The Corporate Social Responsibility of Pure-Play Sites versus Brick-and-Mortar Corporations

By Juliana Muñoz and Dr. Johnny Snyder Mesa State College

Abstract

 The goal of this paper is to begin to compare the relationships between brick and-mortar companies and pure-play companies in a socially conscious setting.

 This comparison will be made utilizing a model known as Carroll’s Pyramid and the business standards that have been set out for brick-and-mortar companies.

Introduction: The Events

    The terrorist attacks of 9/11 The Asian Tsunami of 2004 Hurricane Katrina in 2005 The South Asian Earthquake of 2005

Introduction: Frequency

EM-DAT (2006)

Who was there to help?

 Brick-and-Mortar corporations such as Wal-Mart, GM, and many others.

 Pure-play sites such as Amazon.com, and other Internet corporations like eBbay, Yahoo, and many others

So?

 Brick-and-Mortar companies are expected to fulfill certain social responsibilities by the communities that surround them.

 For amazon.com and other Internet sites, there are no such expectations due to the lack of a surrounding physical community.

What’s the Difference?

 A Brick-and-Mortar Corporation: - has all their resources (buying, selling, shipping, services, and all other functions), put into one or several physical locations - is surrounded by a community of some kind - probably has some Web presence (don’t be fooled) - most importantly, has a direct impact on the community which surrounds it Example: Wal-Mart

What’s the Difference? Cont.

 A Pure-Play organization: - has physical building which serves only to house employees, an IT infrastructure, and/or products for shipping - conducts all day-to-day transactions and activities via the Internet - has far less of an impact on the community that surrounds it’s physical building Example: Amazon.com

The Key Element of Embedded Corporations

A direct impact on a community, society and economy surrounding a corporation

Defining Corporate Social Responsibility (CSR)

Generic definition of CSR “the concept that business should be actively concerned with the welfare of society at large” (Brigham, 2004, p.16)

The Three Roles of Brick-and-Mortar Corporations

Wood (1991) 1. As an institution in society 2. As a particular corporation, or organization in society 3. As individual managers who are moral actors within the corporation (p. 695)

Wal-Mart Example

According to CNNmoney.com, after Hurricane Katrina, one hundred and twenty three Wal-Mart stores were closed in the gulf coast region.

Wal-Mart offered all affected employees jobs at other Wal-Mart stores…philanthropic behavior. Bhatnagar, P. (2005)

CSR on the Web

 After Katrina and the Asian Tsunami the pure play corporations were quick to install buttons on their sites (home pages) to aid the consumer in donating to these relief causes.  Note that as “best practices” are created, rivals tend to copy them quickly (Porter, 2001)

Justification?

The Humanist says, “Philanthropy” The Skeptic says, “PR ploy” The business person turns to a model that could help better explain the possible logic behind such a move for both brick-and-mortar and pure-play sites.

Carroll’s

The Question

Why should Pure-Play sites care?

One answer could be in Porter’s model, the rivalry among existing competitors (for page views).

(Porter, 2001)

The Debate: To Give or Not to Give

Brick-and-Mortar vs. Pure-Play  Against: Business fundamentals = maximize profits “social policy is the jurisdiction of governments, not business” (Sexty, 2004, p. 4)  For: - Society (consumers), fuel corporations, in turn a corporation should serve society - “social responsibility is in the stockholder's interest…Corporate virtue is good for profits” (Sexty, 2004, p. 3).

Pitfalls

Brick-and-Mortar vs. Pure-Play    Focus shifted from profit making Possible dissatisfaction of shareholders Could be seen as utilizing misfortune for press    Buttons divert traffic from site Customer focus is shifted from buying Could be seen as utilizing misfortune for press

Benefits

Brick-and-Mortar vs. Pure-Play     Helps employees Helps community in which embedded Promotes company name in positive manner Giving entails: • Employee time • Cash contributions • In-kind contributions   Promotes company name in positive manner Giving entails: • Employee time (minimal) • Addition of a button to a web site • Web page space (minimal)

Largest Corporate Contributors to Katrina

Alexa (2006)

Pure Play Companies Contribute

 By enabling the e-consumer to contribute  By facilitating easy payment options • Pay-Pal • Credit Card • eGold • gBuy

Users Want to Donate

Search term on Google Trends “Hurricane Katrina Donate” Google Trends, 2006

Online Contributions

3500 3000 2500 2000 1500 1000 500 0 192 1999

How Much Charities Raised Online

525 2000 1025 2001

Year

1435 2002 1900 2003 3000 2004 Pearlstein (2006, February)

