Ch 2: Corporate Social Responsibility

Question 1

Drucker’s 2 areas of Social Resp.

Answer 1

1. responsibility emerges out of social impacts of the business itself
   (ex. providing salary, goods/services, taxes)
2. responsibility emerge out of problems of society

Question 2

Examples of Drucker’s areas of SR discussed in class (2)

Answer 2

1. responsibility of impacts of the org = walmart parking lots
2. responsibility of social issues = UPS training truck drivers to spot sex trafficking

Question 3

social resp. of business encompasses the ….. (4, in order from most basic to most involved level) factors that society has

Answer 3

economic
legal
ethical
discretionary/philanthropic

Question 4

top characteristics of a socially resp. business (6)

Answer 4

1. make safe products
2. obey the law
3. promote honest, ethical employee behavior
4. don’t use misleading, deceptive advertising
5. help displaced workers
6. utilize biodegradable material

Question 5

arguments against CSR (6)

Answer 5

1. classical economics
2. business is not equipped
3. CSR dilutes purpose of business
4. businesses have too much power already
5. CSR limits ability to compete in global marketplace
6. publicly traded firms need permission of shareholders

Question 6

arguments in support of CSR (4)

Answer 6

1. enlightened self-interest
2. CSR wards off govt regulation (per Iron Law of Resp)
3. business has the resources, so why not
4. strong public support

Question 7

does CSR benefit the organization? what is the Defensive Approach?

Answer 7

avoid any pressure that may incur cost

Question 8

does CSR benefit the organization? what is the Cost-Benefit Approach?

Answer 8

see direct benefits > costs

Question 9

does CSR benefit the organization? what is the Strategic Approach?

Answer 9

incorporate into society, society expects this

Question 10

does CSR benefit the organization? what is the Innovation and Learning Approach?

Answer 10

CSR provides new opportunities to understand marketplace such as innovative products/services, org learning → competitive advantage

Question 11

5 business-rooted reasons for engaging in CSR

Answer 11

1. customer, employee engagement
2. brand differentiation
3. long-term plans
4. cutting costs
5. innovation

Question 12

CSR Greenwashing

Answer 12

when a company appears ethically/environmentally responsible but is really just conducting “business as usual”

Question 13

3 political impacts of CSR

Answer 13

1. companies become providers of community services like health, education (previously done by govt)
2. voluntarily self-regulatory to fill voids in governance/public regulation
3. exercising political pressure through lobbying

Question 14

CSR and financial performance relationship is…

Answer 14

small, but positive

Question 15

Impacts/benefits of social performance can’t be fully understood by only considering the impact on the ______ _____ _____.

This full impact must include impact on _____ _____.

Answer 15

financial bottom line
other stakeholders (community, consumers, etc.)

Question 16

conscious capitalism

Answer 16

business should operate ethically in pursuit of profit and serve ALL stakeholders

Question 17

Socially Responsible Investing Movement

Answer 17

has led to ~$7 trillion in ESG investments in U.S.

Question 18

ESG Investments

Answer 18

Environmental, Social, Governance – investing principle prioritizing environmental issues, social issues, corporate governance

Question 19

ESG critics argue…

Answer 19

considering environmental/social issues violates the fiduciary duty of managers to their clients