Good Governance and Corporate

Social Responsibility
SESSION Present several theories and frameworks of
OBJECTIVES CSR
Articulate the main contributions and
limitations of each model
Explain how CSR has changed based on the
evolution of such models
Critically reflect on the current body of
knowledge and on the way forward
Apply the theories and models to managerial
practice.
CSR Pyramid
 CSR Pyramid
• Created in 1979 By Archie Carroll

• ‘CSR encompasses the economic, legal, ethical, and discretionary (philanthropic)

expectations that society has of organizations at a given point in time.’

• This set of four responsibilities creates a foundation that helps to characterize the nature of
businesses’ responsibilities to the society of which it is a part.

• The CSR pyramid is built upon the assumption of an economically sound and sustainable
business
 CSR Pyramid - Economic

o The strongest expectation that society has of a business is

Phil to be financially successful, produce goods that have value
antr
oph for society, provide investment, create jobs and pay taxes.
ic
o Profit is, according to Carroll, the incentive and the reward
Ethical
for companies to do all the above.
Legal

Economic
 CSR Pyramid - Legal

o It is the duty of business to know and obey the law

Phil and the basic ‘rules of the game’.
antr
oph o The legal responsibilities include:
ic
performing in a manner consistent with the
Ethical
expectations of government and law
• complying with various regulations
Legal
• conducting business as law-abiding corporate
citizens
Economic
• fulfilling all legal obligations to societal
stakeholders
• providing goods and services that at least meet
minimal legal requirements.
 CSR Pyramid - Ethical

o Being ethically responsible means performing in a

Phil manner consistent with the expectations of societal
antr
oph
ic
norms and ethical norms
• recognizing and respecting ethical/moral norms
Ethical
adopted by society
• preventing ethical norms from being
Legal
compromised in order to achieve business goals
• being good corporate citizens by doing what is
Economic
expected morally or ethically
 CSR Pyramid – Philanthropic

o It includes all forms of business giving (including

Phil money, in-kind and time) and voluntary activities.
antr
oph o Not a responsibility in a literal sense
ic
o Based on the unwritten social contract between
Ethical
business and society
Legal

Economic
 CSR Pyramid – Criticisms
o Hierarchy - Being a pyramid implies some level of hierarchy between the four
responsibilities, with economic being the most important responsibility of all.
• Economic Responsibilities + Legal Responsibilities + Ethical Responsibilities +
Philanthropic Responsibilities = Total Corporate Social Responsibility.

o Philanthropy, not sustainability - Another point of criticism against the pyramid is the
emphasis on corporate philanthropy.
o Tensions - tensions between the four responsibilities could inevitably arise.
• What if doing the right thing decreases sales?
• What if we could use philanthropy to patch up our negative behavior – is this ethical?
CSR Pyramid – Alternative Pyramid
CSR Stages
 CSR Stages

Civil
Strategic
Managerial
Compliance
Defensive

o Model is primarily based on a case study of Nike - Nike’s metamorphosis from the poster
child for irresponsibility to a leader in progressive practices reveals the five stages of
organizational growth
o Created by Simon Zidek in 2004
 CSR Stages

Defensive

o Takes place when a company is accused of behaving unethically

o Companies with the lowest levels of CSR will only deny practices (‘we did not do
it’) or responsibility (‘everyone is doing the same’).
o In this case, the company attempts to avoid additional harm to its reputation
and performance.
 CSR Stages

Compliance

o Managers and leader starts to rebuild reputation

o The company agrees to comply with laws, regulations and policies (be it
external or internal).
o The company usually feels forced into such actions, but it does understand that
it must follow these actions to mitigate the erosion of economic value in the
medium term because of ongoing reputation and litigation risks.
 CSR Stages

Managerial

o Companies embed societal issues in their core management processes

o The goal at this stage is to mitigate the erosion of economic value in the medium term
and to achieve longer-term gains by integrating responsible business practices into daily
operations.
o The first three stages are risk averse. - Companies engage in such practices to reduce
risk and engage in some level of damage control. However, the next two stages,
strategic and civil, are aimed at value creation.
 CSR Stages

