CSR - 28july17 (Week 1 To 8) PDF

Corporate Social Responsibility
Aradhna Malik (PhD)

Assistant Professor
VGSOM, IIT Kharagpur
What is CSR?
What is CSR? (Werther & Chandler, 2010)
 Three words, corporate, social, responsibility
 “A view of the corporation and its role in

society that assumes a responsibility among
firms to pursue goals in addition to profit
maximization & a responsibility among a firm’s
stakeholders to hold the firm accountable for its
actions.”
Corporate philanthropy
 Philanthropy (Oxford English Dictionary): “The
practice of helping people in need”
 Corporate philanthropy: The desire of profit

making organizations to help people in need or
promote welfare of people in need.
Strategic corporate philanthropy
(Michael Porter & Mark Kramer in Werther & Chandler, 2010)
 “The acid test of good corporate philanthropy

is whether the desired social change is so
beneficial to the company that the organization
would pursue the change even if no one ever
knew about it.”
 A balance between the “… ends of economic

viability and the means of being socially
responsible.”
The CSR Pyramid
(Carroll, 1991, in Schwartz & Carroll, 2003)
Be a good citizen Desired

Philanthropic
Be ethical Expected
Ethical
Required
Obey the law Legal
Required
Be profitable Economic
The CSR Hierarchy
(Carroll, 1991, in Werther & Chandler, 2010)
Discretionary
Responsibilities
Ethical
Responsibilities
Legal
Responsibilities
Economic
Responsibilities
The CSR Hierarchy (Contd.)
(Carroll, 1991, in Werther & Chandler, 2010)
 Economic responsibility: “…to produce an

acceptable return on its owners’ investments”
 Legal responsibility: “… a duty to act within the
legal framework drawn up by the government &
judiciary”
 Ethical responsibility: “… to do no harm to its
stakeholders & within its operating environment”
 Discretionary responsibility: “… proactive, strategic
behaviors that can benefit the firm & society, or
both”
The culture & context (Werther & Chandler, 2010)
 Rich and poor societies: Who can afford what

 Individualistic and collectivistic cultures:
Different needs, different priorities, different
agendas for CSR
A moral argument for CSR
(Werther & Chandler, 2010)
 The existence of an organization and the

expectations of the community and wider
society it functions in.
The iron law of social responsibility
(Davis & Blomstrom, 1966, in Werther & Chandler, 2010)
“In a democratic society, power is taken away

from those who abuse it.”
CSR and profits (Werther & Chandler, 2010)
“While CSR does not increase profits, higher

profits lead to greater CSR.”
Why is CSR important?
(Werther & Chandler, 2010)
 Growing affluence
 Ecological sustainability
 Globalization
 The free flow of information
 The public image of an organization
Thank You
Theories of CSR
Legitimacy Theory
(Fernando & Lawrence 2014)
 The society gives organizations their resources.

So, the organizations are expected to fulfil the
expectations of the society they function in
 “Organizations can only continue to exist if the

society in which they are based perceives the
organization to be operating to a value system that
is commensurate with the society’s own value
system.” (Gray et al., 2010, in Fernando & Lawrence, 2014)
How do organizations legitimize
their operations? (Fernando & Lawrence, 2014)
 “To educate relevant stakeholders about their actual

performance”: Reporting
 Change the perceptions of the relevant stakeholders
about the underlying issue without changing the
organization’s behavior”: Public impression management
 “Distract or manipulate the attention away from the
issue of concern and seek to divert the attention to a
favorable issue”: CSR Activities and advertising
 “Seek to change external expectations about the
organization’s performance”
Limitations of Legitimacy Theory
(Gray et al., 2010, in Fernando & Lawrence, 2014)
 Legitimacy gap: Dynamic nature of the

expectations of the society versus
organizational objectives
 Legitimization threats: Unexpected occurrences
affecting the organization’s reputation, such as
a financial threat, major accident, scandal, etc.
 Vagueness regarding disclosure: If and why
and how much should organizations disclose
Stakeholder Theory (Fernando & Lawrence, 2014)
 “… the management of an organization is

expected to perform its accountability towards
its stakeholders by undertaking activities
deemed important by its stakeholders, and by
reporting information”
Who are stakeholders?
(Florea & Florea, 2013)
“Stakeholders are the persons, institutions,

organizations, formal & non formal groups which
are interested or can be affected or which could
influence the company decisions or actions.” (Freeman,
1980, in Florea & Florea, 2013)
21
Types of stakeholders (Florea & Florea, 2013)
Based on involvement:
 “Internal stakeholders have a range of interests in
the different parts of the company [or organization
or community] and its activities.”
 “External stakeholders are individuals, companies

or groups outside the companies which are
influenced or could influence company [or
organization or community] decisions and
activities.”
Types of stakeholders (Contd.)
Based on how they are influenced by decisions/ actions

 “Primary stakeholders are the people or groups which are directly
affected, in a positive or negative way, by a strategy, decision or
action of a company, organization [or community].”
 “Secondary stakeholders are people or groups that are indirectly
affected, either positively or negatively by a company [or
organization or community] decision or action.”
 “Key stakeholders play an important role in [the] decision making
process & also in its implementation because they are involved in
company management or financing [or management & financing of
the organization or community], [e.g.] policy makers, officials,
important professionals or community personalities having a
strong position or influence.”
23
Based on the amount of power and influence they have:

 “Promoters have both great interest in the decision & the
power to help make it successful (or to fail it)”
 “Defenders have a vested interest & can voice their
support in the community, but have little actual power to
influence the decision in any way.”
 “Latents have not particular interest or involvement in
the decision, but have the power to influence it greatly if
they become interested.”
 “Apathetics have little interest & little power, & may not
even know the decision exists.”
Perspectives of stakeholder theory
(Fernando & Lawrence, 2014)
 Ethical perspective:
 “Irrespective of the stakeholder power, all the
stakeholders have the same right to be treated
fairly by an organization.”
 “”Managers of an organization are expected to
manage the business for the benefit of all
stakeholders, regardless of whether management of
stakeholders leads to improved financial
performance.”
 Limitation: very difficult to manage different
and contradictory interests of stakeholders
Perspectives of stakeholder theory
(Contd.) (Fernando & Lawrence, 2014)
 Managerial perspective: “ an organization is

expected to be accountable to its economically
powerful stakeholders.” The more powerful or
critical the stakeholder, the more accountable
the organization is to her or him.
 Challenge: Deciding the priority list
Institutional theory (Fernando & Lawrence, 2014)
 Social acceptance
 “Institutional theory views organizations as
operating within a social framework of norms,
values, & taken-for-granted assumptions about
what constitutes appropriate or acceptable
economic behavior.”
Dimensions of institutional theory
 Isomorphism: “A constraining process that

forces one unit in a population to resemble
other units that face the same set of
environmental conditions.”
 Coercive isomorphism: Pressure from people and
institutions that matter
 Mimetic isomorphism: Copying others’ practices
when one fails to do something unique on one’s
own
 Normative isomorphism: Doing good just like
everyone else…
Dimensions of institutional theory
(Contd.) (Fernando & Lawrence, 2014)
 Decoupling: “… situation in which the formal

organizational structure or practice is separate
and distinct from actual organizational
practice.”
 Social and environmental disclosures help construct
an image of the organization that may or may not
match the real image.
Theoretical Framework
Convergent predictions Convergent motivations

Integrated of organizational of CSR practice
Theories behavior & motivations
1. An organization seeks 1. To legitimize the business or

Legitimacy survivability & stability of organization (legitimacy
its business motive)
Theory
2. To perform accountability to
2. An organization seeks the organization’s
legitimacy of its business stakeholders, sometimes
based on the extent of the
3. An organization tries to be
stakeholders’ power
Stakeholder accountable to its
(accountability motive)
Theory stakeholders
3. To conform to social norms &
4. An organization tries to beliefs those are largely
conform to procedures & imposed on an organization,
structures of other which ultimately leads to
organizations which are homogeneity in organizations
Institutional in the same field (isomorphic
within a particular
Theory motive)
organizational field
Thank You
Aradhna Malik (PhD)

Assistant Professor
Theories of CSR
(Contd.)
(Garriga & Mele, 2004)
Broad categories of theories
 Instrumental theories
 Political theories
 Integrative theories
 Ethical theories
Instrumental theories (Garriga & Mele, 2004)
 “The corporation is an instrument for wealth

creation & this is its sole social responsibility
 “Any supposed social activity is accepted if, and
only if, it is consistent with wealth creation:
 “CSR is a mere means to the end of profits.”
Groups of instrumental theories
 Maximising the shareholder value:

 “Any investment in social demands that would
produce an increase of the shareholder value
should be made, acting without deception & fraud”
 “In contrast, if the social demands only impose a
cost on the company, they should be rejected.”
 “… the socio-economic objectives are completely
separate from the economic objectives”
Groups of instrumental theories
(Contd.) (Garriga & Mele, 2004)
 Strategies for achieving competitive advantage:

 “… focussed on how to allocate resources in order
to achieve long-term social objectives & create a
competitive advantage”
 Approaches:
 “Social investments in competitive contexts
 Natural resource-based view of the firm & its dynamic
capabilities
 Strategies for the bottom of the economic pyramid”
Approaches to strategies for achieving
competitive advantage (Contd.)
 Social investments in a competitive context:

Philanthropic investments are perceived as having
better social value than any other investment (Porter &
Kramer, 2002, in Garriga & Mele, 2004)
 “When philanthropic activities are closer to a

company’s mission, they create greater wealth
than other kinds of donations.” (Burke & Lodgson, 1996, in Garriga &
Mele, 2004)
 “… philanthropic investments by members of

cluster, either individually or collectively, can have
a powerful effect on the cluster competitiveness &
the performance of all its constituents’
companies.” (Porter & Kramer, 2002, in Garriga & Mele, 2004)
 Natural resource based view of the firm (RBV)

& dynamic capabilities:
 RBV:
 “… the ability of a firm to perform better than its
competitors depends on the unique interplay of human,
organizational, & physical resources over time.”
 Resources for competitive advantage “… should be
valuable, rare, and inimitable, and the organization must
be organized to deploy these resources effectively”
Natural resource-based view of the
firm & dynamic capabilities approach
 ‘Dynamic capabilities’ approach:

 “drivers behind the creation, evolution, &
recombination of the resources into new sources of
competitive advantage”
 “organizational & strategic routines by which managers
acquire resources, modify them, integrate them, &
recombine them to generate new value-creating
strategies”
Natural resource-based view of the
firm & dynamic capabilities approach
 Social & ethical capabilities include,
 “process of moral decision making
 process of perception, deliberation & responsiveness or
capacity of adaptation
 development of proper relationships with the primary
stakeholders: employees, customers, suppliers, &
communities”
 Hart (1995): Strategic capabilities model:
 Interconnected capabilities: “pollution prevention, product
stewardship, sustainable development”
 Critical resources: “Continuous improvement, stakeholder
integration, & shared vision”
 Strategies for the bottom of the economic

pyramid:
 Strategies that can “serve the poor & simultaneously
make profits”
 Disruptive innovations: “Products & services that do not
have the same capabilities& conditions as those being
used by customers in mainstream markets; as a result
they can be introduced only for new or less demanding
applications among non-traditional customers, with a
low-cost production & adapted to the necessities of the
population.” (Christensen & Overdorf, 2000; Christensen et al., 2001, in Garriga &
Mele, 2004) e.g. a low cost basic cell phone
Groups of instrumental
theories (Contd.) (Garriga & Mele, 2004)
 Cause related marketing :

 “… the process of formulating & implementing marketing
activities that are characterized by an offer from the firm to
contribute a specified amount to a designated cause when
customers engage in revenue-providing exchanges that
satisfy organizational & individual objectives.” (Varadarajan & Menon,
1988, in Garriga & Mele, 2004)
 Goal: “… to enhance company revenues & sales or customer

relationship by building the brand through the acquisition of,
& association with the ethical dimension or social
responsibility dimension”
 “… seeks product differentiation by creating socially
responsible attributes that affect company reputation.”
Political theories (Garriga & Mele, 2004)
 “… the social power of the corporation is

emphasized, specifically in its relationship with
society & its responsibility in the political arena
associated with this power. This leads the
corporation to accept social duties & rights or
participate in certain social cooperation.”
Political theories (Contd.) (Garriga & Mele, 2004)
 Principles for managing social power (Davis, 1967, in
Garriga & Mele, 2004):
 Social power equation: “… the social responsibilities

of businessmen arise from the amount of social
power that they have”
 Iron law of responsibility: “Whoever does not use
his social power responsibly shall lose it.”
Corporate constitutionalism
(Davis, 1967, in Garriga & Mele, 2004)
 “The constituency groups of corporations

define conditions of the responsible use of
power by corporations, “… and channel
organizational power in a supportive way and
to protect other interests against unreasonable
organizational power.”
Groups of political theories
 Integrative social contract theory

 Corporate citizenship
Integrative social contract theory
 Donaldson & Dunfee (1994, 1999):

 Assumption of a social contract between the society and
business
 “Social responsibilities come from consent”
 Macrosocial contract: “provides rules for any social contracting.
These rules are called the ‘hyper-norms’; they ought to take
precedence over other contracts.”
 Microsocial contract:
 “… show explicit or implicit agreements that are binding within an
identified community, industry, companies or economic systems.”
 “generate ‘authentic norms’.”
 “… based on the attitudes & behaviors of the members of the norm-
generating community and, in order to be legitimate, have to accord
with the hyper-norms.”
Groups of political theories (Contd)
 Corporate citizenship: Profit making

organizations are responsible citizens of the
community they flourish in
Integrative theories (Garriga & Mele, 2004)
 “… consider that business ought to integrate

social demands.”
 “… argue that business depends on society for
its continuity & growth & even for the existence
of business itself.”
 “… focused on the detection & scanning of, &
response to, the social demands that achieve
social legitimacy, greater social acceptance &
prestige”
Groups of integrative theories
 Issues management
 The principle of public responsibility
 Stakeholder management
 Corporate social performance
Issues management (Garriga & Mele, 2004)
 “… the process by which the corporation can

identify, evaluate & respond to those social &
political issues which may impact significantly
upon it.”
 Social responsiveness: action, the how of CSR
The principle of public responsibility
 “… public policy includes not only the literal text of law

& regulation but also the broad pattern of social
direction reflected in public opinion, emerging issues,
formal legal requirements, & enforcement or
implementation practices.” (Preson & Post, 1981, in Garriga & Mele, 2004)
 Scope of managerial responsibility:
 Primary: “… essential task of the firm, such as locating &
establishing its facilities, procuring suppliers, engaging
employees, carrying out its production functions, &
marketing products.”
 Secondary: “… come as a consequence of the primary. e.g.
career & earning opportunities for some individuals, etc.”
Ethical theories (Garriga & Mele, 2004)
 “… the relationship between business & society

is embedded with ethical values.”
 “… firms ought to accept social responsibilities
as an ethical obligation above any other
consideration”
Thank You
Aradhna Malik (PhD)

Assistant Professor
Why CSR?
Approaches to CSR (Lee, 2011)
 Obstructionist strategy: Ignorance of social

demands for greater responsibility: We do not
care!
 Defensive strategy: Legal compliance only. We will
do only as much as is required.
 Accommodative strategy: Legal compliance and
stakeholder interests. We will do what is required
and try to keep stakeholders happy.
 Proactive strategy: We will actively work for the
welfare of the community whether or not we get
noticed.
Approaches to CSR (Contd.) (Lee, 2011)
Institutional pressure
Stakeholder Weak Intense
pressure
Weak Obstructionist: Absence of Defensive: Institutional pressure
external pressures without stakeholder support
Intense Accommodative: Stakeholder Proactive: Synchrony in external

pressure without institutional pressures
legitimacy
Antecedents of CSR (Depending
on conditions) (Campbell, 2007)
 Economic conditions
 Institutional conditions
Economic antecedents of CSR
(Campbell, 2007)
 Corporations will be less likely to act in socially

responsible ways when
 “they are experiencing relatively weak financial
performance”
 “when they are operating in a relatively unhealthy
economic environment where the possibility for
near-term profitability is limited.”
 if there is either too much or too little competition.”
Institutional antecedents of CSR
(Campbell, 2007)
Corporations will be more likely to act in socially

responsible ways if:
 The regulations and laws mandate it and the
punishment for non-compliance is tangibly
severe, especially if these compliance measures
have been developed collaboratively
 “There is a system of well-organized & effective
industrial self-regulation in place to ensure such
behavior”
(Contd.) (Campbell, 2007)

 “There are private, independent organizations, including
NGOs, social movement organizations, institutional
investors, & the press, in their environment, who
monitor their behavior, & when necessary, mobilize to
change it.”
 “They operate in an environment where normative calls
for such behavior are institutionalized in important
business publications, business school curricula, & other
educational venues in which corporate managers
participate.”
(Contd.) (Campbell, 2007)

 “They belong to trade or employer associations
[that] are organized in ways that promote
socially responsible behavior.”
 “They are engaged in institutionalized dialogue
with unions, employees, community groups,
investors, & other stakeholders.”
Antecedents of CSR based on level of
involvement (Aguilera et al., 2007)
 Individual level
 Organizational level
 National level
 Transnational level
Individual level Antecedents of CSR
(Aguilera et al., 2007)
Based on a sense of perceived fairness by

employees
 Instrumental motives: If the organization cares
for the environment, it will care for them. So,
they feel more in control.
 Relational motives: Belongingness: CSR fosters
positive social relationships, which in turn lead
to a feeling of belongingness
 Morality based motives: A need to do what is
right
Individual antecedents of CSR
(Contd.) (Aguilera et al., 2007)
 “Individual employees’ needs for control, for

belongingness, and for a meaningful existence
will lead them to push firms to engage in social
change through CSR”
Organizational Level antecedents
of CSR (Aguilera et al., 2007)
 “Internal and external organizational actors’ (Shareholders’,

managers’, consumers’) shareholder interests, stakeholder
interests, & stewardship interests will lead them to push
firms to engage in social change through CSR.”
 “A downward hierarchical ordering of motives among insider

organizational actors (i.e., Top Management Teams) will lead
to stronger pressure on firms to engage in social change
through CSR.”
 “An upward hierarchical ordering of motives among outsider

organizational actors (i.e. consumers) will lead to stronger
pressure on firms to engage in social change through CSR.”
Antecedents of CSR at the
national level (Aguilera et al., 2007)
 Instrumental motives: Promotion of

international competitiveness
 Relational motives: Promotion of social
cohesion and social partnership between
different strata of society and marginalized
groups
 Moral motives: Collective responsibility to the
betterment of society
national level (Contd.) (Aguilera et al., 2007)
 “Governments’ interests in establishing

competitive business environments, promoting
social cohesion, & fostering collective
responsibility for the betterment of society will
lead them to push firms to engage in social
change through CSR.”
 “A compensatory relationship of motives in

governments will lead to stronger pressure on
firms to engage in social change through CSR.”
transnational level (Aguilera et al., 2007)
 Instrumental motives:
 Power to facilitate NGOs and social welfare groups
 Promotion of competitiveness among businesses
 Relational motives:
 Collaborative relationships among Inter Government
Organizations (IGOs)
 Moral motives: Altruism: “…trying to make the
world a better place to live in”
transnational level (Contd.) (Aguilera et al., 2007)
 “NGOs need for power for alignments/ collaborations, &

for altruism will lead them to push firms to engage in
social change through CSR”
 “IGOs interests in promoting competition, social

cohesion, & collective responsibility will lead them to
push firms to engage in social change through CSR.”
 “The existence of a multiplicative relationship of motives

among transnational actors will lead to stronger firm
pressure to engage in social change through CSR,
depending on the density & intensity of positive NGO,
governmental, & intergovernmental action.”
CSR Motives at multiple levels
of analysis (Aguilera et al., 2007)
Transnational
Motives Individual Organizational National Intergovernment Corporate
al entities interest groups &
NGOs
Instrumental Need for control Shareholder interests Competitiveness Competitiveness Power (obtain
(Short Term) scarce
resources)
Relational Need for •Stakeholder interests Social cohesion Social cohesion Interest
belongingness •Legitimation/ alignment,
collective identity collaboration &
(long term) quasi-regulation
Moral Need for •Stewardship interests Collective Collective Altruism
meaningful •Higher-order values responsibility responsibility
existence
Interactions Upward •Insider downward Compensatory Compensatory Multiplicative
hierarchical hierarchical
•Outsider upward
hierarchical
Why CSR? (Carroll & Shabana, 2010)
 “Reducing cost & risk

 Strengthening legitimacy & reputation
 Building competitive advantage
 Creating win-win situations through synergistic
value creation”
Thank You
Aradhna Malik (PhD)

Assistant Professor
Evolution of CSR
(Carroll, 1999)
1953: Howard R. Bowen
Father of CSR
 Social Responsibilities of the Businessman:
 “… several hundred largest businesses were vital
centers of power and decision making & that the
actions of these firms touched the lives of citizens at
many points.”
 “What responsibilities to society may businessmen
reasonably be expected to assume?”
 “[Social responsibilities of businessmen refer] to the
obligations of businessmen to pursue those policies, to
make those decisions, or to follow those lines of action
which are desirable in terms of the objectives & values
of our society.”
1960: Keith Davis
 Iron Law of Responsibility:
 “Social responsibilities of businessmen need to be
commensurate with their social power.”
 “… the avoidance of social responsibility leads to
gradual erosion of social power”
1963: Joseph McGuire
 Business and Society
 “The idea of social responsibilities supposes that the
corporation has not only economic & legal
obligations but also certain responsibilities to
society which extend beyond these obligations.”
1967: Clarence C. Walton
 Corporate Social Responsibilities:
 “... The new concept of corporate social
responsibility recognizes the intimacy of the
relationships between the corporation and society
and realizes that such relationships must be kept in
mind by top managers as the corporation and the
related groups pursue their respective goals.”
1971: Harold Johnson
 “A socially responsible firm is one whose
managerial staff balances a multiplicity of
interests. Instead of striving only for larger
profits for its stakeholders, a responsible
enterprise also takes into account employees,
suppliers, dealers, local communities, & the
nation.”
 “Social responsibility states that businesses
carry out social programs to add profits to their
organization.”
1971: Harold Johnson (Contd.)
 “Utility maximization […] the enterprise seeks
multiple goals rather than only maximum
profits.”
 “Lexicographic view of social responsibility […]
stongly profit motivated firms may engage in
socially responsible behavior. Once they attain
their profit targets, they act as if social
responsibility were an important goal – even
though it isn’t.”
1971: Committee for Economic
Development
 Social Responsibilities of Business Corporations
 “business functions by public consent and its
basic purpose is to serve constructively the
needs of society – to the satisfaction of
society.”
1971: Committee for Economic
Development (Contd.)
 Concentric circles definition of social responsibility:
 “Inner circle includes the clear-cut basic responsibilities
for the efficient execution of the economic function –
products, jobs & economic growth
 “Intermediate circle encompasses responsibility to
exercise this economic function with a sensitive
awareness of changing social values & priorities, e.g.
fair treatment of employees, environmental concerns,
etc.”
 “Outer circle outlines newly emerging and still
amorphous responsibilities that business should assume
to become more broadly involved in actively improving
the social environment.”
1972: Manne & Wallich
 “To qualify as socially responsible action, a
business expenditure or activity must be one
for which the marginal returns to the
corporation are less than the returns available
from some alternative expenditure, must be
purely voluntary, and must be an actual
corporate expenditure rather than a conduit for
individual largesse.”
 Purely voluntary expenditure vs. expenditure in
response to social norms
1972: Prof. Wallich in Manne
& Wallich
 Elements of the exercise of CSR:
 “Setting of objectives
 Decision whether to pursue given objectives
 Financing of these objectives”
1970s
 Increasing mention of Corporate Social
Performance (CSP)
1973: Keith Davis
 “It is the firm’s obligation to evaluate in its
decision-making process the effects of its
decisions on the external social system in a
manner that will accomplish social benefits
along with the traditional economic gains which
the firm seeks.”
 Moving beyond the law
1973: Eilbert & Parket
 Good neighborliness:
 “… not doing things that spoil the neighborhood”
 “… the voluntary assumption of the obligation to
help solve neighborhood problems”
1974: Eells & Walton
 “… the corporate social responsibility
movement represents a broad concern with
business’s role in supporting & improving that
social order”
1975: S. Prakash Sethi
 “Social obligation is corporate behavior ‘in
response to market forces or legal constraints’.”
 “… social responsibility implies bringing
corporate behavior up to a level where it is
congruent with the prevailing social norms,
values, & expectations of performance”
1975: Preston and Post
 Public responsibility: “… the scope of
managerial responsibility is not unlimited, as
the popular conception of ‘social responsibility’
might suggest, but specifically defined in terms
of primary and secondary involvement areas.”
1976: H. Gordon Fitch
 “Corporate social responsibility is defined as the
serious attempt to solve social problems caused
wholly or in part by the corporation.”
 We take responsibility for our actions!
1979: Abbott & Monsen
 Social Involvement Disclosure (SID) Scale: 28
issues categorized under
 Environment
 Equal opportunity
 Personnel
 Community involvement
 Products
 Other
Measured by the number of times they were

mentioned
1979: Archie B. Carroll
 “For managers to engage in Corporate Social
Performance, they needed to have:
 “A basic definition of CSR
 An understanding/ enumeration of the issues for
which a social responsibility existed (or in modern
terms, stakeholders to whom the firm had a
responsibility, relationship, or dependency),
 A specification of the philosophy of responsiveness
to the issues”
1980: Thomas M. Jones
 CSR is a process not an outcome
 CSR, when engaged in as a process of decision
making, should constitute CSR behavior
1983: Rich Strand
 Systems paradigm of organizational social
responsibility, responsiveness, and responses
 How social policies and activities within the
organization are affected by the organization and
the outer environment, and in turn affect the
activities within and outside the environment
 Four constituent parts of CSR:
 Economic
 Legal
 Ethical
 Voluntary or philanthropic
1985: Wartrick & Cochran
 Corporate Social Performance Model:
 Principles: Corporate Social Responsibilities
 Processes: Corporate Social Responsiveness
 Policies: Social issues management
 CSR Pyramid
 “The CSR firm should strive to make a profit,
obey the law, be ethical, and be a good
corporate citizen”
Thank You
Aradhna Malik (PhD)

Assistant Professor
CSR: Global Timeline
(Katsoulakos, 2004)
1946 – 1958: Fair Trade
(http://wfto.com/about-us/history-wfto/history-fair-trade)
 1946: Self Help Crafts began buying

needlework from Puerto Rico
 1958: First formal Fair Trade shop opened in
USA
1960
 OECD (Organization for Economic Cooperation &
Development) created in Paris (came into force on
30/09/61) to:
 “achieve the highest sustainable economic growth &
employment & a rising standard of living in Member
countries, while maintaining financial stability, & thus to
contribute to the development of the world economy
 “contribute to sound economic expansion in Member as
well as non member countries in the process of
economic development”
 “contribute to the expansion of world trade on a
multilateral, non-discriminatory basis in accordance with
international obligations”
1961: George Goyder
 The Responsible Company
 First mention of social auditing: “… a social audit
can act as both a useful management tool & offer
stakeholders a platform for challenging &
influencing companies”
1961: World Wildlife Fund
 WWF created at Morges, Switzerland
1962: Rachel Carson
 Silent Spring, by Penguin Books:
http://www.rachelcarson.org/SilentSpring.aspx
 “... bringing together research on toxicology,
ecology, & epidemiology to suggest that
agricultural pesticides are building to catastrophic
levels.”
1966
 International Covenant on Economic, Social &
Cultural Rights (ICESCR) adopted by the UN
(http://www.ohchr.org/Documents/ProfessionalInterest/cescr.pdf):
 Part 1: Right to self determination: People are free to

“determine their political status and freely pursue their
economic, social and cultural development”, and
dispose off their natural wealth, and the State has a
responsibility to facilitate this
 Part 2: Right to be recognized without discrimination
 Part 3: Rights to fair and respectful treatment at work,
and the responsibility of organizations to facilitate the
balancing of work and personal life of their employees
1968: Club of Rome
 “…commissioned a study […] to model and
analyze the dynamic interactions between
industrial production, population, environmental
damage, food consumption & natural resource
usage.” – published as Limits to Growth in 1972
(https://www.clubofrome.org/report/the-limits-to-growth/)
1969: UNESCO
 “Provided a forum Conference for Rational Use
& Conservation of Biosphere for early
discussions of the concept of ecologically
sustainable development.”
1969: US Congress
 Passed the National Environmental Policy Act
(NEPA) creating the first national agency for
environmental protection (EPA)
(https://www.epa.gov/nepa)
1969: Commonwealth
Arbitration Commission
 “Adopted the principle of equal pay for equal
work regardless of gender”
(http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/
Browse_by_Topic/employmentlaw/Historyemploymentlaw)
1970
 “The first Earth Day was held as a national
awareness campaign on the environment. An
estimated 20 million (2 crore) people
participated in peaceful demonstrations all
across the USA.”
1971
 “Man and Biosphere program founded by
UNESCO (http://www.unesco.org/new/en/natural-sciences/environment/ecological-
sciences/man-and-biosphere-programme/)
 Henderson Poverty Index developed in

