BA 201

• Course Syllabus
• Google Classroom
• Groupings
• Class introduction
Class Code

•jgtlf2x
Groupings
Group 1 Group 2 Group 3 Group 4
Ayos Buid Cuachin Dela Rosa
Delavega Montoya Pioquinto Tagustos
Icaza Obdianela Ocana Olivar
Soria
Grading System
1. Two examinations – 40%
2. Assignments/Quizzes/Group Works – 10%
3. Reports (one group and one individual) – 20%
4. Webinar organized as a class – 30%
Group Report
• Each group will be required to give a 10-points quiz after the
report (Use the Google Quiz feature for ease of correction)
• Make Dr. Dela Cruz an Editor of the quiz
• But send results to [email protected] ASAP
• Send written report and PowerPoint presentation not later than
the day of the report schedule
• Presentation must not exceed 40 minutes (every group member
must speak) plus 10 minutes open forum plus 10 minutes quiz
• There will be a group assigned to ask question per group
(graded as recitation for that group)
Groupings
Group 1 Group 2 Group 3 Group 4
Ayos Buid Cuachin Dela Rosa
Delavega Montoya Pioquinto Tagustos
Icaza Obdianela Ocana Olivar
Soria
To be asked by To be asked by To be asked by To be asked by
Group 3 Group 4 Group 2 Group 1
Parts of the Report
• Introduction
• Legal Bases
• Case Example (preferably in the Philippines or at least in Asia)
highlighting unethical practices in relation to the topic. At this
point the group reporters will ask questions to the class
regarding the case as it relates to CSR and GG.
• Ways Forward
Webinar
• The class will propose a theme and with help from the professor
will finalize it
• The class may also suggest speakers but professor has two
speakers in mind
• Finalize the letters of invitation, certificates, promotion, FB Page
(if needed), virtual background, programme, online platform to
use and token for speakers at least two weeks before the
webinar schedule
• Webinar schedule: December 10, 2022
• To be coordinated with GS-OLC so other graduate students can
attend
Class Introductions
• Who are you?
• What do you do?
• Why did you decide to pursue your graduate degree?
Social Responsibility and Good Governance
• What are these?

• How are these concepts related?

How are they related?
• The relationship between good governance and social
responsibility helps corporations keep things in balance.

• It also supports the company's efforts to develop control

mechanisms, increasing shareholder value and improving
satisfaction among shareholders and stakeholders.
A social contract?
• Foundations of CSR and corporate governance as old as the
history of business (Bolton, Kim & O’Gorman, 2011).
• CSR and corporate governance are central to managing the
contemporary relationship between business and society.
• CSR and corporate governance are mutually beneficial and can
add value to companies whilst maintaining a good relationship
with society (Harjoto & Jo, 2011; Jo & Harjoto, 2011).

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Why do I trust these brands?
1. Consistent quality
2. Good customer service
3. Values feedback from consumers
Trust in business
• Often consumers buy products without worrying about the
impact of that product’s manufacturing upon societies and the
environment because they trust businesses to do this for them.
• Business organisations do (or should do) this through activities
such as corporate governance and CSR.
• When this fails trust can be damaged.

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Business and society
• Businesses are part of societies (locally, nationally, globally)
therefore have a duty to act within society’s expectations and
norms.

• By doing so they are able to operate successfully without

harming the societies, communities and environments in which
they operate (Sethi, 2003).

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Corporate governance
• An essential aspect of ensuring confidence in democratic
market economies (OECD, 2004).

• Managing the relationship between management, board

members, shareholders and other stakeholders (OECD, 2004).

• Central to attracting and maintaining investment.

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Corporate governance defined?
Corporate governance is the system by which companies are directed and controlled.
Boards of directors are responsible for the governance of their companies. The
shareholders’ role in governance is to appoint the directors and the auditors and to satisfy
themselves that an appropriate governance structure is in place. The responsibilities of the
board include setting the company’s strategic aims, providing the leadership to put them
into effect, supervising the management of the business and reporting to shareholders on
their stewardship. The board’s actions are subject to laws, regulations and the shareholders
in general meeting.

The Cadbury Report (1992, paragraph 2.5).

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Corporate governance defined?
Corporate governance is the system by which companies are directed and
controlled. Boards of directors are responsible for the governance of their
companies. The shareholders’ role in governance is to appoint the directors and
the auditors and to satisfy themselves that an appropriate governance
structure is in place. The responsibilities of the board include setting the company’s
strategic aims, providing the leadership to put them into effect, supervising the
management of the business and reporting to shareholders on their
stewardship. The board’s actions are subject to laws, regulations and the
shareholders in general meeting.

