Strategic corporate social responsibility sustainable value creation

SAGE was founded in 1965 by Sara Miller McCune to support the dissemination of usable knowledge by publishing innovative and high-quality research and teaching content Today, we publish over 900 journals, including those of more than 400 learned societies, more than 800 new books per year, and a growing range of library products including archives, data, case studies, reports, and video SAGE remains majority-owned by our founder, and after Sara’s lifetime will become owned by a charitable trust that secures our continued independence Los Angeles | London | New Delhi | Singapore | Washington DC | Melbourne University of Colorado Denver Business School FOR INFORMATION: Copyright © 2017 by SAGE Publications, Inc SAGE Publications, Inc All rights reserved No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the publisher 2455 Teller Road Thousand Oaks, California 91320 E-mail: order@sagepub.com SAGE Publications Ltd Oliver’s Yard 55 City Road London, EC1Y 1SP Printed in the United States of America United Kingdom Library of Congress Cataloging-in-Publication Data SAGE Publications India Pvt Ltd Names: Chandler, David, 1969– author B 1/I Mohan Cooperative Industrial Area Title: Strategic corporate social responsibility : sustainable value creation / David Chandler, University of Colorado Denver Business School Mathura Road, New Delhi 110 044 India SAGE Publications Asia-Pacific Pte Ltd Church Street #10-04 Samsung Hub Singapore 049483 Description: Fourth edition | Thousand Oaks : Sage Publications, [2016] | Earlier editions authored by David Chandler and William B Werther Jr | Includes bibliographical references and index Identifiers: LCCN 2016004555 | ISBN 9781506310992 (pbk : alk paper) Subjects: LCSH: Social responsibility of business | Social responsibility of business—Case studies Acquisitions Editor:  Maggie Stanley Development Editor:  Abbie Rickard Classification: LCC HD60 W46 2016 | DDC 658.4/08—dc23 LC record available at http://lccn.loc.gov/2016004555 This book is printed on acid-free paper eLearning Editor:  Katie Ancheta Editorial Assistant:  Neda Dallal Production Editor:  Jane Haenel Copy Editor:  Paula L Fleming Typesetter:  C&M Digitals (P) Ltd Proofreader:  Susan Schon Indexer:  Terri Morrissey Cover Designer:  Anthony Paular Marketing Manager:  Ashlee Blunk 16 17 18 19 20 10 Brief Contents List of Figures xiv Glossary xvi Preface: Why CSR Matters Plan of the Book xxvii xxxiii Acknowledgments xxxvi Part I: Corporate Social Responsibility Chapter 1: What Is CSR? Chapter 2: The Driving Forces of CSR 23 Chapter 3: Corporate Rights and Responsibilities 40 Part I Case Study: Religion 56 Next Steps 69 Part II: A Stakeholder Perspective 71 Chapter 4: Stakeholder Theory 72 Chapter 5: Corporate Stakeholder Responsibility 87 Chapter 6: Who Owns the Corporation? 110 Part II Case Study: Impact Investing 126 Next Steps 139 Part III: An Economic Perspective 141 Chapter 7: The Pursuit of Profit 142 Chapter 8: Incentives and Compliance 159 Chapter 9: Accountability 180 Part III Case Study: Financial Crisis 199 Next Steps 210 Part IV: A Strategic Perspective 211 Chapter 10: Strategy + CSR 212 Chapter 11: CSR as a Strategic Filter 231 Chapter 12: Strategic CSR 246 Part IV Case Study: Supply Chain 263 Next Steps 281 Part V: A Sustainable Perspective 283 Chapter 13: Sustainability 284 Chapter 14: Implementing CSR 303 Chapter 15: Sustainable Value Creation 325 Part V Case Study: Employees 344 Final Thoughts 359 Endnotes 361 Company Index 431 Subject Index 434 About the Author 448 Detailed Contents List of Figures xiv Glossary xvi CSR Terms xvi Strategy Terms xxiii Preface: Why CSR Matters Strategic Corporate Social Responsibility Studying CSR xxvii xxviii xxx Plan of the Book xxxiii Acknowledgments xxxvi Part I: Corporate Social Responsibility Chapter 1: What Is CSR? A New Definition of CSR The Evolution of CSR Culture and Context Foundations of CSR An Ethical Argument for CSR A Moral Argument for CSR A Rational Argument for CSR An Economic Argument for CSR Strategic CSR Debate Questions for Discussion and Review 13 14 14 16 18 20 22 22 Chapter 2: The Driving Forces of CSR 23 Affluence 23 Sustainability 26 Globalization 28 Communications 32 Mobile Devices 34 Social Media 34 Brands 38 Strategic CSR Debate 39 Questions for Discussion and Review 39 Chapter 3: Corporate Rights and Responsibilities Corporate Rights Citizens United Corporate Responsibilities Benefit Corporations Strategic CSR Debate Questions for Discussion and Review 40 42 43 46 49 54 55 Part I Case Study: Religion Religion and Capitalism Islamic Finance Strategic CSR Debate Questions for Discussion and Review 56 60 63 68 68 Next Steps 69 Part II: A Stakeholder Perspective 71 Chapter 4: Stakeholder Theory 72 Who Is a Stakeholder? 