Australia
 In France, companies with more than 300
employees required by law to produce an
employee report: The Bilan Social.”
1970s
 “Germany engaged in the social model of
corporate management
 Council on Economic Priorities and others in USA
began to rate companies publicly on their social &
environmental performance”
 “United Nation’s Code of Conduct for Transnational
Corporations was an early attempt to define
principles of CSR for businesses in terms of ethics,
product standards, competition, marketing, &
disclosure of information.”
1972
 “United Nations Conference on the Human
Environment considered the need for a
common outlook and for common principles to
inspire & guide the peoples of the world in the
preservation and enhancement of the human
environment”
 United Nations Environment Program established
1972
 Nordhaus and Tobin: Is growth obsolete?
Article in Economic Research: Retrospect and
Prospect, Volume 5 – developed the Measure of
Economic Welfare as an alternative to crude
GDP as a measure of economic progress
(http://www.nber.org/chapters/c7620.pdf)
1974
 “Rowland & Molina release a seminal work on
Chloro Fluoro Carbons in Nature magazine
calculating that if use of CGC gases is to
continue at an unaltered rate, the ozone layer
will be depleted soon.”
1979: Tata Steel
 Chairman asks “audit committee to report on
‘whether, and the extent to which the company
has fulfilled the objectives … regarding the social
and moral objectives”
Advertisements: “We also make steel”

https://www.youtube.com/watch?v=qYBkbYaCUuw
https://www.youtube.com/watch?v=Iw4CQIeWGHo
https://www.youtube.com/watch?v=AnXUJXApoNc
1980: International Union for
the Conservation of Nature
 “World Conservation Strategy released by IUCN
as ‘the modification of the biosphere & the
application of human, financial, living & non-
living resources to satisfy human needs &
improve the quality of human life’.”
(https://portals.iucn.org/library/efiles/documents/
wcs-004.pdf)
1982
 “Business in the Community is founded by UK
based business organizations focussed on CSR”
http://www.bitc.org.uk/
1984
 Edward Freeman: Strategic Management: A
Stakeholder Approach: Classic textbook
integrating CSR with mainstream management
theory
1986: USA
 “Toxics Release Inventory established under
the Emergency Planning and Community Right
to Know Act”
https://www.epa.gov/toxics-release-inventory-
tri-program
1987: United Nations
 “Brundtland Commission appointed by the United
Nations to study the connection between
development & the environment publishes report:
‘Our Common Future’. The report introduces the
term ‘sustainable development’ defining it as
‘development that meets the needs of the present
without compromising the ability of future
generations to meet their own needs.”
 http://www.un-documents.net/our-common-
future.pdf
1988
 “The Co-Operatives UK publishes its first Social
Report”
 Ben & Jerry’s in USA produces its first Social
Performance Assessments”
1989: UK
 Profs. David Pearce, Anil Markandya & Edward
Barbier: Blueprint for a Green Economy.
Earthscan Publishers
 “Introduction of the concept of natural capital and
definition of sustainable development as non-
declining per capita human well-being over time.”
1989: Netherlands
(http://wfto.com/about-us/history-wfto)
 International Federation of Alternative Trade

established (IFAT)
 1993: “… aim of IFAT was to ‘improve living
conditions for the poor’ through ‘promoting fair
trade internally/ externally’ with the ‘anticipated
result’ of ‘a higher level of trust and
cooperative among members thus achieving
the aim of IFAT’. ”
1991
 “IUCN/UNEP/WWF publish “Caring for the
Earth: 2nd World Conservation Strategy’
focussing on ‘sustainable society’, ‘sustainable
living’, & ‘sustainability’ itself”
1992: USA
 Business for Social Reponsibility founded
 https://www.bsr.org/en/
1994
 “European Universities Charter for Sustainable
Development agreed to promoting University
education for the training of decision-makers &
teachers, oriented towards sustainable
development & fostering environmentally aware
attitudes, skills & behavior patterns, as well as a
sense of ethical responsibility.”
 Currently adopted as Copernicus Guidelines by United
Nations Economic Commission for Europe (UNECE):
http://www.unece.org/fileadmin/DAM/env/esd/informati
on/COPERNICUS%20Guidelines.pdf
1994: INSEAD (Institut Européen d'Administration des
Affaires)/ European Institute of Business Administration) France
 Caux Round Table Principles for Business

adopted: “The CRT Principles for Business
articulate a comprehensive set of ethical norms
for businesses operating internationally or
across multiple cultures. ”
http://www.cauxroundtable.org/index.cfm?&menuid=28&parentid=2
1995
 World Business Council for Sustainable
Development (WBCSD) established with a view
to “… provid[ing] business leadership as a
catalyst for change toward sustainable
development, & to promot[ing] the role of co-
efficiency, innovation, & CSR”
 http://www.wbcsd.org/
1995: United Nations Framework
on Climate Change (UNFCC)
 Conference of Parties (COP) constituted in
Berlin, Germany
 Article 3.1: "The Parties should protect the climate
system for the benefit of present and future
generations of humankind, on the basis of equity
and in accordance with their common but
differentiated responsibilities and respective
capabilities. Accordingly, the developed country
Parties should take the lead in combating climate
change and the adverse effects thereof;”
(https://unfccc.int/resource/docs/cop1/07a01.pdf)
1996: Organization for Economic
Cooperation & Development (OECD)
 “Introduced the concept of Environmentally

Sustainable Transportation (EST)”
1996: European Commission
 57 European companies got together and
established CSR Europe “… to help companies
achieve profitability, sustainable growth &
human progress by placing CSR in the
mainstream of business practice”
 http://www.csreurope.org/
1996: USA
 “… Social Accountability International (SAI)
Advisory Board was created to establish a set
of workplace standards in order to ‘define and
verify implementation of ethical workplaces’.”
 Source:
http://www.history.ucsb.edu/labor/sites/secure.lsit.ucsb.edu.hist.d7_labor/files/sitefiles/CSR_Re
search_Files/SAI%20and%20SAAS%20Summary.pdf
1997: Framework Convention
on Climate Change
 Kyoto Protocol negotiated: Clear directions
regarding active measures to reduce in
greenhouse gas emissions
1997: USA
 Social Accountability International launched the SA8000
standard to ensure accountability of social performance
in the following areas:
 “Child Labor
 Forced or Compulsory Labor
 Health and Safety
 Freedom of Association and Right to Collective Bargaining
 Discrimination
 Disciplinary Practices
 Working Hours
 Remuneration
 Management System”
1997
 John Elkington: Cannibals with Forks- The
Triple Bottom Line of the 21st Century,
Capstone Publishing Limited, Oxford
 Coined the term, ‘Triple Bottom Line’
 Focussed on People, Planet & Profit
 Review of the book available at
http://appli6.hec.fr/amo/Public/Files/Docs/148_en.p
df
1997
 “Global Reporting Initiative launched to develop
Sustainability Reporting Guidelines”
Focus on
 actively reducing greenhouse emissions,
 protecting natural habitats, especially of

endangered species of flora & fauna
 reporting sustainability efforts in a systematic
manner
https://www.globalreporting.org/Information/about-
gri/Pages/default.aspx
1999: UK
 Quality of Life Counts: Indicators for a Strategy
for Sustainable Development for the UK: A
Baseline Assessment.
 Update in 2004:
http://www.nies.go.jp/db/sdidoc/qolc2004.pdf
1999
 Paul Hawken, Amory Lovins, Hunter Lovins:
Natural Capitalism: The Next Industrial
Revolution
1999: US
 Global Sullivan Principles of CSR launched
 “The objectives of the Global Sullivan Principles are to
support economic, social and political justice by companies
where they do business; to support human rights and to
encourage equal opportunity at all levels of employment,
including racial and gender diversity on decision making
committees and boards; to train and advance disadvantaged
workers for technical, supervisory and management
opportunities; and to assist with greater tolerance and
understanding among peoples; thereby, helping to improve
the quality of life for communities, workers and children with
dignity and equality.”
 http://hrlibrary.umn.edu/links/sullivanprinciples.html
1999: UN
 Global Compact launched with a view to “…
bring companies together with UN agencies,
labor & civil society to support ten principles in
the areas of human rights, labor & the
environment”
 https://www.unglobalcompact.org/
1999: UK
 “UK Corporations Disclosure Legislation passed.
The Turnbull Report on corporate governance
added reputation, probity, & other non-financial
risks to the necessary criteria for reporting risk
to shareholders.”
1999
 Meeting held in Bonn to discuss Kyoto
Agreement and penalties associated with non-
compliance
2000
 “UK Pension Act amended to require the
trustees of occupational pension schemes to
disclose their policy on socially responsible
investment in their Statement of Investment
Principles”
2001: UK
 Launch of the FTSE4Good Index: Ethical
investment stock market index
2002: UK
 “Business in the Community launches first
Corporate Responsibility Index”
http://www.bitc.org.uk/services/benchmarking/cr
-index
2004
 “There are over 60 Government initiatives of
relevance for CSR.
 The UK Parliament has two all-party groups on
corporate citizenship:
 The All-Party Parliamentary Group on CSR
 The All-Party Parliamentary Group on Socially
Responsible Investment”
Aradhna Malik (PhD)

Assistant Professor
CSR in India
Evolution of Indian CSR
(Deo, 2017; Sundar, 2000, in Dhanesh, 2015)
 Phase 1 (1850 to 1914)

 Phase 2 (1910 to 1960)
 Phase 3 (1950 to 1990)
 Phase 4 (1980 onwards)
Pase 1 (1850 to1914)
(Deo 2017; Sundar, 2000, in Dhanesh, 2015)
 Economic Phase: Industrialization

 What did the rulers do in the name of
development?: Colonial time, extraction
 Corporate CSR: Dynastic charity
Phase 2 (1914-1947)
(Deo, 2017; Sundar 2000, in Dhanesh, 2017)
 Economic Phase: Trade barriers

 What did the rulers do in the name of
development?: Colonial time, exploitation
 Corporate CSR: Support freedom struggle
Phase 3 (1947-1960)
 Economic Phase: Socialism, protectionism

 What did the Government do for
development?: Make five year plans
 Corporate CSR: Support new state; launch own
rural initiatives
Phase 4 (1960-1990)
 Economic Phase: Heavy regulations

development?: Licensing, failed at development
efforts
 Corporate CSR: Corporate trusts
Phase 5 (1991 to 2013)
(Deo, 2017; Sundar 2000, in Dhanesh, 2015)
 Economic Phase: Liberalization

 What did the Government do for development?:
Shrinking in production; expanding in social
provision
 Corporate CSR:
 Family trusts, private-public partnerships, NGO
sponsorship
 2009 (Updated in 2011): Ministry of Corporate Affairs:
National Voluntary Guidelines on Social, Environmental
& Economic Responsibilities of Business
Phase 6 (2013 to Present)
 Economic Phase: Globalization

development?: Realized the need to manage
inequality; New reforms to liberalize further
 Corporate CSR: Addition of 2% mandatory CSR
spending to Companies Act
Models of social responsibility
in India (Balasubramaniam et al., 2005, Arevalo & Aravind, 2011)
 Gandhian model/ Ethical model: “Voluntary commitment

to public welfare based on ethical awareness of broad
social needs
 Statist model/ Nehruvian model: “State-driven policies
including state ownership & extensive corporate
regulation & administration”
 Liberal model/ Friedman model: “Corporate
responsibility primarily focused on owner objectives”
 Stakeholder/ Freeman model: “Stakeholder
responsiveness which recognizes direct & indirect
stakeholder interests”
Discussion points for forum
On the course forum, please list and provide
links to Indian organizations following these
models of social responsibility through their
outreach activities
CSR drivers in Indian organizations
(Balasubramaniam et al., 2005)
 Genuine concern for the society

 “Concern for social improvement
 Ethics and values
 Need to care for society
 Belief in stewardship (Gandhian philosophy)”
CSR drivers in Indian organizations
(Contd.) (Balasubramaniam et al., 2005)
 Profit:
 “Corporate reputation
 Employee & customer relations
 Stakeholder impact
 Responsiveness to local communities
 Legal compliance
 Strategic/ corporate planning at board level”
Discussion points for forum
 On the course forum, please list examples of
Indian corporate organizations whose work
highlights each of these focus areas, i.e.
genuine concern and profits
Thank You
Aradhna Malik (PhD)

Assistant Professor
CSR in India
(Contd.)
National Voluntary Guidelines (2011)
(http://www.mca.gov.in/Ministry/latestnews/National_Voluntary_Guidelines_2011_12jul2011.pdf)
 Applicable to all businesses, irrespective of

sector or size
Principles of NVG
 “Principle 1: Businesses should conduct & govern

themselves with Ethics, Transparency & Accountability
 Principle 2: Businesses should provide goods & services
that are safe & contribute to sustainability throughout
their life cycle
 Principle 3: Businesses should promote the well-being of
all employees
 Principle 4: Businesses should respect the interests of, &
be responsive towards all stakeholders, especially those
who are disadvantaged, vulnerable & marignalized.”
Principles of NVG (Contd.)
 “Principle 5: Businesses should respect & promote human

rights
 Principle 6: Businesses should respect, protect, & make
efforts to restore the environment
 Principle 7: Businesses, when engaged in influencing
public & regulatory policy, should do so in a responsible
manner
 Principle 8: Businesses should support inclusive growth &
equitable development
 Principle 9: Businesses should engage with & provide
value to their customers & consumers in a responsible
manner
Principle 1: Businesses should conduct &
govern themselves with Ethics,
Transparency & Accountability
 Core elements:
1. “Businesses should develop governance structures, procedures, & practices
that ensure ethical conduct at all levels; & promote the adoption of this
principle across its value chain
2. Businesses should communicate transparently & assure access to information
about their decisions that impact relevant stakeholders
3. Businesses should not engage in practices that are abusive, corrupt, or anti-
competition
4. Businesses should truthfully discharge their responsibility on financial & other
mandatory disclosures
5. Businesses should report on the status of their adoption of these Guidelines as
suggested in the reporting framework of the NVG document
6. Businesses should avoid complicity with the actions of any third party that
violates any of the principles contained in these guidelines.”
Principle 2: Businesses should provide goods &
services that are safe & contribute to
sustainability throughout their life cycle
 Core Elements:
1. “Businesses should assure safety & optimal resource use over
the life-cycle of the product – from design to disposal - & ensure
that everyone connected with it – designers, producers, value
chain members, customers & recyclers are aware of their
responsibilities
2. Businesses should raise the consumer’s awareness of their
rights through education, product labelling, appropriate &
helpful marketing communication, full details of contents &
composition & promotion of safe usage & disposal of their
products & services
3. In designing the product, businesses should ensure that the
manufacturing processes & technologies required to produce it
are resource efficient & sustainable.”
Core elements of Principle 2
(Contd.)
4. “Businesses should regularly review & improve upon
the process of new technology development,
deployment & commercialization, incorporating social,
ethical, & environmental considerations.
5. Businesses should recognize & respect the rights of
people who may be owners of traditional knowledge, &
other forms of intellectual property
6. Businesses should recognize that over-consumption
results in unsustainable exploitation of our planet’s
resources, & should therefore promote sustainable
consumption, including recycling of resources.”
Principle 3: Businesses should promote
the well-being of all employees
 Core Elements:
1. “Businesses should respect the right to freedom of
association, participation, collective bargaining, & provide
access to appropriate grievance redressal mechanisms
2. Businesses should provide & maintain equal opportunities
at the time of recruitment as well as during the course of
employment irrespective of caste, creed, gender, race,
religion, disability, or sexual orientation
3. Businesses should not use child labor, forced labor, or any
form of involuntary labor, paid or unpaid
4. Businesses should take cognizance of the work-life balance
of its employees, especially that of women”
(Contd.)
5. “Businesses should provide facilities for the wellbeing of its employees
including those with special needs. They should ensure timely payment of
fair living wages to meet basic needs & economic security of the
employees.
6. Businesses should provide a workplace environment that is safe, hygienic,
human, & which upholds the dignity of the employees. Business should
communicate this provision to their employees & train them on a regular
basis
7. Businesses should ensure continuous skill & competence upgrading of all
employees by providing access to necessary learning opportunities, on an
equal & non-discriminatory basis. They should promote employee morale &
career development through enlightened human resource interventions.
8. Businesses should create systems & practices to ensure a harassment free
workplace where employees feel safe & secure in discharging their
responsibilities.”
Principle 4: Businesses should respect the
interests of, & be responsive towards all
stakeholders, especially those who are
disadvantaged, vulnerable & marginalized.”
 Core Elements:
1. “Businesses should systematically identify their
stakeholders, understand their concerns, define purpose &
scope of engagement, & commit to engaging with them
2. Businesses should acknowledge, assume responsibility, &
be transparent about the impact of their policies, decisions,
product & services & associated operations on the
stakeholders
3. Businesses should give special attention to stakeholders in
areas that are underdeveloped
4. Businesses should resolve differences with stakeholders in
a just, fair, & equitable manner”
Principle 5: Businesses should
respect & promote human rights
 Core Elements:
1. “Businesses should understand the human rights
content of the Constitution of India, national laws &
policies, & the content of International Bill of Human
Rights. Businesses should appreciate that human
rights are inherent, universal, indivisible, &
interdependent in nature.
2. Businesses should integrate respect for human rights
in management systems, in particular through
assessing & managing human rights impacts of
operations, & ensuring all individuals impacted by the
business have access to grievance mechanisms.
Core Elements of Principle 5
(Contd.)
3. “Businesses should recognize & respect the
human rights of all relevant stakeholders &
groups within & beyond the workplace, including
that of communities, consumers & vulnerable &
marginalized groups
4. Businesses should, within their sphere of
influence, promote the awareness & realization of
human rights across their value chain
5. Businesses should not be complicit with human
rights abuses by a third party”
respect, protect, & make efforts to
restore the environment
 Core Elements
1. “Businesses should utilize natural & manmade resources in an
optimal & responsible manner & ensure the sustainability of
resources by reducing, reusing, recycling, & managing waste.
2. Businesses should take measures to check & prevent pollution.
They should assess the environmental damage & bear the cost
of pollution abatement with due regard to public interest.
3. Businesses should ensure that benefits arising out of access &
commercialization of biological & other natural resources &
associated traditional knowledge are shared equitably.
4. Businesses should continuously seek to improve their
environmental performance by adopting cleaner production
methods, promoting use of energy efficient & environment
friendly technologies & use of renewable energy.
respect, protect, & make efforts to
restore the environment
 Core Elements
1. “Businesses should utilize natural & manmade resources in an
optimal & responsible manner & ensure the sustainability of
resources by reducing, reusing, recycling, & managing waste.
2. Businesses should take measures to check & prevent pollution.
They should assess the environmental damage & bear the cost
of pollution abatement with due regard to public interest.
3. Businesses should ensure that benefits arising out of access &
commercialization of biological & other natural resources &
associated traditional knowledge are shared equitably.
4. Businesses should continuously seek to improve their
environmental performance by adopting cleaner production
methods, promoting use of energy efficient & environment
friendly technologies & use of renewable energy.
(Contd.)
5. “Businesses should develop Environment Management
Systems (EMS) & contingency plans & processes that
help them in preventing, mitigating & controlling
environmental damages & disasters, which may be
caused due to their operations or that of a member of
its value chain.
6. Businesses should report their environmental
performance, including the assessment of potential
environmental risks associated with their operations, to
the stakeholders in a fair & transparent manner
7. Businesses should proactively persuade & support their
value chain to adopt this principle.”
Principle 7: Businesses when engaged in
influencing public & regulatory policy,
should do so in a responsible manner
 Core Elements
1. “Businesses, while pursuing policy advocacy,
must ensure that their advocacy positions are
consistent with the Principles & Core Elements
contained in these Guidelines.
2. To the extent possible, businesses should
utilize the trade & industry chambers &
associations & other such collective platforms
to undertake such policy advocacy.”
support inclusive growth & equitable
development
 Core Elements
1. “Businesses should understand their impact on social &
economic development, & respond through appropriate
action to minimize the negative impacts.
2. Businesses should innovate & invest in products,
technologies, & processes that promote the wellbeing of
society.
3. Businesses should make efforts to complement & support the
development priorities at local & national levels, & assure
appropriate resettlement & rehabilitation of communities who
have been displaced owing to their business operations.
4. Businesses operating in regions that are underdeveloped
should be especially sensitive to local concerns.”
Principle 9: Businesses should engage
with & provide value to their customers &
consumers in a responsible manner
 Core Elements
1. “Businesses, while serving the needs of their customers, should
take into account the overall well-being of the customers & that
of society.
2. Businesses should ensure that they do not restrict the freedom
of choice & free competition in any manner while designing,
promoting, & selling their products.
3. Businesses should disclose all information truthfully & factually,
through labelling & other means, including the risks to the
individual, to society, & to the planet from the use of the
products, so that the customers can exercise their freedom to
consume in a responsible manner. Where required, businesses
should also educate their customers on the safe & responsible
usage of their products & services.”
Core Elements of Principle 9
(Contd.)
4. “Businesses should promote & advertise their
products in ways that do not mislead or confuse
the consumers or violate any of the principles in
these Guidelines.
5. Businesses should exercise due care & caution
while providing goods & services that result in
over exploitation of natural resources or lead to
excessive conspicuous consumption.
6. Businesses should provide adequate grievance
handling mechanisms to address customer
concerns & feedback.”
Indian Companies Act (2013)
 Chapter IX, Section 135: Corporate Social Responsibility:
1. CSR Committee
2. CSR Policy
1. Formulation
2. Public disclosure
3. “The Board of every company […] shall ensure that the company
spends, in every financial year, at least 2%, of the average net
profits of the company made during the three immediately
preceding financial years, in pursuance of its CSR policy:
1. Provided that the company shall give preference to the local area &
areas around it where it operates, for spending the amount earmarked
for CSR activities
2. Provided further if the company fails to spend such amount, the Board
shall, in its report […] specify reasons for not spending the amount.”
Homework
 Please go through the Business Responsibility
Reports of various organizations and spot
examples of these principles and discuss them
on the Forum.
Thank You
Aradhna Malik (PhD)

Assistant Professor
Stakeholders
&
CSR
“Stakeholders are the persons, institutions,

organizations, formal & non formal groups which
are interested or can be affected or which could
influence the company decisions or actions.” (Freeman,
1980, in Florea & Florea, 2013)
193
 “… those groups without whose support the
organization would cease to exist.” (Stanford Research
Institute, 1963, in Donaldson & Preston, 1995)
 “… those who benefit from or are harmed by, &

whose rights are violated or respected by,
company actions. (Evan & Freeman, 1988, in Shin, 2011)
 “Participants in ‘the human process of joint
value creation’.” (Freeman, 1994, in Shin, 2013)
 “… are or which could impact or be impacted
by the firm/ organization.” (Brenner, 1995, in Shin, 2013)
Types of stakeholders (Florea & Florea, 2013)
Based on involvement:
 “Internal stakeholders have a range of interests in
the different parts of the company [or organization
or community] and its activities.”
 “External stakeholders are individuals, companies

or groups outside the companies which are
influenced or could influence company [or
organization or community] decisions and
activities.”
Based on how they are influenced by decisions/ actions

 “Primary stakeholders are the people or groups which are directly
affected, in a positive or negative way, by a strategy, decision or
action of a company, organization [or community].”
 “Secondary stakeholders are people or groups that are indirectly
affected, either positively or negatively by a company [or
organization or community] decision or action.”
 “Key stakeholders play an important role in [the] decision making
process & also in its implementation because they are involved in
company management or financing [or management & financing of
the organization or community], [e.g.] policy makers, officials,
important professionals or community personalities having a
strong position or influence.”
196
Based on the amount of power and influence they have:

 “Promoters have both great interest in the decision & the
power to help make it successful (or to fail it)”
 “Defenders have a vested interest & can voice their
support in the community, but have little actual power to
influence the decision in any way.”
 “Latents have not particular interest or involvement in
the decision, but have the power to influence it greatly if
they become interested.”
 “Apathetics have little interest & little power, & may not
even know the decision exists.”
The company & its stakeholders (Shin, 2013)
On-line Info-System Providers

Hardware Providers Software Providers Network Providers Service Website
Corporate Citizen
Community Community Member
Shareholders
Administration
Creditors Government Supervision
Laws & Regulations
Employee Friendship
Foreign Government
Conflicts Relationship
Non-Market
Company
Supplier Consumer Association

Social activity groups Environmental Protection
Market
Retailer Internet
Media Broadcast & TV
Consumer Newspapers, Magazines
Positive Opinions
The Public
Competitor Negative Opinions
Industry & Business Associations
Supportive Groups University, Research Institute
Industry Associations
On-line Consumer Info Broadcaster Online Regulation Online Competitor

Formulator
Online Stakeholders
Benefits demanded by stakeholders
(Shin, 2013)
 Offline stakeholders:
 Shareholder: High investment returns, sustainable
development
 Employee: Stable income, good corporate image, good
benefits, congenial work environment, fair treatment,
sustainable development
 Creditor: Capital recovery rate, capital recovery period,
credit scope
 Supplier: Loan recovery rate, level of difficulty of access to
raw materials, supply price
 Retailer: Supply assurance, commodity market conditions,
adaptability of existing company facilities
(Contd.) (Shin, 2013)
 Offline stakeholders (Contd.):
 Consumer: High quality goods, good service, low price,
easy to use
 Competitor: Price level, conditions of commodity
production & competitiveness
 Government: Require the company to abide by the law,
timely & full payment of taxes
 Foreign Government: Protect the interests of domestic
enterprises, access to foreign exchange earnings
 Online stakeholders:
 Hardware provider: Company scale, commodity
price
 Software provider: Company scale, commodity
price, capital
 Network provider: Facilities to enhance speed,
supply price, demand requirements
 Service website: The content the company
demands, function, price
 Offline stakeholders (Contd.):
 On-line consumer: Business to assure data security &
personal privacy of the consumers, providing information
truly, accurately, and in a timely manner, provide timely
delivery of product, low cost
 Online regulation formulator: Internet [presence of the]
company to abide by the law, protection of intellectual
property rights
 Online competitor: Exchange business information, fair
competition
 Information broadcaster: Timely & accurate broadcast
abundant information
How do stakeholders
influence firm
performance?
(Frooman, 1999)
Resource Dependence Theory
(Frooman, 1999)
 “… a firm’s need for resources provides

opportunities for others to gain control over it.”
Why control resources? (Frooman, 1999)
 To convince/ persuade the firm to change some

behavior
Resource control strategies
(Frooman, 1999)
 Withholding strategies:
 “… determining whether a firm gets the resources”
 Stakeholder’s “… ability to articulate a credible
threat of withdrawal.” (Pfeffer & Leon, 1977, in
Frooman, 1999)
 Usage strategies:
 “… determining whether it can use the resources in
the way it wants”
 “… attach[ing] conditions to the continued supply of
that resource.”
Basis for resource control
(Frooman, 1999)
 Withholding strategy:
 “Stakeholder is prepared to shut off the flow of resources”,
implying that the stakeholder is able to “… simply walk away
from the relationship with no harm to itself” -> “firm is
unilaterally dependent on the stakeholder.”
 Major portion of the cost of changing behavior to be paid by
firm
 Usage strategy:
 Stakeholder is not prepared to shut off the flow of
resources.
 Mutual dependence between firm & stakeholder
 Cost of changing behavior to be shared by stakeholder &
firm
Types of influence pathways
(Frooman, 1999)
 Direct strategies: “…stakeholder itself manipulates flow of

resources to the firm”
 Indirect strategies: Indirectly weakening the position of the
firm by influencing others to take advantage of the firm’s
vulnerabilities.
e.g. “stakeholder informs a potential ally about:
1. “a firm’s behavior
2. why the stakeholder perceives that behavior to be undesirable
3. what the ally ought to do (i.e. initiate a resource strategy
against the firm or a communication strategy directed at an ally
of the ally)”
Typology of resource relationships
(Frooman, 1999)
Is the stakeholder dependent on the firm?

