reach their full potential because they pit business against society
- Shared value creation focuses on identifyiing and expanding the connections between societal and economic progress
- CSV is integrated in profit maximization, not separated
Which threefold distinction do they propose to prioritize social issues? What do they mean by responsive and strategic CSR? What are inside-out and outside-in linkages?
- Generic Social Issues: Social Isues that are not significantly affected by a company’s operations nor materially affect its long term competitiveness
- Value Chain Social Impacts: (inside-out-linkage): Social issues that are significantly affected by a company’s activities in the ordinary course of business
- Social Dimensions of competitive context (outside-in-linkage): Social issues in the external environment that significantly affect the underlying drrivers of a company’s competitiveness in the locations where it operates
Which three ways to create shared value do Porter & Kramer (2011) propose? Why do the authors criticize the fair trade movement?
- Reconceiving products and markets
- Redefining productivity in the value chain
- Enabling local cluster development
They claim that CSV is not about redistribution but about expanding the total pool of economic and social value.
This blurs the line between non-profit and for-profit organizations.
Which arguments do Crane et al. (2014) use to criticize Porter & Kramer’s CSV approach? Critically discuss whether you think that they have a point.
- failure to deal adequately with trade-offs between economic and social value creation, simply ignoring them
- might promote more sophisticated strategies of greenwashing
- they are seeking to solve a system-level problem with merely organizational-level changes
What strength and weaknesses does the CSV approach has according to Crane et al. (2014)?
- Strength:
- succesfully appeals to practitioners and scholars
- elevates social goals to a strategic level
- articulates a clear role for government in responsible behavior
- adds rigor to ideas of “conscious capitalism” and provides an umbrella construct for losely connected concepts
- Weaknesses:
- unoriginak
- ignores the tension between social and economic goals
- naive about the challenges of business compliance
- base on a shallow conception of the corporation’s role in society
Which outcomes of corporate behavior does Wood (1991) propose as indicators of Corporate Social Performance?
Wood (1991): CSP as principles of CSR, processes of social responsiveness, and outcomes of corporate behavior.
Outcomes:
- Social policies: explicit and pronounced social policies stating the company‘s values, beliefs, and goals with regard to its social environment.
- Social programs: activitites, measures, and instruments implemented to achieve social policies.
- Social impacts: concrete changes a corporation has achieved through the programs implemented
Why is it so hard to measure the value created by CSR activities? What are the specific problems of CSR Ratings like the Dow Jones Sustainability Index?
„Measuring and publicizing social performance is a powerful way to influence corporate behavior – assuming that the ratings are consistently measured and accurately reflect corporate social impact. Unfortunately, neither holds true in the current profusion of CSR checklists.“
Problems:
- Criteria used in the ratings differ significantly
- Weighing of criteria differs
- Judgment of when a criterion is met is unclear
- Usually, ratings are based on data that is easily available
- Data is frequently unreliable (e.g., self-reported company data without external assurance)
- Companies who have the most to hide are most likely not to respond to surveys