72 A New Stakeholder Definition 74 Which Stakeholders Should Be Prioritized? 78 Organizational, Economic, and Societal Stakeholders 79 Evolving Issues 80 A Model of Stakeholder Prioritization 82 Prioritizing Stakeholders 84 Strategic CSR Debate 85 Questions for Discussion and Review 86 Chapter 5: Corporate Stakeholder Responsibility CSR: A Corporate Responsibility? Milton Friedman Versus Charles Handy CSR: A Stakeholder Responsibility? Caring Stakeholders Informed Stakeholders Transparent Stakeholders Educated Stakeholders Engaged Stakeholders Strategic CSR Debate Questions for Discussion and Review 87 90 90 92 96 98 101 104 107 108 108 Chapter 6: Who Owns the Corporation? 110 History of the Corporation 110 Shareholders 112 Shareholders Own Stock 115 A Legal Person 116 Business Judgment Rule 118 Fiduciary Duties 120 Dodge v Ford 120 Shareholders Versus Stakeholders 122 Strategic CSR Debate 125 Questions for Discussion and Review 125 Part II Case Study: Impact Investing Socially Responsible Investing Values-Based Funds Social Impact Bonds Strategic CSR Debate Questions for Discussion and Review 126 128 132 135 138 138 Next Steps 139 Part III: An Economic Perspective 141 Chapter 7: The Pursuit of Profit 142 Markets 143 Stakeholders as Market Makers 145 Profit 146 Economic Value + Social Value 146 Profit Optimization 149 Production Value and Consumption Value 150 Social Progress 151 Bottom of the Pyramid 152 Unilever 154 Strategic CSR Debate 157 Questions for Discussion and Review 157 Chapter 8: Incentives and Compliance 159 Voluntary Versus Mandatory 159 Behavioral Economics 162 Plastic Bags 163 Nudges 164 Walmart 167 The Walmart Paradox 167 Is Walmart Good for Society? 170 Walmart and Sustainability 171 436 S t r at e g i c C o r p o r at e S o c i a l R e s p o n s i b i l i t y Consequentialist reasoning, 15–16 Conservation International, 278 Consumers behavioral economics, 162–167 commitment of, 102–103, 103 (figure) cost of CSR behavior and, 90 customers as organizational stakeholders, 77 firms reacting to, 93, 143, 293 purchase decisions, 266–267, 341 seven sins of misleading, 241–242 virtuous cycle of employees and, 348–349 See also Communication Consumption costs, 182 harm done during, 196–197 implementing CSR through, 304 materialism and, 107 production and, 348–349 value, 150–151 Contingent valuation, 195 Contractors, 349 Cook, Tim, 27, 123, 273, 305, 306 COP21 (21st Conference of the Parties), 26–27, 284, 285–286 Copwatch, 37 Core competencies, 215–217, 234–235 Core operations, 249–250 Core resources, 234–235 Corporate governance, 320–321 Corporate personhood, 43–44, 46 Corporate philanthropy, 96 Corporate responsibility, 40 (figure), 42–46, 90–92 See also Corporate social responsibility Corporate rights, 40 (figure), 42–46 Corporate self-interest, 40 (figure) Corporate social responsibility (CSR) certification, 188–190 as component of strategic CSR, 248–249, 249 (figure) CSR filter, 248, 336 CSR officers, 307–309, 318, 321 defined, 4–8, 181 disadvantages, 261, 336–337 economic argument for, 20–22, 87, 174 ethical argument for, 14–16, 174 evolution of, 8–13, 10 (figure) executive investment in, 222–224, 305–307 Friedman vs Handy debate, 90–92 hierarchy of, (figure), implementing through value chain, 304 importance of, 23 labels, 190–191 measuring, 181–184 moral argument for, 16–18, 99–100, 174 public purposes, 47–48 rational argument for, 18–20, 174 reports of, 185–188, 320–321 responsiveness, 249 standards of, 11, 185–188 strategic CSR comparison, 261–262, 261 (figure) threshold variations, 224–230, 224 (figure) timing of implementation, 222–224 See also Strategic CSR; Strategic CSR filter; Trends in CSR Corporate Social Responsibility standard (ISO 26000), 189–190 Corporate stakeholder responsibility caring stakeholders, 96–98 defined, 93–96, 95 (figure) education of stakeholders, 104–106 engagement of stakeholders, 107–108, 108 (figure) informed stakeholders, 98–101 transparency and, 101–104 Corporations benefits to society from, 42–43 globalization benefiting, 28–32, 29 (figure), 31 (figure) high profiles of, 42 interests of, 110–111 legal personhood, 116 performance and CSR, 180, 183–184 reflecting, not defining, values, 92–93 role in social progress, 359 role of, 3–4 stakeholder models of, 82–83 See also Consumers; Employees; Owners of corporations; Profit; Stakeholders; Stock market; Supply chain management Corruption Perceptions Index, 229 Costa, Ken, 62 Cost leadership See Low-cost business strategy Costs See Lifestyle pricing Costs of climate change, 290 Countrywide case study, 205–209 Subject Index Creating