Corporate Social Responsibility/Corporate Moral Responsibility: The Difference There Is and the Difference That Makes in Global Settings Patricia H. Werhane University of Virginia and DePaul University
“Corporate Social Responsibility”as a Fig Leaf CSR “is the obligation of decision makers to take actions which protect and improve the welfare of society as a whole along with their own interests.” (Davis and Blomstrom, 1975, 23) “The social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that a society has of organizations at a given point in time.” [Carroll, 1979, 500]
Problems: • Focuses externally • Reactive • Discretionary • Can be a cover-up • Enron, etc.
CSR as an Umbrella • …The responsibility of a company for the totality of its impact.” (Chandler, 2001) • To primary stakeholders • To other stakeholders • To culture and society • To those affected by externalities • To the public sector • To Government(s) • NGOs • Ecosystem • The Globe! ?
CSR defined by Politeia • The common way of thinking about CSR emphasizes the moral obligations of the corporation toward various stakeholders…” • So here CSR = CMR: normative obligations – What companies ought to do. • ?Which stakeholders? • Reciprocal nature of these obligations (Goodstein & Wicks, Bowie, et.al.)
“Globalization has now shifted into warp drive.” That is, “the World is [becoming] Flat.”Tom Friedman
So….. • IF CSR = CMR, • How do we prioritize stakeholders in a global economy? • What are the relationships between business and society? • “Musts?” Obligatory – “oughts”? Discretionary? • And IF “the world is flat” (the globalization thesis), • How should we think or rethink about ideas of CSR/CMR in a global economy?
A Stakeholder Map Mass media Pressure groups Local communities Shareholders Employees Company Corporate management Customers Political parties Privatesector Professionals Governments Special interest Groups Suppliers International Organizations NGOs • Slide Compliments of Klaus Leisinger, Novartis Foundation
SYSTEMS THINKING • A truly systemic view considers how a set of individuals, institutions, and process operates in a complex network of relationships, an array of individual and institutional actors with conflicting interests and goals, and a number of feedback loops. (Wolf, 1999) • MNEs arecomplex open interactive enterprises embedded in larger political, economic, legal, and cultural systems that are able to affect and be affected by various interactions and unpredictable events. (Werhane, 2008)
Customer Stakeholder Networks of Responsibilities in a Globalized Setting Local employees Local Governments & Political Systems Corporation Global employees NGOs Social Norms & Customs Suppliers Partners & Competitors Communities Shareholders Religious influences
The Four “Ps” Global Challenge Population: 75-100 million Purchasing power: > $20,000 USD 1,500-1,750 million $1,500-20,000 USD The Bottom of the Pyramid (BOP): Poverty, Pollution and Pandemics $1,500 USD 4,000 million < $1,500 USD Adapted from: C.K. Prahalad and Stewart Hall, 2002. The Fortune at the Bottom of the Pyramid
CSR as an Umbrella Again? • What are the limits of CSR and/or CMR, that is, Corporate Responsibility in a global economy? • Are companies responsible for EVERYTHING and EVERYONE they affect internally and externally worldwide?? • And what are the reciprocal stakeholder obligations in this context?
NOVARTIS: We want to discover, develop and successfully market innovative products to prevent and cure diseases, to ease suffering and to enhance the quality of life.
Novartis and reciprocal obligations • MUSTS: adherence to their mission, respect for professionalism, patient responsibility, researcher and employee commitment, shareholder input • SHOULDS: Global citizenship, human rights, UN Global Compact guidelines, etc. • DISCRETIONARY: 5 year window for self-sufficiency for philanthropic ventures having to do with health care
NIKE • …[W]e would build our business with all of our partners based on trust, teamwork, honesty and mutual respect. We expect all of our business partners to operate on the same principles. • At the core of the NIKE corporate ethic is the belief that we are a company comprised of many different kinds of people, appreciating individual diversity, and dedicated to equal opportunity for each individual.
NIKE’S Code of Conduct For Nike and its business partners • Employee rights; to health, safety, compensation, work hours & benefits • Minimize environmental impact • Dignity of individual and equal opportunity • Anti: forced labor, child labor under 15 • Minimum wages, benefits, pay for overtime • Limits: 60 hrs/week; 6 day work week maximum • Employee information • Transparency to inspection
Nike’s Alliance Model Home country (U.S.) Nike Nike Management & Employees Board of Directors Other Sports Clothing cos. Mission & Code of Conduct Country(s) & Local Traditions Customers Environment NGOs Suppliers & Sub-Contractors Off-shore workers Franchises Communities Media Model Courtesy of Mary Ann Leeper, COO, Female Health Company
CONCLUSION • Globalization weakens the ability to “outsource”—Fewer externalities • Globalization increases the need to prioritize corporate responsibilities: • Integration of Mission and code throughout • “MUSTS” Do what company does best • OUGHTS: follow guidelines of international codes of ethics and be good corporate citizens • Discretionary: philanthropy in areas of corporate expertise Acknowledgement of parallel stakeholder reciprocal responsibilities CR CSR CMR