Is the firm dependent
on the stakeholder?
No Yes
No Low interdependence Firm power
Yes Stakeholder power High interdependence

Thank You
Aradhna Malik (PhD)

Assistant Professor
What is the stakeholder approach
(Freeman & McVea, 2001)
 “… managers must formulate & implement

processes which satisfy all & only those groups
who have a stake in the business.”
Characteristics of the stakeholder
approach (Freeman & McVea, 2001)
 “… intended to provide a single strategic

framework, flexible enough to deal with
environmental shifts without requiring managers to
regularly adopt new strategic paradigms.”
 Strategic management process: “… actively plots a
new direction for the firm & considers how the firm
can affect the environment as well as how the
environment may affect the firm.”
 Directed towards the survival of the firm, and in
doing so “… direct[ing] a course for the firm not
merely optimiz[ing] current output.”
Characteristics (Contd.)
 “… encourages management to develop

strategies by looking out from the firm &
identifying, & investing in, all the relationships
that will ensure long-term success.”
 “… both a prescriptive & descriptive approach,
rather than purely empirical & descriptive.”
 “… stakeholder relationships can be created &
influenced, not just taken as given.”
Characteristics (Contd.)
 “… about concrete ‘names & faces’ for

stakeholders rather than merely analyzing
particular stakeholder roles.”
 Not the whole society, but specific stakeholders
 “… calls for an integrated approach to strategic
decision making […] managers must find ways
to satisfy multiple stakeholders
simultaneously.”
Why pay so much attention to
stakeholders? (Freeman & McVea, 2001)
 Normative theory:
 The definitions of right and wrong.
 “above & beyond the consequences of stakeholder
management, is there a fundamental & moral
requirement to adopt this style of management?”
 “… managers should make corporate decisions
respecting stakeholders’ well being rather than treating
them as means to a corporate end.”
 “… an ethics of care emphasizes the primacy of the
network of relationships that create the business
enterprise.”
Why pay so much attention to
stakeholders? (Contd.)
(Kochan & Rubenstein, 2000, in Freeman & McVea, 2001)
 “… stakeholder firms will emerge when the

stakeholders hold critical assets, expose these
assets to risk & have both influence & voice.”
 Along the lines of Frooman’s paper regarding
influence exerted by stakeholders.
Managing stakeholders
 Buffering: “… aimed at containing the effects of

stakeholders on the firm. Includes activities
such as market research, public relations, &
planning.”
 Bridging: “… involves forming strategic
partnership […] requires recognizing common
goals & lowering the barriers around the
organization. Partnering is proactive & builds
on interdependence.”
Thank You
Stakeholders
&
CSR
(Clarkson, 1995)
Stakeholder issues vs. social issues
(Clarkson, 1995)
 Identification of boundaries between stakeholders and

the society in general
 “… necessary to distinguish between stakeholder issues
& social issues because corporations & their managers
manage relationships with their stakeholders & not with
society.”
 “… necessary to conduct analysis at the appropriate
level: institutional, organizational, or individual.”
 Analysis & evaluation of “… both, the social performance
of a corporation & the performance of its managers in
managing the corporation’s responsibilities to, &
relationships with, its stakeholders.”
Typical corporate & stakeholder
issues (Clarkson, 1995)
1. Company:
1. Company history
2. Industry background
3. Organization structure
4. Economic performance
5. Competitive environment
6. Mission or purpose
7. Corporate codes
8. Stakeholder & social issues management systems
Typical corporate & stakeholder
issues (Contd.) (Clarkson, 1995)
2. Employees
1. General policy 11. Dismissal & appeal
2. Benefits 12. Termination, layoff, & redundancy
3. Compensation & rewards 13. Retirement & termination counseling
4. Training & development 14. Employment equity & discrimination
5. Career planning 15. Women in management & on the board
6. Employee assistance 16. Day care & family accommodation
program
7. Health promotion 17. Employee communication
8. Absenteeism & turnover 18. Occupational health & safety
9. Leaves of absence 19. Part-time, temporary, or contract employees
10. Relationships with unions 20. Other employee or human resource issues
Typical corporate & stakeholder issues
(Contd.) (Clarkson, 1995)
3. Shareholders:
1. General policy
2. Shareholder communications & complaints
3. Shareholder advocacy
4. Shareholder rights
5. Other shareholder issues
 4. Customers:
1. General policy
2. Customer communications
3. Product safety
4. Customer complaints
5. Special customer services
6. Other customer issues
5. Suppliers:
1. General policy
2. Relative power
3. Other supplier issues
6. Public stakeholders:
1. Public health, safety, & protection
2. Conservation of energy & materials
3. Environmental assessment of capital projects
4. Other environmental issues
5. Public policy involvement
6. Community relations
7. Social investment & donations
Difference between stakeholder &
social issues (Clarkson, 1995)
 Social issue: Enactment of legislations or

regulations developed over a period of time by
a particular society (Municipal, state, or
national)
 Stakeholder issue: No such legislation or
regulation, but organization identifies it and
considers it necessary
Groups of stakeholders (Clarkson, 1995)
 Primary
 Secondary
Primary stakeholder group
(Clarkson, 1995)
 “… one without whose continuing participation the

corporation cannot survive as a going concern
 “…typically comprised of shareholders & investors,
employees, customers, & suppliers, together with
what is defined as the public stakeholder group:
the governments & communities that provide
infrastructures & markets whos laws & regulations
must be obeyed, & to whom taxes & other
obligations must be due.”
 “high level of interdependence between the
corporation & its primary stakeholder groups.”
Secondary stakeholder group
(Clarkson, 1995)
 “… those who influence or affect, or are

influenced or affected by the corporation, but
they are not engaged in transactions with the
corporation & are not essential for its survival.”
e.g. media, special interest groups
 “… may be opposed to the policies or programs
that a corporation has adopted to fulfill its
responsibilities to, or to satisfy the needs &
expectations of, its primary stakeholder
groups.”
Thank You
Aradhna Malik (PhD)

Assistant Professor
Stakeholder theory
perspectives
Bases for stakeholder theory
 “The very purpose of the firm is […] to serve as
a vehicle for coordinating stakeholder
interests.” (Evan & Freeman, 1993, in Donaldson & Preston, 1995)
 Based on Social Contract Theory: i.e. The
expectations of the society that we live in are a
result of the contract that binds us to that
society. The context decides what the society
expects us to do in exchange for letting us be a
part of it.
Social contract, stakeholders & CSR
(Secchi, 2007)
 “The analysis of corporation-stakeholder

relations leads to the definition of hypernorms,
macro- & micro-social contracts.”
 “Social responsibility is expressed through
stakeholder relations & defines corporate
existence.”
CSR Perspectives based on
stakeholder-firm relationship (Secchi, 2007)
 Utilitarian
 Managerial
 Relational
Utilitarian perspective (Secchi, 2007)
 Social cost
 Functionalism
Managerial perspective (Secchi, 2007)
 Corporate social performance

 Social accountability, auditing, & reporting
 Social responsibility of multinationals
Relational perspective (Secchi, 2007)
 Business & society

 Stakeholder approach
 Corporate global citizenship
 Social contract theory
Facets of stakeholder theory
 Convergent stakeholder theory
 Divergent stakeholder theory: Proposal
Convergent stakeholder theory
(Jones & Wicks, 1999)
 “Managerial maxim: Managers should strive to

create & maintain mutually trusting & cooperative
relationships with corporate stakeholders.
 Normative core: Relationships characterized by
mutual trust & cooperation are morally desirable.
 Supporting instrumental theory: Firms whose
managers establish & maintain mutually trusting &
cooperative relationships with their stakeholders
will achieve competitive advantage over those
whose managers do not.”
Divergent stakeholder theory:
Proposal (Freeman, 1999)
 Acknowledging that:
 “There is more than one way to be effective in
stakeholder management.”
 “There is more than one vision for creating value or
for what consequences count as valuable.”
 Requirement: Conversation encouraging
divergent views & discarding views “… that are
not useful, not simple, & that do not show us
how it is possible to live better.”
Types of stakeholder theories
(Freeman, 1999)
 “Descriptive stakeholder theory: Describe[s]

how organizations manage or interact with
stakeholders”
 “Normative stakeholder theory: Prescribe[s]
how organizations ought to treat their
stakeholders.”
 “Instrumental theory:[…] ‘If you want to
maximize shareholder value, you should pay
attention to key stakeholders’.”
What stakeholder theory is not
(Phillips, Freeman & Wicks, 2003)
 “… an excuse for managerial opportunism” (Jensen,

2000; Marcoux, 2000; Sternberg,2000, in Phillips, Freeman & Wicks, 2003)
 Unable to “… provide a sufficiently specific

objective function for the corporation” (Jensen, 2000, in
Phillips, Freeman & Wicks, 2003)
 “… primarily concerned with distribution of

financial outputs” (Marcoux, 2000, in Phillips, Freeman & Wicks, 2003)
 insistent on treating all stakeholders equally (Gioia,
1999; Marcoux, 2000; Sternberg, 2000, in Phillips, Freeman & Wicks, 2003)
What stakeholder theory is not
(Contd.) (Phillips, Freeman & Wicks, 2003)
 Insistent on “… changes to current law” (Hendry, 2001

a, b; Van Buren, 2001, in Phillips, Freeman & Wicks, 2003)
 “… socialism, and refers to the entire economy”

(Barnett, 1997; Hutton, 1995; Rustin, 1997, in Phillips, Freeman & Wicks, 2003)
 “… a comprehensive moral doctrine” (Orts & Strudler,

2000, in Phillips, Freeman & Wicks, 2003)
 Applicable only to corporations (Donaldson & Preston, 1995, in

Phillips, Freeman & Wicks, 2003)
Thank You
Aradhna Malik (PhD)

Assistant Professor
Stakeholder theory in
action
Steps in ethical decision making:
PASCAL (Goodpaster, 1991)
 Perception
 Analysis
 Synthesis
 Choice
 Action
 Learning
PASCAL (Contd.) (Goodpaster, 1991)
 “Perception: Or fact gathering about the options

available & their short & long-term implications.
 Analysis of these implications with specific

attention to affected parties & to the decision-
maker’s goals, objectives, values, responsibilities,
etc.
 Synthesis of this structured information according

to whatever fundamental priorities obtain in the
mindset of the decision-maker.”
PASCAL (Contd.) (Goodpaster, 1991)
 “Choice among the available options based on the

synthesis.
 Action or implementation of the chosen option
through a series of specific requests to specific
individuals or groups, resource allocation,
incentives, controls, & feedback.
 Learning from the outcome of the decision,
resulting in either reinforcement or modification
(for future decisions) of the way in which the
above steps have been taken.”
Stakeholder analysis (Goodpaster, 1991)
 Perception
 Analysis
Stakeholder synthesis (Goodpaster, 1991)
 “… offers a pattern or channel by which to

move from stakeholder identification to a
practical response or resolution.”
 Synthesis, Choice, Action & Learning from
PASCAL
Strategic stakeholder synthesis
(Goodpaster, 1991)
 “The essence of a strategic view of

stakeholders is not that stakeholders are
ignored, but that all but a special group
(stockholders) are considered on the basis of
their actual or potential influence on
management’s central mission. The basic
normative principle is fiduciary responsibility
(organizational prudence) supplemented by
legal compliance.”
Process of strategic stakeholder
synthesis (Goodpaster, 1991)
 “… defining ethical behavior partly in terms of

the nonstrategic decision-making values behind
it.”
 “…recognizing that too much optimism about
the correlation between strategic success &
virtue runs the risk of tailoring the latter to suit
the former.”
Multi-fiduciary stakeholder synthesis
(Goodpaster, 1991)
 Balancing the (often conflicting) fiduciary needs

of and commitments to multiple stakeholders of
the organization: Where and how does one
draw the line?
 Stakeholder paradox: It is the obligation of the
managers to make money for investors/
shareholders. However, if the organization does
that, it could be disadvantaging other stakeholders
who are affected but may not have invested.
Stages of corporate moral
development (Reidenback & Robin, 1991, in Iamandi, 2007)
 “Amoral organization
 Legalistic organization
 Responsive organization
 Emerging ethical organization
 Ethical organization”
Amoral organization
(Reidenback & Robin, 1991, in Iamandi, 2007)
 ‘Win at all costs’

 “Driven by greed & short term orientation”
 “It is ethical as long as we don’t get caught”
 “Ethical violations, when caught, are considered
to be a cost of doing business.”
 “No meaningful code of ethics or other
documentation”
Legalistic organization
 ‘Obey the law’

 “Driven by concern for economic performance”
 “Uses damage control through public relations
when social problems occur”
 “Reactive approach to ethics”
 “If it is legal, it is okay”
 “Avoids writing codes of ethics, as this can create
legal problems later on; however, if a code of
ethics exists, this is an internal document.”
Responsive organization (Iamandi, 2007)
 ‘Ethics pays’
 “Characterized by a growing concern for balance
between profits & ethics, taking also into account
corporate stakeholders other than owners.”
 “Management […] understands the value of not
acting solely on a legal basis”
 “Approach to ethics […] based on the profits that
ethics may [bring].”
 “Codes of ethics are more externally oriented &
reflect a concern for other publics.”
Emerging ethical organization
 ‘Do the right thing’

 “Demonstrates an active concern for ethical outcomes,
providing support & measures of ethical behavior,
although it lacks organization & long-term planning.”
 “Shared ethical values provide corporate guidance in
some situations”
 “Corporate culture is less reactive & more proactive to
social problems when they occur.”
 “Codes of ethics become action documents.”
Ethical organization
 ‘Integrate ethics with economics’

 “Thoroughly integrates questions of ethical behavior
with developing strategy & mission, thereby addressing
the fundamental issue of organizational integrity.”
 “Totally ethical profile, with carefully selected core
values”
 “Corporate culture is planned & managed to be ethical.”
 “Corporate codes focus on the ethical profile & core
values.”
Business ethics without
stakeholders (Heath, 2006)
 Dilemmas:
 What is ethical behavior when it comes to profit
making organizations?
 Who are stakeholders and how responsible should
the corporation be to them?
 Stakeholder paradox in the context of multi-
fiduciary stakeholder theory:
Business ethics without
stakeholders (Contd.) (Heath, 2006)
 Stakeholder paradox in the context of multi-fiduciary

stakeholder theory:
 Blurring of “… traditional goals in terms of entrepreneurial
risk-taking”
 Slowing down decision making “… because of the dilemmas
posed by divided loyalties”
Thank You
Aradhna Malik (PhD)

Assistant Professor
Stakeholder
identification
Basis for stakeholder identification
(Mitchell, Agle & Wood, 1997)
 Stakes in the organization

 Claimants vs. influencers
 Actual vs. potential relationship
Claimants vs. influencers
 Claimants: “… may have legitimate claims or

illegitimate ones, & they may or may not have any
power to influence the firm.”
 Influencers: “… have power over the firm, whether

or not they have valid claims or any claims at all &
whether or not they wish to press their claims.”
Actual vs. potential relationship
 Actual: Current, existing, relationship
 Potential: “… stakeholders who ‘are or might be

influenced by, or are or potentially are
influencers of some organization’.” (Clarkson, 1994, in
Mitchell, Agle & Wood, 1997)
Sorting of rationales for stakeholder
identification
 A relationship exists
 Power dependence: Stakeholder dominant
 Power dependence: Firm dominant
 Mutual power dependence relationship
 Basis for legitimacy of relationship
 Stakeholder interests: Legitimacy not implied
A relationship exists
 The firm & stakeholder are in relationship:

 “… having some legitimate, non-trivial relationship
with an organization (such as) exchange
transactions, action impacts& moral responsibilities”
 “… interact with & give meaning & defintion to the
corporation”
 The stakeholder exercises voice with respect to
the firm: ‘Can and are making their actual
stakes known’.”
Power dependence: Stakeholder
dominant
 The firm is dependent on the stakeholder

 The stakeholder has power over the firm”
Power dependence: Firm
dominant
 The stakeholder is dependent on the firm:

 “the firm is significantly responsible for their well-
being, or they hold a moral or legal claim on the
firm”
 The firm has power over the stakeholder:
 “asserts to have one or more of the kinds of stakes
in busines”
Mutual power-dependence
relationship
 The firm & stakeholder are mutually

dependent:
 “are depending on the firm in order to achieve their
personal goals & on whom the firm is depending for
its existence”
 “driven by their own interests & goals are
participants in a firm, & thus depending on it & on
whom for its sake the firm is depending”
Basis for legitimacy of relationship
 The firm & stakeholder are in contractual

relationship:
 “constituents who have a legitimate claim on the
firm… established through the existence of an
exchange relationship” who supply “the firm with
critical resources (contributions) & in exchange
each expects its interests to be satisfied (by
inducements)”
(Contd.) (Mitchell, Agle & Wood, 1997)
 The stakeholder has a claim on the firm

 “groups to whom the corporation is responsible”
 “asserts to have one or more of these kinds of
stakes” – “ranging from an interest to a right (legal
or moral) to ownership or legal title to the
company’s assets or property”
 The stakeholder has something at risk:

 “bear some form of risk as a result of having
invested some form of capital, human or financial,
something of value, in a firm” or “are placed at risk
as a result of a firm’s activities”
 The stakeholder has a moral claim on the firm:

 “benefit from or are harmed by, & whose rights are
violated or respected by corporate actions”
 “identified through the actual or potential harms &
benefits they experience or anticipate experiencing
as a result of the firm’s actions or inactions.”
Stakeholder interests: Legitimacy
not implied (Mitchell, Agle & Wood, 1997)
 The stakeholder has an interest in the firm:

 “have an interest in the actions of an organization
and … have the ability to influence it”
 “have, or claim, ownership, rights, or interests in a
corporation & its activities”
Stakeholder salience
What is stakeholder salience?
 “The degree to which managers give priority to

competing stakeholder claims”
Stakeholder salience depends on
 Power
 Legitimacy
 Urgency
Power
(Dahl, 1957, Pfeffer, 1981, Weber, 1947, in Mitchell, Agle & Wood, 1997)
 “A relationship among social actors in which

one social actor, A, can get another social
actor, B, to do something that B would not
have otherwise done”
Bases of power
 “Coercive: force/ threat

 Utilitarian: material/ incentives
 Normative: symbolic influences”
Legitimacy
(Suchman, 1995; Weber, 1947, in Mitchell, Agle & Wood, 1997)
 “A generalized perception or assumption that

the actions of an entity are desirable, proper,
or appropriate within some socially constructed
system of norms, values, beliefs, definitions”
Bases for legitimacy
 “Individual
 Organizational
 Societal”
Urgency (Mitchell, Agle & Wood, 1997)
 “The degree to which stakeholder claims call

for immediate attention”
Bases for urgency
 “Time sensitivity: the degree to which

managerial delay in attending to the claim or
relationship is unacceptable to the stakeholder
 Criticality: the importance of the claim or the

relationship to the stakeholder”
Sorting of stakeholders
based on salience
Stakeholder typology
POWER
Dormant
Dangerous Dominant
LEGITIMACY
Definitive
Demanding
Dependent Discretionary
Nonstakeholder
URGENCY
Classes of stakeholders based on
salience (Mitchell, Agle & Wood, 1997)
 Latent stakeholders
 Expectant stakeholders
 Definitive stakeholders
Latent stakeholders
 Do not acknowledge the firm

 Possess only one attribute
 Classes
 Dormant stakeholders
 Discretionary stakeholders
 Demanding stakeholders
Dormant stakeholders
 Attribute: Power
 “Possess power to impose their will on a firm,
but by not having a legitimate relationship or
an urgent claim, their power remains unused.
 e.g.
 “… those who have a loaded gun (Coercive)”
 “…those who can spend a lot of money (Utilitarian)”
 “… those who can command the attention of the
news media (Symbolic)”
Discretionary stakeholders
 Attribute: Legitimacy
 “… have no power to influence the firm & no
urgent claims.”
 In the absence of “… power & urgent claims,
there is absolutely no pressure on managers to
engage in an active relationship with such a
stakeholder, although managers can choose to
do so”
 E.g. donation dependent non profit
organizations
Demanding stakeholders
 Attribute: Urgency
 “… those with urgent claims but having neither
power nor legitimacy”
 “… irksome but not dangerous, bothersome but
not warranting more than passing management
attention”
 e.g. non-violent protestors on the street
Expectant stakeholders
 Stakeholders expect something

 Two attributes
 Classes:
 Dominant
 Dependent
 Dangerous
Dominant stakeholders
 Attributes: Power & legitimacy

 Stake legitimate claims upon the organization and
are able “…to act on these claims (rather than as a
forecast to act on their claims)”
 Organization formalizes mechanisms to deal with
them
 e.g.
 Corporate boards of directors
 Representatives of owners
 Significant creditors
Dependent stakeholders
 Attributes: Urgency & legitimacy

 “… lack power but have urgent legitimate claims
and depend on others for the power necessary to
carry out their will.
 “Because power in this relationship is not
reciprocal, its exercise is governed either through
the advocacy of guardianship of other
stakeholders, or through the guidance of internal
management values.”
 e.g. environmental stakeholders affected by
pollution
Dangerous stakeholders
 Attributes: Urgency & power, no legitimacy

 “… stakeholder may become coercive &
possibly violent, making the stakeholder
“dangerous” to the firm”
 e.g. wildcat strikes, sabotage, & terrorism
Definitive stakeholders
 Attributes: Legitimacy, Power, Urgency

 “… managers have a clear & immediate
mandate to attend to & give priority to that
stakeholder’s claim.”
Thank You
Stakeholder
management
Comprehensive
stakeholder management
process model
(Preble, 2005)
Step 1: Stakeholder identification
 Primary
 Public
 Secondary
Step 2: General nature of stakeholder
claims & power implications
 Equity
 Economic
 Influencers
Step 3: Determine performance
gaps
 Define stakeholder expectations
 Conduct performance audits
 Reveal gaps
 Explore stakeholder influence strategies
Step 4: Prioritize stakeholder
demands
 Determine stakeholder salience (Power,
legitimacy, urgency)
 Assess the strategic importance of various
stakeholders
Step 5: Develop organizational
responses
 Direct communication
 Collaboration/ partnering
 Set performance goals
 Develop policies/ strategies/ programs
 Allocate resources
 Revise Statement of Purpose
Step 6: Monitoring & Control
 Continually check stakeholder positions
 Evaluate strategic progress
 Conduct social/ environmental audits
Step 7
 Go back to step 1
Assessing stakeholders
(Savage et al., 1991)
Factors affecting stakeholders’ potentials
for threat & cooperation (Savage et al, 2005)
Stakeholder’s Stakeholder’s
potential for potential for
threat cooperation
Stakeholder controls key resources Increases Increases

Stakeholder does not control key resources Decreases Either
Stakeholder more powerful than organization Increases Either
Stakeholder as powerful as organization Either Either
Stakeholder less powerful than organization Decreases Increases
Stakeholder likely to take action (supportive of the org) Decreases Increases
Stakeholder likely to take unsupportive action Increases Decreases
Stakeholder unlikely to take any action Decreases Decreases
Stakeholder likely to form coalition with other Increases Either
stakeholders
Stakeholder likely to form coalition with organization Decreases Increases
Stakeholder unlikely to form any coalition Decreases Decreases
Strategies for managing
stakeholders
(Savage et al, 1991)
Diagnostic typology of organizational
stakeholders (Savage et al, 2005)
STAKEHOLDER’S POTENTIAL THREAT TO ORGANIZATION
COOPERATION WITH ORGANIZATION
STAKEHOLDER’S POTENTIAL FOR
HIGH LOW
Stakeholder Type 4: Stakeholder Type 1:

Mixed Blessing Supportive
HIGH
Strategy: Collaborate Strategy: Collaborate
Stakeholder Type 3 Stakeholder Type 2:

Nonsupportive Marginal
LOW
Strategy: Defend Strategy: Monitor
Managing stakeholders: Types
& strategies (Savage et al., 2005)
 Type 1: The supportive stakeholder:

 Low potential threat, high potential cooperation
 Strategy: “Involve the supportive stakeholder” in
decision making, relevant issues, etc.
& strategies (Contd.) (Savage et al., 2005)
 Type 2: Marginal stakeholder

 “… neither highly threatening, nor especially
cooperative”
 Strategy: Monitor the marginal stakeholder
 Type 3: The nonsupportive stakeholder

 “… high on potential threat, low on potential
cooperation”
 e.g. competing organizations, employee unions, &
sometimes news media
 “Strategy: Defend against the nonsupportive
stakeholder”
 Type 4: The mixed blessing stakeholder

 High potential threat & cooperation
 e.g. employees with specialized training
 Strategy: “Collaborate with the mixed blessing
stakeholder”
Transforming typical stakeholder
relationships (Savage et al., 2005)
1. “Identify key organizational stakeholders

2. Diagnose them along two critical dimensions
of potential for threat & potential for
cooperation
3. Formulate appropriate strategies both to
enhance or change current relationships with
those key stakeholders & to improve the
organization’s overall situation
4. Effectively implement these strategies”
Aradhna Malik (PhD)

Assistant Professor
Stakeholder
dialogue
Stakeholder dialogue (Kaptein & Van Tulder, 2003)
 “In the dialogue with stakeholders (both

primary & secondary) opinions are exchanged,
(future) interests & expectations are discussed,
& standards are developed with respect to
business practices.”
Stakeholder debate vs. stakeholder
dialogue (Kaptein & Van Tulder, 2003)
Stakeholder Debate Stakeholder Dialogue

Competition with a single Cooperation where everyone is
winner or only losers (either-or a winner (and-and thinking)
thinking)
Egocentric where the other Empathetic where the other
party is a threat or a means to party is an opportunity and
personal profit represents an intrinsic interest
Putting yourself in a better light Being yourself
Speaking, to which others have Listening to others before
to listen speaking yourself
Influencing Convincing
Stakeholder debate vs. stakeholder
dialogue (Contd.) (Kaptein & Van Tulder, 2003)
Stakeholder Debate Stakeholder Dialogue
Confronting, combative & destructive, Constructive &, from a point of mutual
whereby the weaknesses & wrongs of understanding & respect, looking for
the other party are sought out & the similarities from which to consider the
similarities are negated differences
A closed & defensive attitude because A vulnerable attitude because there
you personally know the truth are many truths & where parties are
open to criticism about their own
performance & they can use this to
learn from each other
Taking & keeping Giving & receiving
Divide & rule Share & serve
Separate/ isolated responsibilities Shared responsibilities
Preconditions for effective
stakeholder dialogue (Kaptein & Van Tulder, 2003)
 “To know & be understood

 Trust & reliability
 Clear rules for the dialogue
 A coherent vision on the dialogue
 Dialogue skills
 Expertise on the subject matter
 Clear dialogue structure
 Valid information as basis
 Consecutive meetings
 Feedback of results”
Why stakeholder dialogue?
(Kaptein & Van Tulder, 2003)
 “To identify trends & future issues at an early stage & to

prioritize these
 To gain insight into the stakeholders’ appreciation for the
organization & the evaluation of the current of current
performance
 To allow the organization & stakeholders to gain a better
understanding of each other’s interests & dilemmas, & broader
support for the decisions companies make
 To resolve specific tensions in the relationship with
stakeholders
 To gather suggestions & ideas for improving the company’s
performance in the social area, as well as KPIs for the
sustainability report.”
Why stakeholder dialogue? (Contd)
 “To increase sensitivity within the organization for

the stakeholders’ expectations & to heighten the
sense of responsibility for social issues.
 To create a greater mutual buffer of trust,
whereby possible problems can be dealt with more
effectively.
 To avoid incidents that receive wide pubic & media
attention.
 To create a basis for joint projects, alliances, &
partnerships.”
Issues to consider when setting up a
dialogue with stakeholders
 “How do we clarify for ourselves what the specific

objectives of the stakeholder dialogue are?
 How do we decide which stakeholders we are
going to talk to?
 How do we determine the topics for discussion?
 Who will represent the organization in the
meetings?
 How can we determine the order of the
meetings?”
dialogue with stakeholders (Contd.)
 “How often should the meetings take place?

 How do we avoid leaving out stakeholders, as a result of
which they may feel excluded & cause a big fuss?
 How do we retain our freedom to make decisions &
carry our responsibility for these?
 How do we avoid stakeholders abusing the trust we vest
in them & the information we share with them?
 How do we avoid stakeholders developing the feeling,
also in hindsight, that they have been abused?”
dialogue with stakeholders (Contd.)
 “How can we learn the most from the meetings?