a World Without Poverty (Yunus), 203 Credit card companies, 65 Credo of Johnson & Johnson, 251 CSR See Corporate social responsibility CSR filter, 248, 336 See also Strategic CSR filter CSR officers, 307–309, 318, 321 CSR threshold, 224–230, 224 (figure) Cultural differences, 6–7, 13–14, 228–230 See also specific cultures Cultural relativism, 269–271 Culture of integrity, 322, 329 Customers See Consumers Customer service, 355 “Customers first” approach to business, 251–252 Data collection for metrics, 310 Dawkins, Richard, 60 Day-to-day operations, 248–250, 256, 322, 330–331, 336 Decision making buy-in for, 357 consumers’ purchase decisions, 266–267, 341 profit maximization and, 149–150 short-term versus long-term goals, 123–124 stakeholders and, 326, 336 value conflicts affecting, 327–328 in values-based businesses, 335–336, 335 (figure) Deepwater Horizon disaster, 27, 188–189 Delaware, 49–50, 118, 121 Deloitte survey, 105 Descriptive approach to creating value, 41–42 Descriptive ethics, 15 Developing nations affluence and, 25–26 bottom of the pyramid, 152–154, 153 (figure), 220–221 corporate philanthropy and, 228 e-waste in, 299 mobile devices in, 34, 154–155 personal hygiene and social progress, 155–157, 156 (figure) sweatshops in, 269–271 See also China; Fair trade Differentiation-based business strategy, 225–230, 236 437 Disclosure scores, 228–229 Discrimination, 19, 238 Discrimination, gender-based, 30 Distributors of products, 276, 316 Dodd-Frank Wall Street Reform and Consumer Protection Act, 20, 271–272, 321 Dodge v Ford Motor Company, 47, 120–122 Drucker, Peter, 7–8, 17, 333, 345 Duesenberry, James, 165 Duke, Mike, 306 Earnings reports, 254–255 Eco Index, 192 Ecolabels, 190–191 The Ecology of Commerce (Hawkens), 294 Ecomagination program, 293 Economic argument for CSR, 20–22, 87, 174 Economic incentives, unintended consequences of, 310–311 Economics of waste, 296 Economic stakeholders, 75–77, 76 (figure), 79–80, 108 (figure) Ecuador’s regulatory environment, 162 Education of stakeholders, 104–106 Egypt, 28 Ehrlich, Paul, 26 Employee-centered firms, 351–357 Employees as customers, 348–349 global value of, 349 as organizational stakeholders, 77 recruitment of, 344 See also Wages Employees case study benefits of motivated employees, 345 employee-centered firms, 351–357 gig economy, 347–351, 350 (figure) John Lewis, 352–354 Timberland, 346–347 volunteer programs, 346–347 W L Gore, 356–357 Zappos, 354–356 Employee Share Ownership Plans (ESOPs), 354 Energy costs, 175 Energy demand, 289 Engagement of stakeholders, 107–108, 108 (figure) 438 S t r at e g i c C o r p o r at e S o c i a l R e s p o n s i b i l i t y Environment China’s environmental degradation, 25 consumer views on, 97–98 impact investing, 126–127 misleading consumers about, 241 as stakeholder, 74–75 as strategic filter of CSR, 237–240 See also Lifestyle pricing; Sustainability Environmental, Social and Governance (ESG) funds, 129, 130 (figure), 133–134 Environmental profit and loss accounting, 291 Environmental Protection Agency, 95, 160, 174 Equal pay, 238 Equitrade, 268 ESG (Environmental, Social and Governance) funds, 129, 130 (figure), 133–134 ESOPs (Employee Share Ownership Plans), 354 Ethical argument for CSR, 14–16, 174 Ethical consumerism, 88 Ethical spending, 98 Ethics business school curriculum covering, 104–106 chief ethics officer, 305–307 codes and training, 315–318 conscious capitalism, 331–332 CSR vs strategic CSR vs., 327 fair trade and, 265–269, 265 (figure), 266 (figure) financial crisis and, 205 free trade and, 267–268 honesty of executives, 101 (figure), 102 privacy concerns, 310 in strategic CSR, 247 use of nudges, 167 Ethics & Compliance Officers Association survey, 311 European Union CSR definition, Economy for the Common Good, 51 mandatory reporting, 312 socially responsible investments, 129 See also specific EU countries Evangelicals, 59–60 Evans, Dave, 62 Evolution of CSR, 8–13, 10 (figure) Evolution of systems, 27 E-waste, 297–300, 298 (figure) Executives, 101 (figure), 102, 305–307 See also Chief executive officers (CEOs) Externality, 192 Extraction firms, 276 Facebook, 35 Factory audits, 274–276, 275 (figure) Fair Labor Association (FLA), 273 Fair Labor Standards Act, 270 Fair trade, 265–269, 265 (figure), 266 (figure), 277–279, 340 Fairtrade profiteers, 268 Faith-based mutual funds, 63, 133 Fama, Eugene, 116 Fame, 107 Fast Fashion, 304 Fast-food industry, 228, 230 Feuerstein, Aaron, 11–12 Fiduciary duties of managers and directors, 120–122 Filters See CSR filter; Strategic CSR filter Financial crisis (2007–2008) about, 89, 176–177 bad decisions of, 199–201 Bank of America and, 207–209 causes, 200–201, 206 Countrywide and, 205–207 global