Transcript Yes U Can: A Navigation Guide to US Graduate Business

“Corporate Social Responsibility(CSR)”
and “Sustainability” Movements
in the US:
Past, Present, Future
Professor Earl Molander, PhD
Professor Emeritus, Portland State University
Executive Director, Free Market Business Development
Institute
President, US Graduate Admission Navigator
Sustainable Earth
Summary
GLOBAL
BUSINESS ENVIRONMENT TODAY
Highly competitive
Global—the world is flat”
Complexity in supply chain structure
Dynamic in its processes—new entrants
Uncertainties of modern technology
Activism of new “stakeholders, especially nongovernmental organizations (NGOs) and other
groups
Increased government role in business decisions
Overall level of affluence in Western society
Extended time horizon for policy and strategy
CHANGING DETERMINANTS OF
ECONOMIC SUCCESS
Success is dependent on ability to
understand national macroeconomic,
social and political systems
need to detect significant environmental
changes early in order to
develop appropriate organizational
strategies and responses before the full
potential impact on the firm.
CORPORATE
SOCIAL RESPONSIBILITY (CSR):
AN HISTORICAL PERSPECTIVE
Historical/Theoretical View: the enterprise as an
economic institution with economic contracts with
shareholders, employers, and suppliers.
The Intellectual Critique: Marx and Socialist writers
The Political Challenge: Socialism in Europe and
America in the 20th century
“Corporate Social Responsibility” emerges as an issue
focused on corporate irresponsibility in the 1960s.
60-Year Evolution of
CSR in the US
Began with reexamination of the relationship
between the business firm and the rest of
society in the 1950s
power of large corporations relative to more smaller
societal elements--customers, employees,
shareholders, local citizens;
greater knowledge--technical and informational--of
the large firm relative to these societal elements;
growing status of the business firm as a social,
political, and cultural, as well as economic, institution;
relationship of social problems--e.g., pollution,
product safety, discrimination--to business (in)action.
The CSR Challenge to US Business
in the 1960s
The idea of CSR outside U.S. business widens
Shift from focus on corporate "social irresponsibility“ to CSR
social movements/non-governmental organizations (NGOs)
achieved significant political power and legitimacy
new public policy and new governmental agencies to ensure
its enforcement, in areas such as equal employment
opportunity (women and minorities, environmental protection,
workplace safety and health.
the American public never wavered significantly from its view
of the corporation as primarily an economic institution.
new expectations were additions to the old economic
responsibilities to employees, customers, shareholders.
The CSR Challenge to US Business
in the 1960s
The idea of CSR inside U.S. business widens
Intellectual defense: Economist Milton Friedman
Enlisting support from an American public that still
viewed the corporation as primarily an economic
institution.
Public is sensitive to cost of additions to the
traditional corporate responsibilities to employees,
customers and, most importantly, shareholders.
Can government be trusted to reliably and sensibly
enforce new policies and rules?
Shift from focus on resistance to proactive policy
and decisions
Social Audits in the 1970s
Social auditing:communicating the
social and environmental effects of
organizations' economic actions to
particular interest groups within society
and to society at large; also known as:
Social accounting
social and environmental accounting
corporate social reporting
corporate social responsibility reporting
sustainability accounting.
A PYRAMID OF
BUSINESS RESPONSIBILITIES
desired
Philanthropy
.
Ethical Responsibilities
expected
required
required
.
Legal Responsibilities
Economic Responsibilities
CONTEMPORARY
CSR TERMINOLOGY
Corporate Social Responsibility—
emphasizes obligation and
accountability
Corporate Social Responsiveness—
emphasizes action and activity
Corporate Social Performance—
emphasizes outcomes and results
“Sustainability” is Added to The
Enterprise’s Responsibilities in the 1980s
Sustainability in business defined: “meeting the needs
of business while simultaneously contributing to the
possibilities that humans and other life will flourish on
the earth for a long time.”
“Natural capital “is the extension of the economic
notion of capital (manufactured means of production)
to goods and services relating to the natural
environment to ensure future flow of goods or services.
People, planet and profit: “Triple Bottom Line” expands
the traditional business reporting framework to account
for social, environmental and financial performance.
Sustainability Definition
“Sustainable development is development that meets the
needs of the present without compromising the ability of
future generations to meet their own needs.”
UN definition
Diagrams of Sustainability
Focus is on 1. Population
and 2. Carrying Capacity of Earth
Focus is on 1. Population
and 2. Carrying Capacity of Earth
IPAT Equation
I=PxAxT
Impact
Population
Affluence
Technology
“STAKEHOLDER THEORY” IS ADDED TO
CSR IN THE 1990s
Traditional view of the firm: shareholders/stockholders are the
owners of the company, and the firm has a binding fiduciary duty
to put their needs first
increase value for them in the form of share value or
dividends.
Stakeholder Theory argues that there are other parties involved
with a legitimate “stake” in business decisions, including
Communities and their governmental bodies
NGOs and other community groups
Employees and unions
suppliers and customers.
Stakeholder Theory challenges the historical US legal definition of
the corporation and views it more like an enterprise in European
socialism.
