FSU MAN 4701 - Chapter 7: global corporate citizenship

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Chapter 7 global corporate citizenship Global corporate citizenship o Refers to putting an organization s commitment to social and environmental responsibility into practice worldwide not only locally and regionally This is particular to company s global footprint all about the stakeholder relationships multiple governments social interest groups and other organizations o Entails putting corporate social responsibility into practice by Proactively building stakeholder partnerships Discovering business opportunities in serving society Transforming a concern for financial performance into a vision of integrated financial and social performance could eventually lead to other business opportunities o Concept is consistent with several major themes discussed throughout this book Managers and companies have responsibilities to all their stakeholders Corporate citizenship or responsibility involves more than just meeting legal requirements should try to go above and beyond the legally required minimum Corporate citizenship requires that a company focus on and respond to stakeholder expectations and undertake those voluntary acts that are consistent with its values and business mission Corporate citizenship involves both what the company does and through what structures it engages the stakeholders and makes decisions Citizenship profile o Research by Gardberg and Fombrun argues that corporate citizenship activities should be viewed as strategic investments like research and development Create intangible assets that lead to improved legitimacy reputation and competitive advantage being genuinely involved with stakeholders Particularly true of global firms where citizenship activities overcome nationalistic barriers and build local advantage o Important for global firms to choose a citizenship profile which matches the local setting The public expectations on factors like environmental risk philanthropy and workers rights vary in different parts of the world If the company chooses the right configuration of citizenship activities that match public expectations they will have a significant strategic advantage Management systems for global corporate citizenship o Global corporate citizenship is more than espoused values it requires action Espoused values are what they advertise like a mission statement o In order to become leading citizens of the world companies must establish management processes and structures to carry out their citizen commitments Could be assigned to committee of the board senior executive committee single executive group of executives or departments of corporate citizenship International organizations that support corporate citizenship activities for businesses o Do research of what corporations support and what the practices are and act as liaisons to help companies get involved and sustain with membership and connect members They include 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 AICC Africa CSR Asia and Asian Forum on Corporate Social Responsibility Stages of global corporate citizenship o This is a developmental change process involving new attitudes routines policies programs and relationships Mirvis and Googins of the Center for Global Citizenship proposed a five stage model of global corporate citizenship The five stages are elementary out of touch and focused on legal compliance defensive engaged supporter in the loop reactive innovative steward on top of it responsive integrated champion in front proactive and transforming visionary ahead of the pack defining o Each stage is characterized by distinct patterns of these elements citizenship content strategic intent leadership structure issues management stakeholder relationships and transparency Assessing global corporate citizenship o As companies around the world expand their commitment to corporate citizenship they have also improved their capacity to measure performance and assess results They use a social audit to systematically evaluate how the organization is performing socially economically and ethically A company s performance is evaluated relative to a set of externally imposed standards looking at where they are in their programs The results of the audit are used to improve the firm s performance to communicate with stakeholders and the public Six benefits of social audits o Identified by scholar Simon Zadek Help businesses know what is happening within their firm Understand what stakeholders think about and want from the business 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 The auditing process o Companies have several choices in carrying out an audit Internal audit company hires and trains its own staff of auditors whose job is to inspect factories either its own or those operated by contractors to determine whether or not they are in compliance External or third day audit company hires another organization to carry out the audit and report back to the company Crowd sourcing audit company gathers information directly from workers using their mobile phones Social and environmental reporting o When a company decides to publicize information collected in a social audit this is called corporate social reporting When they clearly and openly report their financial social and environmental performance they are acting with transparency because they have a quality of complete clarity Triple bottom line o Bottom line refers to the figure at the end of a company s financial statement that summarizes its earnings after expenses The triple bottom line is the company s results financially environmentally and socially This idea has been more quickly accepted in European firms than American ones Chapter 8 Business Government Relations How business and government relate Government s public policy role o Government cooperates with business for mutually beneficial goals through collaborative partnerships Influenced by nation s values and customs therefore differs by country o Government s goals and business s objectives are in conflict Adversarial relationship where business and government works at arm s length o Companies operating globally may find governments whose legitimacy or right to be in power is questioned May


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