How do we avoid creating overly high expectations
among the stakeholders about the content &
follow-up of the stakeholder dialogue?
 How do we prevent a stakeholder dialogue from
becoming a time-consuming exercise?
 How can the dialogue be embedded in the
management systems & the sustainability report
that may be published?
 How can we know that the stakeholder dialogue
satisfies the wishes of the stakeholders?
Inappropriate/ Inadequate attention
to the above issues leads to
 “Stakeholders feeling ignored

 Stakeholders feeling abused
 Meetings becoming a repetition of sets
 Internal support for the meetings crumbling
 Misuse of confidential information”
Thank You
Aradhna Malik (PhD)

Assistant Professor
Management
of Stakeholder
Dialogue
Stakeholder dialogue: Levels of
engagement (Pedersen, 2006)
Level of engagement
Low High
Inclusion Only a few privileged stakeholders All relevant stakeholders are
are included in the dialogue included in the dialogue
Openness Dialogue is structured around a Dialogue is structured around open
fixed set of questions/ problems/ questions/ problems/ issues
Dimension
issues
Tolerance One position has priority over all New, alternative & critical voices
the others are respected
Empower- One stakeholder dominates the Freedom & equality in dialogue as
ment dialogue & decisions well as in decisions
Transpa- No access to information about the Full access to information about the
rency process & outcomes of the process & outcomes of the
stakeholder dialogue stakeholder dialogue
Types of stakeholder dialogue
 Proactive dialogue
 Organization takes initiative
 Inclusive
 Prioritization of issues & prompt communication to
stakeholders
 Stakeholder panel
 Organization takes initiative
 Usually in response to a crisis
 Concrete plan of action developed & action taken
Types of stakeholder dialogue
(Contd.) (Kaptein & Van Tulder, 2003)
 Selective reactive stakeholder dialogue

 Selective about stakeholders
 In response to a crisis
 Very cautiously dealt with – spread of problem
controlled
 Defensive dialogue
 Usually in response to a crisis
 Purpose is to defend the reputation of/ minimize
risk to the organization
Dimensions of stakeholder
dialogue (Kaptein & Van Tulder, 2003)
 Type of issue (social & / or environmental)

 No. of stakeholders involved in the dialogue
 Frequency of conversations
 No. of issues per conversation
 No. of stakeholders per conversation
 Orientation toward problems (identifying
problem and/ or problem solving)
Dimensions of stakeholder
dialogue (Contd.) (Kaptein & Van Tulder, 2003)
 Orientation toward time (prospective/

retrospective)
 Participants of the organization (support
management, operational management and/ or
employees
 Organizational level (head office and/ or local)
 Monitoring of dialogue quality
 Inclusion in annual report
Filters in stakeholder dialogue
(Pedersen, 2006)
 “Selection Filter: “[…] about the access to the

dialogue ‘arena’.”
 “Interpretation filter: […] concerns the
transformation of the multiple voices from the
dialogue into a limited number of decisions.”
 “Response filter: […] relates to the activities
that take place when the decisions move out of
the dialogue arena.”
Phases of stakeholder dialogue
(Pedersen, 2006)
Selection Interpretation Response

Filter Filter Filter
Customers
Suppliers
Distributors
Stakeholder Implementation
Employees Decision
dialogue & Impact
Investors
Community
Etc.
Factors affecting operationalization
of stakeholder dialogue (Pedersen, 2006)
 Commitment: Willingness
 Consciousness: Knowledge & awareness
 Consensus: Harmony/ conflict between
stakeholders & organization
 Capacity: Available resources
Thank You
Aradhna Malik (PhD)

Assistant Professor
Planning of CSR activities:
Responsibility paradigms
Paradigms of responsibility
 The CSR Pyramid
 Intersecting circles
 Concentric circles
The CSR Pyramid
(Carroll, 1991, in Schwartz & Carroll, 2003)
Be a good citizen Desired

Philanthropic
Be ethical Expected
Ethical
Required
Obey the law Legal
Required
Be profitable Economic
Intersecting Circles (Schwartz & Carroll, 2003)
Purely Ethical
Economic/
Legal/
Ethical
Ethical/ Ethical
Legal/
Economic
Purely Economic Purely Legal
Economic/
Legal
Intersecting circles (Contd.)
(Schwartz & Carroll, 2003)
 Economic Domain:
 “… those activities which are intended to have
either a direct or indirect positive economic impact
on the [organization]”
 Criteria for positive impact:
 “… maximization of profits” and/ or
 “… maximization of shared value”
 Legal Domain:
 “Compliance:
 Passive
 Restrictive
 Opportunistic”
 Avoidance of civil litigation
 Anticipation of the law”
Legal Domain (Contd.)
Type of legal motive Typical corporate/ managerial response

Passive compliance “Well, looking back on it, we did happen to
(Outside legal domain) comply with the law”
Restrictive compliance “We wanted to do something else but the law
prevented us.”
“We did it in order to comply with the law”
Opportunistic compliance “Well, the law allows us to do it”
“We operate in that jurisdiction because of the
less stringent legal standards”
Avoidance of civil “We did it because we might get sued otherwise”
litigation “Lawsuits will be dropped”
“Anticipation of the law “The law is going to be changed soon”
“We wanted to pre-empt the need for legislation”
 Ethical domain:
 “Conventional standard: “… those standards or norms
which have been accepted by the organization, the
industry, the profession or society as necessary for the
proper functioning of business”
 “Consequentialist standard: “… an action can be
considered eithical […] when it promotes the good of
society or […] when the action is intended to produce
the greatest net benefit (or lowest net cost) to society
when compared to all of the other alternatives.”
 Deontological standard: “… those activities which reflect
a consideration of one’s duty or obligation”
 Economic/ Ethical: “good ethics is good business”

e.g. green products, social marketing etc.
 Economic/ Legal: using legal loopholes for
economic benefit, e.g. eco-dumping, social
dumping etc. (offshoring activities to countries
with lower environmental or work safety
standards)
 Legal/ Ethical: e.g. installing devices because they
are legally required & ethical even with no
economic benefit
 Economic/ Legal/ Ethical: All three domains.

e.g. withdrawing defective/ potentially harmful
products from the market. Maggi Noodles case
– mono sodium glutamate & lead found in
Maggi noodles.
https://www.youtube.com/watch?v=ko8pIdcr5
xk
Concentric model (Geva, 2008)
Philanthropic
Ethical
Legal
Economic
Concentric model (Contd.)
(Geva, 2008)
 Interdependence of various circles

 Economic circle: Generation of wealth towards improving
overall standard of living, fair price selling, provision of jobs
etc.
 Legal circle: Following the law: Obey the law & justify your
reasons for not being able to follow the law when you are
not able to follow the law
 Ethical circle: Doing good rests on good economics & legal
compliance
 Philanthropic circle: “… contributions of business firms to
humanitarian & social causes, which are usually considered
outside the firms’ natural line of business”
Comparison of the three paradigms
(Geva, 2008)
CSR Pyramid Intersecting Circles Concentric Circles

General Hierarchy of separate Nonhierarchical set of Integration of
Description responsibilities intersecting responsibilities: all
responsibilities sharing a central core
Theoretical Normative restraints Classification Incurred obligation to
assumptions: of responsiveness framework: No work for social
Nature of CSR normative guidance betterment
Scope of Narrow Split Wide
responsibilities
Total CSR Conjunction Disjunction Integration
Order of Hierarchy: Economic No prima facie order Inclusion system:
importance Responsibility first economic circle at the
core
Role of “Icing on the cake” Subsumed under Integral part of CSR
philanthropy economic/ ethical
responsibilities
Comparison of the three paradigms
(Contd.) (Geva, 2008)
CSR Pyramid Intersecting Circles Concentric Circles

Research Constant-sum CSR portraits Representative range
implications: method of measures
Operationalization
CSR-CFP Positive Positive, negative or Non-linear
relationship neutral
Justification for Ethics pays Strategic Normative obligation

ethics considerations
Thank You
Aradhna Malik (PhD)

Assistant Professor
CSR Design
&
Implementation:
Stakeholder Integration
(Maon, 2009)
Cramer’s framework (2005)
(in Maon et al., 2009)
 CSR Conception:
 World Business Council for Sustainable
Development (WBCSD) definition: “… the
commitment of business to contribute to
sustainable economic development, working with
employees, their families, the local community &
society at large to improve their quality of life”
Cramer’s (2005) framework (Contd.)
(Maon et al., 2009)
 CSR integration process:

1. “Listing the expectations & demands of the stakeholders
2. Formulating a vision & a mission with regard to corporate
social responsibility and, if desired, a code of conduct
3. Developing short- and longer-term strategies with regard
to CSR & using these to draft a plan of action
4. Setting up a monitoring & reporting system
5. Embedding the process by rooting it in quality &
management systems
6. Communicating internally & externally about the approach
& the results obtained.
Cramer’s (2005) framework (Contd.)
(Maon et al., 2009)
 Stakeholders’ role in the process:

 Primarily stakeholder dialogue
Khoo & Tan’s (2002) framework
(Maon et al., 2008)
 CSR conception:
 “Business commitment to CSR should ‘envelop all
employees (i.e. their health & well being), the quality of
products, the continuous improvement of processes, &
the company’s facilities & profit-making opportunities.
[…] Sustainable manufacturing & development is
further defined as ‘the integration of processes, decision
making & the environmental concerns of an active
industrial system that seeks to achieve economic
growth, without destroying precious resources or the
environment”
(Contd.) (Maon, 2009)
 CSR Integration Process:

1. “Preparation (involving leadership & strategy
planning)
2. Transformation (involving people & information
management)
3. Implementation (involving the embedment of
sustainability in the company processes)
4. Sustainable business results (involving the review
of the system’s performance)”
 Stakeholders’ role: “… addressing the well-

being of employees & needs & expectations of
customers.”
Maignan et al.’s, (2005) framework
(Maon et al., 2009)
 CSR Conception:
 “Business commitment to CSR is viewed as, ‘at a
minimum, adopt values & norms along with
organizational processes to minimize their negative
impacts & maximize their positive impacts on
important stakeholder issues’. The CSR of an
organization is issue specific. Also commitment to
CSR is best evaluated at the level of an individual
business unit.”
Maignan et al.’s (2005) framework
(Contd.) (Maon et al., 2009)

1. “Discovering organizational values & norms
2. Identifying stakeholders & their respective salience
3. Identifying the main issues of concern to the identified
stakeholders
4. Assessing a meaning of CSR that fits the organization of
interest
5. Auditing current practices
6. Prioritizing & implementing CSR changes & initiatives
7. Promoting CSR by creating awareness & getting stakeholders
involved
8. Gaining stakeholders’ feedback”
Maignan et al.’s (2005) framework
(Contd.) (Maon et al., 2009)
 Stakeholders’ role in the process: Feedback

loops:
 “Stakeholders’ feedback to be used as input for the
next audit. Consequently, the sequence linking
steps five to eight should be performed on a regular
basis (bi-annual audits of current practices)
 Stakeholders’ feedback as an input to reassess the
first three steps of the CSR management process in
the long run (approximately every four years)
Panapanaan et al.’s (2003)
framework (Maon, 2009)
 “CSR ‘encompasses three dimensions –

economic, environmental, & social’ […] & is
about ‘doing business sustainably & ethically as
well as treating or addressing stakeholders’
concerns responsibly”
framework (Contd.) (Maon et al., 2009)

1. Assessment of CSR (identification of the main CSR
areas & identifications of the relevant CSR
parameters)
2. Decision whether to proceed in managing CSR:
1. Organization & structure
2. Planning
3. Implementation
4. Monitoring & evaluation
5. Communication & reporting”
framework (Contd.) (Maon et al., 2009)

 Step 1: Social risk assessment & its role in
developing CSR programs by “… considering
stakeholders’ clusters (employees, community,
customers, community, suppliers)& their issues.
Werre’s (2003) framework
(Maon et al., 2009)
 CSR conception:
 “… the strategic choice to take responsibility for the
impact of business with respect to economic,
environmental & social dimensions.”
Werre’s (2003) framework
 CSR integration process: Main phases in a

Corporate Responsibility implementation model:
1. “Raising top management awareness
2. Formulating a CSR vision & core corporate values
3. Changing organizational behavior
4. Anchoring the change”
Werre’s (2003) framework (Contd.)
(Maon et al., 2009)

 Involvement of internal stakeholders
Thank You
Aradhna Malik (PhD)

Assistant Professor
CSR Design
&
Implementation:
Stakeholder Integration
(Maon, 2009)
Stakeholder expectations
(Longo et al., 2005, in Jamali, 2008)
Stakeholder Expectations divided into value classes

Employees Health & safety at work
Development of workers’ skills
Wellbeing & satisfaction of workers
Quality of work
Social equity
Suppliers Partnership between ordering company & suppliers
Selection & analysis systems of suppliers
Customers Product quality

Safety of customer during use of product
Consumer protection
Transparency of consumer product information
Community Creation of added value to the community
Environmental safety & production
Integrative framework for
designing & implementing CSR
(Maon et al., 2009)
 Sensitize:
 Unfreeze: Plan
 Move:
 Do
 Check/ improve
 Refreeze: Mainstream
While engaging continuously in a dialogue with

stakeholders
Integrative framework (Contd.)
(Maon et al., 2009)
 Sensitize:
 Step 1: Raise CSR awareness through:
 Social drivers
 Political drivers
 Managers’ personal values
 Economic drivers
Integrative framework … (Contd.)
(Maon et al., 2009)
 Unfreeze: Plan:
 Step 2: Assess corporate purpose in a social context:
 Uncover organizational systems, as well as corporate norms &
values
 Identify key stakeholders & critical stakeholder issues
 Step 3: Establish a vision & a working definition for CSR
 Step 4: Assess current CSR status
 Audit current CSR norms, standards, practices
 Benchmark competitors’ CSR practices, norms, standards,
practices
 Step 5: Develop a CSR-integrated strategic plan: Embed
CSR in organizational strategy
(Maon et al., 2009)
 Move:
 Do:
 Step 6: Implement CSR integrated strategic plan:
Implement organizational initiatives & strategies linked to
CSR
 Step 7 (Steps 6, 8 & 9 feed into this and this is ongoing
till the end of the process): Communicating about CSR
commitments & performance
 Check/ Improve:
 Step 8: Evaluate CSR integrated strategies &
communication: Evaluate, verify & report on CSR
progress
(Maon et al., 2009)
 Mainstream:
 Step 9: Institutionalize CSR: Anchoring changes into
organizational systems, as well as corporate culture
& values
Critical success factors in the CSR
process (Maon et al., 2009)
Plan Do Check/ Improve Mainstream

Corporate •Connecting CSR vision & - Considering mistakes as an -
Level initiatives with organization’s opportunity to learn &
core values & competencies improve CSR programs &
•Formalizing CSR vision policies
through official documents
•Getting key people’s commitment (directors, owners, senior managers)
•Engaging participation of key stakeholders in the CSR process
Organizational Building upon •Ensuring the •Considering Emphasizing
Level existing organization has mistakes as an relationships
organizational internal skills to make opportunity to between new
structures & the transformation learn & improve organizational
process •Training employees in CSR programs & behavior & success
CSR issues policies
•Fostering the presence of moral/ CSR champions
•Thinking in terms of long-term engagement rather than quick fix solutions
Managerial Creating enthusiasm & credibility around Rewarding people that
Level CSR create CSR success
Recognizing the critical role of leadership
Thank You
Aradhna Malik (PhD)

Assistant Professor
CSR Activities:
Corporate Social Performance
How do corporations take decisions
about their social behavior (Sethi, 1975)
 Behavior of corporations is adjusted to their
understanding of what they need to do for the
society:
 State One: Social obligation: Proscriptive
(Prohibitive)
 State Two: Social responsibility: Prescriptive
(Solutions)
 State Three: Social responsiveness: Anticipatory &
preventive
1975: S. Prakash Sethi
 “Social obligation is corporate behavior ‘in
response to market forces or legal constraints’.”
 “… social responsibility implies bringing
corporate behavior up to a level where it is
congruent with the prevailing social norms,
values, & expectations of performance”
Dimension of behavior: Legitimacy
(Sethi, 1975)
 State One: Social obligation:

 “… does not violate laws; profitable operations with fulfilling
social expectations”
 State Two: Social responsibility:
 “Willing to consider & accept broader – extralegal & extra-
market criteria for measuring corporate performance &
social role.”
 State Three: Social responsiveness:
 “Accepts its role as defined by the social system & therefore
subject to change; recognizes importance of profitable
operations but includes other criteria”
Dimension of behavior: Ethical norms
(Sethi, 1975)

 “Considers business value neutral; managers expected to behave
according to their own ethical standards.”
 “Defines norms in community related terms, i.e. good corporate
citizen. Avoids taking moral stand on issues which may harm its
economic interests or go against prevailing social norms.”
 “Takes define stand on issues of public concern, advocates
institutional ethical norms even though they may be detrimental
to its immediate economic interest or prevailing social norms.”
Dimension of behavior: Social
accountability for corporate actions
(Sethi, 1975)

 “Construes narrowly as limited to stockholders;
jealously guards its prerogative against outsiders.”
 “Construes narrowly for legal purposes, but
broadened to include groups affected by its actions;
management more outward looking”
 “Willing to account for its actions to other groups,
even those not directly affected by its actions.”
Dimension of behavior:
Operating strategy (Sethi, 1975)
 State One: Social obligation

 “Exploitative & defensive adaptation. Maximum externalization of costs.”
 State Two: Social responsibility
 “Reactive adaptation. Where identifiable internalize previously external
costs. Maintain current standards of physical & social environment.
Compensate victims of pollution & other corporate related activities even
in the absence of clearly established legal grounds. Develop industry-
wide standards.”
 State Three: Social responsiveness
 “Proactive adaptation: Takes lead in developing & adapting new
technology for environmental protectors. Evaluates side effects of
corporate actions & eliminates them prior to the actions being taken.
Anticipates future social changes & develops internal structures to cope
with them.”
Dimension of behavior: Response
to social pressures
(Sethi, 1975)

 “Maintains low public profile, but if attacked, uses
PR methods to upgrade its public image;
 denies any deficiencies;
 blames public dissatisfaction on ignorance or failure
to understand corporate functions
 Discloses information only where legally required”
Dimension of behavior: Response to
social pressures (Contd.) (Sethi, 1975)

 “Accepts responsibility for solving current problems
 Will admit deficiencies in former practices & attempt
to persuade public that its current practices meet
social norms
 Attitude towards critics conciliatory
 Freer information disclosures than state one”
Dimension of behavior: Response to
social pressures (Contd.) (Sethi, 1975)

 “Willingly discusses activities with outside groups
 Makes information freely available to public
 Accepts formal & informal inputs from outside
groups in decision making
 Is willing to be publicly evaluated for its various
activities”
Dimension of behavior: Activities
pertaining to governmental actions
(Sethi, 1975)
 State One: Social obligation

 “Strongly resists any regulation of its activities
except when it needs help to protect its market
position
 Avoids contact
 Resists any demands for information beyond that
legally required”
Dimension of behavior: Activities pertaining
to governmental actions (Contd.) (Sethi, 1975)
 State Two: Social responsibility

 “Preserves management discretion in corporate
decisions, but cooperates with government in
research to improve industry-wide standards
 Participates in political processes & encourages
employees to do likewise”
Dimension of behavior: Activities pertaining
to governmental actions (Contd.) (Sethi, 1975)
 State Three: Social responsiveness

 “Openly communicates with government
 Assists in enforcing existing laws & developing
evaluations of business practices
 Objects publicly to governmental activities that it
feels are detrimental to the public good”
Dimension of behavior: Legislative
& political activities (Sethi, 1975)
 Step One: Social obligation:

 “Seeks to maintain status quo
 Actively opposes laws that would internalize any
previously externalized costs
 Seeks to keep lobbying activities secret”
& political activities (Contd.) (Sethi, 1975)
 Step Two: Social responsibility:

 “Willing to work with outside groups for good
environment laws
 Concedes need for change in some status quo laws
 Less secrecy in lobbying than state one”
& political activities (Contd.) (Sethi, 1975)
 Step Three: Social responsiveness:

 “Avoids meddling in politics & does not pursue
special-interest laws
 Assists legislative bodies in developing better laws
where relevant
 Promotes honesty & openness in government & in
its own lobbying activities”
Dimension of behavior: Philanthropy
(Sethi, 1975)

 “Contributes only when direct benefit to it clearly
shows
 Otherwise views contributions as responsibility of
individual employees”
(Contd.) (Sethi, 1975)

 “Contributes to noncontroversial & established
causes
 Matches employee contributions”
(Contd.) (Sethi, 1975)

 “Activities of state two plus support & contributions
to new, controversial groups whose needs it sees as
unfulfilled & increasingly important”
Thank You
Aradhna Malik (PhD)

Assistant Professor
CSR Process
Phases & steps within the CSR
process (O’Riordan, 2006, in O’Riordan & Fairbass, 2008)
 Phase 1: CSR strategy development:

 Values
 Vision/ mission
 Objectives
 Scope
Phase 1: CSR Strategy Development
(Contd.) (O’Riordan, 2006 in O’Riordan & Fairbass, 2008)
 Alternatives:
 Stakeholder priorities
 Causes supported
 Methods of support
 Practices/ Policies
Phase 1: CSR Strategy Development
(Contd.) (O’Riordan, 2006 in O’Riordan & Fairbass, 2008)
 Strategy:
 Selection
 Combination
 Based on:
 Value
 Fit
Phases & steps within the CSR
process (Contd.) (O’Riordan, 2006, in O’Riordan & Fairbass, 2008)
 Phase 2: Implementation:
 Implement/ Control
 Communicate
 Stakeholder dialogue
 Output
 Goodwill
 Reputation
 Image
Model for managing CSR
(Bakic, 2012, in Bakic, Kostic, Neskovic, 2015)
1. “Ensuring compliance & commitment of the top

management of an organization
2. Analyzing existing business policies, processes &
performances in the context of social
responsibility
3. Identifying key aspects of business used by a
company to influence local community
4. Identifying problems of local community& their
connection to business interests
5. Defining goals, strategies & operational plans”
Model for managing CSR (Contd.)
(Bakic, 2012, in Bakic, Kostic, Neskovic, 2015)
6. “Providing necessary human & material resources”: Budget

for
 “Management, coordination of activities & communication,
 Specific costs of implementation activities”
7. Implementation of programs & plans
8. Measuring results & effects
9. Reporting & communicating the results
10. Researching the perception & attitudes of internal &
external stakeholders”
11. Go back to step 5
Steps for building
a strategy for
responsible business
(National Voluntary Guidelines on Social, Environmental & Economic Responsibilities of Business,
Ministry of Corporate Affairs, Govt. of India, 2011)
Step 1: Analyze your business
 “Key business drivers
 Opportunities & threats, Strengths &
weaknesses
 Articulate the responsible business policy”
Step 2: Identify risks & issues
 “Identify issue
 Network
 Prioritize”
Step 3: Develop a strategy
 “Operational/ strategic
 Compliance/ Beyond compliance
Step 4: Plan & implement strategy
 “Roadmap
 Clear objective
 Training
 Low-hanging fruit
 Adoption of indicators for each principle”
Step 5: Monitor & review progress
 “Monitor
 Measure
 Learn & refine processes”
 Go back to Step 1 if required
Step 6: Communicate
 “Convey rationale
 Listen
 Embed in communications
 Report”
 Go back to Step 1
Thank You
Aradhna Malik (PhD)

Assistant Professor
VGSoM, IIT Kharagpur
CSR Activities
(Peloza & Shang, 2011)
Categories of CSR Activities
 Philanthropy: “other oriented… relies on

supporting others in need, valued for its own
sake”
 Business practices: Activities related to how
companies do what they do
 Product [or service] related: Activities related
to the actual output of profit making
organizations
Types of CSR Activities
 Single activities: Independent

 Focused activities: “Multiple activities within the
same category”
 Diffuse activities: “Activities from [several]
categories”
Single activities (Peloza & Shang, 2011)
 Philanthropy:
 “Cause-related marketing: e.g.
https://www.youtube.com/watch?v=C1s65IGuRMM
 Charity events
 Employee volunteerism
 Cash donations
 Public service announcement sponsorship
 Customer donations”
Single activities (Contd.)
 Business practice:
 Environmental protection
 Child labor/ sweatshop prevention
 Decreased product use messages
 Diversity
 Prevention of false/ misleading information
 Ethical behavior
 Socially responsible company
 Fair trade
 Supply chain responsibility
 Fortune rankings
 Customer relations
 Employee relations
 Packaging
Single activities (Contd.)
 Products:
 Organic products
 Residue free products
 Green products
Focused activities (Peloza & Shang, 2011)
 Philanthropy:
 “Employee volunteerism
 Cash donations
 Cause related marketing
 Licensing agreements
 Cause related marketing
 Promotion of social issues
 Product donation
 Advocacy advertising
 Non-specific charity support”
Focused activities (Contd.)
 Business practices:
 “Controlled animal testing
 Employee relations
 Community satisfaction
 Supplier satisfaction
 Competitor satisfaction
 Socially responsible advertisements
 Animal testing
 Campaigns against false advertising
 Protection of human rights
 Domestic supply chain”
Diffuse activities
 “Philanthropy and business practices:

 Employee rights
 Cash donations
 Product donations
 Ethical conduct
 Customer relations”
Diffuse activities (Contd.)
 “Business practices & products:

 Organic products
 Healthy products
 Green products
 Packaging
 Supply chain responsibility:
 Sweatshop labor issues: e.g. Goodweave Campaign:
https://www.youtube.com/watch?v=xVsxCT8ogb0
 Animal byproducts
 Animal testing
 Biodegradability
 Fair trade
 Honest advertising
 Environmental protection”
Diffuse activities (Contd.)
 Philanthropy, business practices & products:

 e.g.
https://www.youtube.com/watch?v=V1WfVOW6mKc&ind
ex=6&list=PLJiJfCKScn5iI6YOxpJdr0oYkLAw6DxW3
 Diversity
 Product issues
 Product quality
 Controversial products
Thank You
Aradhna Malik (PhD)

Assistant Professor
Evaluating CSR
Starting the evaluation process
(Clarkson, 1995)
 “Socially responsible to whom?

 Socially responsive about what?
 Social performance judged by whom & by what
standards?”
Basis for evaluation (Clarkson, 1995)
 Obligations to & expectations of stakeholders

vis-à-vis what they are given
Tests of the effectiveness of CSR
 Single activity tests involving philanthropy:

 Degree of logical fit between the firm and the work
done - Improvement of consumer attitudes towards the
firm & purchase intentions (Barone et al, 2007, Basil & Herr, 2006, Becker-Olsen et
al., 2006, Bigne-Alcanz et al., 2009, Ellen et al., 2006, etc. in Peloza & Shang, 2011)
 Donation level – Improvement of consumer attitudes

towards the firm & donation intentions (Hajjat, 2003, in Peloza & Shang,
2011)
 Proactive donations – Improvement of attitudes

towards the activity, firm & purchase intentions (Ricks, 2005, in
Peloza & Shang, 2011)
 Strategic CSR (higher fit, longer tenure & higher

donations) – Improvement of attitudes towards the firm
(van den Brink et al., 2006, in Peloza & Shang, 2011)
(Contd.) (Peloza & Shang, 2011)
 Single activity tests involving business

practices:
 “Proximity of environmental damage positively
impacts purchase intentions, though some
moderators exist” (Russel & Russell, 2010, in Peloza & Shang, 2011)
 Single activity tests involving products/

services:
 “Environmental appeals improve purchase
intentions & attitudes toward the ad for those who
are less involved with the environment” (Schuhwerk & Leikoff
Hagius, 1995, in Peloza & Shang, 2011)
 Focused activity tests involving philanthropy

 Licensing associations – Improvement of attitudes
towards the firm
 Cause related marketing/ Non-specific charity
support – Improvement of attitudes towards the
firm
 Cash donations – Improvement of attitudes toward
the firm
 Employee volunteerism – Improvement of attitudes
toward the firm
 Focused activity tests involving business
practices:
 Environmental indicators
Improvement of customer attitudes
 Customer relations
 Tests across CSR categories:

 Product responsibility (Anselmsson & Johansson, 2007, in Peloza & Shang, 2011)
 Human responsibility (Anselmsson & Johansson, 2007, in Peloza & Shang, 2011)
 Community relations & diversity (Luce et al., 2011, in Peloza & Shang,
2011)
 Philanthropy & environmental protection (Oppewal et al., 2006,

in Peloza & Shang, 2011)
 Product related messages (Phau & Ong, 2007, in Peloza & Shang, 2011)
 Institutionalized CSR programs rather than
promotional CSR programs – Generation of
purchase intention (Pirsh et al., 2007, in Peloza & Shang, 2011)
Thank You
Aradhna Malik (PhD)

Assistant Professor
Measurement of
CSR
The benchmark for CSR
 SDG: United Nations Sustainable Development
Goals:
 http://www.un.org/sustainabledevelopment/
 https://www.youtube.com/watch?v=89tInECFdQ4
Indexes to rate CSR (Jankalova, 2016)
 “… those that explore the structure of

sustainability indexes”
 “… those that explore the purpose of
sustainable indexes”
 “… those that explore other dimension, such as
their application by the evaluation of CSR
activities of companies”
Sustainability indexes
 Dow Jones Sustainability Index:
 http://us.spindices.com/indexology/esg
 http://www.sustainability-indices.com/index-family-
overview/djsi-diversified-family-overview/index.jsp
 http://www.robecosam.com/en/sustainability-
insights/about-sustainability/corporate-
sustainability-assessment/index.jsp
 http://eu.spindices.com/index-family/esg/djsi
 RobecoSAM :
http://www.robecosam.com/images/sample-
questionnaire-diversified-consumer-services.pdf
Sustainability indexes (Contd.)
 FTSE Russell (UK): http://www.ftserussell.com/
 Ethibel Sustainability Index (Belgium):
http://forumethibel.org/content/ethibel_sustainabil
ity_index.html
 Global Challenges Index (Germany):
http://gcindex.boersenag.de/en/
 STOXX Global ESG Leaders
 Heng Sustainability Index Series (Hong Kong):
http://www.hsi.com.hk/HSI-Net/HSI-
Net?cmd=navigation&pageId=en.indexes.hssus
Thank You
Aradhna Malik (PhD)

Assistant Professor
An example of CSR Evaluation:
RobecoSAM Sustainability Index
Introduction to RobecoSAM
 https://www.youtube.com/watch?v=Gpa1INdR
aug
 https://www.youtube.com/watch?v=HciTqzUiF
g8
RobecoSAM Criteria
(http://www.robecosam.com/images/sample-questionnaire-diversified-consumer-services.pdf)
 Economic dimension
 Environmental dimension
 Social dimension
Economic dimension
 Corporate governance
 Materiality
 Risk & crisis management
 Codes of business conduct
 Customer relationship management
 Policy influence
 Brand management
 Tax strategy
 Impact measurement & valuation
 Information security & cybersecurity
 Privacy protection
Corporate Governance
 “CG systems ensure that a company is managed in the interests of

shareholders” – checks and balances for control & alignment of
shareholder and management interests.
 Board structure
 Non-executive chairman/ Lead director
 Responsibilities & committees
 Diversity policy
 Gender diversity
 Board effectiveness
 Average tenure
 Board industry experience
 Executive compensation
 Management ownership requirements
 Compensation disclosure
 Media & stakeholder analysis: Consistency of management behavior during
crisis situations
Materiality
 “… [assessment of] company’s ability to identify

the sources of long-term value creation,
understand the link between long-term issues
& the business case, […] and what targets are
set to address these issues”
 Material issues: economic, environmental, social
 Materiality disclosure
Risk & crisis management
 Development of internal control processes &

compliance with existing regulations &
proactive development of control mechanism
 Risk governance
 Risks correlation
 Sensitivity analysis & stress testing
 Emerging risks
 Risk culture
 Media and stakeholder analysis: Risk & crisis
management
Codes of business conduct
 Codes of conduct
 Coverage
 Corruption & bribery
 Systems & procedures
 Anti-competitive practices
 Corruption & bribery cases
 Reporting on breaches [against codes of
conduct/ ethics]
 Media & stakeholder analysis: Business ethics
Customer relationship management
 Online strategies & customers online

 Satisfaction management
 Media & stakeholder analysis: CRM
Policy influence
 Contributions & other spending

 Largest contributions & expenditures
Brand management
 “… how brand management strategies support

a company’s brand strength & align its
approach to sustainability”
 Brand values
 Brand strategy & sustainability strategy
 Brand management metrics
 Media & stakeholder analysis: Brand management
Tax strategy
 Tax strategy
 Tax reporting
 Taxation governance & risks
 Media & stakeholder analysis: Tax strategy
Impact measurement & valuation
 “… to assess whether companies have business

programs for social needs & if they are
measuring & valuing their broader societal
impacts”
 Business programs for social needs
 Impact valuation
 Valuation disclosure
Information security & cybersecurity
 Information security/ cybersecurity strategy &

governance
 Responsibilities & employees
 Process & infrastructure
 Information security/ cybersecurity breaches
Privacy protection
 Responsibility for data privacy

 Privacy policy: Systems/ Procedures
 Customers’ information
 Media & stakeholder analysis: Privacy
protection
Environmental dimension
 Environmental reporting
 Environmental policy & management systems
 Operational eco-efficiency
Environmental reporting
 “Maintaining transparency through appropriate

reporting, & monitoring it at the board level”
 Coverage
 Assurance
 Quantitative data
Environmental policy & management
systems
 Corporate environmental policy, areas

