Introduction to the basics of CSR

Question 1

What are the 6 core characteristics of CSR ?

Answer 1

1. Voluntary
2. Internalizing or managing externalities
3. Multiple stakeholder orientation
4. Alignment of social and economic responsibilities
5. Practices and value
6. Beyond philanthropy

Question 2

What does CSR looks like in the private sector?

What is their corresponding reason for developing CSR?

Answer 2

Private:

• in large firms, formalized and bureaucratized way, through policies. Because of how many employees there are, the main actors are shareholders and external stakeholders.
• In small firms, it is much more informal, here the main actors are owner-managers and employees.

► Large firms aim to build a corporate brand and to manage public legitimacy.

► Small firms want to build trust, network and personal relations.

Question 3

What does CSR look like in the public sector ?

Answer 3

• Follows a similar approach as the private sector.
• Government makes initiatives to support the private sector on their CSR policies

Question 4

What is the current CSR situation in developed countries?

Answer 4

• The US

In the US, the market is characterized by a fairly unregulated makets for labour and capital, low levels of welfare state provision, and a high appreciation of individual freedom and responsibility, leading to voluntary corporate policies on CSR.

• In Europe, the Far East, and Australasia

There is a stronger tendency to address social issues through governmental policies and collective action.

• In Japan and South Korea

The market is characterized by high bank and public ownership, patriarchal and long-term employment, and coordination and control systems based on long-term relations and partnerships rather than on markets → Legacy of CSR similar to European companies.

Question 5

What is the current CSR situation for developing countries and emerging/transitional economies?

Answer 5

The developing countries are characterized by low standards for working conditions and environmental protection, high corruption, oppressive regimes, poor provision of healthcare and education, and low levels of per capita income and foreign direct investment. now, there is a growing number of domestic companies developing interest in CSR.

► Shit in understanding, CSR as aid to responsible behaviour through development.

Question 6

CASE STUDY: Umicore

Answer 6

Background: Umicore generates the majority of its revenues and dedicates most of its R&D efforts to clean technologies, such as emission control catalysts, materials for rechargeable batteries and recycling.

► Umicore’s overriding goal of sustainable value creation is based on an ambition to develop, produce and recycle materials in a way that fulfils its mission: materials for a better life.

Question 7

What is a first definition of Corporate Social Responsibility?

Answer 7

Based upon Carroll’s pyramid model, it reflects Anglo-American business model and includes a broader set of responsibilites, eg: environment.

Question 8

What is Business Ethics?

Answer 8

It is concerned with the morality of business practices, while CSR is oriented towards the wider role of the corporation in the global economy (rooted in philosophy).

Question 9

What is sustainability ?

Answer 9

It refers to broader set of social, economic and environmental imperatives (originating from forestry and environmental management).

► Contemporary CSR

Question 10

What are the different families of theories ?

Answer 10

1. Instrumental
2. Political
3. Integrative
4. Ethical

Question 11

What are instrumental theories about ?

Answer 11

Profits based theory, achieving economic objectives through social activities and with the goal to maximize shareholder value.

► Strategies for competitive advantage, e.g. natural resource view of the firm, and cause-related marketing – altruistic activities recognized as marketing

Question 12

What are political theories about ?

Answer 12

Responsible use of business power (linked to the capitalization of company) in political arena, such as corporate constitutionalism, social responsibilities arise from power, integrative Social Contract Theory, corporate citizenship meaning that a senior position implies the duty to work for a better world

► corporation as a citizen

Question 13

What are ethical theories about ?

Answer 13

What is the right thing to ahcieve for a good society, which implies:

• stakeholder normative theory
• fiduciary duties towards stakeholders
• universal Rights
• labour rights
• sustainable development
• considerations for present & future generations

►The common good

Question 14

Represent the Three Domain model of CSR (Schwartz & Carroll), what are the strenghts / weaknesses ?