Contributions of Pure-Play Sites

American Red Cross Disaster Fundraising

1800 1600 1400 1200 1000 800 600 400 200 0 1078 568 1670 8.3

2001 - 9/11 Terrorist Attacks 2004 - Asian Tsunami 2005 - Hurricane Katrina 2005 - South Asian Earthquake

Year - Disaster

60% 50% 40% 30% 20% 10% 0% Pearlstein (2006, February)

The Effect on Brick-and-Mortar Websites

Alexa (2006)

Increased Page Views

Rank Spikes due to Hurricane Katrina Alexa (2006)

News – Before and After Hurricane Katrina

Site

Advance Internet ABCNews Digital MSNBC WorldNow Fox News Weather Channel AOL News AccuWeather Internet Broadcasting CNN

8/22 Unique Audience (000)

516 486 3181 558 1106 4482 1833 622 1474 4817

8/29 Unique Audience (000)

1395 1102 6532 1086 2037 7736 3126 961 2140 6917

Growth

170% 127% 105% 95% 84% 73% 71% 55% 45% 44% Nielsen//NetRatings (2005).

The Effect on Pure-play Sites

Hurricane Katrina Post Holiday Slow down South Asian Earthquake Alexa (2006)

Costs?

 Search engine placement: $500.00

 Click through advertising: $2.15/click  A button on Google’s home page: - priceless

Google’s Pioneering Effort

Conclusion

 Pure play corporations are becoming more mainstream  Pure play corporations are concerned with their “public image”  Pure play corporations can react faster than brick-and-mortar corporations

Conclusion (2)

 “Donate Here” buttons do not cost much for the pure play corporation  “Donate Here” buttons seem to benefit the pure play corporation in the arena of Web metrics  Will it continue? Unfortunately we have to wait to see…

Thanks!

 Thanks for coming to the talk.  Questions?

References

 Alexa (2006). Alexa Web Search. Retrieved 7/3/2006 from: http://www.alexa.com/#  Bhatnagar, P. (2005). Wal-Mart closes 123 stores from storm. CNN Money.com.  Retrieved January 21, 2005 from http://money.cnn.com/2005/08/30/news/fortune500/katrina_reta ilers/?cnn=yes  Brigham, E. (2004). Fundamentals of Financial Management. China: Thomson South-Western.  Carroll, A. (1991). The pyramid of corporate social responsibility: toward the moral management of organizational stakeholders. Business Horizons, 34(4), 39-49.

 Carroll, A. (2000). Ethical challenges for business in the new millennium: corporate social responsibility and models of management morality. Business Ethics Quarterly, 10(1), 33-42.



References Cont.

EM-DAT (2006). Trends and relationships for the period 1900 – 2005. Retrieved June 16, 2006 from: http://www.em dat.net/disasters/trends.htm   Google Trends (2006). Google Trends Labs. Retrieved October 10, 2006 from: http://www.google.com/trends?q=hurricane+katrina&ctab=1&geo=all&date=all Internet Archive (2006). The Wayback Machine. Retrieved June 12, 2006 from: http://www.archive.org/web/web.php

  Money (2006). Corporate giving for Katrina reaches 547 million. Retrieved 7/3/2006 from: http://www.usatoday.com/money/companies/2005-09-12-katrina corporate-giving_x.htm Nielsen//NetRatings (2005). Hurricane Katrina drives concerned web users online to web sites for Red Cross, NOAA, news and weather, according to Nielsen//NetRatings. Retrieved 7/6/2006 from: http://www.nielsen-netratings.com/pr/pr_050901.pdf  Pearlstein, J. (2006, February) “Click Here to Donate: Disaster relief efforts spur growth in online fundraising”. Wired Magazine, 54.

References Cont.

 Porter, M. (2001). Strategy and the Internet. Harvard Business Review 79(3), 63-78.

 Porter, M. & Kramer, M. (2002). The competitive advantage of corporate philanthropy. Harvard Business Review, 80(12), 56-68.

  Sexty, R. (2004). Corporate Social Responsibility: The Concept. Retrieved December 5, 2005, from http://www.ucs.mun.ca/~rsexty/business8107/CSocialR.htm Stiner, Ina. (2005). eBay Donates $1 Million to eBay Sellers Affected by Hurricane Katrina. Auctionbytes.com. Retrieved on January 5, 2005 from http://www.auctionbytes.com/cab/abn/y05/m09/i12/s01  Turban, E., King, D., Viehland, D., & Lee, J. (2006). Electronic Commerce 2006: A Managerial Perspective. Upper Saddle River, NJ: Prentice Hall.

  Vise, D. & Malseed, M. (2005). The Google Story. New York: Delacorte Press.

Wood, D. (1991). Corporate social performance revisited. The Academy of Management Review, 16, 691-718