capitalism, 201–203 market abuses, 321 Merrill Lynch and, 207 moving industry closer to CSR threshold, 227–228 Northern Rock and, 207 Occupy Wall Street and, 203–205, 340 regulation and, 161 Washington Mutual and, 207 Financial etymology, 64 Financial industry credit card companies, 65 markets as challenging moral industry, 62 regulation of, 161 reporting requirements, 321 Fines, 204 Firms See Corporations First National Bank of Boston v Bellotti, 44 Flickr, 37 Fluid approach to creating value, 41 Focused differentiation, 226–227 Food choices, 166 Ford, Henry, 118–122, 348–349 Subject Index Fortune’s Most Admired Firm rankings, 308 Fossil fuel stocks, 132 Fourteenth Amendment, 117 Framework Convention on Climate Change, 284 France, 162, 166 Francis, Pope, 60–61 Freedom Capital, 134 Freedom of speech, 44–45, 46 Freeman, R Edward, 73, 74 Free markets, 195–197 Free trade, 267–268 Freshfields Report, 53 Freshwater resources, 194–195 Friedman, Milton, 4, 90–92, 202 Friedman, Thomas, 33, 98, 286–287 Friends of the Earth’s campaigns, 228 The Future of Management (Hamel), 357 Gallup polls, 101–102 Gates, Bill, 203, 257–258 Gender-lens investing, 133 Generic social issues, 248–249 Germany, 166, 354 GHG (greenhouse gas) emissions, 285, 294, 313 Ghoshal, Sumantra, 251 Global capitalism, 201–203, 331, 349 Globalization corporate influence affected by, 99 driving down CSR thresholds, 229–230 income inequality and, 24–25 phases of, 31 (figure) stakeholders and, 28–32, 29 (figure), 31 (figure), 79 sustainability efforts influenced by, 301 as trend, 28–32 See also Offshore production Global warming See Climate change Government firms’ lobbying, 319 incorporation process, 49–53 organizational stakeholder role, 77, 80 quotas and subsidies from, 196–197, 267 social role of, 260 See also Regulation Great Recession See Financial crisis (2007–2008) Green bonds, 132 Green Guides, 191 Greenhouse gas (GHG) emissions, 285, 294, 313 Green products, 240–241 Green Rankings, 228–229, 308 Greenspan, Alan, 161, 203–204 Greenwash, 174–176, 185, 189, 241, 319 GreenXchange initiative, 194 Hamel, Gary, 354–355, 357 Hammergren, John, 348 Handwashing, 155–156 Handy, Charles, 17, 90–92 Hawkens, Paul, 294 Healthcare industry, 159–160, 166 Helpline for ethical dilemmas, 316–318 Hierarchy of CSR, (figure), Hierarchy of purpose, 356–357 Higg Index, 192 High-frequency trading, 114–115 Hillis, Daniel, 255 Hispanus, 67 Holacracy, 356 Hollender, Jeffrey, 306 Hsieh, Tony, 356 Hurricane Katrina, 172–173 Ijara, 66 IMF (International Monetary Fund), 196–197 Immelt, Jeff, 293 Impact investing case study shareholder resolutions, 126–128 social impact bonds, 135–138, 137 (figure) socially responsible investments, 21, 128–132 values-based funds, 132–134 Implementation of strategic CSR actions, 323 (figure) corporate governance and, 320–321 CSR vision, 309 day-to-day operations and, 318, 322 ethics codes and training, 315–318 integrated reporting, 312–315, 313 (figure) performance metrics, 310–312 planning, 303–304, 322 social activism and, 321–322 stakeholder engagement in, 318–319 See also Supply chain management 439 440 S t r at e g i c C o r p o r at e S o c i a l R e s p o n s i b i l i t y Incentives and compliance behavioral economics, 162–167 voluntary vs mandatory, 159–162 See also Economic argument for CSR; Walmart corporate actions Incorporation process, 49–53 India, 28, 264, 310–311 Indonesia, 28 Industry perspective, 215, 217–220, 217 (figure), 227–228 Information consumers’ willingness to access, 98–101 CSR threshold affected by, 229 misleading consumers with, 241–242 phases of access to, 28–32, 29 (figure), 31 (figure) stakeholders’ access to, 28–32, 29 (figure), 31 (figure), 98–101 See also Communication Infrastructure, 47 Initial public offerings, 112, 113 (figure) Integrated reporting, 312–315, 313 (figure) Integration of strategy and CSR, 220–222 Integrity, 322 Interesse, 67 Internet, 29, 32–33, 35, 144–145, 148 Investors and speculators, 253–255 Invisible hand concept, 335 IPO markets, 112, 113 (figure) Iran, 33 Ireland’s recycling efforts, 164 Iron Law of Social Responsibility, 19–20, 321 Islamic finance, 63–67 ISO 26000, 189–190 Issue evolution, 83 Jackson, Andrew, 48 Japan, 50–51, 354 Jenkins, Antony, 337 JLP ( John Lewis Partnership) example, 352–353 Job loss See Offshore production Jobs, Steve, 306 John Lewis Partnership ( JLP) example, 352–353 Kant, Immanuel, 16 Kanter, Rosabeth Moss, 260 Kay, John, 119 Kelleher, Herb, 344 Kelly, Terri, 357 Kennedy, Paul, 203 Kennedy, Robert, 19 Keynes, John Maynard, 115, 254 Kidder, Rushworth, 15 Koestler, Arthur, 356 Kramer, Mark, 221, 248–249, 249 (figure), 259–260 Kyoto Protocol, 284, 285 Laloux, Frederic, 356 Lawson, Nigel, 203 