Answer 14

(+) the use of a Venn diagram to

• reflect overlapping nature of CSR domains
• philanthropy encompassed within economic / ethical dimension
• theoretically develops the economic, legal and ethical domains
• focuses on forces that come into play during ethical decision making

(-) assumes the three domains of CSR as distinct and all-encompassing

(-) complications of international business confound ethical / legal domains

(-) certain CSR categories will rarely apply, limiting practical and conceptual application of some segments of the model.

Question 15

Represent the pyramid of Carroll, what are the strengths / weaknesses of it ?

Answer 15

As a company, it is required to fulfull some requirements to move to the next stage !

(+) widely cited and a leading paradigm in CSR

(-) the use of a pyramid to depict relationships, hierarchy?

(-) role of philanthropy as a separate component

(-) incomplete development of economic, legal and ethical domains

Question 16

CASE STUDY: Brent Spar disposal

Answer 16

Learnings:

• “We realised that our work had essentially followed our normal technical procedure and regulatory compliance, but with limited analysis of potentially wider issues and external sensitivities.” E. Faulds Shell decommissioning manager
• “Greenpeace used our plan to inflame public feelings about the ‘ethics’ of waste disposal and the Spar became a lightning rod for wider concerns about public policy, authority and control. Because… we hadn’t communicated early enough and in the right way, which means listening too.”
• What did they learn ? “That in the show me world, they must be more open and transparent. In controversial matters, good science and regulatory compliance aren’t enough.”

Question 17

What is the Stakeholder Framework?

Answer 17

“Stakeholder management refers to the necessity for an organization to manage the relationships with its specific stakeholder groups in an action-orientated way.”

Question 18

How to enhance one’s company stakeholder management ?

Answer 18

An organization’s ‘stakeholder management capability’ is enhanced through its ability to put 3 levels of analysis together:

1. Analytical / Rational perspective: Who are the groups and individuals who can affect and are affected by the achievement of an organization’s purpose ?
2. Process perspective: What organizational processes are used to implicitly or explicitly manage the organization’s relationships with its stakeholders and do these processes ‘fit’ the stakeholder map of the organization ?
3. Transactional perspective: What transactions are taking place and do these negotiations ‘fit’ with the stakeholder map and organizational processes for stakeholders ?

Question 19

How to proceed on the rational level ?

Answer 19

We use the Stakeholder map & Stakeholder chart to identify specifig groups and ‘stake’ and ‘power’ of each.

Question 20

How to identify stakeholders ?

Answer 20

Propose that stakeholders can be identified by their possession of certain attributes:

1. Power: The stakeholder’s power to influence the firm (coercive, utilitarian or normative)
2. Legitimacy: The legitimacy of the stakeholder’s relationship with the firm (individual, organizational or societal)
3. Urgency: The urgency of the stakeholder’s claim on the firm (time sensitivity or critically).

► Stakeholders can be identified by their attributes, but a firm’s managers must determine which stakeholders are most important.

Question 21

What is the particularity/power of the Stakeholder theory?

Answer 21

It is that we can identify stakeholder classes:

‘Latent’ stakeholders: Low salience, passive, not likely to give any attention to the firm. Possess only one of the attributes and include:

1. Dormant stakeholders (powerful, can become salient if acquire legitimacy / urgency)
2. Discretionary stakeholders (are legitimate, but no power / urgency)
3. Demanding stakeholders (urgent claims, but no power / legitimacy).

‘Expectant’ stakeholders: Moderately salient stakeholders are active. Possess two of the attributes and include:

1. Dominant stakeholders (powerful and legitimate, highly influential)
2. Dependant stakeholders (urgent and legitimate, rely on others to enforce their will)
3. Dangerous stakeholders (urgent and powerful, can be violent).

► ‘Definitive’ stakeholders: Highly salient stakeholders hold all three of the attributes. Managers have a clear mandate to give priority to these stakeholders.
► Individuals / entities possessing none of the attributes are non stakeholders or potential stakeholders.

