Chapter 2: Corporate Social
Responsibility, Performance,
and Impact
Assoc. Prof. Le Thanh Tiep
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Chapter Objectives (1 of 3)
By the end of this chapter, you should be able to:
1. Describe some early views of corporate social responsibility (CSR).
Explain how CSR evolved and encompasses economic, legal, ethical,
and philanthropic components. Explain the Pyramid of CSR. How is it
a unified whole, dynamic, and sustainable? How does ethics permeate
the pyramid? Will the pyramid vary globally?
2. Articulate the traditional arguments both against and for CSR. Explain
how the business case for CSR has strengthened the concept’s
acceptance.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights
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Chapter Objectives (2 of 3)
3. Describe how the concept of corporate social responsiveness differs
from CSR.
4. Explain how corporate social performance (CSP) became more
popular. Describe how it is different than CSR. What does corporate
social impact address?
5. Describe how corporate citizenship is a valuable way of thinking
about CSR. Explain its broad and narrow views.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights
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Chapter Objectives (3 of 3)
6. Summarize the three perspectives on the relationship between
corporate social performance (CSP) and corporate financial
performance (CFP).
7. Define CSR Greenwashing and how it may lead to misleading
reputational profiles of companies.
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Business Criticism–Social Response Cycle
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Corporate Social Responsibility Related
Concepts
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights
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Evolving Meanings of CSR
• CSR means seriously considering the impact of a company’s actions on
society.
• Social responsibility is the obligation of decision makers to take actions
that protect and improve the welfare of society as a whole along with
their own interests.
• CSR supposes that the corporation has not only economic and legal
obligations, but also certain responsibilities to society that extend
beyond these obligations.
• These definitions provide useful insights into the concept of CSR.
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Discussion Activity
Generally speaking, what does CSR mean? What are some of the earlier
definitions of CSR? Why were they sometimes ambiguous?
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A Four-Part Definition of CSR
While each definition is valuable, we will focus on the types of social
responsibilities business has. At any given point in time, societal
expectations included in corporate social responsibility are:
• Economic
• Legal
• Ethical, and
• Philanthropic
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The Four Components of CSR
The Four Components of CSR: Types, Expectations, Explanations, & Examples
Type of Responsibility Societal Expectations Explanations/Examples
Economic responsibility REQUIRED of business Be profitable. Maximize sales, minimize costs. Make sound
by society strategic decisions. Be attentive to dividend policy. Provide
investors with adequate and attractive returns on their
investments. Provide jobs.
Legal responsibility REQUIRED of business Obey all laws, adhere to all regulations. Environmental and
by society consumer laws. Laws protecting employees. Fulfill all
contractual obligations. Honor warranties and guarantees.
Ethical responsibility EXPECTED of business Avoid questionable practices. Respond to spirit as well as to
by society letter of law. Assume law is a floor on practice, operate above
minimum required. Do what is right, fair, and just. Assert ethical
leadership.
Philanthropic DESIRED/EXPECTED of Be a good corporate citizen. Give back. Make corporate
responsibility business by society contributions. Provide programs supporting community—
education, health or human services, culture and arts, and civic.
Provide for community betterment. Engage in volunteerism.
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The Pyramid of Corporate Social
Responsibility
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Discussion Activity
Explain the Pyramid of Corporate Social Responsibility. Define each
category and provide several examples of each “layer” of the pyramid.
Identify and discuss some of the tensions among and between the layers
or components.
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Top 20 Activities/ Characteristics of a
Socially Responsible Company (1 of 2)
• Makes products that are safe.
• Does not pollute air or water.
• Obeys the law in all aspects of business.
• Promotes honest or ethical employee behavior.
• Commits to safe workplace ethics.
• Does not use misleading or deceptive advertising.
• Helps displaced workers with placement.
• Employs friendly, courteous, responsive personnel.
• Utilizes only biodegradable or recyclable materials.
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Top 20 Activities/ Characteristics of a
Socially Responsible Company (2 of 2)
• Upholds stated policy banning discrimination.
• Utilizes “environmentally friendly” packaging.
• Protects employees against sexual harassment.
• Gives money toward charitable or educational causes.
• Recycles within company.
• Shows no past record of questionable activity.
• Responds quickly to customer problems.
• Maintains waste reduction program.
• Provides or pays portion of medical costs.
• Promotes energy conservation program.
• Tries continually to improve quality.
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Rise of the CSR Exemplar Firms
• Social entrepreneurship firms: Social enterprises that began their CSR
initiatives at their founding and strategically carried it forward.
• Social intrapreneurship firms: No specific social agenda as part of their
initial formation but later developed from within a highly visible social
agenda or program. Often begun by an individual within the firm.
• Mainstream adopters: other conventional businesses that have
adopted, practiced, and achieved some degree of distinction or
recognition for socially responsible policies and practices.
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Discussion Activity
Explain what makes a CSR exemplar firm. Distinguish among social
entrepreneurship, social intrapreneurship, and mainstream adopters.
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Arguments Against CSR
• Classical Economics: The classical economic view is that business’s
only goal is the maximizing of profits for owners.
• Business Not Equipped: Business is not equipped to handle social
activities.
• Dilutes Business Purpose: It dilutes the primary purpose of business.
• Too Much Power Already: Businesses have too much power already.
• Global Competitiveness: It limits the ability to compete in a global
marketplace.
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Arguments in Support of CSR
• Enlightened self-interest: Businesses must take actions to ensure
long-term viability.
• Warding off government regulations: This is one of the most practical
reasons.
• Resources Available: Business has the resources and expertise. Let it
try.
• Pro-action is better than Reaction: Pro-action is also less costly.
• Public supports: the public strongly supports CSR.