The Cadbury Report (1992, paragraph 2.5).

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Corporate governance

1. Leadership
2. Effectiveness/capability
3. Accountability/transparency
4. Relations with shareholders
5. Sustainability

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Corporate Social Responsibility
• An evolving concept;

• Variety of models, measures and frameworks

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CSR Defined (1)
World Business Council for Sustainable Development (1999):

“The continuing commitment by business to behave ethically and

contribute to economic development while improving the quality
of life of the workforce and their families as well as of the local
community and society at large”.

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CSR Defined (2)
“CSR is the commitment of business to contribute to sustainable
economic development-working with employees, their families, the
local community and society at large to improve the quality of life in
ways that are both good for business and good for development”
(World Bank, 2008).

“CSR is a commitment to improve community well-being through

discretionary business practices and contributions of corporate
resources”(Kotler & Lee, 2005).

“Social responsibility of business is to encompass the economic,

legal, ethical and discretionary expectations that society has of
organizations at a given point in time” (Carroll, 1979).

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CSR Defined (3)
“Corporate social responsibility is essentially a concept whereby companies decide
voluntarily to contribute to a better society and a cleaner environment. At a time when the
European Union endeavours to identify its common values by adopting a Charter of
Fundamental Rights, an increasing number of European companies recognise their social
responsibility more and more clearly and consider it as part of their identity. This
responsibility is expressed towards employees and more generally towards all the
stakeholders affected by business and which in turn can influence its success.”

The Commission of the European Communities (2001, p.4)

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Models of CSR
• Carroll (1979): Pyramid of corporate social performance and
one of the most cited models

• Dahlsrud (2008): Five dimensions

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Carroll’s pyramid

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Carroll’s pyramid
Archie Carroll’s
definition of CSR:
“CSR refers to a
business’s behavior,
that it’s economically
profitable, complies
with the law, is
ethical, and is
socially supportive.”

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Economic Responsibility
• The economic responsibility was placed at the pyramid’s
foundation, since it’s a fundamental requirement to survive in
business.
• Economic responsibility in CSR is:
- The responsibility to be profitable
- The only way for a business to survive and support society in
the long term
Carroll’s pyramid
Archie Carroll’s
definition of CSR:
“CSR refers to a
business’s behavior,
that it’s economically
profitable, complies
with the law, is
ethical, and is
socially supportive.”

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Legal Responsibility
• The legal responsibility of companies is about complying with
the minimum rules that have been set. Organizations are
expected to operate and function within those rules. The basic
rules consist of laws and regulations that represent society’s
views of codified ethics.
• Behaving as loyal state and company citizens
• Meeting legal obligations
• Supplying goods and services that meet the minimum legal
requirements
Carroll’s pyramid
Archie Carroll’s
definition of CSR:
“CSR refers to a
business’s behavior,
that it’s economically
profitable, complies
with the law, is
ethical, and is
socially supportive.”

34
Ethical Responsibility
Ethical responsibility in CSR includes:
• Performing in a way that’s consistent with society’s expectations
• Recognizing and respecting new or evolving ethical and moral
standards that have been adopted by society
• Preventing ethical standards from being infringed upon to
achieve objectives
• Being proper business citizens by doing what’s ethically or
morally expected
• Acknowledging that business integrity and ethical behavior go
beyond compliance with laws and regulations
Carroll’s pyramid
Archie Carroll’s
definition of CSR:
“CSR refers to a
business’s behavior,
that it’s economically
profitable, complies
with the law, is
ethical, and is
socially supportive.”

36
Philanthropic Responsibility
• The philanthropic responsibility of businesses includes the voluntary or
discretionary activities and practices of businesses.
• Philanthropy isn’t a literal responsibility, but nowadays business are
expected by society to take part in such activities. The nature and quantity
of these activities are voluntary and are guided by companies’ desire to
take part in social activities that are generally not expected from
organizations in an ethical sense.
• Businesses developing philanthropic or discretionary activities give the
public the impression that the company wants to give something back to
the community.
• In order to do so, businesses adopt different types of philanthropy, such as
gifts, donations, volunteer work, community development, and all other
discretionary contributions to the community or groups of stakeholders that
make up that community.
• Global development division
• Gates Cambridge Scholarships
• Financial assistance
• Agricultural development
• Water, sanitation and hygiene
• Other global initiatives
Dahlsrud’s dimensions
Dahlsrud (2008) reviewed
several definitions of CSR
finding five dimensions:
- Environmental
- Social
- Economic
- Stakeholder
- Voluntariness

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• Zadek (2004): shift from looking at CSR as managing risk to its
role in creating value

• Davis (1960): highlighted that short-term costs may lead to

long-term gains.