Lay, Kenneth, 316 LEED (Leadership in Energy and Environmental Design), 53 Legal person, 116, 117 (figure), 119, 122 Leo XIII, Pope, 61 Levy, Gus, 124 LIBOR interest rate-fixing scandal, 337 Lifebuoy soap, 155–156 Lifestyle brands, 226–227 Lifestyle pricing, 192–195, 193 (figure) Limited liability company (LLC), 46, 111, 112, 116, 119 Livable wages, 248–249 LLC (limited liability company), 46, 111, 112, 116, 119 Lobbyists as stakeholders, 319 Local activism, 24–25 Local competition, 28–29 Local products, 268–269 Loeb, David, 205 Long Now Foundation, 255 Los Angeles, California, 13 Low-cost business strategy, 225–230, 236 Low-paying jobs, 240 Mackey, John, 78, 142, 331–332, 336 Make-or-buy decisions, 238 Malaysian government, 66–67 Management fees, 133 Managers, 16, 79 Mandatory enforcement of society’s interests, 159–162 Manufacturing jobs, 263 Market capitalism See Profit Market for CSR, 240–242 Market ideology and financial crisis, 200–201, 203–204 Marketing benefits of philanthropy, 256 Subject Index Marketing of strategic CSR, 319–320 Market niches, 226–227 Market price, 196 Market rate of return, 131 Market regulation and stakeholders, 145–146 Market research, 101–102 Maryland benefit corporations, 51–52 MBA Oath, 328–329 Media influence of, 33, 34 role of, 94–95 See also Social media Medium- and long-term perspective as component of strategic CSR, 252–255 Mental fatigue, 104–105 Metrics, performance, 310–312 Mexico, 162, 175–176 Middle class, 152 Mission, 213–214, 338, 340 Mobile devices, 32, 34–37, 154–155 Model for businesses, 22 Moneylenders, 63–64 Moral argument for CSR, 16–18, 99–100, 174 Moral hazard, 200–201 Morals vs ethics, 327 Mortgage crisis See Financial crisis (2007–2008) Most Admired Firm rankings, 308 Motivation of investors, 134 of stakeholders, 83 Mozilo, Angelo, 205, 207, 208–209 MSCI, 308 Munich Re, 290 Muslims, 59–60 Mutuals’ Vice Fund, 134–135 Myths about shareholders, 115, 119–120 Narcissism of Americans, 107–108 Natural capital, 290–293 Natural price, 196 The Netherlands, 51 Newsweek’s Green Rankings, 228–229, 308 NGOs (nongovernmental organizations), 33 Nigeria, 24 Nongovernmental organizations (NGOs), 33 Nonprofits, social role of, 260 Normative approach to creating value, 41 441 Normative ethics, 15 Nudges to human behavior, 164–167 Nye, Joseph, 335–336 Objective outcomes, 41 Occupy Wall Street, 203–205, 340 Offshore production, 12–13, 237 See also Supply chain management Oil companies, 242 Operations implementing CSR through, 304 Opinion surveys, 101–102 Optimization of performance, 258 Optimization of value, 252 Organ donation programs, 166 Organizational stakeholders, 75–77, 76 (figure), 79–80, 108 (figure) Organizations, types of, 2, 33, 231 See also Corporations Outcome vs process of CSR, Outsourcing offshore production, 12–13, 237 stakeholders support of, 42 and strategic CSR, 248–249 See also Supply chain management Owners of corporations defined, 115 Dodge v Ford Motor Company, 118–122 employee-centered firms, 351, 353–354 fiduciary duties of managers and directors, 120–122 firms’ relationship with shareholders, 112–115, 113 (figure) historical perspective, 110–111 shareholders’ ownership of stock, 115–120 shareholders versus stakeholders, 122–125 See also Impact investing case study Pace of progress, 25 Packard, David, Passenger airlines analysis, 219 Path of Service volunteer program, 222–223, 347 Performance metrics, 310–312 Performance of firms and CSR, 180, 183–184, 258 Personal hygiene, 155–156 Petroleum company, protests against, 24 Philanthropy, 136, 247 Pierce, Frank, 73 Pioneer Fund, 132 442 S t r at e g i c C o r p o r at e S o c i a l R e s p o n s i b i l i t y Plague of snakes, 311 Plan A, 294–295 Plane manufacturing, 233 Plastic bags, 163–164 Point-of-sale tax for sustainability, 300 Poland’s organ donation programs, 166 Polartec fleece, 12 Political campaigns See Citizens United v Federal Election Commission Pollution, 13 Polman, Paul, 123, 155–156, 276, 293, 306, 342, 344 Population growth, 26 Porter, Michael, 217–220, 217 (figure), 220–221, 248–249, 249 (figure), 259–260 Post, James E., 73 Potential opportunities, 81, 81 (figure) Poverty, profiting from, 151–154, 153 (figure) Practical ethics, 15 Prahalad, C K., 152–154, 215, 220–221 Preston, Lee E., 73 Price CSR premium on, 240–241 ethical spending as, 98 Fairtrade-certified products, 267 lifestyle pricing, 192–195, 193 (figure) See also Fair trade Primary (IPO) markets, 112, 113 (figure) Prince, Chuck, 200 Principles for Responsible Investment (UNPRI), 129–131, 130 (figure) Principles of Responsible Management Education (PRME), 106 Prisoner recidivism, 135–136 Privacy, 34, 45–46 PRME (Principles of Responsible Management Education), 