Ch16 - The socialization of Capitalism

Question 1

socialization of capitalism

Answer 1

process through which the business system conforms to the expectations of society resulting in desired, socially responsible outcomes

Question 2

social purpose def

Answer 2

corporation is responsible to society and is aware and concerned about the ethical, social and environmental issues
-> corps will become involved in addressing these issues
-> used in place of social responsibility or sustainability

Movement toward making capitalism more aware of the impact of its actions on society

Question 3

fourth sector

Answer 3

sector of the economy in addition to the traditional private, social and public sectors
=> illustrates in interrelations between these sectors for social purposes
=> “for-benefit” organizations that combine market-based approaches of the private sector with the social and environmental aims of the public and non-profit sectors
=> sometimes referred to as hybrid orgs

Question 4

private sector, social sector and public sector

Answer 4

private = that part of the economy not controlled and operated by government
social = includes charities and non-profit organizations and is also referred to as the non-profit or voluntary sector
public = operated by government departments, agencies, and organizations usually not to operate businesses or make profits

Question 5

Public-private partnership (PPP)

Answer 5

cooperative venture between the public and private sectors, built on the expertise of each partner
-> best meets clearly defined public needs through the appropriate allocation of resources, risks, and rewards

Question 6

sustainable strategy

Answer 6

plan that views economic, ethical, social, and environmental responsibilities more intensively and integrates CSR into all facets of business operations
-> also referred to as CSR strategy

Question 7

four-stage continuum

Answer 7

amoral sustainability strategy ->
compliance-based sustainability strategy ->
emerging sustainability strategy ->
comprehensive sustainability strategy

Question 8

10 things new sustainability managers need to know

Answer 8

1. whether there is payback on investments in sustainability
2. how to make sustainability a part of corporate culture
3. how to make the supply chain competitive and sustainable
4. Whether customers will pay more for sustainable products
5. how to best engage stakeholders
6. how to identify best measurements of corp’s environmental impact
7. whether CSR attracts and retains employees
8. how a corp can mitigate and adapt to climate change
9. the meaning of business sustainability
10. How to identify resources about sustainability and related issues

Question 9

Strategic management

Answer 9

process through which a corp:
- establishes missions and objectives
- analyzes the environment and resource capabilities
- creates the organizational systems and processes needed to implement the strategy
- devises mechanisms for evaluating performance

Question 10

social enterprise

Answer 10

a model of business operation where some or all profits are deliberately used to further social aims
- different types determined by:
- need for operational flexibility
- financing and funding sources
- preferential taxation treatment
- public perception
- use business structure to accomplish a social purpose

Question 11

types of social enterprise

Answer 11

• non profit org : charitable status (can issue donation receipts) or without (exempt from taxation)
• co-operative : member controlled, operated for their social benefit, if profits occur - returned to members
• hybrid corp : with caps on dividends and asset production, no tax advantages
• for-profit corp A: owned by non-profit and can operate as subsidiary earning profits
• for-profit B: owned by investors, can involve private returns to owners as well as committing a portion of profit to social purposes

Question 12

common characteristics of social enterprises

Answer 12

• enterprise orientation
• social aims
• commitment to local capacity building
• accountable to members and community stakeholders
• autonomous orgs
• profits distributed to stakeholders or used for community

Question 13

social entrepreneurship + entrepreneur

Answer 13

involved activities undertaken to enhance social wealth in some innovative way
- social entrepreneur : innovative, visionary leader for of a non-profit or for-profit business with real-world problem-solving creativity and a high awareness for ethical, social, and environmental considerations

Question 14

social intrapreneurship + extrapreneurship

Answer 14

intra : process of addressing social challenges from inside established orgs
extra: process of inter-organizational action that facilitates alternative combinations of ideas, peoples, places, and resources to address social challenges

Question 15

B-Corp

Answer 15

variation of a for-benefit corp, a certification process is required in order to be eligible to receive this designation
-> required to meet rigorous and independent standards of social and environmental accountability and transparency

Question 16

2 dimensions to consider sustainability in social enterprises / non-profits

Answer 16

• how well they accomplish their social aims / objectives
• how they are able to maintain themselves financially

Question 17

criteria for assessing an org’s social impact

Answer 17

• contribution to the intended mission
• evidence that an unmet need was addressed
• contributions to the community
• cooperation with other organizations

Question 18

social license

Answer 18

privilege of operating in society with minimal formalized restrictions based on maintaining public trust by doing what is acceptable to stakeholders in the business and society relationship
-> based on ethics, values, expectations, and self-regulations
-> preferable to social or gov control, which is based on legal regulation, legislation, litigation, and compliance

Question 19

criticism of social license (by business persons)