 Environmental Management System:
Certification/ Audit/ Verification
 Media & stakeholder analysis: Environmental
management
Operational eco-efficiency
 “… reducing the overall environmental

footprint”
 “… minimizing natural resource consumption
and waste generating activities”
 Effective and eco-friendly waste management
Operational eco-efficiency (Contd.)
 Direct greenhouse gas emissions

 Indirect greenhouse gas emissions
 Energy consumption & use
 Water consumption & use
 Waste management
Social dimension
 Social reporting
 Labor practice indicators
 Human rights
 Human capital development
 Talent attraction & retention
 Corporate citizenship & philanthropy
 Occupational health and safety
 Stakeholder engagement
Social reporting
 Coverage
 Assurance
 Quantitative data
Labor practice indicators
 Diversity
 Equal remuneration
 Freedom of association
Human rights
 Commitment
 Due diligence process
 Assessment
 Disclosure
 Media & stakeholder analysis: Human rights
Human capital development
 Training & development inputs

 Employee development programs
 Human capital return on investment
 Return on employee development investment
Talent attraction & retention
 Type of individual performance appraisal

 Long term incentives
 Employee turnover rate
 Trend of employee engagement
 Media and stakeholder analysis talent attraction
& retention
Corporate citizenship & philanthropy
 “… creation of value for both beneficiaries &

shareholders”
 Alignment of programs with UNSDG
Corporate citizenship & philanthropy
(Contd.)
 Group-wide strategy for providing guidance to

corporate citizenship/ philanthropic activities
 Type of philanthropic activities
 Input
Occupational health & safety
 Absentee rate
 Health, safety & well-being
 Healthy lifestyle incentive
Stakeholder engagement
 Governance
 Review
 Media & stakeholder analysis: External
engagement
Thank You
Aradhna Malik (PhD)

Assistant Professor
CSR Evaluation in
India
National Voluntary Guidelines (2011)
Principle 1: Ethics, transparency &
accountability
 “Governance structure of the business, including

committees under the Board responsible for
organizational oversight. In case no committee is
constituted, then the details of the individual responsible
for the oversight
 Mandate & composition (including no. of independent
members &/or non-executive members) of such
committee with the no of oversight review meetings
held
 State whether the person/ committee head responsible
for oversight review is independent from the executive
authority or not. If yes, how?
Principle 1: Ethics, transparency &
accountability (Contd.)
 “Mechanisms for shareholders & employees to

provide recommendations or direction to the
Board/ Chief Executive
 Processes in place for the Board/ Chief Executive
to ensure conflicts of interest are avoided
 Internally developed statement on Ethics, Codes of
Conduct & details of the process followed to
ensure that the same are followed
 Frequency with which the Board/ Chief Executive
assess BR performance”
Principle 2: Product’s life cycle
sustainability
 “Statement on the use of recyclable raw materials

used
 Statement on use of energy-efficient technologies,
designs & manufacturing/ service delivery
processes
 Statement on copyrights issues in case of the
products that involve use of traditional knowledge
& geographical indicators
 Statement on use of sustainable practices used in
the value chain”
Principle 3: Employees’ well-being
 “Total no. of employees with percentage of employees that are engaged

through contractors
 Statement on non-discriminatory employment policy of the business
entity
 Percentage of employees who are women
 No. Of persons with disabilities hired
 Amount of the least monthly wage paid to any skilled & unskilled
employee
 No. of training & skill upgradation programs organized during the
reporting period for skilled unskilled employees
 No. of incidents of delay in payment of wages during the reporting
period
 No. of grievances submitted by the employees”
Principle 4: Stakeholder engagement
 “Statement on the process of identification of

stakeholders & engaging with them
 Statement on significant issues on which formal
dialogue has been undertaken with any of the
stakeholder groups”
Principle 5: Human rights
 “Statement on the policy of the business entity

on observance of human rights in their
operation
 Statement on complaints of human rights
violations filed during the reporting period”
Principle 6: Environment
 “Percentage of materials used that are recycled input

materials
 Total energy consumed by the business entity for its
operations
 Statement on use of energy saving processes & the total
energy saved due to use of such processes
 Use of renewable energy as percentage of total energy
saved due to use of such processes
 Total water consumed & the percentage of water that is
recycled & reused”
Principle 6: Environment (Contd.)
 “Statement on quantum of emissions of

greenhouse gases & efforts made to reduce the
same
 Statement on discharge of water & effluents
indicating the treatment done before discharge
& the destination of disposal
 Details of efforts made for reconstruction of
bio-diversity”
Principle 7: Policy advocacy
 “Statement on significant policy advocacy

efforts undertaken with details of the platforms
used”
Principle 8: Inclusive growth
 “Details of community investment &

development work undertaken indicating the
financial resources deployed & the impact of
this work with a longer term perspective
 Details of innovative practices, products &
services that particularly enhance access &
allocation of resources to the poor & the
marginalized groups of society”
Principle 9: Customer value
 “Statement on whether the labelling of their

products has adequate information regarding
product-related customer health & safety,
method of use & disposal, product & process
standards observed
 Details of the customer complaints on safety,
labeling & safe disposal of the products
received during the reporting period”
 http://www.itcportal.com/about-itc/shareholder-value/annual-
reports/itc-annual-report-2016/pdf/business-reponsibility-report.pdf
 http://www.emamiltd.in/investor-
info/pdf/Business_Responsibility_Reports.pdf
 www.emamiltd.in/investor-
info/pdf/Business_Responsibility_Policy.pdf
 https://www.mindtree.com/sites/default/files/mindtree-business-
responsibility-report-2015-2016.pdf
 https://www.mindtree.com/about-us/investors/annual-report-2015-
16/directors-report
 https://www.mindtree.com/corporate-social-responsibility-policy
 http://www.dabur.com/in/en-us/investor/reports/brr
 http://www.dabur.com/img/assets/138-reference-only-dabur-brr-
inside.pdf
Challenges to/ concerns regarding
CSR evaluation (Peloza & Shang, 2011)
 “How does the form of CSR impact consumer

perceptions of value?”
 “CSR activities in the categories of philanthropy or
business practices enhance other-oriented value.
Product-related CSR activities enhance other & self-
oriented value.”
 “When CSR activities provide other-oriented value,
consumers will perceive trade-offs with self-oriented
value”
 “Faced with a choice, consumers will prioritize CSR
categorized as product-related over philanthropy and
business practices”
CSR evaluation (Contd.) (Peloza & Shang, 2011)
 “Do all consumers view value from different

forms of CSR?”
 “CSR activities categorized as philanthropy or
business practices will create other-oriented value
for self-transcendent consumers, but not for self-
enhancement consumers. CSR activities categorized
as product features will enhance self-oriented value
for all consumers.”
 “Are all consumers equally aware of different

forms of CSR?”
 “Consumers will be more aware of product-related
CSR activities when compared to philanthropy &
business practices”
 “Consumers will perceive product-related CSR
activities to require more firm commitment & effort
when compared to philanthropy & business
practices”
 “Is value from different forms of CSR consistent

across product categories?”
 “Other oriented/ intrinsic value increases in salience
for experiential products, other-oriented/ extrinsic
value increases in salience for symbolic products, &
self-oriented value increases in salience for
functional products.”
Thank You
Aradhna Malik (PhD)

Assistant Professor
Corporate
Governance
What is corporate
governance?
Definitions
 Corporate governance “… comprises the laws &
practices by which managers are held
accountable to those who have a legitimate
stake in the corporation.” (Jacoby, 2005)
 “CG is conceptualized as the creation and
implementation of processes seeking to
optimize returns to shareholders while
satisfying the legitimate demands of
stakeholders” (Durden, 2008, in Mason & Simmons, 2014)
Definitions (Contd.)
 “Corporate governance is maximizing the
shareholder value in a corporation while ensuring
fairness to all stakeholders – customers,
employees, investors, vendors, the government &
society at large. Corporate governance is about
transparency & raising the trust & confidence of
stakeholders in the way the company is run.” (Murthy,
2011-12)
 “Corporate governance relates to the structure of

rights & responsibilities among the parties with a
stake in the firm.” (Aoki, 2001, in Aguilera, Filatochev, Gospel, & Jackson, 2008)
Definition (Contd.)
 OECD Definition (1999): “Corporate governance is
a system through which business companies are
managed & controlled. The structure of corporate
governance defines the division of rights & duties
between the individual stakeholders in a company
& lays down detailed rules & procedures for the
decision-making on business matters of a
company. On this basis a structure is created that
establishes the company goals & the means of
reaching the goals & monitoring performance.”
Definition (Contd.)
 OECD (2004): “Corporate governance ‘specifies
the distribution of rights & responsibilities
among the different participants in the
organization – such as the board, managers,
shareholders & other stakeholders – & lays
down the rules & procedures for decision-
making’.”
CG includes
 Methods used by financers to assure return on
investment (Shleifer & Vishny, 1997)
 “… the determination of the broad uses to
which organizational resources will be deployed
& the resolution of conflicts among the myriad
participants in organizations.” (Daly, Dalton & Cannella, 2000)
 A legal & financial framework for management
of a profit making organization (Werder, 2011)
Specific activities covered under
CG (Werder, 2011)
 “determination of the overall goal of a

company;
 selection of structures, processes & persons at
the top of the company for pursuing this goal;
 periodical evaluations of the implemented
structures, processes, & persons;
 securing of an adequate transparency of the
company’s activities via communication.”
Concept of global governance
(Crowther & Aras, 2008)
 “… formal political institutions that aim to

coordinate & control interdependent social
relations & that have the ability to enforce
decisions.”
 “… global governance can be considered as the
management of global processes in the
absence of form of global government.”
Players in CG (Murthy, 2011-12)
 “Shareholders who have invested their money

in the corporation.
 The executive management that runs the
business & is responsible to the board of
directors.
 The board of directors which is elected by the
shareholders & is accountable to them.”
Where does all this begin (Klein, 1999)
 “In the production-function approach, money

capital is treated as a factor of production. The
manager’s objective is to maximize the
difference between total revenues & total costs,
with the cost of capital treated simply as
another cost (& typically assumed to be
exogenous). The residual, ‘profit’, is retained by
the manager.”
Thank You
Aradhna Malik (PhD)

Assistant Professor
Theories of corporate
governance
Some theories of corporate
governance
 Agency theory
 Resource dependence theory
 Stewardship theory
 Class hegemony theory
 Social comparison theory
 Signalling theory
 Stakeholder approach
Resource dependence theory
(Daly, Dalton & Cannella, 1992)
 “… provides a theoretical foundation for

directors’ resource role. Proponents of this
theory address board members’ contributions
as boundary spanners of the organization & its
environment.[…] In this role, outside directors
provide access to resources needed by the
firm.”
Stewardship theory (Daly, Dalton & Cannella, 1992)
 “… stewardship theorists describe [executives &

directors] as frequently having interests that
are isomorphic with (imitably similar to) those
of shareholders (e.g. Davis et al., 1997). […] stewardship
theorists […] recognize that there are many
situations in which executives conclude that
serving shareholders’ interests also serves their
own interests. (Lane, Cannella, & Lubatkin, 1998)
Stakeholder approach (Mason & Simmons, 2014)
 “… facilitates consideration of a wider range of

corporate governance issues, contributes to
stakeholder management decisions on who & what
really counts (Mitchell et al., 1997, in Mason & Simmons, 2014), &
extends company director duties to include formal
consideration of stakeholder perspectives &
agendas. Stakeholder approaches also facilitate a
heightened awareness of CSR, business ethics, &
business practices that enable more informed
decisions on stakeholder salience (Fassin, 2010, in Mason &
Simmons, 2014) & more robust CSR evaluations (Fassin &
Buelens, 2011, in Mason & Simmons, 2014)”
Problem with the stakeholder
approach (Mason & Simmons, 2014)
Profit making is the primary concern & priority

of profit making organizations, & any attention
to stakeholder interests is influenced by this.
Agency theory
 “… shareholders (as principals) hire managers
(as their agents) to run the company. (Werder, 2011)
Agency theory
(Fiss, 2008)
Someone owns, someone controls

 “… a variety of incentive mechanisms to control the
behavior of managers, focusing mostly on
compensation, the composition of the board of
directors, & the market for corporate control as the
three primary control issues”
Agency Theory (Contd.)
 “Principal-agent theory postulates that by
delegating the management of companies to
managers (agents), the owners (principals)
have to create mechanisms to align the agents’
interests with their own.” (Machold, Ahmad & Faquhar, 2008)
Agency theory: Limitations on
monitoring: Limits on board
effectiveness (Lipton & Lorsch, 1992)
 Lack of time & board size

 Complexity of information
 Lack of cohesiveness
 Power of top management
 Confused accountabilities
Agency problem
(Shleifer & Vishny, 1997)
 “… separation of ownership & control.”

 “… separation of management & finance, or
[…] of ownership & control.”
Why does the agency problem
arise? (O’Connor & Rafferty, 2012)
 People who own the company are not the same

as people who run the company. People who
own the company (shareholders) have different
priorities and different stakes than people who
run the company on a salary (executives).
How does the agency problem
influence CG? (O’Connor & Rafferty, 2012)
 “Shareholders have the ability to diversify away firm specific

risk because they can hold a broad portfolio of assets. In
contrast, much of an executive’s wealth in the form of
salary, perquisites, & professional reputation is directly tied
to the firm. Hence, executives are usually more risk averse
than shareholders, so executives will usually prefer a
strategy that emphasizes low-risk/ low-return assets over
high-risk/ high-return assets. When agency problems exist,
the set of customs, rules & institutions known as corporate
governance will determine the relative importance of these 2
different sets of preferences in determining corporate policy.
If the agency problem is severe enough, then executives
may reduce risky investment strategies (like innovative
activity) in favor of much less risky investment.”
Comparison of various theories of CG
(Chambers et. Al., 2013)
Agency Stewardship Resource Stakeholder

Dependency
Composition •Representatives of •Unitary •Experts, •Representatives
owners boundary
spanners
•Tendency to •Tendency to •Balance •Tendency to

homogeneity homogeneity between heterogeneity
homogeneity &
heterogeneity
•Tendency to small •Tendency to •Board size •Tendency to

boards small boards varies large boards
(Contd.) (Chambers et al., 2013)
Dependency
Focus •Supervision of •Strategic •Policy •Supervision of
management thinking as task formulation as management
board task
•More focus on •More focus on •Focus on
compliance improvements in compliance
performance
•Type of fiduciary •Type 2 strategic •Type 3 •Type 1 fiduciary

governance (Guarding governance (Focus Generative governance
resources & their use) on performance as
opposed to
governance
(Leadership &
conformance) development)
•Monitoring of
•Monitoring of performance
performance against against targets &
targets & objectives objectives
•Use of
•Conformance of board resources •Conformance as
task board task
(Contd.) (Chambers et al., 2013)
Dependency
Dynamics •High challenge •Appreciative •Predominantly •Predominantly
style to achieve external focus external focus
goals
•Controlling •Collaborative •Tendency to be
active in relation to
sectional or
•Critical style to •Well-functioning political interests
achieve goals board
committees
A typology of corporate governance
theories & ethics (Machold, Ahmad & Farquhar, 2008)
 Shareholder theories
Source Concepts & reasoning Normative basis
Friedman Responsibility to shareholders, private Utilitarian, virtue ethics
(1970) property rights, individual assumption of
social responsibilities, ‘open & free
competition without deception of fraud’
Jensen & Property rights, agency costs, contracts, Utilitarianism – Principals
Meckling conflict of interest between principals & seek to maximize their
(1976) agents own utility
Fama & Firm as a nexus of contracts, separation of Survival of the fittest –
Jensen risk bearing & decision making naturalist ethics
(1983)
Pound (1993) Shareholder power & legitimacy to influence Utilitarianism – pursuit of
managers, political mechanisms to solve self interest by harnessing
conflicts between principals & agents political processes
La Porta et al. Investor rights, contract enforcement, legal Prima facie moral duty to
(2000) systems comply with laws
 Stakeholder theories
Evan & Principles of corporate rights & effects, Kantian duties,
Freeman management bears fiduciary duty to stakeholders as ends &
(1988) stakeholders not means
Freeman & Multilateral contractarian perspective, Rawlsian justice
Evan (1990) managers contract with multiple
stakeholders
Goodpaster Fiduciary & non-fiduciary duties & Kantian perfect &
(1991) obligations imperfect duties
Jones in Social contracts, agent morality, social Kantian duties

Starik (1994) responsibility
Collins in Democratic & undemocratic management Rawlsian justice

Starik (1994)
 Stakeholder theories (Contd.)
Donaldson & Legitimacy of stakeholder interests, Distributive justice,
Preston (1995) property rights Kantian ends not means
Jones (1995) Contracting, corporate morality, Virtue ethics
competitive advantage through
relationships based on honesty & trust
Mitchell et al. Stakeholder salience defined by power, Pragmatism
(1997) urgency, legitimacy
Phillips (1997) Competing stakeholder claims, Principle of fairness
stakeholder identification, & the ‘duty of (drawing on Mills & Rawls)
fair play’
Freeman & Individuals with rights &reason engage Liberatarianism
Phillips (2002) voluntarily in agreements
Jensen (2002) Trade-offs among stakeholders based on Teleological
value maximization
Thank You
Aradhna Malik (PhD)

Assistant Professor
Why corporate
governance?
The problem (Werder, 2011)
 “possible opportunistic behavior of the

management” may lead to exploitation of
company’s resources, which is likely to lead to
“compromising the interests of the
stakeholders”.
Why CG?
 “ [to deal with] the detrimental effect of
deregulated labor markets on workers’ conditions,
employment hours & protection, wage levels &
training.” (Zumbansen, 2006)
 “… realignment of incentives, commonly through
some type of penalty for premature termination,
[…] creation of a specialized governance structure
to resolve disputes, […] & […] the introduction of
trading regularities that support & signal intentions
of continuity.” (Williamson, 1984)
Why CG? (Contd.)
 “… to ensure that we do not create asymmetry
of benefits between different sections of
shareholders – generally, the owner-managers
of a company & the rest of the shareholders.”
(Murthy, 2011-12)
 “… minimizing agency cost or the cost of

managers who manage the corporation on
behalf of shareholders.” (Murthy, 2011-12)
Why CG? (Contd.) (Love, 2011)
 Improvement of performance in terms of:

 “Operating performance (Profitability or Return on
Assets or Return on Equity)
 Market Value: Market capitalization relative to book
value
 Stock returns: Relative change in stock prices over
time (Return on investment), often controlling for
risk & other factors affecting returns”
 Improvement of operating performance in the

following ways:
 “With better oversight, managers are more likely to
invest in value maximizing projects & be more efficient
in their operations
 Fewer resources will be wasted on nonproductive
activities (perquisites consumption by the management,
empire-building, shirking)
 Better governance reduces the incidence of tunneling,
asset-stripping, related party transactions, & other ways
of diverting firm assets or cash flows from equity
holders
 Improvement of operating performance

(Contd.)
 If investors are better protected & bear less risk of
losing their assets, they should be willing to accept
a lower return on their investment. This will
translate into a lower cost of capital for firms &
hence higher income.
 The availability of external finance may also be
improved, allowing firms to undertake an increased
number of profitable growth opportunities.”
Bottomline
 The above are likely to increase trust of
stakeholders in the organization (Kocmanová, Hřebiček,
Dočekalová, 2011)
What does good governance do?
 Creating sustainable value

 Ways of achieving the firm’s goals
 Increasing stakeholders’ satisfaction
 Efficient & effective management
 Increasing credibility
 Ensuring efficient risk management
 Providing an early warning system against all risk
 Ensuring a responsive & accountable corporation
 Describing the role of a firm’s units
 Developing control & internal auditing
What does good governance do?
(Contd.) (Crowther & Aras, 2008)
 Keeping a balance between economic & social

benefit
 Ensuring efficient use of resources
 Controlling performance
 Distributing responsibility fairly
 Producing all necessary information for
stakeholders
 Keeping the board independent from management
 Facilitating sustainable performance
Benefits of good governance
 “Increasing the firm’s market value

 Increasing the firm’s rating
 Increasing competitive power
 Attracting new investors, shareholders & more equity
 More or higher credibility
 Enhancing flexible borrowing condition/ facilities from
financial institutions
 Decreasing credit interest rate & cost of capital
 New investment opportunities
 Attracting better personnel/ employees
 Reaching new markets”
Good corporate governance is
influenced by(Mitchell & Wee, 2004)
 Politics
 Economics
 Management
 Accounting
 Ethics
 The law
Thank You
Aradhna Malik (PhD)

Assistant Professor
Models & Systems
of
Corporate Governance
Systems of governance
(Crowther & Aras, 2008; Macdonald & Beattie, 1993)
 Anglo Saxon model of governance

 UK model of governance
 Latin model of governance
 Ottoman model of governance
 African model of governance
 German model of governance
 Japanese model of governance
Anglo-Saxon model of governance
 “Found on rules which must be codified & can

therefore be subject to a standard
interpretation by the appropriate adjudicating
body”
 “Governance on the other hand, is concerned
with the processes & administrative elements of
governing rather than its antagonistic ones”
(Solomon, 2007, in Crowther & Aras, 2008)
 Shareholders appoint directors, who in turn

appoint managers to run the company
UK governance model (Macdonald & Beattie, 1993)
 “The company is a legal entity quite separate from its

owners
 The power to govern the company is derived from
ownership
 The company exists in perpetuity since its shares may
be transferred
 The board oversees the running of the company &
reports regularly to the members on the stewardship of
their investment, &
 Independent auditors, appointed by the members,
report on whether the financial statements show a true
& fair view.”
UK Governance model (Contd.)
(Macdonald & Beattie, 1993)
Appoint Independent
Members auditors
Report to
Board of Directors
The business
Suppliers/ Employees
creditors
Customers Providers of non-

equity finance
Latin model of governance
 “… based on the fact that extended families are

associated with all other family members and
therefore feel obligated. And older members of the
family are deemed to have more wisdom &
therefore assume a leadership role because of the
respect accorded them by other family members.
As a consequence there is no real need for formal
codification of governance procedures & the
system of adjudication does not need to be
formalized – it works very satisfactorily on an
informal basis.”
Ottoman model of governance
 “All parties must be fully aware of the risks

attendant on a particular course of action & be
accepting of equal liability for the outcomes, good
or bad.”
 “The governance system was effectively a form of
patronage which operated in a hierarchical manner
but with the systems & procedures being
delegated in return for the benefits being shared in
an equitable manner – devolved form of
governance that operated in Asia, Europe & Africa”
African model of governance
 Governance through networks, kinship, tribal

membership and shared belonging to various
networks.
 “… network of weak ties (Granovetter, 1973, in Crowther & Aras,
2008) which are based upon social interaction
around a commonality of interests & upon

shared memberships rather than based upon
friendship."
German governance model
 “The supervisory board has no executive power over direction

or executive action, but it exercises its authority by the right to
appoint, approve or remove the Management Board.
 Accountability role is fulfilled by a representative membership
of the Supervisory Board elected by shareholders & employees.
 Supervisory board cannot take part in the active management
of the company,
 The management board must report to the supervisory board
at regular intervals on matters of policy, profitability, the course
of business, turnover, the state of the company’s affairs, & any
transaction of significant importance for the company.”
German governance model
Supervisory Board
Employees Management Board Shareholders
Customers Creditors Auditors

Japanese governance model
 “Banks frequently own shares in companies & are often one

of the […] largest shareholders of a public company […]
[and as a result are] involved in major investment decisions
of the company.”
 “… disconnection between shareholders & the board has led
to management & the board becoming fused, with all board
members being insiders in the sense that they are managers
as well as board members.”
 “The informal information flows which result from the role of
‘insiders’ & the lack of influence of shareholders means that
there is less need to communicate information via the
corporate report or employee reports than is the case in
other countries.”
Japanese governance model (Contd)
 “Audit:
 Statutory auditors [are] responsible for auditing
both the financial statements & the operations of
the company, i.e. monitoring the activities of
directors in the discharge of their duties & ensuring
that no fraud or illegal acts take place.
 Accountant auditors’ role is to audit the company’s
financial statements.”
Japanese governance model (Contd)
Statutory auditors
Banks Independent
accountant
auditors
Shareholders Board of directors
Business
Employees
Customers
Suppliers/ creditors
Homework
 Please go through the descriptions of these
models and discuss on the forum:
1. The similarities and differences between these
models
2. The appropriateness of these models for various
types of organizations
3. The appropriateness of these models keeping in
mind the social fabric of rural and urban India
Thank You
Aradhna Malik (PhD)

Assistant Professor
Implementing
Corporate
Governance
Policies to implement CG (Siebens, 2002)
 “Self-regulation: The organizations spontaneously proceed to

observe certain standards or targets in their sector or area.
 Publicity system: The organizations strive for possibly widest
& most evident range of information about activities &
results
 Best-practices
 Normative recommendations
 Legislation, decisions, regulation
 Peer groups: By means of mutual contacts about this theme
the organizations can learn from each other.”
Policies to implement CG (Contd.)
(Siebens, 2002)
Market incentives
Best practices
Benchmarking
Recommendations
Requirements of exchange
Self-regulation
Regulation
Legislation
CG Deontology (Ethical
processes leading to
ethically achieved ends)
Peer review
How does corporate
governance take place?
 “In most general terms, the financiers & the
manager sign a contract that specifies what the
manager does with the funds, & how the
returns are divided between him & the
financiers.” (Shleifer & Vishny, 1997)
How does corporate governance
take place? (Contd.)
 “Effective CG uses mechanisms to ensure that
executives respect the rights & interests of
company stakeholders, & that those
stakeholders are held accountable for acting
responsibly regarding the protection,
generation, & distribution of wealth invested in
the firm.” (Aguilera, Filatochev, Gospel & Jackson, 2008)
Thank You
Aradhna Malik (PhD)

Assistant Professor
Board of Directors
What is the board of directors?
(Siebens, 2002)
 The board of directors is “… a circle of wise

men [and women] reflecting, together with the
management, about the day-by-day policy [of
an organization].”
What does the board of directors do?
(Siebens, 2002)
 “… the board [of directors] focuses on the long

term & on the ‘longest’ term, the organization’s
ethics, among other things in view of the
confidence in & the reputation of the
enterprise. Both internal & external.”
Duties of the Board of Directors
(Lipton & Lorsch, 1992)
Duties Specific activities

Strategic • Approving a corporate philosophy
planning • Annually reviewing & approving the corporation’s strategy
Capital allocation • Reviewing & approving the corporation’s capital allocations
Long range goals • Reviewing & approving the corporation’s long range goals
• Reviewing & approving the corporation’s financial standards,
policies & plans
Performance • Approving annually the performance of the board & taking steps
appraisal to improve its performance
• Appraising top management
• Comparing review results with:
• Corporate philosophy
• Goals
• Competition
Manpower • Electing/ selecting top management
planning • Making sure that management succession is provided for
Strategic • Ensuring that the status of organizational strength & manpower
planning planning is equal to the requirements of the long range goals
Competencies desired in a good
director (Siebens, 2002)
 “Personal qualities
 Relational qualities
 Professional qualities
 Ethical qualities
 Motivation
 Being complementary within the board as a
whole”
Critical considerations in the
appointment of a director (Siebens, 2002)
 “The motivation
 The skills needed
 The value added to board and & enterprise
 The time available
 The incompatibilities
 The degree of similarity between personal ethics &
deontology & the ethical codes followed up by the
enterprise
 The degree of similarity between vision (declaration of
assignments) & strategy within the board
 The presence of an assurance for personal liability”
Self evaluation by the board
(Siebens, 2002)
 “… the board can only demand quality from its

management & employees if its own working is
[of good quality].”
 “… no authority without credibility.”
 “Walk the talk.”
Qualitative streams of information
& communication, & the scorecard
(Siebens, 2002)
 “Being short of information leads to unbalanced

decisions. Having too much information, often in
combination with a shortage of preparation time,
leads to partial decisions.”
 To ensure quality, the information received by the
board, & sent by the board should be:
 Adequate: Neither too much, nor too little
 Sent in time to people who are going to use that
information to make critical decisions about the
organization
Balanced Scorecard
(Hall, in Gilmore & Williams, 2009)
 Kaplan and Norton (1996): Performance measurement system to Performance

management system
 Perspectives to managing performance:
 Customer: Customer value proposition
 Business processes (operational): The internal processes & systems
 Innovation & learning (people): The human contribution through knowledge

& skills
 Goals: Strategic goals at the top level of an organization and then ‘translated’
into appropriate goals at lower levels such as business units, teams, &
individuals
 Process of translating and ‘cascading’ strategic aims into goals at every level
throughout an organization guides and encourages people to contribute towards
the overall performance of the organization
 Strategic mapping: Definition of strategic aims and relation of these aims to
organizational activities to serve as a basis for specifying goals within the
different performance perspectives
Balanced Scorecard
Financial
perspective
How we
satisfy our
shareholders
Customer
Operational perspective
perspective
How our
Vision and customers
How we excel strategy
at what we do view us
People
perspective
How our
employees
contribute
Example of a Balanced Scorecard
Goal Measure or Objective/ target Development

(Broad objective) ‘metric’ actions
Achieve ‘excellent’ % of customers lost Less than 10% loss Develop ‘lost
customer over 12 months of customers in 6 customers’ report
satisfaction months time
% of customers More than 80% of Use customer
completed a CS customers complete feedback to improve
survey in past 6 a CS survey this CS survey
months year
Level of CS More than 75% of Develop employee
customers to rate competencies in CS
our service as
‘excellent’
Quartile for CS Upper quartile in Develop
compared to sector industry sector by benchmarking within
end of financial year sector
Qualities of a good scorecard
(Siebens, 2002)
 “It should meet certain quality standards: clear,

plainly structured, […] but complete, up-to-
date and accurate, correct, comparative with
the past, comparative to similar organizations,
subject to standards, readable.”
 Primary purpose of a scorecard: Accountability

