The following statements were made by the chief executive officers of four companies about corporate social responsibility stance of their respective companies, in Mercyland, at a ball to honour companies that were socially responsible in the just ended year.
i) “Keener Ltd has invested heavily in digital communities in villages of Mercyland to create new market opportunities and promote community economic development. On the business side of the deal, Keener has partnered with local business leaders, community groups, and NGOs to create web-based services for education, healthcare, and agriculture needs of the people. Keener Ltd has created an executive level corporate citizenship committee and several tiers of multi-functional committees to support citizenship in the company’s lines of business. ”
ii) “Standard Ltd primary social responsibility is to assure our shareholders of the short term financial success of the company. Expecting us to exercise social duties beyond this can undermine the authority of government. As a company we have met all government regulations concerning society and nothing more is expected of us.”
iii) “Poor Ltd is increasingly moving from simply complying with environmental laws to taking more practical actions to winning the public’s trust through interactions and dialogue with other stakeholders. The company recognises the fact that engaging and addressing concerns of other stakeholders will result in long-term financial benefit to the shareholders. We are aware that company’s operations sometimes affect society negatively and we take steps to promptly address issues stakeholders bring to our attention. This is currently enhancing our reputation.”
iv) “High Ltd has come to accept the legitimacy of the expectations of stakeholders other than shareholders and we have built their expectations into our organisation’s stated vision, mission and strategic direction. We recognise that without appropriate relationships with groups such as suppliers, customers, employees, government and society at large, High Ltd will not be able to function. As a company, our long term survival depends on protecting our environment and promoting social equity as well as economic or financial performance.”
Required:
Identify and discuss the corporate social responsibility stance each company is as stated by their respective CEOs. (12 marks)
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i) Keener Ltd is pursuing shapers of society corporate social responsibility stance. Shapers of society stance regard financial considerations as of secondary importance or a constraint. These are activists, seeking to change society and social norms. Here the social role is the raison d’être of the business. Such organisations may see their strategic purpose as ‘changing the rules of the game’ through which they may benefit but by which they wish to assure that society benefits. In this role it is unlikely that they will be operating on their own: rather they are likely to be partnering with other organisations, commercial and otherwise, to achieve their purposes. The Keener Ltd has put Mercyland community at the centre of its purpose.
ii) Standard Ltd is pursuing the laissez-faire stance of corporate social responsibility. The laissez-faire view represents an extreme stance. Proponents argue that the only responsibility of business is to make a profit and provide for the interests of shareholders. It is for government to prescribe, through legislation and regulation, the constraints which society chooses to impose on businesses in their pursuit of economic efficiency. Organisations should meet these minimum obligations but no more. Expecting companies to exercise social duties beyond this can, in extreme cases, undermine the authority of government.
iii) Poor Ltd is pursuing enlightened self-interest stance of corporate social responsibility. Enlightened self-interest is tempered with recognition of the long-term financial benefit to the shareholder of well-managed relationships with other stakeholders. The justification for social action is that it makes good business sense. An organisation’s reputation is important to its long-term financial success. Given that employees see it as important that their employer acts in a socially responsible manner, a more proactive stance on social issues also helps in recruiting and retaining staff. So, like any other form of investment or promotion expenditure, corporate philanthropy or welfare provision might be regarded as sensible expenditure. The avoidance of ‘shady’ marketing practices is also necessary to prevent the need for yet more legislation in that area. Managers here would take the view that organisations not only have responsibility to their shareholders, but also a responsibility for relationships with other stakeholders (as against responsibilities to other stakeholders).
iv) High Ltd is pursuing a forum for stakeholder stance of corporate social responsibility. A forum for stakeholder stance explicitly incorporates multiple stakeholder interests and expectations rather than just shareholders as influences on organisational purposes and strategies. Here the argument is that the performance of an organisation should be measured in a more pluralistic way than just through the financial bottom line. Companies in this category might retain uneconomic units to preserve jobs, avoid manufacturing or selling ‘anti-social’ products and be prepared to bear reductions in profitability for the social good. Some financial service organisations have also chosen to offer socially responsible investment ‘products’ to investors. These include only holdings in organisations that meet high standards of social responsibility in their activities.