Social Contract: A Useful Framework
A concept from political philosophy to describe
the relationship between a social organization,
and its members, defining mutual expectations,
rights and duties.
Extended to the business--society relationship helps
understand the origin, power and legitimacy of
expectations being placed on the modern business
enterprise.
Facilitates business decision-making as to the
appropriate corporate response to current
expectations and challenges from stakeholders
Social Contract
in Early (Classical) Capitalism
4 Traditional “Stakeholders”
and their “Economic
Contracts” (+ Suppliers)
Goods and
Services
for
Customers
Profit for
Shareholders
Wages for
Employees
Social Contract
for the Corporate Enterprise Today
Formally still the limited economic contract of
early capitalism.
Evolved into complex written (laws and
regulation) and unwritten (culture) terms
The formal and informal bargaining process in
the public domain
The marketplace
The media
Public policy making
Intellectual circles—books, journals and the universities
The parties to the process-- the “stakeholders”- and the terms of the contract are constantly
changing.
Understanding the Social Contract:
the View from Today’s Enterprise
Still want to view from the framework of the
limited economic contract of early capitalism.
Resistant to written (laws and regulation) terms
of the social contract
Resistant to, and not understanding, unwritten
(culture) terms with the result:
Hostility to the media, government, and intellectual institutions
Slow to understand changes in expectations
Active resistance where cooperation may be more beneficial.
Understanding the Social Contract:
View of Today’s Enterprise Managers
What are these expectations?
What is it that society wants from me and my
business?
Are the expectations reasonable, given my
fiduciary responsibilities?
Are they more than my business can
reasonably provide?
Understanding Stakeholders
What are their “missions”?
What is the source of their legitimacy?
What are their goals in a particular domain
that affects our business?
What is the source and “location” of their
power?
How likely are they to use their power in a
given situation—will they “play” and devote
their scarce resources to this situation?
CSR:
A MANAGERIAL PERSPECTIVE
How can I, as a manager, best meet the
expectations of the continuously changing
social contract and roster of stakeholders
while still meeting my fiduciary
responsibilities?
ENVIRONMENTAL MONITORING:
BRINGING ENVIRONMENTAL INFORMATION
INTO THE ORGANIZATION
Environmental information collection process:
"environmental scanning" or "environmental
monitoring."
Reading “environmental signals” and bringing
environmental information into the organization
in a systematic way.
Choosing an environmental monitoring system,
balancing
informational needs
analytical capabilities, and
cost.
ENVIRONMENTAL ASSESSMENT:
Characterizing Environmental “Signals”
"strength" of the signal--the probability that the
event it portends will in fact occur.
"timing" of a signaled event--if it does occur,
will it occur next month, next year, or five-ten
years from now.
potential "impact" of the signaled event on the
organization--its significance in terms of the
economic "threat" or "opportunity" it presents.
The "threat--opportunity continuum"
ENVIRONMENTAL ACTORS
AND
POWER RELATIONSHIPS
Who is in the constellation of actors
around a particular signal or issue?
Mapping the interrelationship between and
among the firm and the major environmental
actors.
Identifying the predisposition, power, and
inclination to act of these actors
MAPPING
POWER RELATIONSHIPS
Competitors
Government Agency
Government Agency
Firm
NGO
ASSESSING PROBABLE FUTURES:
Scenario Building
Scenarios are generally “issue-specific”:
Constructing scenarios: how interaction of the
principal actors could come to present a threat
or opportunity to the firm.
How reliable are your projections?
Best case
Worst Case
Probable Case
Corporate strategy formulation.
Continuous monitoring of your probable case
scenario to adjust strategy.
A Scenario for
Collapse of the Euro Zone
EU Banking
Union
Greece Default
Bond rates rise
for Italy, Spain
Run on
EU Banks
Political Crises
In EU
EU Cash infusion
to Banks
Germany withdraws
Support for Bailouts
Euro Collapse
CHOOSING WHERE
AND WHEN TO FIGHT
Are the social trends moving against us and if so, how
can we accommodate to them?
What arenas offer us the best chance of success?
The Marketplace
The Popular Media—newspapers and television
The Universities and opinion-forming media
“Think tanks” research and intellectual opinion
The Political Process
Electoral politics
The legislative (law-making) process
The regulatory (rule making and implementation) process
The courts
A POSTSCRIPT:
Social Movements and
“NGO Issue Fatigue”
Social Movements Come and Go
NGOs have difficulty sustaining momentum with
volunteers
financial sources
media attention
NGOs have had their greatest success in drawing attention to issues
In the popular media
In opinion-forming media
In “Think tanks” research and
In intellectual opinion
In legislative bodies
BUT--
NGO volunteers/members enjoy public activities in large groups
have difficulty sustaining momentum in the public policy process—
legislative and regulatory arenas
Conclusions and
Remaining Questions
CSR and Sustainability have established legitimacy in
the public and political institutions,
BUT
Where do the CSR and Sustainability go from here?
In an era of economic stagnation and decline, will CSR
and Sustainability take a back seat to short-term
economic survival and reestablishment of economic
growth?
Is there a place for CSR and Sustainability in
reestablishing long-term economic growth
The End
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