Committees (Siebens, 2002)
 Committees work “… under the order of &

within the board. The actual authority to make
decisions stays with the board.”
Thank You
Aradhna Malik (PhD)

Assistant Professor
Types of boards (Molz, 1995)
 Managerial dominated board

 Pluralist board
Managerial dominated board
(Molz, 1995)
 “… serves three main functions:

 To fire the CEO
 To declare dividends
 To affirm & approve the actions of management”
 “Captive of management
 Does not take on a normative role
 Its influence on the direction of the firm is limited
to those times it is forced to act in changing the
CEO or responding to hostile takeover bids”
Pluralist board (Molz, 1995)
 “This board is active and participative in

determining the normative goals & objectives
of the firm.
 Not a captive of management but rather is
sensitive & responsive first to society followed
by shareholders & lastly management.”
Characteristics of managerial
dominated & pluralist boards (Molz, 1995)
Theorist Managerial Mid-range Pluralist

Lynch (1979) Passive Activist
Vance (1983) Constitutional Consultive, Collegial
Communal
Baserman & Managerial Financial, Class Multilevel limited
Schoorman Hegemony, rationality
(1983) Reciprocity
Molz (1985) Managerial Review & approve, Social
Control by
exception,
Normative,
Strategic
Differences between the two
types of boards (Molz, 1995)
Managerial dominated Pluralist

Infrequent board meetings Frequent board meetings
Few board committees Many active board committees
Many inside directors Many outside directors
‘Old boy’ network Diversity in directors
CEO is chairman CEO is not chairman
Significant blocks of inside stock No significant blocks of inside stock
represented represented
Chairman/ CEO as dominant power Chairman/ CEO does not have
dominant power
Working instruments for better
corporate governance (Siebens, 2002)
 “Complete openness
 Spreading of knowledge in the board’s composition
 Frequent meetings
 Splitting up of special functions
 Thorough preparation & recording of all meetings
 Replacement of weak or regularly absent directors
 Sufficient time to discuss.”
An ethical code for directors
(Siebens, 2002)
 “To exercise in good faith the mandate of a director,

representing all the stakeholders. To devote oneself
actively & in all loyalty to the enterprise means, among
other things:
 To be present at & participate actively in the meetings of the
board
 To prepare & study thoroughly the documents received
 To read the reports carefully
 To observe the duty of discretion towards sensitive
differences of opinion or pieces of information within the
board
 To avoid contradictory interests or to inform the chairman of
the board at the first occasion.”
An ethical code for directors (Contd)
(Siebens, 2002)
 “To look in the first place after the interests of the

enterprise, taking into account social interests in a
broader issue & from a long term view.
 To observe the necessary distance in relation to some of
the stakeholders or employees in the company
 To inform oneself on one’s own initiative & on a regular
basis about the state of affairs in the enterprise by way
of the appropriate channels, by showing openness
towards the questions posed by other internal directors
or by making contracts oneself. This should be
mentioned first to the chairman of the board & be
elaborated with his permission.”
An ethical code for directors (Contd)
(Siebens, 2002)
 “To support the existing deontologic or ethical

standards (possibly codes) subscribed by the
enterprise or applicable to its line of action & to
take care to fill them in actively at the level of
the board.
 The board’s line of action & the actual
performance of all of its members should be
evaluated & adjusted regularly. Therefore, all
the directors are to be prepared for discussions
about & evaluations of their performances.
Thank You
Aradhna Malik (PhD)

Assistant Professor
Principles of Corporate
Governance
Principles of corporate governance
(Crowther & Aras, 2008; Mitchell & Wee, 2004)
 Transparency
 Accountability
 Disclosure
 Discipline
 Responsibility
 Fairness
 Incentives
Principles of CG recommended by ASX
Corporate Governance Council,
Australia, 2010
1. “Lay solid foundations for management & oversight: A
listed entity should establish & disclose the respective roles
& responsibilities of its board & management & how their
performance is monitored & evaluated.
2. Structure the board to add value: A listed entity should
have a board of an appropriate size, composition, skills &
commitment to enable it to discharge its duties effectively.
3. Act ethically & responsibly: A listed entity should act
ethically & responsibly.
4. Safeguard integrity in corporate reporting: A listed entity
should have formal & rigorous processes that independently
verify & safeguard the integrity of its corporate reporting.”
Principles of CG recommended by ASX
Corporate Governance Council,
Australia, 2010 (Contd.)
5. “Make timely & balanced disclosure: A listed entity should make
timely & balanced disclosure of all matters concerning it that a
reasonable person would expect to have a material effect on the
price or value of its securities.
6. Respect the rights of security holders: A listed entity should respect
the rights of its security holders by providing them with appropriate
information & facilities to allow them to exercise those rights
effectively.
7. Recognize & manage risk: A listed entity should establish a sound
risk management framework & periodically review the effectiveness
of their framework.
8. Remunerate fairly & responsibly: A listed entity should pay director
remuneration sufficient to attract & retain high quality directors &
design its executive remuneration to attract, retain & motivate high
quality senior executives & to sign their interests with the creation
of value for security holders.”
Principles of CG (OECD 2015)
 http://www.oecd-
ilibrary.org/docserver/download/2615021e.pdf?
expires=1502454530&id=id&accname=guest&c
hecksum=85E5107BE10097B49F704E379C91E3
03
 OECD principles of corporate governance 2015
Principles of CG recommended
by OECD 2004 (Summarized in Pintea, 2015)
Principle Content (“The corporate framework should …)

Ensuring the Basis for … Promote transparent & efficient markets, be
an Effective Corporate consistent with the rule of law & clearly
Governance articulate the division of responsibilities among
Framework different supervisory, regulatory & enforcement
authorities.”
The Rights of … Protect & facilitate the exercise of
Shareholders & Key shareholders’ rights.”
Ownership Functions
The Equitable … Ensure the equitable treatment of all
Treatment of shareholders, including minority & foreign
Shareholders shareholders. All shareholders should have the
opportunity to obtain effective redress for
violation of their rights.”
Principles of CG recommended
by OECD 2004 (Contd.) (Summarized in
Pintea, 2015)
Principle Content (“The corporate framework should …)

The Role of … Recognize the rights of stakeholders
Stakeholders in established by law or through mutual agreements
Corporate Governance & encourage active cooperation between
corporations & stakeholders in creating wealth,
jobs, & the sustainability of financially sound
enterprises.”
Disclosure & … Ensure that timely & accurate disclosure is
Transparency made on all material matters regarding the
corporation, including the financial situation,
performance, ownership, & governance of the
company.”
The Responsibilities of … Ensure the strategic guidance of the company,
the Board the effective monitoring of management by the
board, & the board’s accountability to the
company & the shareholders.”
OECD Principles 2015 (http://www.oecd-
ilibrary.org/docserver/download/2615021e.pdf?expires=1504159320&id=id&accname=guest&c
hecksum=A11738E42039EDCD57C8B2331E6F26D2)
Principle 1: Ensuring the
basis for an effective
corporate governance
framework
Description of Principle 1
(oecd-ilibrary.org)
 “The corporate governance framework should

promote transparent and fair markets, and the
efficient allocation of resources. It should be
consistent with the rule of law and support
effective supervision and enforcement.”
Principle 1 (Contd.) (oecd-ilibrary.org)
A. “The corporate governance framework should be

developed with a view to its impact on overall economic
performance, market integrity and the incentives it
creates for market participants and the promotion of
transparent and well-functioning markets.
B. The legal and regulatory requirements that affect
corporate governance practices should be consistent with
the rule of law, transparent and enforceable.
C. Stock market regulation should support effective
corporate governance. ”
C. Supervisory, regulatory and enforcement authorities

should have the authority, integrity and resources to
fulfil their duties in a professional and objective
manner. Moreover, their rulings should be timely,
transparent and fully explained.
D. Cross-border co-operation should be enhanced,
including through bilateral and multilateral
arrangements for exchange of information.”
Principle 2: The rights and
equitable treatment of
shareholders and key
ownership functions
(oecd-ilibrary.org)
Principle 2: Description (oecd-ilibrary.org)
 “The corporate governance framework should

protect and facilitate the exercise of
shareholders’ rights and ensure the equitable
treatment of all shareholders, including
minority and foreign shareholders. All
shareholders should have the opportunity to
obtain effective redress for violation of their
rights.”
A. “Basic shareholder rights should include the right to: 1) secure

methods of ownership registration; 2) convey or transfer
shares; 3) obtain relevant and material information on the
corporation on a timely and regular basis; 4) participate and
vote in general shareholder meetings; 5) elect and remove
members of the board; and 6) share in the profits of the
corporation.
B. Shareholders should be sufficiently informed about, and have
the right to approve or participate in, decisions concerning
fundamental corporate changes such as: 1) amendments to
the statutes, or articles of incorporation or similar governing
documents of the company; 2) the authorisation of additional
shares; and 3) extraordinary transactions, including the
transfer of all or substantially all assets, that in effect result in
the sale of the company.”
C. “Shareholders should have the opportunity to

participate effectively and vote in general shareholder
meetings and should be informed of the rules,
including voting procedures, that govern general
shareholder meetings:
1. Shareholders should be furnished with sufficient and timely
information concerning the date, location and agenda of
general meetings, as well as full and timely information
regarding the issues to be decided at the meeting.
2. Processes and procedures for general shareholder meetings
should allow for equitable treatment of all shareholders.
Company procedures should not make it unduly difficult or
expensive to cast votes.”
Principle 2 (Contd.): Opportunities
for effective participation of
shareholders (Contd.) (oecd-ilibrary.org)
3. “Shareholders should have the opportunity to ask questions
to the board, including questions relating to the annual
external audit, to place items on the agenda of general
meetings, and to propose resolutions, subject to reasonable
limitations.
4. Effective shareholder participation in key corporate
governance decisions, such as the nomination and election
of board members, should be facilitated. Shareholders
should be able to make their views known, including
through votes at shareholder meetings, on the
remuneration of board members and/or key executives, as
applicable. The equity component of compensation
schemes for board members and employees should be
subject to shareholder approval.”
Principle 2 (Contd.): Opportunities
for effective participation of
shareholders (Contd.) (oecd-ilibrary.org)
5. “Shareholders should be able to vote in person
or in absentia, and equal effect should be
given to votes whether cast in person or in
absentia.
6. Impediments to cross border voting should be
eliminated.”
D. “Shareholders, including institutional shareholders, should be

allowed to consult with each other on issues concerning their basic
shareholder rights as defined in the Principles, subject to exceptions
to prevent abuse.
E. All shareholders of the same series of a class should be treated
equally. Capital structures and arrangements that enable certain
shareholders to obtain a degree of influence or control
disproportionate to their equity ownership should be disclosed.
1. Within any series of a class, all shares should carry the same rights. All
investors should be able to obtain information about the rights
attached to all series and classes of shares before they purchase. Any
changes in economic or voting rights should be subject to approval by
those classes of shares which are negatively affected.
2. The disclosure of capital structures and control arrangements should be
required.”
F. “Related-party transactions should be approved

and conducted in a manner that ensures proper
management of conflict of interest and protects
the interest of the company and its shareholders.
1. Conflicts of interest inherent in related-party
transactions should be addressed.
2. Members of the board and key executives should be
required to disclose to the board whether they,
directly, indirectly or on behalf of third parties, have a
material interest in any transaction or matter directly
affecting the corporation.”
G. “Minority shareholders should be protected from abusive actions by,

or in the interest of, controlling shareholders acting either directly or
indirectly, and should have effective means of redress. Abusive self-
dealing should be prohibited.
H. Markets for corporate control should be allowed to function in an
efficient and transparent manner.
1. The rules and procedures governing the acquisition of corporate
control in the capital markets, and extraordinary transactions such as
mergers, and sales of substantial portions of corporate assets, should
be clearly articulated and disclosed so that investors understand their
rights and recourse. Transactions should occur at transparent prices
and under fair conditions that protect the rights of all shareholders
according to their class.
2. Anti-take-over devices should not be used to shield management and
the board from accountability.”
Principle 3: Institutional
investors, stock markets,
and other intermediaries
(oecd-ilibrary.org)
“The corporate governance framework should

provide sound incentives throughout the
investment chain and provide for stock markets
to function in a way that contributes to good
corporate governance.”
A. “Institutional investors acting in a fiduciary capacity

should disclose their corporate governance and voting
policies with respect to their investments, including the
procedures that they have in place for deciding on the
use of their voting rights.
B. Votes should be cast by custodians or nominees in line
with the directions of the beneficial owner of the
shares.
C. Institutional investors acting in a fiduciary capacity
should disclose how they manage material conflicts of
interest that may affect the exercise of key ownership
rights regarding their investments.”
D. “The corporate governance framework should require that proxy

advisors, analysts, brokers, rating agencies and others that
provide analysis or advice relevant to decisions by investors,
disclose and minimise conflicts of interest that might compromise
the integrity of thei
E. Insider trading and market manipulation should be prohibited
and the applicable rules enforced.r analysis or advice.
F. For companies who are listed in a jurisdiction other than their
jurisdiction of incorporation, the applicable corporate governance
laws and regulations should be clearly disclosed. In the case of
cross listings, the criteria and procedure for recognising the
listing requirements of the primary listing should be transparent
and documented.
G. Stock markets should provide fair and efficient price discovery as
Principle 4: The role of
stakeholders in corporate
governance
(oecd-ilibrary.org)

recognise the rights of stakeholders established
by law or through mutual agreements and
encourage active co-operation between
corporations and stakeholders in creating
wealth, jobs, and the sustainability of
financially sound enterprises.”
A. “The rights of stakeholders that are established by law

or through mutual agreements are to be respected.
B. Where stakeholder interests are protected by law,
stakeholders should have the opportunity to obtain
effective redress for violation of their rights.
C. Mechanisms for employee participation should be
permitted to develop.
D. Where stakeholders participate in the corporate
governance process, they should have access to
relevant, sufficient and reliable information on a timely
and regular basis.”
E. Stakeholders, including individual employees and

their representative bodies, should be able to
freely communicate their concerns about illegal or
unethical practices to the board and to the
competent public authorities and their rights
should not be compromised for doing this.
F. The corporate governance framework should be
complemented by an effective, efficient
insolvency framework and by effective
enforcement of creditor rights.”
Principle 5: Disclosure
& Transparency
(oecd-ilibrary.org)

ensure that timely and accurate disclosure is
made on all material matters regarding the
corporation, including the financial situation,
performance, ownership, and governance of
the company.”
A. Disclosure should include, but not be limited to, material

information on:
1. The financial and operating results of the company.
2. Company objectives and non-financial information.
3. Major share ownership, including beneficial owners, and voting rights.
4. Remuneration of members of the board and key executives.
5. Information about board members, including their qualifications, the
selection process, other company directorships and whether they are
regarded as independent by the board.
6. Related party transactions.
7. Foreseeable risk factors.
8. Issues regarding employees and other stakeholders.
9. Governance structures and policies, including the content of any
corporate governance code or policy and the process by which it is
implemented.”
B. Information should be prepared and disclosed in accordance with

high quality standards of accounting and financial and non-financial
reporting.
C. An annual audit should be conducted by an independent, competent
and qualified, auditor in accordance with high-quality auditing
standards in order to provide an external and objective assurance to
the board and shareholders that the financial statements fairly
represent the financial position and performance of the company in
all material respects.
D. External auditors should be accountable to the shareholders and
owe a duty to the company to exercise due professional care in the
conduct of the audit.
E. Channels for disseminating information should provide for equal,
timely and cost-efficient access to relevant information by users.
Principle 6: The
responsibilities of the
Board
(oecd-ilibrary.org)

ensure the strategic guidance of the company,
the effective monitoring of management by the
board, and the board’s accountability to the
company and the shareholders.”
 “Board members should act on a fully informed

basis, in good faith, with due diligence and care,
and in the best interest of the company and the
shareholders.
 Where board decisions may affect different
shareholder groups differently, the board should
treat all shareholders fairly.
 The board should apply high ethical standards. It
should take into account the interests of
stakeholders.”
D. “The board should fulfil certain key functions, including:

1. Reviewing and guiding corporate strategy, major plans of
action, risk management policies and procedures, annual
budgets and business plans; setting performance
objectives; monitoring implementation and corporate
performance; and overseeing major capital expenditures,
acquisitions and divestitures.
2. Monitoring the effectiveness of the company’s governance
practices and making changes as needed.
3. Selecting, compensating, monitoring and, when necessary,
replacing key executives and overseeing succession
planning. In most two tier board systems the supervisory
board.”
Principle 6: D: “The board should
fulfil certain key functions” (Contd)
(oecd-ilibrary.org)
4. Aligning key executive and board remuneration with the longer

term interests of the company and its shareholders.
5. Ensuring a formal and transparent board nomination and
election process.
6. Monitoring and managing potential conflicts of interest of
management, board members and shareholders, including
misuse of corporate assets and abuse in related party
transactions.
7. Ensuring the integrity of the corporation’s accounting and
financial reporting systems, including the independent audit,
and that appropriate systems of control are in place, in
particular, systems for risk management, financial and
operational control, and compliance with the law and relevant
standards.
8. Overseeing the process of disclosure and communications.
E. The board should be able to exercise objective independent

judgement on corporate affairs.
1. Boards should consider assigning a sufficient number of non-
executive board members capable of exercising independent
judgement to tasks where there is a potential for conflict of
interest. Examples of such key responsibilities are ensuring the
integrity of financial and non-financial reporting, the review of
related party transactions, nomination of board members and
key executives, and board remuneration.
2. Boards should consider setting up specialised committees to
support the full board in performing its functions, particularly in
respect to audit, and, depending upon the company’s size and
risk profile, also in respect to risk management and
remuneration. When committees of the board are established,
their mandate, composition and working procedures should be
well defined and disclosed by the board.
Principle 6: E: The board should be
able to exercise objective independent
judgement (Contd.) (oecd-ilibrary.org)
 “Board members should be able to commit
themselves effectively to their responsibilities.
 Boards should regularly carry out evaluations to
appraise their performance and assess whether
they possess the right mix of background and
competences.”
F. “In order to fulfil their responsibilities, board

members should have access to accurate,
relevant and timely information.
G. When employee representation on the board
is mandated, mechanisms should be
developed to facilitate access to information
and training for employee representatives, so
that this representation is exercised effectively
and best contributes to the enhancement of
board skills, information and independence.”
Thank You
Aradhna Malik (PhD)

Assistant Professor
CG & CSR
Relationship between CG & CSR
 “a society whose members pursue self interest
without a sense of justice will eventually collapse
 A society whose members pursue self interest
checked by their sense of justice alone will survive
 A society whose members pursue self interest,
justice, & the interests of others will flourish.”
(Adam Smith – Wealth of Nations – in Stovall, Neill & Perkins, 2004)
implying that:
 “Rule making is bound by both the law & the social
force of moral & ethical persuasion.” (Mason & Mahony, 2008)
Workplace democracy (Matten & Crane, 2005)
 “Workplace democracy - ‘the search for

effective means by which employees might
exert equitable influence over matters affecting
their working lives’.” (Ramsay, 1997, in Matten & Crane, 2005).”
 “The main issues in workplace democracy are
employee participation in decision making,
inclusion of employees in corporate governance
processes, & co-determination of organizational
strategy.”
How does organizational climate
affect CSR? (Aguilera, Rupp, Williams & Ganapathy, 2007)
 “… if an organization has a general concern for

fairness (e.g. respect & care for the
environment, for working conditions),
employees may deduce that chances are
conditions will be fair for them, thus satisfying
their need for control.”
Reminder: Definition of CSR
(EU Commission, 2001, in Sacconi, 2004)
 “By stating their social responsibility & voluntarily

taking on commitments which go beyond common
regulatory & conventional requirements, which
they would have to respect in any case, companies
endeavor to raise the standards of social
development, environmental protection & respect
of fundamental rights & embrace an open
governance, reconciling interests of various
stakeholders in an overall approach of quality &
sustainability’.”
CG & CSR (Sacconi, 2004)
 CSR refers to “a model of extended corporate

governance whereby who runs a firm
(entrepreneurs, directors, managers) have
responsibilities that range from fulfilment of
their fiduciary duties towards the owners to
fulfilment of analogous fiduciary duties towards
all the firm’s stakeholders.”
The economic bases of the idea that
the firm has ‘further’ responsibilities
towards its stakeholders (Sacconi, 2004)
 Theory of the firm:
 “According to the neo-institutional theory (Williamson, 1975,
1986; Grossman & Hart, 1986; Hart & Moore, 1990; Hart, 1995; Hansmann, 1996, Sacconi,
the firm emerges as an institutional form of ‘unified
2004),
transactions governance’ intended to remedy
imperfections in the contracts that regulate exchange
relations among subjects endowed with diverse assets
(capital, labor, instrumental goods, consumption
decisions, & so on).
 These assets, if used jointly, are able to generate a
surplus over the cost of their use that is higher than in
the case of their separate use by each asset holder.”
 Optimal use of these assets requires a structure and
boundaries (governance)
Economic bases (Contd.)
(Sacconi, 2004)
 The risk of abuse of authority & control: “Those

wielding authority may use it to expropriate the
specific investments of others by exploiting ‘gaps’
in contracts – which persist even under unified
governance. […] Those in a position of authority,
are able to threaten the other stakeholders with
exclusion from access to physical assets of the
firm, or from the benefits of the contract, to the
point that those other stakeholders become
indifferent between accepting the expropriation &
foregoing the value of their investment by
withdrawing from the relation.”
How can CG help with abuse
of authority? (Sacconi, 2004)
 “Extended governance should comprise:

 The residual control right (ownership) allocated to the stakeholder
with the largest investments at risk & with relatively low
governance costs, as well as the right to delegate authority to
professional directors & management.
 The fiduciary duties of the those who effectively run the firm
(administrators & managers( towards the owners, given that
these have delegated control to them.
 The fiduciary duties of those in a position of authority in the firm
(the owner or the managers) towards the non-controlling
stakeholders: the obligation, that is, to run the firm in a manner
such that these stakeholders are not derived of their fair shares of
the surplus produced from their specific investments, & that they
are not subject to negative externalities.”
How can we identify CSR duties?
(Sacconi, 2004)
 The social contract as a criterion for strategic

management
 Social contract & the emergence of the firm
 The societary interest of the company &
extended fiduciary duties
The social contract as a criterion
for strategic management (Sacconi, 2004)
 “Identifying the joint strategy that the stakeholders

may utilize to coordinate themselves, in that they
accept it […] as a voluntary agreement to
cooperate – so that strategic management can
reduce bargaining costs (time, conflict, etc.) & the
costs of gathering information on the alternatives
available & on the intentions of each player about
cooperation.”
 Ensuring […] that each member of the team
complies with the agreement on the joint strategy
selected & does not act as a free rider with regard
to the others.”
The social contract as a criterion for
strategic management (Contd.)
(Sacconi, 2004)
 How will the above be taken care of?

 “Force, fraud & manipulation must be set aside.”
 The only agenda in negotiation is to negotiate based on facts and logic and no
threats of any other sort are to be used.
 “Each stakeholder must obtain from the social contract at least reimbursement of
the specific investment with which it has contributed to the surplus (otherwise
the bargaining process would permit opportunistic exploitation of the
counterparty’s lock-in situation).
 Each party in turn puts itself in the position of all others, & in the position of
each of them he can accept or reject the contractual alternatives proposed.
 If solutions are found which are acceptable to some stakeholders but not to
others, these solutions must be discarded & the procedure repeated (which
reflects the assumption that cooperation by all stakeholders is recognized as
necessary)”
 Agreements arrived at must be acceptable to all stakeholders
Social contract & the emergence
of the firm (Sacconi, 2004)
 Social contract of the firm:

 “Rejection of shared plans of action which generate negative
externalities for those not participating in the cooperative venture
or, if these negative externalities are essential for the production
of the cooperative surplus, a compensation of third parties so that
they are rendered neutral;
 Production of the maximum surplus possible (difference between
the value of the product for its consumers, who belong to the
association, & the costs sustained by each stakeholder to produce
it)
 A distribution of the surplus which is fair, or rationally acceptable
to each stakeholder in a bargaining process free from force or
fraud & based on an equitable status quo, i.e., considering the
surplus net of the specific investments.”
Social contract & the emergence
of the firm (Contd.) (Sacconi, 2004)
 How can all this be taken care of? – The firm must
take care of the non-owners in the following ways:
 “The firm must abstain from activities which impose
negative external effects on stakeholders not party to
transactions, or compensate them so that they remain
neutral.
 The firm must remunerate the stakeholders
participating in the firm’s transactions with payoffs
which, taken for granted a fair status quo, must contain
a part tied to the firm’s economic performance such to
approximate fair/ efficient shares of the surplus as
envisaged by the first social contract.”
The societary interest of the
company & extended fiduciary duties
(Sacconi, 2004)
 Construction of the corporate interest by means of a

hierarchical decision-making procedure which moves
from the most general conditions to the most specific
ones:
 First step: Minimize the negative externalities affecting
stakeholders in the broad sense (perhaps by paying suitable
compensation)
 Second step: Identify the agreements compatible with the
maximization of the joint surplus & its simultaneous fair
distribution, as established by the impartial cooperative
agreement among the stakeholders in the strict sense.
 Third step: If more than one option is available in the above
is defined feasible, choose the one that maximizes the
residual allocated to the owner.”
The logic of a CSR strategic
management standard (Sacconi, 2004)
 “The firm’s strategic behavior must conform to

in a context of incomplete information in order
that reputation effects are reactivated:
 Generality & the abstractness of principles
 Precautionary protocols of behavior
 Communication & dialogue with the stakeholders
CG, dialogue with stakeholders &
CSR (Sacconi, 2004)
 “Enunciation of the social contract stating the firm’s

fiduciary duties towards its stakeholders: If this
statement is formulated on consultation with the
stakeholders, its acceptability is ensured & the
parameters with which behavior is assessed are known
to both parties.
 Internal management & implementation: The presence
of external members on internal board or committee –
both corporate board of directors or those committees
set up ad hoc to manage CSR, like an ethics committee
– enables representation of the stakeholders’ points of
view & prevents divergence between the ex post
assessment by the two parties
CG, dialogue with stakeholders
& CSR (Contd.) (Sacconi, 2004)
 Social accountability: Dialogue with stakeholders
identifies the areas of their effective interest for
which account should be made, & therefore
ensures the relevance of social communications.
 Verification by an independent third party: Multi –
stakeholder bodies – based on multi-stakeholder
dialog – may control third-party verification &
certification of CSR management standard
compliance, preventing auditors conflicts of
interest & granting credibility to the entire
system.”
How have different countries
embedded CSR in CG? (Young & Thyil, 2014)
Australia UK India
Strategic vs Move from strategic to Reactive focus maybe Strategic focus link with
reactive reactive focus due to due to GFC community
global financial crisis
Environmental Governance & envt.al Structural focus; Broad review of ESG;
Social focus; Industry Governance focus; Moral case; Sustainable
Governance differences; Business Socially responsible communities;
(ESG) case investing; Business case
External Linked to reputation & Fund managers & Community focus
stakeholders access to resources pension schemes to use
power
Remuneration Key risk response to Key risk public anger Increases linked to
increase reporting influx of MNCs
How have different countries
embedded CSR in CG? (Contd.)
(Young & Thyil, 2014)
Australia UK India
Communication Calls for increased Use flexibility to improve Legislative requirement;
with transparency, more transparency Maintains reputation &
stakeholders quality & less trust
quantity; GFC impact
Integrate - - Companies integrated
communities with communities
Increased ASA (American Calls for institutional -
activism Studies Association) investors to use power
driver – Academic &
community activism
Regulation No need for Focused on regulation & Lack of enforcement
strengthening codes
Ethical behavior Intersection of Look to EU to bring about Tolerance & ‘hearts of
ethics, culture & change in behaviors people’
leadership
Thank You
Aradhna Malik (PhD)

Assistant Professor
Models connecting
CG to CSR
Satisfaction with firm performance as
a moderator in the relationship
between CG & CSR (Arora & Dharwadkar, 2011)
Corporate Governance Corporate Social Responsibility
Managerial ownership
Independent directors Positive CSR
Institutional ownership Negative CSR
Shareholder rights
Satisfaction with Firm Performance
Slack (“the existence of a ‘cushion of actual or potential resources’.”)