Answer 19

• rules, procedures, and processes are vague, making it difficult to obtain
• requirements are too open-ended, undefined and biased with unaccountable tests

Question 20

social innovation

Answer 20

novel solution to a social problem that is more effective, efficient, sustainable, or just than current solutions
- value created accrues primarily to society rather than private individuals
- society’s most important problems cannot be solved without involving private, social, and public sectors of economy

Question 21

social impact investing and social finance

Answer 21

1- financing of initiatives to address social and environmental challenges and that generates a financial return and measurable benefits to society
2- investments intended to create measurable social pr environmental impact as well as to generate financial returns

Question 22

how is impact investment different from traditional investment

Answer 22

1. investors expect tot receive a financial return with a defined societal impact
2. investees’ business models constructed to seek both financial and social values
3. both investors and investees expect to be able to measure social impact

Question 23

sharing economy

Answer 23

sustainable social and economic system involving the sharing of human and physical resources
- reduce, reuse, recycle
- swapping, exchanging, shared ownership, borrowing, trading of used goods
- market- and exchanged-based and offers opportunities to consumers and providers of services that were not being provided in the past

Question 24

philanthrocapitalism

Answer 24

philosophy of capitalist style objectives and criteria with and entrepreneurial spirit to get more from non-profit or social orgs
-> applies to the “one percent”
-> goals are to address social issues (human well-being, poverty, equality)

Question 25

Philanthrocapitalism criticism

Answer 25

• undermining work of NGOs
• good causes pursued dependent on whims of a few
• avoiding taxation
• rarely tackle fundamental inequities
• individual initiatives lack collaboration and coordination with aid agencies
• duplication of effort
• provide band-aid solutions that fail to find and address the underlying causes

Question 26

Social capital

Answer 26

any aspect of a corp’s organizational arrangements that creates value and facilitates the actions of stakeholders within and external to the org
- corp’s stakeholders are a network (ties liking the corp to who it influences / is influenced by)
- trust or goodwill existing between the corp and its stakeholders
- facilitate corporation + coordination that minimizes transaction costs (boycotts, legal actions, negotiations, disruptions in production)

Question 27

Model of Social Capital
and Business Value
Creation

Answer 27

Relationship Quality
(communication, mutual understanding / trust)
->
Social Capital
(goodwill and trust available)
->
Manifestations of Social Capital
(info sharing, adhering to group norms
->
Realization of Business Value
(growth and development, social license to operate, operational efficiency and effectiveness)

Question 28

sustainable capitalism

Answer 28

economic system within which business and trade seek to maximize long-term value creation, accounting for all material ESG (environmental, social and governance) metrics

Question 29

how sustainable capitalism benefits corps

Answer 29

• increasing profits (enhances brand, improves competitive positioning)
• saves money (reduce waste and increase energy efficiency)
• higher compliance standards + better manage risk (eco, social and governance metrics)
• financial benefits (lower cost of debt, lower capital restraints)

Question 30

prevailing justifications for CSR and their limitations

Answer 30

• moral obligation for corps to do the right thing does not always improve guidance
• sustainability that involves environmental and community
• license to operate means outside stakeholders have control over social agenda
• emphasis on reputation as a justification focuses on external stakeholders

Question 31

how to integrate social perspective with business strategy

Answer 31

• identify points of intersection between business and society
• choosing which social issues to address
• creating a corporate social agenda
• integrate inside out and outside in linkages

Question 32

inside-out vs outside-in linkage

Answer 32

inside-out: represent the corp’s positive and negative influence on society through its operations
outside-in: represent society’s positive and negative influences on the corp

Question 33

3 types of social issues (to prioritize)

Answer 33

1 generic - do not significantly affect the corp but are important to society
2 value chain - significantly affected by the corp as it carries out business
3 social dimensions of competitive context - factors in the external environment that significantly affect the underlying drivers of competitiveness where to company operates

Question 34

competencies students acquire when exposed to sustainability

Answer 34

• systems thinking (to understand complex econ, social and environ. issues)
• capability to consider long-and short-term implication of actions
• strategic thinking relating to stakeholder engagement and issues
• importance of collaboration

Question 35

how to develop future responsible managers

Answer 35

• embedding sustainability into existing and/or new courses and programs
• providing sustainability-focused exchange and service learning opportunities
• empowering students to make real-world impact through supervised projects
• engaging students to co-organize educational events

Question 36

how students can adopt and practice sustainability

Answer 36

• lobby officials to follow socially responsible investing
• become directly involved in sustainability initiatives
• volunteer internationally
• pledge to engage in ethical behaviour (e.g. Graduation Pledge of Social and Environmental Responsibility)

Question 37

service learning def

Answer 37

method of teaching combining classroom learning with service to the community (locally or in developing countries)