106 Proactive perspective, 85, 87–88, 177 Process vs outcome of CSR, Production and consumption costs, 182 Production and consumption value, 150–151 Productivity of employees, 345 Product lifestyle, 192–195, 193 (figure) Professional activists, 127 Profit becoming primary purpose of firms, 111 bottom of the pyramid market, 152–154, 153 (figure) causing firms to ignore calls for reform, 89 as firm’s goal, 96 markets, 143–146 no moral justification for, 17–18 optimization of, 331 poverty and, 151–154, 153 (figure) role of business in maximizing, 90–92, 146–151 short-term versus long-term, 123–124 social progress and, 142, 151–152 Unilever as sustainability leader, 154–157, 156 (figure) Protests, 35–36 See also Social activism Proxy season, 127 Public Concern at Work survey, 317–318 Public purposes, 47–48, 51 Quakers, 61, 129 Rational argument for CSR, 18–20, 174 Reaction in stakeholder prioritization model, 85 Recycling issues, 14, 162–164 Regulation carbon emissions, 20, 27 in developing countries, 299 failures in Great Recession, 200–201 healthcare industry setting, 159–160 recycling issues, 162–164 of states, 49–51, 111 voluntary vs mandatory enforcement of society’s interests, 159–162 Religion atheism, 59, 60 Bank of Islam, 66–67 biblically responsible investing, 133 Calvinism, 61 Canada’s symbols of, 60 Quakers, 61, 129 Religion case study capitalism and, 60–62 Islamic finance, 63–67 statistics on affiliation, 56–60, 57 (figure), 58 (figure) symbols of, 59–60 Reports of CSR, 185–188, 320–321 Resilience, need for, 289–290 Resources make-or-buy decisions about, 238 scarcity of, 295–296 as strategic constraint, 232 Subject Index in SWOT analysis, 214–217 utilization of, 27 variations in dependency on, 229 Responsibility and ethics, 15–16 Responsive CSR, 249 Return on investment, 122–125 Reusable cups, 296 Revocation of corporation’s charter, 111 Rhenman, Eric, 72–73 Rice market, 196 Right of possession, 118 Right of use, 118 Rikers Island prison, 135–136 Russia, 28, 60 Sachs, Jeffrey, 335 Sachs, Sybille, 73 Sacrifices for CSR, 92–93 Safety precautions and profit, 145 Salaries See Wages Sambol, David, 207 Sanction avoidance, 18–20 Santa Clara County v Southern Pacific Railroad, 44 Santiago, Chile, 13 São Paulo (Brazil) recycling, 14 Sarbanes-Oxley Act, 20, 317 Schmidt, Eric, 32 School lunches, 166 Schultz, Howard, 38, 278, 306, 337–338, 341 Scott, Lee, 172, 174–175, 306 Secondary (stock) markets, 112, 113 (figure) Self-interest, 335 Self-reports on religion, 56–59, 57 (figure) Sen, Amartya, 203 Seven sins of misleading consumers, 241–242 Shareholders barriers to stakeholder perspective, 249–252 evolving role of, 253 interests of, 120–122 as owners, 112–115 primacy of, 46–47 rights of, 116, 117 (figure) suing firms, 54 symbiotic relationship of firm and, 77 See also Stakeholders Sharia law, 65–67 443 Short-term financial targets, 253–254, 330–331 SIBs (social impact bonds), 135–138, 137 (figure) Sin funds, 134–135 Sins of misleading consumers, 241–242 60 Minutes, 94–95 Smartphones, 34, 154–155 Smith, Adam, 18, 28–29, 196, 334 Social activism Citizens United, 46 current examples, 11 local efforts, 24–25 as part of strategic CSR, 321–322 protests, 9, 35–36 stakeholders and, 97–98 sugar boycott, types of activist investors, 127 See also Impact investing case study; Social progress Social and Behavioral Sciences Team in U.S., 166–167 Social constructions, 22 Social & Environmental Assessment Report, 338 Social impact bonds (SIBs), 135–138, 137 (figure) Socially responsible investments (SRI), 21, 128–132 Social media about, 34–37, 36 (figure) stakeholders interacting with, 144–145 statistics, 33, 35 Twitter, 35–36 Social networks, 355 Social progress behavioral economics and, 162–167 competitive context, 248–249 economic competence and, 222 moral responsibility in return for benefits, 16–17 profit and, 151–152 role of business in, 359 strategic CSR and, 248–249 value of business in, 146–149 voluntary vs mandatory change, 159–162 See also Social activism Social Responsibilities of the Businessman (Bowen), 325 Societal stakeholders, 75–77, 76 (figure), 79–80, 108 (figure), 110–111, 146 444 S t r at e g i c C o r p o r at e S o c i a l R e s p o n s i b i l i t y Soros, George, 200–201 South Africa, 28 Speculators and investors, 253–255 SRI (socially responsible investments), 21, 128–132 Stages of learning/intensity, 80–81, 81 (figure) Stakeholder prioritization about, 78–79 economic stakeholders, 75–77, 76 (figure), 79–80, 108 (figure) model of, 82–85, 82 (figure), 85 (figure) organizational stakeholders, 75–77, 76 (figure), 79–80, 108 (figure) societal stakeholders, 75–77, 76 (figure), 79–80, 108 (figure), 110–111, 146 steps of, 84–85, 85 (figure) Zadek’s