Attainment Discrepancy (“the difference between actual & aspired performance”)
Specific relationships between CG,
satisfaction with firm performance, &
positive & negative CSR (Arora & Dharwadkar, 2011)
Satisfaction with firm Low High

performance (Low slack, negative (High slack, positive
attainment discrepancy) attainment discrepancy)
Corporate governance
Low positive CSR Targeted positive CSR

Strong
Low negative CSR Low negative CSR
Low positive CSR High positive CSR

Weak
High negative CSR Low negative CSR
How does CG affect CSR?
(Gul, Muhammad & Rashid, 2017)
 “Board leadership & independence, analyst

following, institutional ownership, & antitakeover
provisions appear to have a direct positive
influence on CSR engagement.” (Jo & Harijoto, 2011, in Gul,
Muhammad & Rashid, 2017)
 “Foreign & public ownership, presence of audit

committee, & board independence have significant
positive effect on CSR disclosures.” (Khan et al., 2012, in Gul,
 “Dominance of family ownership on CSR disclosure

is alleviated to some extent by sound CSR
mechanisms.” (Khan et al., 2012, in Gul, Muhammad & Rashid, 2017)
How does CG affect CSR? (Contd.)
 “Boards with independent directors are less

involved in CSR activities [possibly implying that]
for independent directors, CSR engagement is not
a primary concern.” (Ghazali, 2012, in Gul, Muhammad & Rashid, 2017)
 “CSR disclosure is significantly higher in firms that
are larger in size & have higher government
ownership [with reference to Malaysia].” (Ghazali, 2012, in
Gul, Muhammad & Rashid, 2017)
 “High proportion of management ownership & CSR

disclosure is negatively correlated.” (Ghazali, 2012, in Gul,
 “Only the presence of audit committee, ownership

concentration, & government ownership
significantly positively impact the extent of CSR
disclosures.” (Said, et al., 2009, in Gul, Muhammad & Rashid, 2017)
 “Profitability, board commitment to CSR, & firm
size positively affect the extent of CSR disclosure.”
(Giannarakis, 2014, in Gul, Muhammad & Rashid, 2017)
 “ESG performance is negatively affected by closely

held equity & family ownership.” (Rees & Rodionova, 2015, in Gul,
 “Corporate social performance is positively related

to the proportions of independent, community
influential & female directors.” (Mallin & Michelon, 2011, in Gul,
 “State ownership positively affects CSR

performance [in China].” (Lau et al., 2016, in Gul, Muhammad & Rashid,
2017)
 “Audit committee characteristics, size & risk, &

board meeting frequency, both size &
independence of the board positively affect
disclosure of CSR.” (Jizi et. Al., 2014, in Gul, Muhammad, & Rashid, 2017)
 “Supervisory board meetings, state ownership,

number of directors, & managerial shareholding
positively affect CSR.” (Liu & Zhang, 2017, in Gul, Muhammad & Rashid, 2017)
 “CSR information is not beneficial for the short-
term profit of an information, but can increase its
long-term value.” (Liu & Zhang, 2017, in Gul, Muhammad & Rashid, 2017)
 “Hiring ‘individually’ socially responsible CEO acts
as a commitment device for the firm’s owners &
signal to consumers that the missioned CSR
activities will be undertaken.” (Manasakis et al., 2014, in Gul,
How does CG affect CSR?:
Summary of the above
Board composition
Agency theory
Transparency & auditing CG Index CSR Legitimacy theory
Stakeholder theory
Disclosure
CG & CSR: Application of the
stakeholder systems model of CSR
(Mason & Simmons, 2014)
 Stakeholder claims & agendas include:

 Shareholders & institutional investors
 Customers
 Employees
 Suppliers
 Government regulations & auditors
 Local & national communities
 Social & environmental activists
 And are influenced by:

 CSR outcomes & reporting
 Stakeholder perceptions of distributive justice
 CSR – cumulative company evaluation
 And influence: Board decisions on stakeholder saliency

CG & CSR: Application of the stakeholder
systems model of CSR (Contd)
 Board decisions on stakeholder saliency influence:

 Investor & company expectations: Revenue increases, cost reduction, increased
brand value, greater customer & employee attraction & retention, enhanced
corporate image
 Customer & supplier expectations: Functional, emotion & social benefits of CSR
infused products, services & supply chains
 Employee expectations: Fulfilling work, job security, & involvement in decision-
making, commensurate & competitive reward, equitable treatment, &
development opportunities
 Community & environment expectations: Commitment to industry, national &
international standards, comprehensive & timely disclosure, sustainable resource
utilization, voice, consideration of the social & natural environment
Which in turn influence
 CSR: Company philosophy & strategy
 Stakeholder perceptions of procedural justice
systems model of CSR (Contd.)
 CSR: Company philosophy & strategy

 Stakeholder perceptions of procedural justice
Influence:
 Hard wiring (systems): Investor relations
 CSR: Processes & operations: Customer relations &
employee relations
 Soft wiring (culture): Community relations
Which in turn influence

 Stakeholder perceptions of interactional justice
 Stakeholder perceptions of interactional justice

Influence
 CSR outcomes & reporting, which includes:
 Investor evaluation: Cost benefit assessment, appropriate RoI, greater
innovation, increased customer revenue, loyalty & advocacy, reputational
benefits, vicarious evaluation of the organization’s wider CSR practice
 Customer & supplier evaluation: Functional, emotional & social benefits of CSR
manifested; fair trade principles observed; sustainable production, service
provision & supply chains, vicarious evaluation of the organization’s wider CSR
practice
 Employee evaluation: Ethical people management, employees recognized as key
source of competitive advantage in employee resourcing, development & reward
strategies, involvement in decision making; vicarious evaluation of the
organization’s wider CSR practice
 Community & environmental evaluation: Demonstrable alignment with industry,
national & international standards; timely auditing & comprehensive disclosure;
verifiable sustainability; viewed as a ‘good neighbor’
 And influence

influence:
 Stakeholder claims & agendas
 Board decisions on stakeholder saliency
 Investor & company expectations, customer &
supplier expectations, employee expectations, &
community & environment expectations
 CSR: Company evaluation
 CSR: Cumulative company evaluation

influences:
 Stakeholder claims & agendas
 Board decisions on stakeholder saliency
 Investor & company expectations, customer &
supplier expectations, employee expectations, &
community & environment expectations
 CSR: Cumulative company evaluation includes:

 Efficiency: incorporation of CSR principles & standards in
Management Control Systems & performance management
systems
 Effectiveness: Overall (quantitative & qualitative) cost
benefit analysis of CSR within an appropriate time frame
 Equity: CSR stakeholder perceptions of appropriate power,
scope & justice
 Environmental impact: Demonstrate sustainability in
resource acquisition & utilization
 External reputation: Alignment with relevant standards &
enhancement of ethical capital across stakeholder groups.
Thank You
Aradhna Malik (PhD)

Assistant Professor
CG in India
Structures of corporate governance
in independent India (Reed, 2002)
The business house model The Anglo-American model
Formal Single tiered board of directors Single tiered board of directors
structure of Role for nominee directors Reduced role for nominee directors
governance with a move toward abolishing
nominee directors altogether
in independent India (Contd.) (Reed, 2002)
Macro- Direct government intervention in Anglo-Americanization of capital markets
economic capital markets through pricing of with deregulated pricing or corporate
context corporate securities securities
Development banking – heavy use of A more ‘marketised’ model of
financing from public financial development banking; banking system
institutions more continuation oriented toward profit
generation – but of the dependence on
financing from public financial institutions
Protected, non-competitive product Limited reduction in protection
markets
Stringent controls on foreign Relaxed controls on foreign ownership as
ownership as well as portfolio well as portfolio investment
investment
Regulation of foreign exchange Reduced regulation of foreign exchange
expenditure by firms expenditure by firm
License permit quota regime Abolition of license permit quota regime
No buybacks of its own shares by a Firms allowed to buyback their own
firm shares through open market operations
takeover code the corporate governance
codes
in independent India (Contd.) (Reed, 2002)
Control: Minority ownership (of group Minority ownership (of groups
Proximate companies by the apex companies by apex company)
company)
Control: Majority ownership (of apex Majority ownership (of apex company
Ultimate company by controlling family) by controlling family)
Other Interlocking boards Interlocking boards
mechanisms Intercorporate investments Intercorporate investments
of control
Debt financing through PFI Private (or regulated) placement of
stocks
Discouraging shareholder Mergers (of group firms)
participation
control of share offerings Discouraging shareholder participation
Aradhna Malik (PhD)

Assistant Professor
Thank You
Aradhna Malik (PhD)

Assistant Professor
CSR &
Sustainability
CSR & Corporate
Citizenship
What is citizenship? (Matten & Crane, 2005)
 Belongingness
 Affiliation
 Rights
 Responsibilities
 “legal entities with rights & duties, in effect,

‘citizens’ of states within which they operate”
(Marsden, 2000, in Crane & Matten 2005)
The rights of citizens (Crane & Matten, 2005)
 Social
 Civil
 Political
Social rights (Matten & Crane, 2005)
 “Social rights consist of those rights that

provide the individual with the freedom to
participate in society, such as the right to
education.”
Civil rights (Matten & Crane, 2005)
 “Civil rights consist of those rights that provide

freedom from abuses & interference by third
parties (most notably governments), among
the most important of which are the rights to
own property, exercise freedom of speech, &
engage in ‘free’ markets.”
Political rights (Matten & Crane, 2005)
 “Political rights […] include the right to vote or

the right to hold office, & generally speaking,
entitles the individual to take part in the
process of collective will formation in the public
sphere.”
Opportunities for corporations
to step in as citizens (Matten & Crane, 2005)
 “Where government ceases to administer

citizenship rights
 Where government has not as yet administered
citizenship rights,
 Where the administration of citizenship rights
may be beyond the reach of the nation-state
government.” (primarily social rights)
Where government ceases to
administer citizenship (Matten & Crane, 2005)
 “Either corporations have the opportunity (or

are encouraged) to step in where once only
governments acted, or
 Corporations are already active in the territory
concerned and, therefore, their role becomes
more pronounced as governments retreat.”
What is corporate citizenship?
(Matten & Crane, 2005)
 “Corporate Citizenship describes the role of the

corporation in administering citizenship rights
for individuals.”
How can the corporation help?
(Matten & Crane, 2005)
 “Corporate citizenship: Social role of the

corporation in administering citizenship rights
 Social rights: Corporation as provider
 Civil rights: Corporation as enabler
 Political rights: Corporation as channel”
Global corporate citizenship
(Hemphill, 2004)
 Different organizations from the same industry

from different parts of the world coming
together to help with social rights of people
connected to that industry.
 e.g. Fair Labor Association:
http://www.fairlabor.org/
 Equator Principles: http://www.equator-
principles.com/
 Rugmark:
http://www.rugmarkindia.org/rugmark/index.htm
Dimensions of corporate
citizenship (Marvis & Googins, 2006)
1. “Citizenship concept: How is citizenship

defined? How comprehensive is it?”
 “… how comprehensive & inclusive a company
regards its role in society?”
 “… [how well] the total actions of a company […]
minimize harm, maximize benefit, are accountable
& responsible to stakeholders, & support financial
results.”
Dimensions of corporate citizenship
(Contd.) (Marvis & Googins, 2006)
2. “Strategic intent: What is the purpose of

citizenship?”
 “… [is citizenship] embedded in a company’s

strategies, products & services, culture, & ways of
doing business?”
3. “Leadership: Do top leaders support

citizenship? Do they lead the effort?
 “… do they walk the talk?”
4. “Structure: How are responsibilities for

citizenship managed?”
 “… movement of citizenship from a marginal
position to its management as mainstream
business activity.”
 “ movement from ‘functional islands’ to cross-
functional committees [to] […] integration through
a combination of structures, processes, &
systems.”
5. “Issues management: How does a company

deal with issues that arise?”
 “… how proactive a company is on myriad
citizenship issues & how responsive it is in terms of
policies, programs, & performance?”
6. “Stakeholder relationships: How does a

company engage its stakeholders?
 “… increasing openness & depth of such
relationships”
 “… [could range from] increased social activism by
shareholders to […] increase in non governmental
organizations”
7. “Transparency: How open is a corporation

about its financial, social, & environmental
performance?”
 “… when and how companies adopt transparent
practices & how much they disclose”
Thank You
Aradhna Malik (PhD)

Assistant Professor
Stages of corporate
citizenship
(Mirvis & Googins, 2006)
Stage 1: Elementary (Marvis & Googins, 2006)
 “Citizenship concept: Jobs, profits, taxes”

 Activity: “episodic”; underdeveloped programs
 “Strategic intent: Compliance” – obeying the law
 Leadership: Lip-service, out of touch
 “Structure: Marginal; staff driven[…] - functional
heads of departments”
 “Issues management: Defensiveness
 Stakeholder relationships: Unilateral
 Transparency”: With the sole intent of ‘protection’
 Challenge: To gain credibility
Stage 2: Engaged (Marvis & Googins, 2006)
 “Citizenship concept: Philanthropy, environmental

protection”
 Activity: “policy based approach to mitigate the
likelihood of litigation & risks to reputation”
 “Strategic intent: License to operate
 Leadership: Supporter, in the loop
 Structure: Functional ownership [by staff units]
 Issues management: Reactive, policies
 Stakeholder relationships: Interactive
 Transparency: Public relations”
 Challenge: To build capacity
Stage 3: Innovative (Marvis & Googins, 2006)
 “Citizenship concept: Stakeholder management”

 Activity: “Planning, funding & launching […] myriad
corporate citizenship related programs, […] monitoring social
& environmental performance & publishing results in public
reports”
 “Strategic intent: “Business case”
 “Leadership: Steward, on top of it”
 “Structure: Cross-functional coordination
 Issues management: Responsive, programs
 Stakeholder relationships: Mutual influence
 Transparency: Public reporting”
 Challenge: To create coherence between programs programs
Reasons for lack of coherence
at stage 3 (Marvis & Googins, 2006)
 “Corporate staff units don’t see the necessity &

value of working together, especially when they
feel stretched by their own agendas & a sense of
competition for scarce resources
 Many line managers don’t see the relevance as
they often face compelling, short-term priorities”
 “… a comprehensive view of citizenship is not
linked with corporate strategy or embedded in the
company culture.”
Stage 4: Integrated (Marvis & Googins, 2006)
 “Citizenship concept: Sustainability or triple bottom line

(People, planet, profit)”
 Activity: “… setting targets & KPIs, & monitoring
performance through balanced scorecards.”
 “Strategic intent: Value proposition
 Leadership: Champion, in front of it
 “Structure: Organizational alignment
 “Issues management: Proactive, systems
 Stakeholder relationships: Partnership, alliances
 Transparency: Assurance
 Challenge: To deepen commitment to sustainability
through citizenship
Stage 5: Transforming (Marvis & Googins, 2006)
 “Citizenship concept: Change the game”

 Activity: “… partnering extensively with other businesses, community
groups, & NGOs to address problems, reach new markets, & develop
local economies [...] – cross-industry and multisector cooperation in
addressing societal ills.”
 “Strategic intent: Mainstream, business driven
 Leadership: Visionary, ahead of the pack
 Structure: Mainstream, business driven
 Issues management: Defining
 Stakeholder relationships: Multi-organizational
 Transparency: Full disclosure”
 Challenge: “Development of inter-organizational alliances, innovation
in different socio-economic spheres, & differentiation”
Factors that shape citizenship
(Marvis & Googins, 2006)
 Founding purpose & time

 External forces
 Strategy & competition
 Traditions & culture
 Leadership matters
 Pull vs. push:
 Pull: Legislation, external demand for transparency &
responsible behavior
 Push: Self-monitoring, realization from the inside,
bottom-up responsible behavior
Elements & issues in corporate
citizenship (Altman, 1998)
 “Moral & ethical obligations of the firm

 Provision of economic benefits
 Integration, common goals between corporation & its
communities
 Responsibility to stakeholders
 Inclusion of proactive action
 Partnership across sector lines
 Global interconnectedness
 Preservation/ protection of natural environment
 Active leadership’
Strategic advantages of corporate
citizenship (Altman, 1998)
 “Enhance the long-term sustainability of an

investment & manage change
 Build the brand
 Develop human resources in the company & in
the community
 Help create a growing economy & stable
society”
Indicators of good corporate
citizenship (Davenport, 2000)
 “Ethical business behavior: The company is guided by

rigorous ethical standards in all of its business dealings.
 Stakeholder commitment: The company is managed for
the benefit of all stakeholders: community, consumers,
employees, investors, & suppliers.
 Environmental commitment: The company moderates its
overall environmental impact through programs such as
recycling, waste & emission abatement, & impact
assessment via environmental audits.”
Antecedents & consequences of
corporate citizenship (Maignan & Ferrell, 2001)
ORGANIZATIONAL CORPORATE BUSINESS

CULTURE CITIZENSHIP OUTCOMES
Economic citizenship Employee commitment

Market orientation
Legal citizenship
Humanistic orientation Customer loyalty
Ethical citizenship
Competitive orientation Business performance

Discretionary citizenship
Corporate citizenship
& CSR
How do CC & CSR come together?
(Moon, Crane & Matten, 2005)
 “Corporate dialogues, mediation processes, &

other for a, to both involve citizens in corporate
decisions as well as making corporations active
& accountable members of their respective
communities.” (Steimann & Löhr, 1994, in Moon, Crane & Matten, 2005)
Historical, developmental &
intersectoral (IS) organizing lessons
for corporate citizenship (Waddell, 2000)
Issue Action
Recognizing the role of both rights & - Provide opportunities to broaden
responsibilities discussion about organizations’ historical
activities
- Allow discussions around specific
controversial actions by a collaboration
member, even if it has no direct bearing
on the relationship
Understanding & valuing sectoral - Undertake further research on the IS
differences model
- analyze specific IS opportunities in
terms of organizations’ sectoral position,
core competencies, assets, etc.
- Build strategies & activities that
recognize & support the sectoral
differences
intersectoral (IS) organizing lessons for
corporate citizenship (Contd) (Waddell, 2000)
Issue Action
Appreciating history, culture & technology - Analyze the specific locational
circumstances
- Rather than ‘roll-out’ IS strategies,
develop them grounded in reality of
specific circumstances
Creating & spreading new IS models - Create an experimental & learning
approach
- Create joint comparative learning
processes with other organizations
involved in IS model-building
- Identify needed institutions both within
& between sectors & join with others to
found them
intersectoral (IS) organizing lessons for
corporate citizenship (Contd) (Waddell, 2000)
Issue Action
Developing new IS leaders - Hire people from other sectors
- Develop volunteer & employee
exchange programs with the goal of
creating IS leaders
Recognizing power issues & inequality - talk about power differences &
inequality
- Research exchange mechanisms already
developed
- Categorically experiment with new
power sharing mechanisms
Corporate citizens & CSR
(Aguilera, Rupp, Williams & Ganapathy, 2007)
Multiple motives Mechanisms

Actor & relationships Pressure to increase CSR level;
employee participation &
Employee leadership
Employees perceptions of
distributive, Organizational commitment; job
procedural, satisfaction, employee
interactional
justice citizenship, performance
Insiders Direct strategic decision Change in CSR

Stakeholders
Exercising voice thru’
Outsiders collective action
MOTIVES Social Change
Law enactment, law
enforcement, ‘bully pulpit’,
Domestic education on best practices
Governments
IGOs ‘Bully pulpit’ policy papers
NGOs Campaigns, boycotts, &

multiparty dialogues
Thank You
Aradhna Malik (PhD)

Assistant Professor
What is sustainability?
What is sustainable development?
The following slides are from the MOOC course
titled, ‘Strategic communication for sustainable
development’ offered by Dr. A. Malik in Sep-Oct,
2016
What is sustainability?
Perspectives:
 “Sustainability implies that society must use no more of
a resource than can be generated.” (Aras & Crowther, 2009)
 Preservation of capital (Economic, social and
environmental):
 Economic sustainability – “Maximizing the flow of income
from a given stock of assets (or capital) while at least
maintaining them.” (Maler, 1990, in Bonevac, 2010)
 Environmental - “Requiring that conditions necessary for
equal access to the Earth’s resource base be met for each
generation.” (Pearce, Markandya & Barbier, 1989, in Bonevac, 2010)
 Each generation “leave a lesser burden than they inherited,
increasing the quantity and quality of ecological, human and
man made resources.” (Keiner, 2006,740in Bonevac, 2010)
What is development?
 Betterment of human life
 People centric
 “[Development may be understood as] a process that must lead to
the expansion of people’s freedoms.” (Amartya Sen, 1998, in Saez, 2013)
 Development is about choices: Video:
http://www.undp.org/content/undp/en/home/blog/2016/8/1/Development-in-2-
minutes-It-s-about-expanding-choices/
 Human Development is “…the process that allows the expansion and
amplification of people’s capabilities and life choices.” (Saez, 2013)
Characteristics of human development (Hamelink, 2000, in Saez, 2013):
 “Equitable access to resources.
 Sustainable resources and institutions.
 The procurement and dissemination of knowledge aimed at rendering
human beings responsible.
 Participation.”
741
What is sustainable development?
 Continuing environmental and economic development
towards the betterment of human life. – Discussion started
with environment, moved on to economic prosperity & then
its contribution to the betterment of human life.
 “Development that meets the needs of the present without
compromising the ability of future generations to meet their
own needs.” (Our Common Future – 1997 Report of World Commission on Environment & Development)
 “Societal process of exploration, learning and
transformation.” (Godemann & Michelsen, 2011, in Fischer et al, 2016)
 “In order for development to continue indefinitely, it should
balance the interests of different groups of people, within
the same generation and among generations, and do so
simultaneously in three major interrelated areas–economic, 7
social, and environmental.” (Soubbotina & Sheram, 2000) 4
2
What is sustainable development
(Contd.) (Bansal, 2005)
 The three principles of sustainable development:
 “Environmental integrity principle ensures that human
activities do not erode the earth’s land, air & water
resources.”
 “Social equity principle ensures that all members of
society have equal access to resources & opportunities.”
 “Economic prosperity principle promotes a reasonable
quality of life through the productive capacity of
organizations and individuals in society.” (Holliday, Schmidheiny, &
Watts, 2002, in Bansal, 2005)
743
Four ‘C’s of Sustainable Development
(Heliopolis University for Sustainable Development, 2013)
 Engaging in context
 Raising consciousness
 Assimilating content
 Making a contribution
744
Building blocks of sustainable
development (du Plessis, 1999)
 Environment: “Balance between conserving and

protecting the environment and using renewable
resources”
 Economy: “Creat[ing] equitable but viable
economic systems with an ethical basis.”
 Society: “Encourag[ing] equitability and
responsibility within social and cultural systems
and values.”
(Barbier, 1987, in duPlessis, 1999)
 Adaptability: “Continual adjustment according to

feedback loops.” (du Plessis, 1999) 745
The Goal:
UN Sustainable Development Goals
 United Nations:
http://www.un.org/sustainabledevelopment/sustainable-
development-goals/
 https://www.youtube.com/watch?v=3VbLIz9SaaY
 International Institute for Environment & Development:
http://www.iied.org/sustainable-development-goals-new-
negotiation-under-way?gclid=CjwKEAjwl4q-BRDtzJmSk-
uGunkSJACmCOY-
eW9GBnt4Ej83PMF0xHiMZqp3OtV3TXltLAYBGK5JHBoCtn3w_
wcB
 Sustainable Development Goals: Indian Experiences (Prof. R.
B. Singh, Delhi School of Economics, University of Delhi):
https://www.youtube.com/watch?v=TWnDJqeuowE
746
Channels
 International Programme for the Development

of Communication:
http://www.unesco.org/new/en/communication
-and-information/intergovernmental-
programmes/ipdc/
 Communication Initiative Network:
comminit.com
747
Texts
 https://www.eda.admin.ch/content/dam/de
za/en/documents/themen/staats-
wirtschaftsreformen/228184-ict4d-
connectiong-partners_EN.pdf
 http://www.cs.cmu.edu/~rtongia/ICT4SD_F
ull_Book.pdf
 http://www.ecologyandsociety.org
748
Examples of commitment to
environmental sustainability
 Pavegen: pavegen.com
 http://www.pavegen.com/what-we-do
 https://www.youtube.com/watch?v=-Sp2QiKATwY
 Energy Floors: http://www.energy-
floors.com/sustainable-dance-floor/
 Think Parallax: http://www.thinkparallax.com/
 Sustainable Brands:
http://www.sustainablebrands.com/
749
Thank You
Aradhna Malik (PhD)

Assistant Professor
Corporate Sustainability
&
Corporate Social
Responsibility
Spectrum of social strategies
(Lindgreen, Córdoba, Maon & Mendoza, 2010)
 Social strategies adopted by companies range

from:
 No CSR to “Internationally recognized CSR

(Integrated business strategies, attention to
social issues, compliance with codes of
conduct, governance, & sustainability)”
Corporate sustainability
(Hahn et al., 2015, in Vildásen, Meitsch & Fet, 2017)
 Corporate sustainability refers to preservation/

conservation of economic, social, and
environmental resources within a dynamic,
systemic, organizational, and individual context,
which is constantly evolving in time and space.
Corporate sustainability & Corporate
social responsibility (Marrewijk, 2003)
 “CSR relates to phenomena such as

transparency, stakeholder dialogue &
sustainability reporting, while CS focuses on
value creation, environmental management,
environment friendly production systems,
human capital management, & so forth.”
Stages of the CS/ CSR nexus
(Marrewijk, 2003)
1. Compliance driven CS/ CSR

2. Profit driven CS/ CSR
3. Caring CS/ CSR
4. Synergistic CS/ CSR
5. Holistic CS/ CSR
Stage 1: Compliance driven CS/ CSR
(Marrewijk, 2003)
 Motivation: “Duty/ obligation, correct

behavior”
 Activities:
 “Providing welfare to society within the limits of
regulations from the rightful authorities”
 “Responding to charity & stewardship
considerations”
Stage 2: Profit-driven CS/ CSR
(Marrewijk, 2003)
 Motivation: “Business case” - Anything that

benefits the business
 Activities:
 “Integration of social, ethical, & ecological aspects
into business operations & decision making,
provided it contributes to the financial bottom line.”
Stage 3: Caring CS/ CSR (Marrewijk, 2003)
 Motivation: “Human potential, social

responsibility & care for the planet are as such
important”
 Activities:
 “Balancing economic, social & ecological concerns”
 “CS/ CSR initiatives go beyond legal compliance &
beyond profit considerations.”
Stage 4: Synergistic CS/ CSR
(Marrewijk, 2003)
 Motivation: “Sustainability is important in

itself, especially because it is recognized as
being the inevitable direction the business
takes.”
 Activities:
 “Search for well-balanced, functional solutions
creating value in the economic, social & ecological
realms of corporate performance, in a synergistic,
win-together approach with all relevant
stakeholders.”
Stage 5: Holistic CS/ CSR (Marrewijk, 2003)
 Motivation: “Sustainability is the only

alternative since all beings & phenomena are
mutually interdependent. Each person or
organization therefore has a universal
responsibility towards all other beings.”
 Activities:
 “CS is fully integrated & embedded in every aspect
of the organization, aimed at contributing to the
quality & continuation of life of every being &
entity, now & in the future.”
Strategic communication
management, CS & CSR (Bɩrɩm, 2016)
 CSR Projects are dependent upon:

 Environmental responsibility
 Employee talent development
 Socially responsible supply chain management
 Social media usage is dependent on:
 Social support
 Brand image
 Tracking of large scale data
 CSR projects & social media usage contribute to strategic
communication management, which, in turn results in:
 Long term customer engagement
 Increased income
Thank You
Aradhna Malik (PhD)

Assistant Professor
Integration of
sustainability with
CSR
Conceptual framework (Wijethilake, 2017)
Proactive sustainability Sustainability Corporate sustainability

strategy control systems performance
Mediating effect
Control variables:
Firm size, Industry type,
Nature of firms
Example of sustainability integration
strategy (Essah & Andrews, 2016)
 Ref: Mining operations in Ghana

 Stages:
1. “Sustainability as land reclamation
2. Sustainability as disjointed CSR/ social license
activities
3. Sustainability as long-term community
development”
Summary of CSR codes
pertaining to
environmental health
(Dimmler, 2017)
OECD Guidelines (1970s/ 2000)
(Dimmler, 2017)

“Theme/ Applies to: Recommendations from
governments to corporations

Components included: Law; Investment;
Industrial relations; Employment regulation

Comments: France & Holland require
companies to take note of guidelines”
UN Global Compact (2000)
(Dimmler, 2017)

“Themes/ Applies to: Governments & businesses

Components included: Environment; Human rights; Worker
rights

Comments: Focuses on development; lacks specificity
because it is designed to address a very global & diverse
constituency; Principles 7-8 address envt. MDGs begin to
address Social Determinants of Health but are not specific

Notes: Not designed to supplant regulatory initiatives;
focuses on developing strong partnerships; very ambitious
objectives, lacks reporting systems; 7700 participants; very
limited resources; complement to specialized codes &
standards”
ISO 26000
(Dimmler, 2017)

“Themes/ Applies to: All organizations in all sectors

Components included: Social responsibility; governance,
environment, human rights, labor practices, fair
operating practices, consumer issues, community
involvement, societal development

Comments: Voluntary; focuses on mgmt systems, laws
& regulations where business activity takes place, it
must be followed

Notes: Combines well with existing systems such as
Global Compact; corporations can choose how to orient
with their own policies”
Universal Declaration of Human Rights
(1948 adopted by 48 UN member states) (Dimmler, 2017)

“Themes/ Applies to: ‘Every organ of society’; Defines ‘What are
rights?’; Outlines 1400 indicators for business

Components included: Broadly includes human rights, political, social,
& economic rights, highlighted by 2 UN International covenants – one
on political & civil rights, the other on social, economic, & cultural
rights; covenants are binding to states that join these treaties;
universally accepted, serves as the foundations for many CSR codes

Comments: 1993 – 171 nations adopted the Vienna Declaration to
reaffirm support; not legally binding, but accepted as customary law;
challenge is how to translate into business principles, particularly the
civil & political rights

Notes: Formed on the basis of many constitutions around the world;
subsequent UN documents have compensated for a lack of focus on
the rights of minorities & indigenous peoples, resulting in 80
conventions, declarations, & resolutions on human rights”
ILO Tripartite Declaration of
Principles (Social Policy) (1977)
(Dimmler, 2017)

“Themes/ Applies to: Companies, governments, trade unions, &
employer organizations; ILO Declaration defines the obligation of
governments as well as companies in promoting social & economic
development; precursor to the Global Compact

Components included: Important precursor to CSR codes &
standards; refers to 28 ILO conventions negotiated within a multi-
national framework; includes dispute resolution procedures; can be
used to determine whether a company is in accordance with the
declaration; procedures exist to challenge company behavior, but are
rarely used

