CSR

Question 1

What are some definitions of CSR?

Answer 1

Corporate social responsibility comprise the responsibilities or obligations that a business has to the society in which it operates. - Hartman, Des Jardins, and MacDonald, 2014

The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at any given point in time. – Carroll, 1999

Actions that appear to further some social good, beyond the interests of the firm and that which is required by law. – McWilliams and Seigel, 2001

Question 2

What are the three levels of CSR?

Answer 2

Three different types of responsibilities, on a scale from more to less demanding or binding:
1. To not cause harm to others – obligation; most demanding
2. To prevent harm even in those cases where one is not the cause
“We are in the business of preserving and improving human life.” - Merck
3. To do good (volunteer and charitable work)

Question 3

What is the Mitlon Friedman Stockholders/ Shareholder Theory?

Answer 3

The social responsibility of business is to pursue maximum profit while engaging in open and free competition within the law and without deception or fraud.

Worth noting 
Applies to publicly traded companies
Who is the primary stakeholder?
The meaning of profit

Question 4

What are the first and second arguments of Friedman?

Answer 4

First Argument:
Businesses cannot have responsibility, only people do
The individual has– personal responsibilities; professional responsibilities

Second Argument:
Business executives are the agents (employees) of the shareholders (owners)
They have responsibility (obligation, duty) to their employers  to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rule of society…”
Thus, business executives have the obligation to increase profits within the law and without deception or fraud

Question 5

How is Friedmans theory best summed up?

Answer 5

Business cannot have responsibilities . . . people do.
Managers of a publicly traded company are agents of a principal (i.e. shareholder)
The shareholders want maximum profit  Any activity besides those that are profit-seeking is not acceptable

Question 6

What is a stakeholder?

Answer 6

‘A stakeholder in an organization is (by definition) any group or individual who can affect or is affected by the achievement of the organization’s objectives.’ Freeman, 1984, p.46

Question 7

What are some examples of internal and external stakeholders?

Answer 7

Internal:
> employees
> managers
> Owners

External:
> Suppliers
> Society
> governments
> Customers
> creditors
> shareholders

Question 8

What are the four elements of Carrol’s CSR pyramid?

Answer 8

Carrol - CSR pyramid to symbolize the interconnectedness of business elements
Philanthopic > be a good citizen
Economic > must be viable
Ethical > what is right, just and fair
Legal > law is societies codification of right and wrong

Question 9

What are the three moral management approaches?

Answer 9

Imoral - the customer is an opportunity to be exploited
Amoral > does not consider > just makes profit, obeys law
Moral > customer is a partner whose rights are liberally interpreted and honored.

Question 10

What are three ways to prioritize stakeholders?

Answer 10

Legitimacy –
“The extent to which a group has a justifiable right to be making its claim” – Carroll, 1991, 43
“Based upon contract, exchange, legal title, legal right, moral right, at-risk status, or moral interest in the harms and benefits generated by company actions” – Mitchell, Agle, and Wood, 1997, 862

Power –
To influence the firm (individual investors, institutional investors)
“Power may be tricky to define, but it is not that difficult to recognize: ‘[it is] the ability of those who possess power to bring about the outcomes they desire’ “ (Salancik & Pfeffer, 1974: 3) as quoted in Mitchell, Agle, and Wood, 1997, 865

Urgency –
‘The degree to which stakeholder claims call for immediate attention‘ – Mitchell, Agle, & Wood, 1997, 867

Question 11

What is Freemans stakeholder theory in a summary?

Answer 11

Stakeholders’ interests are joint
Business is about creating value for stakeholders
The primary responsibility of the executive is to create as much value as possible for stakeholders without resorting to tradeoffs
If made, figure out how to improve the trade-off for all parties