stages of learning/intensity, 80–81, 81 (figure) Stakeholder relations department, 308, 319 Stakeholders accessing information, 28–32, 29 (figure), 31 (figure), 98–101 adopting perspective of, 326–327 conflicting interests of, 78–79, 87–88, 176–178 CSR as responsibility of, 92–96 decision making and, 326 defined, 2–3, 6, 72–77 demands from, 3, 84–85, 85 (figure) dependent relationships with firms, 143–145 employees as organizational stakeholders, 77 engagement of, 318–319 globalization raising expectations of, 28 identifying, 83 influence of, 177–178 market makers as, 145–146 mission statements containing concerns of, 338–339 model of, 74 (figure), 76 (figure) satisfying, 239–240 sensitivity to, 330 social media communicating concerns of, 37 strategic CSR component, 50–51 sustainability and, 293–294 tradeoffs among, values of, 41, 239–240 See also Communication; Consumers; Corporate stakeholder responsibility; Cultural differences; Owners of corporations; Stakeholder prioritization; Strategic CSR; Strategic CSR filter Standards of CSR, 11, 185–188 State regulations, 49–51, 111 Stern report on climate change, 289 Stevens, John Paul, 46 Stitzer, Todd, 42–43 Stock market employee-centered firms and stocks, 351 functions of, 112–114, 113 (figure) speculators and investors, 253–255 See also Financial crisis (2007–2008); Shareholders Stout, Lynn, 47, 121 Stoxx Europe Christian Index, 133 Strategic corporate philanthropy, 247 Strategic CSR competing perspectives, 214–220 consumption decisions and, 144 core operations as component of, 249–250 CSR comparison, 261–262, 261 (figure) CSR officers, 318 CSR perspective as component of, 248–249, 249 (figure) defined, 212–214, 247–248 employees, view of, 351 evolution of systems in, 27 Friedman and, 91–92 importance of, 359–360 medium- and long-term perspective as component of, 252–255 “not caring capitalism” comparison, 257–259 “not sharing value” comparison, 259–260 philanthropy comparison, 256–257 stakeholder perspective as component of, 250–252 value creation and, 326 values and, 96–98, 97 (figure), 252 Walmart and, 176–178 See also Corporate social responsibility; Implementation of strategic CSR; Profit; Strategic CSR filter Subject Index Strategic CSR filter competencies, 234–235 environment, 237–240 filter, 236–237 market abuse potential, 241–242 strategies, 235–236, 243, 244 (figure) structure of firms, 234 varying constraints on methods and results, 231, 232–234, 232 (figure) Strategic imperatives, 243 Strategic relevance, 83 Strengths, weaknesses, opportunities, threats (SWOT) analysis, 214–215 Structural design of firms, 234 Subcontractors, 311 Subprime mortgage industry, 89, 206–207 See also Financial crisis (2007–2008) Success See Profit Sugar boycott, Sukuk securities, 66 SuperCorp (Kanter), 260 Supply chain management at Apple, 272–274 CEOs commitment to understanding, 305 ethics issues, 265–269, 265 (figure), 266 (figure), 316 globalization adding to complexity of, 263 implementing CSR through, 304 role of CSR officer in, 308 at Starbucks, 277–279 strategic perspective of, 274–277, 275 (figure) unethical threats to, 269–274 at Walmart, 235 Sustainability CEO’s views on consumer commitment to, 102–103, 103 (figure) defined, 284–285 eliminating waste, 300–301 Interface and, 294 Marks & Spencer and, 294–295 natural capital, 290–293 questions raised by issues, 284 reasons to care about, 294 resilience, need for, 289–290 stakeholders and, 293–294 strategic CSR and, 247 as trend, 26–28 445 Walmart and, 171–174 waste, 295–300 See also Climate change Sustainable Apparel Coalition, 192 Sustainable Living Plan, 155–156, 293 Swartz, Jeffrey, 347 Sweatshops, 269–271 Sweet spot versus danger zone of CSR, 100–101, 100 (figure) Switzerland’s religious symbols, 60 SWOT (strengths, weaknesses, opportunities, threats) analysis, 214–215 Symbiotic relationship of firm and shareholders, 77 Synergy between firms and stakeholders, 107–108 Tactics, 213, 214 Takeover offers, 48 Taxation of railroad properties, 44 Teal stage of development, 356 Technology Internet, 29, 32–33, 35, 144–145, 148 mobile devices, 32, 34–37, 154–155 social bifurcation aggravated by, 24 See also Social media Teleological reasoning, 15–16 Temporal focus on value, 124–125 10,000 Year Clock, 255 Terrachoice, 241–242 Thaler, Richard, 167 The Theory of Moral Sentiments (Smith), 196, 334 Third World aid, 152–154 See also Developing nations Timing of CSR implementation, 222–224 Tobacco industry, 228, 230 Transparency better profits from, 32 corporate governance and, 320–321 reporting and, 314 stakeholders and, 101–104 Trends in CSR affluence, 23–25 brands, 38–39 communications, 32–37, 36 (figure) globalization, 28–32 sustainability, 26–28 