Lecture 6: CSR Definition & Theories Flashcards
According to Carroll’s CSR Pyramid, which responsibility is the most vital for business survival?
A) Ethical Responsibility
B) Legal Responsibility
C) Economic Responsibility
D) Philanthropic Responsibility
C
Provide an example of how a company can fulfill its philanthropic responsibility.
(Answer: A company can donate a portion of its earnings to charity or sponsor community events.)
How does environmental responsibility benefit businesses in the long run?
Reducing waste and energy consumption lowers costs, improves sustainability, and enhances the company’s reputation
Give one example of an ethical responsibility that is not legally required.
Answer: Paying workers fairly and on time, even if not legally required in some countries
List the four components of Carroll’s CSR Pyramid in order from Most Important to Least important.
Economic, Legal, Ethical, Philanthropic
Which of the following is a key benefit of corporate social responsibility (CSR)?
A) Higher immediate profits
B) Increased business reputation and long-term growth
C) Reduced stakeholder involvement
D) Lower wages for employees
B
Which of the following is NOT an example of an environmental responsibility in the Triple Bottom Line approach?
A) Reducing reliance on fossil fuels
B) Investing in employee training programs
C) Using paper instead of plastic packaging
D) Lowering energy consumption
B
Which of the following best describes the Stakeholder Theory?
A) Businesses should only focus on maximizing shareholder profits
B) Organisations should create value for all stakeholders affected by business actions
C) Companies should only consider customers as stakeholders
D) Employees and customers are the only important stakeholders
B
What are the three components of the Triple Bottom Line framework?
A) People, Profit, Policy
B) Profit, People, Planet
C) Profit, Politics, Planet
D) Productivity, Profit, People
B
Which of the following is an example of legal responsibility in CSR?
A) Paying employees on time
B) Donating to charities
C) Avoiding tax evasion and money laundering
D) Reducing carbon emissions
C
Discuss the stakeholder theory
Emphasises the inter-relationship between a business and its various stakeholders
An organisation should create value for stakeholders, directly or indirectly affected by business actions, not just shareholders.
More representation of various stakeholders to make a fair opinion (otherwise major shareholders picked are only profit-driven and do not care about other initiatives)
Discuss the Triple Bottom Line theory
Economic Results
Measures financial performance and profitability of business
Most important for company to achieve continuous profit for long-term, not high profits
Measures business’ contribution towards overall economy and growth of its industry
Social
Measure organisations commitment to people
Including stakeholders, employees, individuals throughout Supply chain, customers, community and future generations
Methods to measure: Advancing human rights; donating to global poor and hungry ; promoting diversity, race and gender inequality
Environmental
Measures and improves organisations’ commitment to reducing environmental footprint
E.g., less energy consumption/reliance on fossil fuels
Using alternative energy sources to minimise consumption of traditional sources
→ H&M: transits to paper bag packaging from plastic
Discuss Carroll’s CSR Pyramid theory (PELE)
Economic Responsibility
Obligation to make money for business survival
Profits necessary to reward investors and owners
Must be reinvested back to maintain business growth
Represented through investments, marketing strategies, business operations and long-term financial strategies
Legal Responsibility
Respect laws and regulations
Seen as a responsible organisation, reflects positively on whole economy and society
E.g Tax evasion, money laundering—reflects badly on reputation of corporation
Ethical responsibility
Must behave as a good citizen
Allows corporation to do what is good for society even if the law didn’t require it (e.g Maritime Labour convention, ensuring workers paid on time, basic human rights)
Philanthropic responsibility
Voluntary activity guided by business’s desire to participate in social activities not required by law and not generally accepted in business as ethical sense
Help increase corporate reputation and a good citizenship image
E.g sponsoring sports activities, donating a percentage of business earnings to a prominent cause
Define CSR
Corporate Social Responsibility practices are under spotlight by regulators, policymakers, and businesses due to financial scandal (e.g Lehman brothers) and environmental accidents (e.g oil spills)
Research links CSR to higher financial performance for organisations.
Evolved from being voluntary to mandatory ( pressure from stakeholders)- then to an investment
Results: Cost savings, fewer inspections, and faster turn-around time in ports.
What are the strengths of applying the Caroll’s Pyramid Theory
Listed in order of hierarchy from Philantropic, Ethical, Legal and Environmental, while taking into account these 4 responsibilities
What are the benefits of applying Stakeholder Theory?
Allowing the corporation to maintain a strong interrelation and interconnection with community and business components.
If aim is achieved, will gain trust and loyalty of all stakeholders.
What are the challenges of applying the Stakeholder Theory?
- The need to balance the interests of all stakeholders
- and adopt a transparent policy with them.
Challenges in applying Caroll’s CSR Pyramid Theory
- Might take time and effort to study external social and environmental factors
Challenges in applying the Triple Bottom Line theory
When using the approach, corporation has to balance the interests of all stakeholders to achieve sustainable goals in society and ecology