Question 22

CASE STUDY: Barick Gold

What was the situation ?

Who were the Stakeholders ?

Map them and assess their impact and the type of relationship you need to maintain with them.

Answer 22

• The raped woman have high interest but low power because of their poverty level, shyness about their rape, low access to support.
• The local community has a high interest but low power because of their stressed due to the com- pany’s operations.
• Customers have low interest and power because the company is B2B and they are far from the operations.
• The security force have high interest and low power because they are pointed by this scandal and are dependant of the company contract.
• The NGO has high interest and power because it is their core business and they represent a large organization.
• The PNC has high power (legislation, police, etc.) and high interest because operations weights 12% of their PNG.
• The Canadian government has some power of influence and high interest. The PNG has signed the chart of human rights, so it is possible to act with them to enforce the human rights, and to strengthen the investigation process, as well as sanctions.
• The security company could be dismissed if this allegation are true.
• Regarding the NGO, they need to be involved into the investigation progress to make sure that it is done in a independent way.

Question 23

CASE STUDY: Unilever

Question 24

What are the 7 steps to build a social strategy (Husted & Allen’s)?

Answer 24

1. Analyze social issue opportunities, competitive environment, and non maket stakeholders
2. Analyse firm resources and capabilities for capitalizing on opportunities
   
   • Continuous innovation, development of new products and services
   • Stakeholder integration, establishing trusting relationships
3. Evaluate firm identity in terms of social needs and opportunities
   
   • Social responsibility orientation (threats and opportunities)
   • Participative decision-making, involve employees
4. Determine the means and cost of acquiring any necessary resources and capabilities
   
   • Outsource social action = charitable contributions
   • Internalize social projects = bring in-house
   • Collaborate with NGO’s = form alliances
5. Create a plan integrating issues, stakeholders, identity, resources, competitive environment and expected outcomes
6. Implement the plan !
7. Measure and evaluate performance, consider financial and seconday benefits (trust, reputation, commitment, values, identity) !

Question 25

The fortune at the bottom of the pyramid (C.K. Prahalad & Allen Hammond) ?

Answer 25

Definition: The bottom of the pyramid (BOP) concept refers to those at the very bottom of the world’s earnings league, the poorest of the poor.

► We need to integrate the poorest, who have been neglected by businesses !

“Improving the lives of the billions of people at the bottom of the economic pyramid is a noble endeavor. It can also be a lucrative one.” Prahalad and Hammond

Question 26

What measure should we take regarding the bottom of the pyramid?

Answer 26

By stimulating commerce and development at the bottom of economic pyramid, MNCs could radically improve the lives of billions of people and bring them into a more stable, less dangerous world.

Question 27

What is the current situation at the bottom of the pyramid ?

Answer 27

• The BOP is in a changing context, indeed

Question 28

What are the three advantages for serving the bottom of the pyramid ?

Answer 28

1. Revenue growth: BOP markets represent new sources of growth due to being in early stages of economic development
2. Greater efficiency: Cost saving opportunities and reconfiguration of supply chain (eg: outsourcing)
3. Access to innovation: BOP markets are hotbeds of commercial and technological experimentation

Question 29

What are the 6 strategies for serving bottom of the pyramid markets ?

Answer 29

1. Education: Overcome attitudes and preconceptions of senior management to expand understanding of BOP markets.
2. Structural changes: Capitalize on innovation by setting up local R&D centres.
3. Seed entrepreneurial efforts: Develop investment funds to grow market development at a local level, particuarly amongst female entrepreneurs.
4. Create business development task forces: assemble and empower inter-disciplinary group workforces with local level accountability.
5. Invest in powerful synergies and reach out to external partners: Join with businesses already established in these markets and harbour relationships with critical partners.
6. Work to remove external barriers: Factors inluding poor infrastructure, inadequate connectivity and corrupt intermediaries should be overcome.