Lecture_1-_Is_Corporate_Social_Responsibility_an_Oxymoron
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Transcript of Lecture_1-_Is_Corporate_Social_Responsibility_an_Oxymoron
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GLOBAL CITIZENSHIP
CORPORATE SOCIAL
RESPONSIBILITY
&
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Why do you thinkyou are
required to take this course?
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CSRIs the term Corporate Social
Responsibility an Oxymoron?
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OxymoronA figure of speech that combines two usually contradictoryterms in a compressed paradox, as in the word bittersweetor
the phrase living death.Oxymoronic phrases, like Milton's darkness visible, wereespecially cultivated in 16th and 17th century poetry
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What does CSR Mean?
Integrating the interests of stakeholders intothe firms business policies and actions.
Aligning business operations with social
values.
Embracing two main conceptsaccountability
and transparency
Focusing on the social, environmental and
financial success of a company the Triple
Bottom Line.
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Global Corporate
Citizenship?
A moral and ethical disposition whichguides a firms understanding of local and
global contexts- and their responsibilities
within the different communitiesin which
they do business
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Where do we begin when
thinking about CSR? Who decides what is Socially Responsible?
The board of directors?
The C EO?
The management team? The stockholders/investors?
How does CSR differ from philanthropy?
Is compliance with a governments laws sufficient?
F
or multinationals, which laws should be followed? Local,Regional, National orWTO, etc?
Does a corporation owe a duty to society?
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Where do we begin when
thinking about CSR?
Doeshow the corporation treats*its
employees tell us anything about a
corporations values?
*Compensates, provides benefits, working environment, etc.
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Social good comes about
automatically when companiesmake a profit!
- Milton Friedman, Professor and dominant force in the
establishment of the University of the Chicago Boys,internationally influential economists.
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Basic Assumptions
Founders tend to establish the fundamental valuesystem for their corporations:
Johnson and Johnson (The Johnson Brothers) IBM (Watson)
Hewlett Packard (Hewlett and Packard) How were these value systems communicated
throughout the organization?
The value that these organizations placed theiremployees. This is more than extolling the notion that
People are our most important asset then you hear How many are laid off, downsized, reduced in benefits, offered
early retirement.
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A Question?How much is enough profit?
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How muchis enough profit?
Theoretically there is neverenough.
It is not that profits are good or bad:
Return to shareholders via dividends
Share with employees
Give to high level executives
Reinvest in the company
Buy back shares
Create foundations for good works
The recent sub-prime collapse is just one example of unsustainable
and irrational exuberance a la: Alan Greenspan There have been bubbles long before the first corporationDutch
Tulips, silkworms, gold, diamonds, Dot com and on and on!
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To achieve unrealistic short
term profits corporations must:
Downsize reduce the number of employees
Cut costs
Raise prices
Introduce new products
Forego needed maintenance and repairs
Reduce investment in research and
development
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In 2006, McKinsey conducted a
global survey of business executives
84% of the executives responding said
that profitability does NOT automaticallyenhance the public good
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Was Professor Freidman wrong?
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Employees
Stockholders
Society-Government
-Public in general
- the Community
In a perfect
capitalist world
Perfect equilibrium controlled by the
invisible hand of, long dead, Adam Smith!
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employees
Stockholders
SocietyGovernment
Public in
general the
Community
In the so-calledFree Market system, the assumption is that Market forces will act to
regulate corporate behavior so that all stakeholders are protected and considered
FREE MARKET
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The Power ofWall Street and
Gordon Gekko! Greed is good! Stockholder interests are paramount
Executives inflate the importance of their contributions
Employees are considered primarily as an expense
Short term profits control decisions and the allocation ofresources
Employees and employers have equal power indetermining their conditions of employment If you dont like what is happening, then you can find somewhere
else to work If you are no longer needed you can be surplussed with
impunity
Unions are viewed as destabilizing agents that interferewith the normal operation of the free market.
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Employees
Stockholders
Society-Government
-Public in general
- the Community
Social Capitalist Model*
*Generally EU, Nordic Countries, Great Britain, Chile, Singapore
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Social Capitalist Model
The free market concept is not viewed as valid
Corporate behavior is implicitly suspect and thereforemust be tightly regulated
Laws are enacted to protect employees from capriciousemployers
Unions are viewed as the legitimate representatives ofthe workers and are mandated often required to be on
the boards of directors.
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Social Capitalist Model continued
Voluntary compliance never works! Therefore there are
governmentally established mechanisms:
Laws, regulations, enforcement and oversight of all
financial and profit-making institutions and agencies
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Employees
Family Owned*
Society
-Government
-Public in general
- the Community
Highly dependent
on the perspective
of the owners
However they too have to balance their
operations with society
Have a very tough
challenge because of
legacy considerations.The patronis usually
focused onbuilding
something for posterity
and his familyhonor.
- Tata
- Barcardi
- Ferragamo
- Paed Group
- Heinz,- Campbells
- Hershey
- Parmalat-TheTanzis
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Family Owned Model
Generally a highly entrepreneurial, risk taking, visionary founder
who establishes and builds the family business.
Businesses are not necessarily related but become part of a
empire:
Bronfman Family (Seagram Company) business dynasty
Henry Ford, Henry Ford II, William Clay Ford
The Tata Group multinational conglomerate based in Mumbai has interests in
steel, automobiles, IT, communication, power, tea,, consulting and hotels.
Carlos Slim Helu (Telmex) plus educational services, and healthcare
The Family Business begins to exert significant influence on the
government either thru corruption (bribes), lobbying, or other ways.
Depending on the familys decision the business can be an outstanding
employer (paternalistic) or highly dictatorial, demanding and inhumane.
Management is through Blood Line or marriage.
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Employees
Privately Held
Society
-Government
-Public in general
- the Community
Those not identified with
a family, pension funds
or stockholders are truly
anonymous and areessentially answerable
only to the law and
their investors!
Hedge Funds, Venture
F
unds, Governments,Global Investors
A Growing Trend
Managing Cashis
always a challenge*
* Regardless of the amount!
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Employees
In Totalitarian Governments there are NO
Stockholderstherefore there canbe no CSR.
Society-Government
-Public in general
- the Community
?
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We are going to look at:
Corporations operating under so-called
Free Market Capitalism
Family Owned Businesses
Businesses operating under the Social
Capitalist Model
Privately
Held (non
-public entities)
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Why do you thinkyou are
required to take this course?
Now, are you beginning to get the reason?