Tri-sector athlete, 335–336 Trust, 38, 64–65 446 S t r at e g i c C o r p o r at e S o c i a l R e s p o n s i b i l i t y Trustees of Dartmouth College v Woodward, 43–45 T-shirts, 143–144 Tumblr.com, 99 Turkey in CIVETS, 28 21st Conference of the Parties (COP21), 26–27, 284, 285–286 United Kingdom Behavioral Insights Team, 167 coffee and fair trade, 265–267, 265 (figure) common law, 118 Community Interest Companies, 51 Companies Act, 120 CSR definition, fair trade, 278 financial crisis, 207 greenhouse gases, 293 green products, 240–241 Islamic finance industry center, 67 mandatory reporting, 312 Marks & Spencer, 24, 191, 228, 278, 294–295 Public Concern at Work survey, 317–318 recycling efforts in, 164 religious affiliations, 57–60, 58 (figure), 61 social impact bonds, 135, 136 socially responsible investments, 129 tax letters sent from, 165 United Nations Basel Convention, 299 Bruntland Report, 284 COP21, 26–27 CSR definition, Framework Convention on Climate Change, 284 Principles for Responsible Investment (UNPRI), 129–131, 130 (figure) PRME, 106 United States Climate Action Partnership, 20 coffee and fair trade, 265–267, 266 (figure) employee ownership, 354 investments, 135–138 organ donation programs, 166 public’s views on Congress, 102 religious affiliations, 56–59, 57 (figure) Social and Behavioral Sciences Team, 166–167 trash produced by, 296, 299 whistle-blowing system, 317–318 UNPRI (United Nations Principles for Responsible Investment), 129–131, 130 (figure) Urban density, 26 Usury, 63–65 Utah programs, 136–137 Value individual variations in, 336–337 myth of maximizing for shareholders, 47 optimizing, 252 production and consumption components, 150–151 social vs economic, 146–149 stakeholders’, 94–96 subjectivity of, 99–100 temporal focus on, 124–125 Value chain social impacts, 248–249 Value creation approaches to, 41–42 Ben & Jerry example, 338–341 conscious capitalism, 331–332 firms reflecting, not defining, value, 92–93 morals and business ethics and, 326–329 Patagonia example, 333–334 strategic CSR and, 259–260, 303–304, 329–331, 335–338, 335 (figure), 341–343 values-based businesses, 333 Zappos example, 334 See also Employees case study Values-based culture, 334 Values-based funds, 132–134 Vermont, 339 Vietnam, 28, 29 Virtuous cycle of employees and customers, 348–349 Vision, 213–214 Vision statements, 309, 315 Voluntary enforcement of society’s interests, 159–162 Volunteer programs for employees, 222–223, 346–347 VRIO analysis, 216 Subject Index Wages Ben & Jerry’s compensation policy, 339 developing countries’, 12, 25, 30, 55 equal pay, 238 living wage, 330, 342 low-paying jobs, 92–93, 240 minimum wage, 330, 342 pay differentials, 347–348, 353 Walmart salaries, 170–171 Walmart corporate actions greenwash, 174–176 paradox of, 167–171 size of, 168–169, 169 (figure) strategic CSR and, 176–178 sustainability, 171–174 Waste elimination, 300–301 Water conservation investments, 132 Wealth distribution, 144 The Wealth of Nations (Smith), 18, 196 Welby, Justin, 62 Welch, Jack, 123 Wesley, John, 62 Whistle-blowing system, 317–318 Wiedeking, Wendelin, 254 Window of opportunity for strategic CSR, 96–98, 97 (figure) Wolf, Martin, 116, 201 Working conditions, prices tied to, 98 YouTube, 37 Yunus, Muhammad, 203, 257, 258–259 Zadek, Simon, 80–81, 81 (figure), 82, 83 447 About the Author David Chandler (david.chandler@ucdenver.edu) is Assistant Professor of Management and Co-Director of the Managing for Sustainability Program at the University of Colorado Denver Business School His research focuses on the dynamic interface between the organization and its institutional environment, which he operationalizes within the context of corporate social responsibility, business ethics, and firm/stakeholder relations His research has been published in Organization Science, Academy of Management Review, Journal of Management, and Strategic Organization Additional related publications include the book Corporate Social Responsibility: A Strategic Perspective (Business Expert Press, 2014) He received his PhD in Management from The University of Texas at Austin 448 ... CSR, this book is titled Strategic Corporate Social Responsibility: Sustainable Value Creation Talking about CSR in terms of value creation means that it becomes the responsibility of the CEO... Marketing 319 Corporate Governance 320 Social Activism 321 The Socially Responsible Firm 322 Strategic CSR Debate 323 Questions for Discussion and Review 323 Chapter 15: Sustainable Value Creation Values,... Profit 146 Economic Value + Social Value 146 Profit Optimization 149 Production Value and Consumption Value 150 Social Progress 151 Bottom of the Pyramid 152 Unilever 154 Strategic CSR Debate