Lecture 4: Responsibility Flashcards
What is responsibility?
conduct fulfilling stakeholder responsibilities, and serving stakeholder value optimization.
What is instrumental responsibility?
responsible management as a tool for profit generation.
What is political responsibility?
management’s responsibility as an engagement with society.
What is the agency problem?
conflicting interests between control (decision making) and ownership (consequences of actions). Misalignment of interests.
What is integrative responsibility?
management can only survive and prosper of it integrates stakeholder demands.
What is ethical responsibility?
management-society relationship is embedded into an ethical framework.
What are the four layers of the CSR pyramid?
- Economic responsibility: economically sustainable management to provide goods needed by society
- Legal responsibility: managing within legally defined boundaries for management conduct
- Ethical responsibility: meeting society’s expectations beyond legal requirements
- Discretionary responsibility: voluntary responsibilities assumed in spite of no explicit demands.
What are the three analytical facets of grand challenges?
- Complex: problems are characterized by many interactions and associations
- Uncertain: problems and their evolution are difficult to forecast for the actors
- Evaluative: problems implicate multiple criteria of worth
Name the five principles of shareholder theory?
- Only social responsibility of business is profit.
- Executives engaging in philanthropy are spending their principal’s money
- Open and free competition without deception and fraud
- Invest additional resources in employees. Suppliers and customers if it increases profit only
- Boasting about treating nonshareholders responsibly is hypocritical.
Name four principles of stakeholder theory?
- Helps managers think about how value is created and to see business as an endeavor by and for humans
- Stakeholders are any groups, individuals, entities that can affect or are affected by business activity
- All stakeholders are intrinsically valuable and deserve care. Organizations are vehicles to maximize value for all stakeholders.
- Businesses flourish when stakeholders flourish.
Name six tools to measure responsibility?
- Governance structures
- Partnership portfolio
- Materiality matrix
- Responsibility & Profitability
- CSR Reporting
- True price
What is the goal of materiality assessment?
identifying importance of certain issues for stakeholders. Important or material topic addressed value created
What are the four organizational antecedents of responsible governance challenges?
- Organizational domain (governmental and non-governmental)
- Organizational means (for profit, non-profit)
- Legal form ( public and private)
- Functional orientation (public, privat, club goods)
Name six advantages of collaboration between public and private sector, and civil society
- Management of risk and uncertainty
- Enhancement of firm resilience to changes in business ecosystem
- Opportunities for accelerated learning
- Access to complementary resources
- Extended relational capital
- Leverage of power, influence and positioning.
What are the two horizons partnership portfolios focus on?
- Present: covers company’s present sustainability ambitions
- Future: forging (new) partnerships that enable company to move into future sustainability areas.
What are the five elements of partnership portfolios?
- Size: what scope issues currently covered by partnerships
- Diversity: what organizations and governance are present in these partnerships
- Density: what are ties between focal organization and the others in the partnership, and the organizations within the partnership
- Dynamics: how is partnership changing over time
What is a materiality analysis?
analysis to better understand how global challenged affect organization and the key issues for both stakeholder concern and business impact.
Which two responsible activities increase reputation?
- Philanthropic donations
- Communicate these activities.
Good reputation increases financial performance
What are the three results from increased financial performance due to stronger reputation?
- Larger pool of willing stakeholders to collaborate with
- Consumers more willing to pay premium
- Investors more likely to see CSR as signal of future profitability
In what three ways does CSR stimulate innovation?
- Closer relationships with stakeholder new knowledge pools
- Employees more willing to share information
- CSR activities require organizational learning
What are GRI standards?
standards for global reporting initiative. Enables organizations to publicly disclose its most significant impacts on the economy, environment and people, including impacts on their human rights and how the organization manages these impacts. Enhances transparency on organization’s impacts and increases organizational accountability.
What is CSDR reporting?
Corporate Sustainability Reporting Directive. Requires companies to disclose information necessary to understand its impact on sustainability matters, and the information necessary to understand how sustainability matters affect company development, performance and position.
What are the two advantages and two disadvantages of CSDR reporting?
Benefits of CSDR reporting:
1. Reporting standard that carries legal obligations
2. Double materiality reporting will become mandatory
Bad points of CSDR reporting:
1. Lobbying has weakened standards
2. Limited obligatory declarations.
What are negative/positive externalities?
cost (/benefit) to a third party that results from an economic activity and that is not reflected in the prices.
What is true cost? Which costs can be used?
true price can be calculated by adding true social and environmental costs on top of retail prices. Costs to be used:
1. Damage costs (monetized welfare effects)
2. Abatement costs (costs to prevent or restore externality)
