Chapter 7: Global Corporate Citizenship

Chapter 7 Global Corporate CitizenshipCopyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinCh. 7: Key Learning ObjectivesDefining global corporate citizenship and observing it in practiceRecognizing the many different approaches to managing corporate citizenship Understanding how the multiple dimensions of corporate citizenship progress through a series of stagesUnderstanding how business or social groups can audit corporate citizenship activities and report their findings to stakeholdersRecognizing how an organization communicates its corporate citizenship practices and manifests its attention to various social performance standards, such as the triple bottom line7-*Global Corporate CitizenshipRefers to putting an organization’s commitment to social and environmental responsibility into practice worldwide not only locally and regionallyEntails putting corporate social responsibility into practice byProactively building stakeholder partnershipsDiscovering business opportunities in serving societyTransforming a concern for financial performance into a vision of integrated financial and social performance 7-*Global Corporate CitizenshipConcept is consistent with several major themes discussed throughout this book:Managers and companies have responsibilities to all their stakeholdersCorporate citizenship or responsibility involves more than just meeting legal requirementsCorporate citizenship requires that a company focus on, and respond to, stakeholder expectations and undertake those voluntary acts that are consistent with its values and business missionCorporate citizenship involves both what the corporation does and the processes and structures through which it engages stakeholders and makes decisions7-*Citizenship ProfileResearch by Gardberg and Fombrun argues that corporate citizenship activities should be viewed as strategic investments (like research and development)Create intangible assets that lead to improved legitimacy, reputation and competitive advantageParticularly true of global firms where citizenship activities overcome nationalistic barriers and build local advantageImportant for global firms to choose a Citizenship Profile which matches the local setting Public expectations vary on factors such as environmental risk, philanthropy and worker rightsCompanies that choose the right configuration of citizenship activities to match public expectations will reap strategic advantages 7-*Management Systems for Global Corporate CitizenshipGlobal corporate citizenship is more than espoused values; it requires actionIn order to become leading citizens of the world, companies must establish management processes and structures to carry out their citizen commitmentsCould be assigned to committee of the board, senior executive committee, single executive/group of executives, or departments of corporate citizenship7-*International Organizations that Support Corporate Citizenship Activities for BusinessesBSR (formerly Business for Social Responsibility), Canadian Business for Social Responsibility (CBSR) Corporate Social Responsibility Europe Forum Empresa The African Institute of Corporate Citizenship, or AICC AfricaCSR-Asia Asian Forum on Corporate Social Responsibility 7-*The Stages of Global Corporate CitizenshipIs a developmental change process, involving new attitudes, routines, policies, programs and relationshipsMirvis and Googins of the Center for Global Citizenship proposed a five stage model of global corporate citizenshipEach stage is characterized by distinct patterns of:Citizenship contentStrategic intentLeadershipStructureIssues managementStakeholder relationshipsTransparency7-*Stages of Global Corporate Citizenship Figure 7.17-*Assessing Global Corporate CitizenshipAs companies around the world expand their commitment to corporate citizenship, they have also improved their capacity to measure performance and assess resultsA social audit is a systematic evaluation of an organization’s social, ethical, and environmental performanceA company’s performance is evaluated relative to a set of externally imposed standardsThe results of the audit are used to improve the firm’s performance and to communicate with stakeholders and the public 7-*Six Benefits of Social AuditsIdentified by scholar Simon ZadekHelp businesses know what is happening within their firmUnderstand what stakeholders think about and want from the businessTell stakeholders what the business has achieved Strengthen the loyalty and commitment of stakeholdersEnhance the organization’s decision makingImprove the business’s overall performance7-*Global Social and EnvironmentalAudit Standards Figure 7.27-*The Auditing ProcessCompanies have several choices in carrying out an auditInternal audit: company hires and trains its own staff of auditors whose job is to inspect factories—either its own or those operated by contractors—to determine whether or not they are in complianceExternal or third-party audit: company hires another organization to carry out the audit and report back to the companyCrowd-sourcing audit: company gathers information directly from workers using their mobile phones7-*Social and Environmental ReportingWhen a company decides to publicize information collected in a social audit, this is called corporate social reportingWhen companies clearly and openly report their performance—financial, social, and environmental—to their various stakeholders, they are acting with transparencyThe term transparency refers to a quality of complete clarity; a clear glass window, for example, is said to be transparent7-*Trends in Corporate Social ReportingFigure 7.3 7-*Triple Bottom LineBottom line refers to the figure at the end of a company’s financial statement that summarizes its earnings, after expensesOccurs when companies report to stakeholders not just their financial results—as in the traditional annual report to shareholders—but also their environmental and social impactsFirms in Europe have more quickly accepted triple bottom line than have those in the United States 7-*