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The Business Case for CSR
Defensive approach
Cost-benefit approach
Strategic approach
Innovation and learning approach
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Reasons and Benefits Supporting the
Business Case for CSR (1 of 2)
Six Business Reasons for Engaging in CSR
1. Customer engagement
2. Employee engagement
3. Brand differentiation
4. Long-term plans
5. Cutting costs
6. Innovation
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Reasons and Benefits Supporting the
Business Case for CSR (2 of 2)
Business Benefits of CSR 6. Differentiate itself from
1. Win new business competitors
2. Increase customer retention 7. Improve its business reputation
and standing
3. Develop and enhance relationships
with customers, suppliers, and 8. Provide access to investment and
networks funding opportunities
4. Attract, retain, and maintain a 9. Generate positive publicity and
happy workforce and be an media opportunities due to media
Employer of Choice interest in ethical business
activities
5. Save money on energy and
operating costs and manage risk
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Discussion Activity 2.2.1
In small groups, In your view, what is the single strongest argument
against the idea of corporate social responsibility? What is the single
strongest argument for corporate social responsibility? Briefly explain
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CSR Greenwashing
• Some companies convey an image of responsibility when in fact they
are conducting business as usual.
• Companies attempt to make the public believe they are “green”—
environmentally friendly — when they are not.
• CSR Greenwashing is intentionally seeking to convey the image of a
socially responsible firm when the evidence of their practices does not
support this conclusion.
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Corporate Social Responsiveness,
Performance, and Impact
Corporate Social Responsiveness -
• An action-oriented variant of CSR.
Responsibility -
• Implies a state or condition of having assumed an obligation.
Responsiveness -
• Connotes a dynamic, action-oriented condition.
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Carroll’s Corporate Social Performance
Model
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Discussion Activity
• In small groups differentiate between corporate social responsibility
and corporate social responsiveness. Give an example of each. How
does corporate social performance relate to these terms? Where do
corporate citizenship and sustainability fit in?
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Corporate Citizenship (1 of 2)
Corporate citizenship -
• Embraces all the facets of corporate social responsibility,
responsiveness, and sustainability.
• Corporate citizenship is not a new concept, but one whose time has
come.
• Corporate citizenship serves a variety of stakeholders.
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Corporate Citizenship (2 of 2)
Broad View
• A reflection of shared moral and ethical principles.
• A vehicle for integrating individuals into the communities in which they
work.
• A form of enlightened self-interest that balances stakeholders’ claims
and enhances a company’s long-term value.
Narrow View
• Corporate community relations
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Global CSR and Corporate Citizenship
• …and Global CSR are topics in which there has been an explosion of
interest.
• Multinational enterprises are expected to:
• be good corporate citizens in the countries in which they do business.
• tailor their initiatives to conform to the cultural environment.
• International academics and businesspeople around the world are now
researching and advocating CSR and corporate citizenship concepts.
• Convergence in global CSR approaches will continue as the world
economic stage becomes the common environment within which
businesses function.
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The Social and Financial Performance
Relationship
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One Bottom Line, or Many?
The stakeholder-bottom line perspective -
• Impacts or benefits of social performance cannot be fully measured or
appreciated by considering only the impact on the firm’s financial
bottom line.
• CSP cannot be fully comprehended unless it includes impacts and
measures on consumers, employees, the community and other
stakeholder groups.
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Creating Shared Value, Conscious
Capitalism, and Purpose-Driven Business
CSV (Creating Shared Value)
• Business and society could be brought back together if business
redefined the basic purpose as creating shared value—generating
economic value in a way that also produces value for society.
Conscious Capitalism
• A more complex form of capitalism that reflect and leverages the
interdependent nature of life and all of the stakeholders in business.
• Pillars include: Higher purpose, stakeholder orientation, conscious
leadership, conscious culture.
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The CSR Evolutionary Trajectory
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Socially Responsible, Sustainable, ESG
Investing (1 of 2)
Socially Responsible Investing -
• Emerged in the 1970s.
• Nearly $7 trillion in socially responsible investments in the U.S.
Social Screening -
• A technique used to screen firms for socially-responsible investment
purposes.
• Includes negative social screens and positive social screens.
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Socially Responsible, Sustainable, ESG
Investing (2 of 2)
• Total dollars invested in SRI has grown exponentially over past twenty
years.
• Council on Economic Priorities suggests 3 reasons:
• More reliable research on CSP.
• Investment firms using social criteria have solid track record.
• The socially conscious 1960s generation is making investment
decisions.
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Discussion Activity
• Does socially responsible investing seem to you to be a legitimate way
in which the average citizen might demonstrate concern for CSR? Why
is it also called impact investing? Discuss.
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Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 36
Summary (1 of 2)
• Describe some early views of corporate social responsibility (CSR),
explain how CSR evolved and encompasses economic, legal, ethical,
and philanthropic components; describe and explain the Pyramid of
CSR.
• Articulate the traditional arguments both against and for CSR. Explain
how the business case for CSR has strengthened the concept’s
acceptance.
• Describe how the concept of corporate social responsiveness differs
from CSR.
• Explain how corporate social performance (CSP) became more popular
and describe how it is different than CSR.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights
Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 37
Summary (2 of 2)
• Describe how corporate citizenship is a valuable way of thinking about
CSR and explain its broad and narrow views.
• Summarize the three perspectives on the relationship between
corporate social performance (CSP) and corporate financial
performance (CFP).
• Define CSR Greenwashing and how it may lead to misleading
reputational profiles of companies.
• Describe and characterize the socially responsible investing movement
and differentiate between negative and positive screens used in
investment decisions.
Carroll/Brown, Business & Society: Ethics, Sustainability & Stakeholder Management; 11th Edition. © 2023 Cengage. All Rights
Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 38