• How?
• Reducing emissions – efficient (cheaper) supply chains
• Employee retention – reduced recruitment and training costs
• Customer loyalty as result of CSR

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Large corporations vs small businesses
• CSR causes implementation issues because one size does not
fit all.

• Large corporations: standardisation and formulation.

• Smaller business: organic structure, looser and informal.

…this leads to significant differences in CSR approach

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Large corporations vs small businesses
• Large corporations often have a CSR policy which is developed
at board level and implemented from the top down.

• CSR in smaller businesses often seen as an additional activity

(Jenkins, 2004; Schaper & Savery, 2004).

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Indorama Ventures, Ltd.
University Social Responsibility

Ali et al., 2021

Quiz No. 1
• Once CSR becomes a profit gaining activity does it cease to
become CSR?
• No. It is possible to be profitable while deliver significant
benefits to society. As long as the company values are
aligned with the CSR, the CSR is integrated into our
business model and employees can participate.
The Board Model of Social Responsibility
• the board should represent the interest of the company and look
after the shareholder interests of corporate performance,
generated profit and realized dividend.

• The board becomes a platform for balancing shareholders and

stakeholders expectations, for discussing corporate strategy, for
resolving shareholder conflicts and fights, for electing
executives and formulating compensation policy.
• Monks and Minow (2004) boards “are the link between the
people who provide capital (the shareholders) and the people
who use that capital to create value (the managers)”

• Thus, shareholders must have incentives to monitor contracts

with agents.
156 A H a n d b o o k o f C o r p o r a t e G o v e r n a n c e a n d S o c i a l R e s p o n s i b i l i t y

Governance mechanisms

Monitoring and control mechanisms Motivation and binding mechanisms

Internal External Executive compensation

Ownership structure Market for corporate control Stock options
Board Debt market Credit covenants
Cross shareholdings Product market Market signalling
Creditor Executives market
Internal monitoring Regulatory role of the state
Employees National culture, business practice

Figure 10.1 Governance mechanisms

Source: Wolf (1999), p. 17.
• the main board task is to represent, formulate and realize the
interests and expectations of shareholders as the owners of the
companies
• board members should act on a fully informed basis, in good
faith, with due diligence and care and in the best interest of the
company and the shareholders’.
• The board should provide for balancing ‘two distinct powers: the
power of those who own the corporation and the power of those
who run it’
Group Discussion
• https://isb.idaho.gov/blog/theranos-and-the-tale-of-the-
disappearing-board-of-directors/
Guide Question
1. If you were a board of member of Theranos, what would you
have done that was not already done by others (e.g.,
questioning Holmes’ competence?)
• Nike’s business model—to market high-end consumer products
manufactured in cost-efficient supply chains
• Beyond getting their own houses in order, companies need to
stay abreast of the public’s evolving ideas about corporate roles
and responsibilities
• Civil learning
• Organizational learning- Organizations’ learning pathways are
complex and iterative. Companies can make great strides in
one area only to take a few steps backward when a new
demand is made of them.
Five Stages of Organizational Learning
Five Stages of Organizational Learning

Use this to determine

which stage of
organizational
learning on CSR your
company of choice is
in.
 Five Stages of Organizational Learning
• It’s not our job to fix that
• In the defensive stage, the company is faced with often
unexpected criticism, usually from civil activists and the media
but sometimes from direct stakeholders such as customers,
employees, and investors
• At the compliance stage, it’s clear that a corporate policy must
be established and observed, usually in ways that can be made
visible to critics
• Compliance is understood as a cost of doing business; it
creates value by protecting the company’s reputation and
reducing the risk of litigation.
• At the managerial stage, the company realizes that it’s facing a
long-term problem that cannot be swatted away with attempts at
compliance or a public relations strategy.
• The company will have to give managers of the core business
responsibility for the problem and its solution
• A company at the strategic stage learns how realigning its
strategy to address responsible business practices can give it a
leg up on the competition and contribute to the organization’s
long-term success.
• e.g., pro-environment
pro-endling world hunger
pro-holistic health
• In the final civil stage, companies promote collective action to
address society’s concerns. Sometimes this is linked directly to
strategy
• companies must be able to predict and credibly respond to
society’s changing awareness of particular issues.

