The iron law of responsibility says that

Chapter 3

Corporate Social Responsibility

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Former CEO, Unilever

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What we will Talk About Today

Big business and responsible use of corporate power

Origins and phases of social responsibility concept

Arguments for and against corporate social responsibility

The “social enterprise” and the B corporation

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What we will Talk About Today

Big business and responsible use of corporate power

Origins and phases of social responsibility concept

Arguments for and against corporate social responsibility

The “social enterprise” and the B corporation

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Corporate Power and Responsibility

The capability of corporations to influence government, the economy, and society, based on their organizational resources

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Corporate Power and Responsibility

Positive:

command more resources

produce at lower costs

new products and technologies

economic opportunities

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Corporate Power and Responsibility

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Negative:

shape tastes

dominate public discourse

divide markets

squash competition

disproportionate political influence

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Corporate Power and Responsibility

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Iron law of responsibility says that in the long run, those who do not use power in ways that society considers responsible will tend to lose it

Given the power of large, global corporations, stakeholders expect business to use its power for the betterment of society

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Case Study Facebook

Consider in the Following Video:

What are some of the most significant issues discussed in this video?

After watching this video, what is your view of Facebook’s power? What kind of power do they have?

Does Facebook have any responsibility as a business to address any of the issues you’ve identified?

If Facebook isn’t motivated to address any of these issues, what should “society” do – if anything?

Facebook

Additional Perspectives

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What we will Talk About Today

Big business and responsible use of corporate power

Origins and phases of social responsibility concept

Arguments for and against corporate social responsibility

The “social enterprise” and the B corporation

Serving the bottom of the pyramid

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The Meaning of

Corporate Social Responsibility

A corporation should act to enhance society and be accountable for its actions

harm to people and society should be acknowledged and corrected

company should forgo some profits if it seriously hurts stakeholders or act if it can have a positive social impact

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Origins of Corporate Social Responsibility

In the US, the idea of corporate social responsibility appeared around the start of the 20th century

In response to social protest, some corporations used their power for broad social purposes rather than for profits alone

Ex. Andrew Carnegie

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Laughlin Memorial Free Library, Ambridge, PA

James Laughlin I (1806-1882), was a partner of Benjamin Franklin Jones (1826-1903) in Jones & Laughlin Steel

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Laughlin Memorial Free Library, Ambridge, PA

James Laughlin I (1806-1882), was a partner of Benjamin Franklin Jones (1826-1903) in Jones & Laughlin Steel

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Figure 3.2

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Balancing Multiple Responsibilities

Multiple responsibilities include:

Economic

Legal

Social

Challenge is to balance all three

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Social responsibilities

Economic responsibilities

Legal Responsibilities

Stages of Corporate Citizenship

Figure 3.5

What we will Talk About Today

Big business and responsible use of corporate power

Origins and phases of social responsibility concept

Arguments for and against corporate social responsibility

The “social enterprise” and the B corporation

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Enlightened Self-Interest

Economic and social goals co-exist

Leadership sees business advantage in providing true value to its customers, helping its employees grow and behaving responsibility

Enlightened Self-Interest

Are socially responsible companies more or less profitable?

Studies show modest correlation between CSR and financial performance

Corporate social and environmental responsibility likely to pay off

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Discourages Government Regulation

Study found that:

“firms enjoyed significant strategic advantages and maximized social benefit to their communities when they voluntarily and freely developed a social strategy rather than acting under coercive pressure.”

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What we will Talk About Today

Big business and responsible use of corporate power

Origins and phases of social responsibility concept

Arguments for and against corporate social responsibility

The “social enterprise” and the B corporation

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The B Corporation

Also called a “benefit corporation”.

Type of corporation that blends social objectives with financial goals.

A “B Corporation” must prove it is socially responsible by meeting B Lab standards

B Lab is a non-profit organization that assesses a corporation’s social and environmental performance standards

The B Corporation

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What we will Talk About Today

Big business and responsible use of corporate power

Origins and phases of social responsibility concept

Arguments for and against corporate social responsibility

The “social enterprise” and the B corporation

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Laughlin Memorial Free Library, Ambridge, PA

James Laughlin I (1806-1882), was a partner of Benjamin Franklin Jones (1826-1903) in Jones & Laughlin Steel

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Laughlin Memorial Free Library, Ambridge, PA

James Laughlin I (1806-1882), was a partner of Benjamin Franklin Jones (1826-1903) in Jones & Laughlin Steel

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