Chapter 7
Global CorporateCitizenship
Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin
Ch. 7: Key Learning Objectives
Defining global corporate citizenship and observing it inpractice
Recognizing the many different approaches to managingcorporate citizenship
Understanding how the multiple dimensions of corporatecitizenship progress through a series of stages
Understanding how business or social groups can auditcorporate citizenship activities and report their findings tostakeholders
Recognizing how an organization communicates itscorporate citizenship practices and manifests its attentionto various social performance standards, such as thetriple bottom line
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Global Corporate Citizenship
Refers to putting an organization’s commitment to socialand environmental responsibility into practice worldwidenot only locally and regionally
Entails putting corporate social responsibility intopractice by
Proactively building stakeholder partnerships
Discovering business opportunities in serving society
Transforming a concern for financial performance into a visionof integrated financial and social performance
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Global Corporate Citizenship
Concept is consistent with several major themesdiscussed throughout this book:
Managers and companies have responsibilities to all theirstakeholders
Corporate citizenship or responsibility involves more than justmeeting legal requirements
Corporate citizenship requires that a company focus on, andrespond to, stakeholder expectations and undertake thosevoluntary acts that are consistent with its values and businessmission
Corporate citizenship involves both what the corporation does andthe processes and structures through which it engagesstakeholders and makes decisions
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Citizenship Profile
Research by Gardberg and Fombrun argues thatcorporate citizenship activities should be viewed asstrategic investments (like research and development)
Create intangible assets that lead to improved legitimacy,reputation and competitive advantage
Particularly true of global firms where citizenship activitiesovercome nationalistic barriers and build local advantage
Important for global firms to choose a Citizenship Profilewhich matches the local setting
Public expectations vary on factors such as environmental risk,philanthropy and worker rights
Companies that choose the right configuration of citizenshipactivities to match public expectations will reap strategicadvantages
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Management Systems forGlobal Corporate Citizenship
Global corporate citizenship is more than espousedvalues; it requires action
In order to become leading citizens of the world,companies must establish management processes andstructures to carry out their citizen commitments
Could be assigned to committee of the board, senior executivecommittee, single executive/group of executives, or departmentsof corporate citizenship
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International Organizations thatSupport Corporate CitizenshipActivities for Businesses
BSR (formerly Business for Social Responsibility),
Canadian Business for Social Responsibility (CBSR)
Corporate Social Responsibility Europe
Forum Empresa
The African Institute of Corporate Citizenship, or AICCAfrica
CSR-Asia
Asian Forum on Corporate Social Responsibility
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The Stages of Global Corporate Citizenship
Is a developmental change process, involving newattitudes, routines, policies, programs and relationships
Mirvis and Googins of the Center for Global Citizenshipproposed a five stage model of global corporatecitizenship
Each stage is characterized by distinct patterns of:
Citizenship content
Strategic intent
Leadership
Structure
Issues management
Stakeholder relationships
Transparency
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Stages of GlobalCorporate Citizenship
Figure 7.1
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Assessing Global Corporate Citizenship
As companies around the world expand their commitmentto corporate citizenship, they have also improved theircapacity to measure performance and assess results
A social audit is a systematic evaluation of anorganization’s social, ethical, and environmentalperformance
A company’s performance is evaluated relative to a set ofexternally imposed standards
The results of the audit are used to improve the firm’s performanceand to communicate with stakeholders and the public
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Six Benefits of Social Audits
Identified by scholar Simon Zadek
Help businesses know what is happening within their firm
Understand what stakeholders think about and want from thebusiness
Tell stakeholders what the business has achieved
Strengthen the loyalty and commitment of stakeholders
Enhance the organization’s decision making
Improve the business’s overall performance
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Global Social and EnvironmentalAudit Standards
Figure 7.2
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The Auditing Process
Companies have several choices in carrying out an audit
Internal audit: company hires and trains its own staff of auditorswhose job is to inspect factories—either its own or those operatedby contractors—to determine whether or not they are in compliance
External or third-party audit: company hires another organizationto carry out the audit and report back to the company
Crowd-sourcing audit: company gathers information directly fromworkers using their mobile phones
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Social and Environmental Reporting
When a company decides to publicize information collectedin a social audit, this is called corporate social reporting
When companies clearly and openly report theirperformance—financial, social, and environmental—to theirvarious stakeholders, they are acting with transparency
The term transparency refers to a quality of complete clarity; a clearglass window, for example, is said to be transparent
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Trends in CorporateSocial Reporting
Figure 7.3
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Triple Bottom Line
Bottom line refers to the figure at the end of a company’sfinancial statement that summarizes its earnings, afterexpenses
Occurs when companies report to stakeholders not justtheir financial results—as in the traditional annual reportto shareholders—but also their environmental and socialimpacts
Firms in Europe have more quickly accepted triplebottom line than have those in the United States
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