The Difference There Is and the Difference That Makes in Global Settings Patricia H. Werhane...
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Transcript of The Difference There Is and the Difference That Makes in Global Settings Patricia H. Werhane...
The Difference There Is and the Difference That Makes in Global Settings
Patricia H. WerhaneUniversity 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
externallyReactiveDiscretionaryCan be a cover-
upEnron, 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 PoliteiaThe 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?
Company
Mass media
Special interestGroups
Privatesector
Politicalparties
InternationalOrganizations
Pressuregroups
Localcommunities
NGOs
Customers
Professionals
Employees
Governments
Suppliers
Corporatemanagement
Shareholders
• Slide Compliments of Klaus Leisinger, Novartis Foundation
SYSTEMS THINKINGA 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 are complex 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)
CommunitiesCommunities
Local Local employeesemployees
CorporationCorporation
NGOsNGOs
Social Social Norms & Norms & CustomsCustoms
CustomerCustomer Local Governments & Local Governments & Political SystemsPolitical Systems
SuppliersSuppliers
Global Global employeeemployee
s s
ShareholderShareholderss
Partners &Partners &CompetitorCompetitor
ss
Religiousinfluences
TierTier 11
Tiers 2-3Tiers 2-3
Tier 4Tier 4
Tier 5Tier 5
The Four “Ps” Global Challenge
The Bottom of the The Bottom of the Pyramid (BOP): Pyramid (BOP): Poverty, Poverty, Pollution and Pollution and PandemicsPandemics
PopulationPopulation: 75-100 million: 75-100 millionPurchasing power: > Purchasing power: > $20,000 USD$20,000 USD
1,500-1,750 1,500-1,750 millionmillion$1,500-20,000 $1,500-20,000 USDUSD
$1,500 USD$1,500 USD
4,000 4,000 millionmillion
< $1,500 < $1,500 USDUSD
Adapted from: C.K. Prahalad and Stewart Hall, 2002. Adapted from: C.K. Prahalad and Stewart Hall, 2002. The Fortune at the Bottom of The Fortune at the Bottom of the Pyramidthe 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
Novartis and reciprocal obligationsMUSTS: 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 ConductFor Nike and its business partnersEmployee rights; to health, safety,
compensation, work hours & benefitsMinimize environmental impactDignity of individual and equal opportunityAnti: forced labor, child labor under 15Minimum wages, benefits, pay for overtime
Limits: 60 hrs/week; 6 day work week maximum
Employee informationTransparency to inspection
Mission& Code
of Conduct
Nike’s Alliance ModelBoard of Directors
Customers
Suppliers & Sub-Contractors
Franchises
Nike
Nike Management & Employees
Country(s) & Local Traditions
Off-shore workers
Model Courtesy of Mary Ann Leeper, COO, Female Health Company
Other SportsClothing cos.
Communities
Media
Home country (U.S.)
Environment NGOs
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 bestOUGHTS: follow guidelines of international codes of
ethics and be good corporate citizensDiscretionary: philanthropy in areas of corporate
expertise
Acknowledgement of parallel stakeholder reciprocal responsibilities
CMR CRCSR