CH 5 IB CSR Flashcards
triple bottom line strategies
take economic, social and environmental performance into account
Primary stakeholders
stakeholders on whom the firm relies for its continuous survival and prosperity.
Secondary stakeholders
influence or are influenced by the firm but not engage in transactions with the firm and are not essential for its survival
Example of secondary stakeholders
NGOs
2+1 views why stakeholders are important for firms
instrumental view
normative view
shared value creation
instrumental view
suggests that treating stakeholders well can indirectly help the financial performance of the firm
normative view
firms should be self-motivated to do it right
shared value creation
combines both views.
Shared value creation focuses on activities that are good for both the firm and the stakeholders
Two important areas of CSR for MNEs
environmental standards
labor standards
pollution havens
countries with lower environmental standards
What might developing countries do to attract MNEs?
they could enter the race to the bottom
This means lowering the environmental regulations
footloose plants
require little set-up costs and can easily be relocated.
They are labor intensive and can be relocated when regulations on environmental standards for example change.
codes of conduct/standards of engagement/ standard of ethics
written policies and standards for corporate conduct and ethics. (Can be also imposed on suppliers)
HSE
health, safety, and the environment
compliance training
mandatory training to ensure that everyone within a firm knows the relevant codes of conduct
compliance
Certification or confirmation that the doer of an action (such as the writer of an audit report), or the manufacturer or supplier of a product, meets the requirements of accepted practices, legislation, prescribed rules and regulations, specified standards, or the terms of a contract.
explicit corporate social responsibility
voluntary assumed responsibility for social concerns.
In LMEs firms are induced to do so by the institutional context.
LMEs
liberal market economies
philanthropy (Love of humans) action example
donations for the purpose that benefit the wider society
CME
coordinated market economy
What sort of CSR do firms in CMEs engage in?
implicit CSR. Because there are a range of formal and informal constraints on firms and the state has a more active role voluntary actions are not quite that necessary.
hyper norms
valid in any country
3 strategies of companies to react to institutional pressure
defensive strategy
accommodative strategy
proactive strategy
defensive strategy to institutional pressure
focuses on regulatory compliance with little top management commitment
accommodative strategy
some support from top managers
proactive strategy
involves doing more than required.
- participate in regional, national and international policy discussions
- firms often build alliances with stakeholder groups NGOs
- engage in voluntary activities that go beyond what is required by law