• Can you name a current issue which was not an issue five to
ten years ago?
• As issues mature, they become absorbed into mainstream
professional debate and eventually into practice.

• Once leading companies adopt unconventional commitments

and practices around certain societal issues, laggards must
either follow suit or risk the consequences
• What was Nike’s business model?

• Why did activist groups target Nike?

• What did Nike do?

• Nike eventually responded to activists’ demands for labor codes
and, after further pressure, agreed to external audits to verify
whether these codes were being enforced.
- Nike hired high-profile firms or individuals to conduct the audits,
which were initially one-off events à backfired
- its first department specifically responsible for managing its
supply chain partners’ compliance with labor standards. And in
1998, Nike established a Corporate Responsibility department,
acknowledging that acting responsibly was far more than
just reaching compliance; it was an aspect of the business
that had to be managed like any other.
• The team’s review didn’t focus on the behaviors of factory
managers and workers, as many previous studies did; the
group considered issues at the factory level symptoms of a
larger systemic problem. Instead of looking down the supply
chain, the team studied the upstream drivers.

• What did Nike do when procurement incentives weren’t

working?
• Nike graded all factories according to their labor conditions and
then tax or reward procurement teams based on the grade of
the supplier they used.
• Fair Labor Association (FLA)
• Apparel Industry Partnership, and the
• SA8000 standard
• Ethical Trading Initiative (ETI)

• Nike has been involved in various initiatives designed to bridge

corporate responsibility and public policy, starting with the FLA
in 1998
• Part of Nike’s response to the price challenge has been to
argue for regulated international labor standards, which would
offset any possible competitive disadvantage that Nike would
incur if it had to go it alone
• Nike’s story illuminates better than most the tensions inherent in
managing corporate performance and societal expectations.
• There’s no doubt that Nike managed to make some
extraordinary errors. But it also learned some important
lessons.
• Today, the company is participating in, facilitating, convening,
and financing initiatives to improve worker conditions in global
supply chains and promote corporate responsibility more
generally.
 What Did Nike Do?
• adopt codes of labor conduct,
• forge alliances with labor and civil society organizations
• develop nonfinancial metrics for compliance that are linked to
the company’s management and its broader governance, and
• engage in the international debate about the role of business in
society and in public policy.
• The benefits of corporate responsibility are hard-won
• When accusations arise, it’s easy for companies to focus on the
low-hanging fruit—employee morale, for instance, or the
immediate need to defend the brand.
• But making business logic out of a deeper sense of corporate
responsibility requires courageous leadership—in particular,
civil leadership—insightful learning, and a grounded process
for organizational innovation.
 Documentary Film Reflection Paper
Watch any of the two in Netflix:

• Bleeding Edge

• Fire in the Blood

1. What was the major issue regarding
• Faulty medical devices in the case of the Bleeding Edge that
proliferated in the market? or
• Production of affordable anti-AIDS drugs?

2. What message resonated with you strongly in the

documentary that you have watched?

3. If you are the owner of the medical device company/anti-AIDS

drug company, what would you do to promote CSR?
1. Submit in a Word file, font size 12, single spaced
2. Put your name and the name of the company
3. Use the file name: Your Surname_Title of the
Documentary_Assignment 2
4. Submit to [email protected]
5. Be prepared to share your output in class next week
 Emerging Trends in Corporate Practice
• Corporate Reforms- corporate governance reforms has given
rise to more social and environment responsibility

• Emergent Trend- focus on off-balance sheet social and

environmental impact

• The Move Towards Convergence- fueled a convergence of

good governance and corporate social responsibility
Corporate Responsibility
• Ensures a better conversation between business and society
• The dialogue between business and society is underpinned by the
principle of accountability à the need for periodic public scrutiny

Governance
• Seeks to create the context for advancing this conversation and creating
trust, progress and continuity by setting the background by which the
conversation is expected to take place

- Governance sets the rules

- It’s the platform for ensuring that rules adopted in pursuit of the need for
an accountable enterprise are not only applied but also made to govern
business and social conversations
 Reading on Corporate Governance
• https://hbr.org/2015/03/corporate-governance-2-0
 Group Discussion
• Can there be a corporate social responsibility without
good governance? Why or why not?

• 15 minutes of group discussion

• Followed by sharing in the class by ONE group

representative.