Strategic

o At this stage, the companies examine their value chain and strive to be
responsible throughout it.
o Similar to the practice of strategic CSR, companies align their responsibility,
sustainability and philanthropy with what they do and what their mission is.
o At this stage, companies integrate the societal issue into their core business
strategies.
 CSR Stages

Civil
o Companies at this stage are considered CSR leaders that inspire others to be
more responsible and pave the way in becoming CSR icons.
o Companies that have a meta-strategy and examine the future role of business in
society and the stability and openness of global society itself.
 Stage Focus Purpose
Defensive The past Risk mitigation,
Compliance economic value and
reputation
Managerial
Strategic The future Value creation and
  social impact
Civil
      
Stage Organizational Action Reasons for Actions
Defensive – “It’s not our job to fix Deny any wrongdoing, Short-term defense against
that” taking no responsibility attacks to reputation and brand
due to negative impact
Compliance – “We’ll do just as much Comply with CSR norms Mid-term defense against
as we have to” and legislation economic value decrease due to
ongoing reputation and
litigation risks
Managerial – “It’s the business” CSR is embedded in Mid-term defense against
management processes economic value decrease by
integrating responsible business
practices into core operations

Strategic – “It gives us competitive Integrate CSR into business Enhance long-term economic
edge” strategy and core and social value by aligning
operations strategy and process
innovations with the societal
issues

Civil – “We need to make sure Lead and inspire industry Enhance long-term economic
everybody does it” participation and strategic and social value
CSR
CSR Congruence
Model
 CSR Congruence Model

• The CSR congruence model offers a bi-dimensional model to capture social responsibility

• The congruence model offers two dimensions on which companies and their CSR should be
measured: CSR identity and CSR behavior.

CSR Behavior CSR Identity

the ways in which a company refers to the company’s strategy,
actually behaves towards its various culture and values that are aligned
stakeholders, both external and with responsibility and sustainability.
internal.
CSR Congruence
Model

• There are three groups of determinants of CSR

patterns:

• The contribution of this model is twofold.

• It offers a multidimensional model of

CSR, tying identity and behavior, both of
which are very important to CSR and the
perception of a company as socially
responsible.
• It is the first one to offer one model,
which applies to both employees and
employers
Creating Shared
Value
 Creating Shared Value
• Creating shared value (CSV) involves creating economic value in a way that also creates
value for society by addressing its need and challenges. This can be done through three key
ways:
• redefining productivity in the value chain

• recreating products and markets

• enabling enabling local cluster development (Porter and Kramer, 2011).

• Making a positive change in society through creating innovative products and new markets.

• A global society in which so many cannot afford basic goods is not only a societal issue, but
also implies that many companies are missing out on potential markets.
Creating Shared
Value – 3 Pathways
Creating Shared Value – Importance
and Limitations

Unethical Behavior Capitalism

Strategic Corporate
Social Responsibility
 Strategic CSR
The incorporation of a holistic CSR perspective within a firm’s
strategic planning and core operations so that the firm is
managed in the interest of a broad set of stakeholders to achieve
maximum economic and social value over the medium to long
term’

Holistic Strategy Core

Perspective Planning Operations

Maximum
Broad set of Medium to
economic and
Stakeholders long term
social value
 Holistic Perspective - It is about having social responsibility

Strategic CSR embedded in every aspect of the company. Every decision

made is based on responsible and ethical thinking.
Strategic Planning – Companies develop a full strategy on how
it will achieve it’s stated mission with tactics as the means to
the end goal. This helps the company to clarify to all
stakeholders what it is, what it stands for, what it does and for
what reason.
Core Operations - Core operations are what the company does
every day in order to achieve its mission and act upon its
strategy. Strategic CSR means that companies behave
Holistic Strategy responsibly, sustainably and ethically in all of their core
Perspective Planning operations.
Broad set of stakeholders - Companies should care about
stakeholders other than just shareholders.
Core Broad set of Maximum economic and social value - While making products
Operations Stakeholders and delivering services to make profits, companies can also
deliver social value at the same time
Medium to long term - Strategic CSR is about shifting away
Maximum from the very short-term thinking of quarterly performance to
Medium to
economic and long-term outcomes and impact
long term
social value