Comments: Business encouraged to observe standards comparable to
the host country in which they operate; in developing countries,
observance of local norms could still involve poor working conditions”
SA 8000; SA 8000/ 2008
(Dimmler, 2017)

“Themes/ Applies to: Companies around the world & across industries; truly a
global & verifiable standard designed to make workplaces more humane; best
management tool available to ensure social accountability; current benchmark in
Corporate Social Accountability; auditing; primarily used by companies where
labor conditions are problematic

Components included: A certification standard developed, overseen, & updated
via multi-stakeholder dialogue with companies, trade unions, stakeholders,
NGOs, & academics; requires training & CQI in the workplace, & ensures that
social policies remain in effect long after auditors leave the facility

Comments: A process & a performance standard – unique in this respect; the
standard is embedded into daily practice; extensive training programs to ensure
worker rights; also evaluates up to supply chain; promotes corrective action,
Social Accountability International (SAI) identifies perceived costs & benefits
through survey

Notes: Difficult for smaller companies to implement with bias towards
companies with existing mgmt systems in place – expensive barriers; key
challenge is to create a critical mass of certified suppliers; also convergence
with other similar initiatives; to conform to ILO convention 138 – a child is
anyone less than 15 years”
Thank You
Aradhna Malik (PhD)

Assistant Professor
Integration of
sustainability with
CSR (Contd.)
Summary of CSR codes
pertaining to
environmental health
(Contd.)
(Dimmler, 2017)
Rio Declaration (Earth Sumit) by the
UN Conference on Environment &
Development (UNCED) (1992) (Dimmler, 2017)

“Themes/ Applies to: Addresses nations & states, but also
addresses many of the issues outlined in the Global
Compact; a weakness is that it does not address companies

Components included: Historical point in time when UNCED
& environmental issues entered the mainstream

Comments: Precautionary Principle & Pollutes-Pay Principle
were defined by Rio Declaration & are key elements of many
environmental standards; these apply to companies

Notes: Provides an important basis for environmental
principles in international law, enshrining many key concepts
& definitions; identifies the question: What is the role of
states in promoting environment & development”
CERES Principles (Coalition for
Environmentally Responsible Economies) –
Valdez Principles (Result of the Exxon-Valdez
disaster); UN-based organization (Dimmler, 2017)

“Themes/ Applies to: Network of more than 80
environmental, investor, & advocacy groups promoting
sustainability; 10 principles covering major environmental
concerns facing companies; encourages ongoing dialogue
with corporations; weakness is that they are aspirational in
nature & do require a two-way dialogue – companies must
meet standards for acceptance; investors can pressure
corporations to comply; uses a trust approach to conflict
resolution

Components included: Helped launch the Global Reporting
Initiative

Comments: Question: What measures can companies take to
promote sustainability of their products & operations?”
The Natural Step (1992) (Dimmler, 2017)

“Themes/ Applies to: Applies to companies,
communities, & individuals worldwide

Components included: Addresses the systematic
causes of environmental problems; general
enough in nature so that different sector
organizations can adopt & make them their own

Comments: Difficult to build capacity & scale up
activities, especially in developing countries;
complements many sustainability tools & resources
including ISO 14001”
Extractive Industries Transparency
Initiative (EITI) (2003) (Dimmler, 2017)

“Themes/ Applies to: Applies to companies that
operate mining, oil & gas fields; & also can apply
to supply-chain companies – upstream &
downstream

Components included: Promotes the use of
systems & procedures that enable the transparent
use of resources; mineral-rich countries report on
revenue; countries must define their own process

Comments: Does not address social issues,
political issues, or health issues”
Equator Principles Financial
Institutions (EPFIs) (2003) (Dimmler, 2017)

“Themes/ Applies to: Guidelines for financial institutions to provide a
benchmark on social & environmental issues for project financing;
banks & insurance companies; export creditors & development
agencies; NGO involvement & reputation at risk has created critical
mass of participation; one of the few voluntary sector initiatives to be
successful; the challenge is how to expand it into emerging markets
(China, Russia, India)

Components included: Address project financing with capital costs
over $10 million

Comments: Achieved critical mass when 70 financial institutions in 16
countries signed the Principles; social & environmental assessment
required of borrowers, & establishment of social & environmental
management systems

Notes: Some believe the EPFIs have financed projects which violate
the Principles; a lack of transparency; PR only concern”
AA 1000 Series (Foundation
Standard) (1999/ 2008) (Dimmler, 2017)

“Themes/ Applies to: Assurance standards for assurance providers
to evaluate public disclosure about performance; established
criteria for evaluation including systems, data, & processes;
Quality Assurance standards; organizational guidelines;
qualification for assurance providers

Components included: Can be used with the Global Reporting
Initiative, as well as with other standards or codes such as factory
audits & labor standards

Comments: Established CSR as a discipline; establishing
professional qualifications, training, & development methodologies

Notes: Accessible online at no cost; as more companies sign up,
then CSR will increase; challenge is to build capacity among
assurance providers”
Global Reporting Initiative
(GRI) (1997) (Dimmler, 2017)

“Themes/ Applies to: Sets a framework for all businesses (GRI reporters);
GRI mission is to evaluate the quality of reporting to a higher level of
comparability, consistence, & utility; companies must meet certain criteria if
they want their reports in accordance with the GRI guidelines

Components included: CERES & the Tellus Institute convened the GRI;
UNEP also has played a significant role; In 2000, the GRI launched the
Sustainability Reporting Guidelines in 2002 as the G3 Guidelines

Comments: Challenges include the need for more research to confirm the
link between reporting & improved social & environmental performance;
reporting can be costly; large no. of GRI indicators can be daunting; lacks
external verification; most visionary of the CSR tools, but will take decades
to become mainstream; sector supplements available in finance, electric
utilities, & mining

Notes: Thousands of companies in 60 countries issue GRI reports; defines
reporting content, defines report quality; report boundary setting; options
for reporting; Questions – How can a company communicate with
stakeholders? What are the issues a company should report? What are the
boundaries of a company?”
ISO 14001 (1996-2008) (Dimmler, 2017)

“Themes/ Applies to: A family of standards to create environmental
management system; a useful framework to address environmental
mgmt systems; does not focus on sustainability

Components included: Used internally without external auditors;
certificates issued; compatible with a range of standards (ISO 9000
series); once a company has developed the management systems for
the ISO 14001 certificate, it is easier to implement SA 8000 as well

Comments: Attained a critical mass of global companies; challenge is
to find mechanisms for enhancing stakeholder participation in
decision making; companies must conduct environmental reviews;
establish effective mgmt systems; conduct environmental audits;
prepare statements on environmental performance

Notes: More than 13,000 standards in 145 countries; Critical Quality
Indicator approach; Question: How can a company develop
management systems to address environmental issues?”
Thank You
Aradhna Malik (PhD)

Assistant Professor
SDG Compass for
business action on the
SDGs
(Developed by GRI, United Nations Global Compact & WBCSD in 2015)
Why do the SDGs matter for
business? (SDG Compass, 2015)
 “The SDGs define global sustainable

development priorities & aspirations for 2030 &
seek to mobilize global efforts around a
common set of goals & targets.”
 “Business is a vital partner in achieving the
SDGs. Companies can contribute through their
core activities, & we ask companies everywhere
to assess their impact, set ambitious goals &
communicate transparently about the results.”
(Mr. Ban Ki Moon, UN Secretary-General)
Objective of the SDG Compass
(SDG Compass, 2015)
 “… to guide companies on how they can align

their strategies as well as measure & manage
their contribution to the SDGs”
Steps in the SDG
Compass
(SDG Compass, 2015)
Step 01: Understanding the SDGs
(SDG Compass, 2015)
 “What are the SDGs?”

 The 17 SDGs: Details available at
https://sdgcompass.org/sdgs/
 “Understanding the business case
 The baseline responsibilities for business” –
Discussed in the previous lecture
Understanding the business case
(SDG Compass, 2015)
 “Identifying future business opportunities

 Enhancing the value of corporate sustainability
 Strengthening stakeholder relations & keeping
pace with policy developments
 Stabilizing societies & markets
 Using a common language & shared priorities”
Identifying future business
opportunities (SDG Compass, 2015)
 “Innovative technologies to increase energy

efficiency, renewable energy, energy storage,
‘green buildings’ & sustainable transportation
 Substitution of traditionally manufactured &
processed products by ICT & other technology
solutions that reduce emissions & waste
 Meeting the needs of the large & mostly untapped
market for products & services – including in
healthcare, education, energy, finance & ICT –
that can improve the lives of the four billion people
who currently live in poverty.”
Enhancing the value of corporate
sustainability (SDG Compass, 2015)
 “The introduction of taxes, fines, & other pricing

mechanisms to make current externalities become
internalized to the business. This will further strengthen
economic incentives for companies to use resources
more efficiently or to switch to more sustainable
alternatives.”
 Encouraging the young generation and enhancing value
for employees through employee engagement leading to
an increase in employee morale & productivity
 Tapping into the ‘feel-good’ factor for customers through
sustainable business practices
Strengthening stakeholder relations
& keeping pace with policy
developments (SDG Compass, 2015)
 Benefits:
 “Improvement of trust among stakeholders
 Strengthening license to operate
 Reduction of legal, reputational & other business
risks
 Building of resilience to costs or requirements
imposed by future legislation”
Stabilizing societies & markets
(SDG Compass, 2015)
 Alleviating quality of life and enhancing

purchasing power
 “… sustaining natural resources that companies
depend on for production”
 “Fostering accountable & well-governed
institutions as well as open & rule-based
trading & financial systems, thereby reducing
the costs & risks of doing business”
Using a common language &
shared purpose (SDG Compass, 2015)
 Standardization of accountability measures

helps with transparency, credibility and
partnerships
Step 02: Defining properties
(SDG Compass, 2015)
 Map the value chain to identify impact areas

 Select indicators & define data
 Define priorities
Mapping the value chain to identify
impact areas (SDG, 2015)
 “Examining each segment of the value chain

falling within the scope of the assessment to
identify areas where:
 The company’s core competencies, technologies &
product portfolio currently or potentially contribute
positively to the implementation of one or more of
the SDGs
 The company’s activities directly or indirectly across
the entire value chain may have current or potential
negative impacts on one or more of the SDGs”
Mapping the value chain to identify
impact areas (Contd) (SDG Compass, 2015)
 “Selecting tools for mapping high impact areas

across the value chain: e.g.
 GHG Protocol Scope 3 Evaluator
 Social Hotspots Database
 Human Rights & Business Country Guide
 WBCSD Global Water Tool
 Poverty Footprint Tool
 https://sdgcompass.org/business-tools/”
 Engaging stakeholders
Selecting indicators & collecting
data (SDG Compass, 2015)
 The logic model:

 Inputs: What resources go on in that could positively or negatively affect
the SDG?
 Activities: What activities are undertaken?
 Outputs: What is generated through those activities?
 Outcomes: What changes in the target population occurred?
 Impacts: What are the changes as a result of those outputs?
 Examples:
 WBCSD’s Global Water Tool
 WRI’s Aqueduct ; http://www.wri.org/resources/maps/aqueduct-water-
risk-atlas; http://www.wri.org/publication/india-water-tool;
http://www.wri.org/publication/aqueduct-global-maps-21-indicators
 WWF-DEG Water Risk Filter
 https://sdgcompass.org/business-indicators/
Define Priorities (SDG Compass, 2015)
 “Consider the magnitude, severity, & likelihood of current &

potential negative impacts, the importance of such impacts
to key stakeholders & the opportunity to strengthen
competitiveness through resource efficiency. Additional
considerations include the likelihood that new regulation,
standardization, market shortages (of material or labor),
supply chain disruptions, stakeholder pressure or changing
market dynamics over time may translate these negative
impacts into costs or risks for the company.
 Assess the opportunity for your company to grow or gain
advantage from its current or potential positive impacts
across the SDGs. This may include opportunities to innovate,
develop new products & solutions or target new market
segments.”
Define priorities (Contd.) (SDG
Compass, 2015)
 Natural Capital Protocols: Natural Capital

Coalition
 Social Capital Protocols
Thank You
Aradhna Malik (PhD)

Assistant Professor
SDG Compass for
business action on the
SDGs (Contd.)
(Developed by GRI, United Nations Global Compact & WBCSD in 2015)
Steps in the SDG
Compass (Contd.)
(SDG Compass, 2015)
Step 03: Setting goals
 Define scope of goals & select KPIs
 Define baseline & select goal type
 Set level of ambition
 Announce commitment to SDGs
Define scope of goals & select KPIs
(SDG Compass, 2015)
 “Identify KPIs
 Define baseline & select goal type
 Set level of ambition
 Goal setting initiatives:
 The Science Based Targets Initiative
 The Future-Fit Benchmarks
 WBCSD’s Action 2020
 Goal setting approach:
 Inside-out approach
 Outside-in approach”
Goal setting approach (SDG Compass, 2015)
 Inside-out approach (Current trend):

 “Business goals set internally
 Based on historical data, current trends & future projections
on the company’s performance
 Benchmarked against performance & goals of industry
peers”
 “Outside-in approach: SDGs help determine:
 Global & Societal Needs:
 Business goals:
 Set based on external societal or global need
 Based on science & external data
 Benchmarked against the needs of society that the business can
address”
Step 04: Integrating
 “Anchoring sustainability goals within the
business
 Embed sustainability across all functions
 Engage in partnerships”
Anchoring sustainability goals
within the business (SDG Compass, 2015)
 “Create a shared understanding of how progress

towards sustainability goals creates value for the
company, in particular by clearly communicating the
business case & how it can complement progress
towards other business goals.
 Integrate sustainability goals into performance reviews
& remuneration schemes across the organization with
additional incentives reflecting the specific role that a
function or individual has in achieving relevant goals”
 Industry specific examples: SDG Industry Matrix
(https://www.unglobalcompact.org/library/3111;
http://sdghub.com/project/sdg-industry-matrix/)
Embed sustainability across all
functions (SDG Compass, 2015)
 “Although dedicated sustainability teams &

professionals can play an important role in
achieving the company’s sustainability goals,
the support & ownership of corporate functions
such as R&D, Business Development, Supply
Management, Operations & Human Resources
are the key to embedding sustainability in
business strategy, culture & operations.”
Engage in partnerships
(SDG Compass, 2015)
 “Value chain partnerships, within which companies in

the value chain combine complementary skills,
technologies, & resources & bring new solutions to
market
 Sector initiatives that bring several industry leaders
together in efforts to raise standards & practices across
the entire industry & overcome shared challenges
 Multi-stakeholder partnerships, where governments,
private sector & civil society organizations join forces to
tackle complex challenges.”
Step 05: Reporting & Communicating
(SDG Compass, 2015)
 “Effective reporting & communication

 Communicating on SDG performance”
Why report? (SDG Compass, 2015)
 Reporting matters project by WBCSD & Radley

Yeldar:
http://www.wbcsd.org/Projects/Reporting/Reso
urces/Reporting-Matters-2016
 Undatarevolution.org
Effective reporting & communication
depends on: (SDG Compass, 2015)
 “The influence on stakeholder assessments &

decisions
 The significance of economic, environmental, &
social impacts”
Communicating on SDG performance
(SDG Compass, 2015)
 “For each SDG identified as relevant,

companies can disclose:
 Why the SDG has been identified as relevant, &
how
 The significant impacts, whether positive or
negative related to the relevant SDG
 The goals for the relevant SDG & progress made in
achieving them
 Their strategies & practices to manage impacts
related to the SDGs & achieve goals through
integration across the business”
Thank You
Aradhna Malik (PhD)

Assistant Professor
CSR public policies in
different relational
perspectives – Lessons from
Europe
(Albareda, Lozano & Ysa, 2007)
Different actors in CSR through
Government policies (Albareda, Lozano & Ysa, 2007)
 “CSR in governments: CSR public policies developed by

governments to improve their own social responsibility,
leading by example
 CSR in government-business relationships: CSR public
policies designed to improve business CSR practices
 CSR in government-society relationships: CSR public
policies designed to improve civil society stakeholders’
awareness
 Relational CSR: CSR public policies designed to improve
collaboration between governments, businesses, & civil
society stakeholders”
CSR in Government (Internal policies)
 “Leadership by example:
 Action plan for Government offices
 Work-life balance policies/ equal opportunities/
ethical investment/ anti-fraud & corruption policies
 Accreditation for good employer practices
 Creation of internal departments:
 Creation of knowledge centres
 Creation of monitoring organizations & control
systems”
(Contd.) (Albareda, Lozano & Ysa, 2007)
 “Coordinating government bodies:
 CSR minister responsible for coordinating activities
 Cross-government CSR programs (Europe –
international aspect)
 CSR feasibility studies for new legislation
 Capacity building:
 Funding for research & innovation programs
 Financial assistance for companies implementing CR
programs
 Publication of guidelines & good practice documents”
 “Public expenditure:
 Social & environmental criteria in supplier policies
 Ethical purchasing & outsourcing
 CSR policies for public contracts
 Public campaigns:
 Promotion of positive impacts of CSR in business &
society
 Surveys on public opinion
 CSR Awards, communication campaigns & media
influence”
(Contd.): International Issues
 “International events:
 International conferences on CSR
 [International level conventions]
 Transferring international debate to local
contexts:
 Agreeing between national & local government
 Seminars on geographic or thematic areas
 Consideration of CSR regional & local policies”
(Contd.): International Issues
 “International instruments & agreements:

 Promotion of global regulatory frameworks
 Development of international certification systems
 Creation of evaluation & certification bodies
 Foreign trade policy & international development:
 CSR integrated into foreign affairs policies for international
markets & international development
 Promotion of good CSR practice in overseas operations (human
rights, labor standards, anti-corruption, envt. etc.
 Link CSR to foreign investment policy & international relations”
CSR in Government (Soft policies)
 “Raising awareness:
 Identify & promote companies leading in CSR
 Promote CR through websites, publications,
specialist journals
 Offer CR services & support to CR initiatives in
companies or partnerships
 Undertake surveys & communication campaigns”
 “Voluntary initiatives (facilitating & promoting):
 Promotion of uptake of CR policies, publication of CR
reports
 Encouraging sharing & promotion of good practice
 Promotion of Social Responsibility Initiatives,
environmental standards, fair trade, sustainable
consumption, work-life balance, equal opportunities,
employee volunteering, employee conditions, life-long
learning
 Promotion of business networks
 Promotion of public private partnerships or public-
private-civil society partnerships”
 “Capacity building:
 Finance research & evaluation programs
 Support business-university research programs (instruments, good
practice, comparative studies)
 Develop guidelines & provide technical assistance
 Incentives for sustainability reports
 Stakeholders:
 Evaluation & communication programs on the impact of CR
programs on stakeholders
 Market mechanisms to favor CR (price policies, competition
policies, investment principles)
 Promotion of stakeholder dialogue”
 “International:
 Incentives for adopting international CR standards
 Promoting CR good practice […] (labor standards, human
rights, anti-corruption
 Convergence & transparency:
 Promote standardization across CR management models,
standards, reports, indicators, & auditing systems
 Promote fair trade labelling systems
 Encourage standardization of SRI analysis
 Promote inclusion of international CR agreements in codes of
conduct”
 “Evaluation & accountability:
 Accountability & auditing mechanisms
 Triple bottom-line reporting initiatives
 Social & environmental labeling
 Tax & funding systems:
 Tax incentives for CR (employment creation, gender
balance, work-personal life balance, environmental
initiatives, etc.)
 Funding streams for CR (volunteering social projects
etc.)
 Promotion of SRI through fiscal mechanisms”
CSR in Government (Social policies)
 “Legislation:
 Transparency regarding socially responsible
investment (pension & investment funds)
 Obliging companies to produce sustainability
reports
 Regulation regarding public contracts & selection
processes
 Environmental legislation”
CSR in Government (Hard policies)
 “Adaptation of international agreements to

national standards”
CSR in Government (Sector specific
issues) (Albareda, Lozano & Ysa, 2007)
 “Small & Medium Enterprises:
 Promotion & incentives for good CR practice in
SMEs
 Raising awareness of impact of operations [...]
 Promote the exchange of good practice & business
cases for Corporate Responsibility in SMEs
 Public campaigns directed at SMEs
 Encourage cooperation between large companies &
SMEs”
Thank You
Aradhna Malik (PhD)

Assistant Professor
CSR public policies in
different relational
perspectives – Lessons from
Europe (Contd.)
CSR in Government – society
relationships (Soft policies)
 Analysis & dissemination of good practices in
business operation with high impact on the
community (work-life balance, social cohesion)
 Tax incentives for civil society-government
partnership programs
 Knowledge dissemination of international
agreements with civil society implications (human
rights, labor standards)”
relationships (Soft policies) (Contd.)
 “Voluntary initiatives (facilitating & promoting):

 Campaigns for sustainable consumption,
publications, seminars & dissemination
 Ethical investment initiatives
 Support Social Responsibility Initiatives
 Support socially responsible consumption
 Capacity building:
 Publications, evens, press
 Surveys & CSR awards””
CSR in Government –society
relationships (Soft policies) (Contd.)
 “Stakeholders:
 Create communication mechanisms to foster
business-community dialogue
 Promote transparency mechanisms
 Promote partnerships & participate in them
 International:
 Promote initiatives with international NGOs
 Participation in international civil society activities”
CSR in Government –society
relationships (Sector specific issues)
 “Management of social organizations:

 Improve management of social enterprise
 Enable Social Responsibility Initiatives”
relationships (Hard policies)
 “Environmental & social criteria for public

contracts to socially financed organizations”
Relational CSR: Government –
business – society (Soft policies)
 Sharing good practice & knowledge dissemination
 Create National Resource Centres (e.g. National
Contact Points all over Europe)”
e.g.
 https://www.ihrb.org/focus-areas/commodities/podcast-
kathryn-dovey
 http://mneguidelines.oecd.org/database/
 http://mneguidelines.oecd.org/database/instances/be001
7.htm
Relational CSR: Government – business
– society (Soft policies) (Contd.)
 “Capacity building:
 Multi-stakeholder forums
 Business support networks
 Sharing experiences & best practices
 Voluntary initiatives (facilitating & promoting)
 Round tables on codes of conduct
 University-business research projects, promoting
dialogues
 Proactive role in promoting innovation, pilot
projects, dialogue”
 “Stakeholders:
 Consumers: information on supply chain,
sustainability index of products
 Investors: information on responsible corporate
policies & expectations regarding pensions
 Evaluation & Accountability:
 Accountability & auditing mechanism
 Triple bottom-line reporting initiatives
 Social & environmental labelling
 “Convergence & transparency:

 Management standards
 Codes of conduct
 Promotion of simple & flexible indicators
 International:
 International partnerships
 Networks & alliances
 Multi-stakeholder forums
– society (Sector specific issues)
 “Community action:
 Urban regeneration projects
 Education projects in poor areas
 Socially responsible investment & fair trade:
 Pension schemes with social, environmental criteria
 Transparency in definition of Socially Responsible
Initiatives
 Selection, retention & realization of investment with
corporate responsibility considerations
– society (Sector specific issues)
 “Cross-sector partnerships:
 Promoting corporate responsibility networks with
public/ private participation
 New social partnerships & common frameworks
 Local partnerships between different sectors for
urban regeneration
 Stakeholder involvement in developing guidelines
 Bringing together different sectors”
– society (Hard policies)
 “Consumer rights”
Thank You
Aradhna Malik (PhD)

Assistant Professor
Consumer Social
Responsibility
(CnSR)
Personal social responsibility
(López Davis, Rives & de Maya, 2017)
 “… the way [one’s] actions affect the

environment or one’s local surroundings”
 “Personal social responsibility requires the
existence of coherence between what [one]
expect[s] from others, & what [one] actually
do[es]. To be responsible towards society, a
person has to be morally coherent”
Consumer social responsibility
 Stems from Personal Social Responsibility and

relates to consumption as a consumer
Perspectives on Personal
Social Responsibility
Perspectives of Consumer Social
Responsibility (López Davis, Rives & de Maya, 2017)
Consumer Social Responsibility:

 Philanthropic
 Social & Environmental:
 Environmental
 Social
 Ethical
Philanthropic perspective of
consumption (López Davis, Rives & de Maya, 2017)
 Social responsibility (Anderson & Cunningham, 1972, in López Davis, Rives & de Maya, 2017):
“Willingness of an individual to help other persons even when there is
nothing to be gained for himself.”
 Ethical consumer (Barnett et al., 2005; Miller 1998, in López Davis, Rives & de Maya, 2017): “All
consumer behavior, however ordinary & routine, that is likely to be
shaped by diverse values of caring for other people & concern for
fairness.”
 Ethical consumption (Barnett et al., 2005, in López Davis, Rives & de Maya, 2017): “Any practice of
consumption in which explicitly registering commitment to distant or
absent others is an important dimension of the meaning of activity of
the actors involved”
 Consumer social responsibility (CnSR) (Fazal, 2011, in López Davis, Rives & de Maya, 2017):
“To be critical, to act, to care for fellow human beings, to live in
peace with the environment, & to join hands & create the solidarity.”
Social & environmental impacts
of consumption (López Davis, Rives & de Maya, 2017)
 Socially conscious consumer (Webster, 1975, in López Davis, Rives & de Maya, 2017): “A
consumer who takes into account the public consequences
of his/her purchasing power to bring about social change.”
 Socially responsible consumption (Antil & Bennett, 1979; Antil, 1984, in López Davis, Rives
& de Maya, 2017): “Those consumer behaviors & purchase decisions
which are related to environmental & resource-related

problems & are motivated not only by a desire to satisfy
personal needs but also by a concern for the welfare of
society in general.”
 Socially responsible consumer (Roberts, 1995, in López Davis, Rives & de Maya, 2017):
“One who purchases products & services perceived to have a
more positive (or less negative) influence on the
environment or who patronizes businesses that attempt to
effect related positive social change.”
Social & environmental impacts of
consumption (Contd) (López Davis, Rives & de Maya, 2017)
 Ethical consumer (Harper & Makatouni, 2002, in López Davis, Rives & de Maya,
2017): “The one who buys products which are not harmful
to the environment & society
 Ethically minded consumers (De Pelsmacker et al., 2005; Shaw & Siu,
2002): “Those who feel a responsibility toward the
environment &/ or to society, & seek to express their
values through ethical consumption & purchasing (or
boycotting) behavior”
 Ethical consumer (Fraj & Martinez, 2007, in López Davis, Rives & de Maya, 2017):
“The one who makes rational use of available
information about free trade/ corrective solutions to
consider the consequences of their purchase practices.”
Social perspective of consumption
 Socially responsible consumer behavior (SRCB)

(Mohr et al., 2001, in López Davis, Rives & de Maya, 2017): “A person basing
his or her acquisition, usage, & disposition of

products on a desire to minimize or eliminate
any harmful effects & maximize the long-run
beneficial impact on society.”
 Ethical consumerism (Uusitalo & Oksanen, 2004, in López Davis, Rives &
de Maya, 2017): “The consumer considers not only
individual but also social goals, ideals &

ideologies”
Social perspective of consumption
(Contd.) (López Davis, Rives & de Maya, 2017)
 Socially responsible consumer behavior (SRCB) (Ha,

Brookeshire & Hodges, 2009, in López Davis, Rives & de Maya, 2017): “The behavior
of a consumer basing decisions on a desire to
minimize or eliminate any harmful effects & to
maximize any beneficial impacts on society in one
or more consumption steps of the consumption
process. This consumption includes product
information search, acquisition, usage, storage,
disposal, & post-disposal evaluation.”
 Consumer Social Responsibility (Vitell, 2015, in López Davis, Rives &
de Maya, 2017): “The responsibility to stakeholders &
society”
Environmental perspective of
consumption (López Davis, Rives & de Maya, 2017)
 Responsible consumption (Fisk, 1973, in López Davis, Rives & de Maya, 2017): “Rational &
efficient use of resources with respect to the global human
population
 Green consumer (Elkington & Hailes, 1989, in López Davis, Rives & de Maya, 2017): “The one who
avoids products that might endanger the health of the consumer or
others; cause significant damage to the environment during
manufacture, use or disposal; cause unnecessary waste; use material
derived from threatened species or environments; involve
unnecessary use or cruelty to animals (or) adversely affect other
countries”
 Ecologically conscious consumer behavior (ECCB) (Straughan & Roberts, 1999, in
López Davis, Rives & de Maya, 2017): “The extent to which individual respondents
purchase goods & services believed to have a more positive (or less
negative) impact on the environment”
Ethical perspective of consumption
 Consumer social responsibilities (Vitell & Muncy, 1992, in López Davis, Rives & de Maya, 2017): “The
moral principles & standard that guide the behaviors of individuals as
they obtain, use, & dispose off goods & services”
 Ethical consumer behavior (Cooper-Martin & Holbrook, 1993, in López Davis, Rives & de Maya, 2017):
“Decision-making, purchases & other consumption experiences that
are affected by the consumer’s ethical concerns
 Green consumerism (Hendarwan, 2002, in López Davis, Rives & de Maya, 2017): “That which
involves beliefs & values aimed at supporting a greater good that
motivates consumers’ purchases”
 Ethically minded consumers (De Pelsmacker et al., 2005, in López Davis, Rives & de Maya,
2017): “Those who feel a responsibility toward the environment &/ or
to society, & seek to express their values through ethical
consumption & purchasing (or boycotting) behavior”
 Ethical purchasing (Harrison, Newholm & Shaw, 2005, in López Davis, Rives & de
Maya, 2017): “ ‘Ethical purchasing’ [refers to a range of activities]
from ethical investment (ethical purchasing of stocks & shares)
to the buying of fair trade products, & from consumer boycotts
to corporate environmental purchasing policies. […] Elements
of concern – the product’s precedence, manufacture
procedures, oppressive systems, human rights, labor relations,
political donations, experimental use of animals, development
of weapons by various countries”
 Consumer social responsibility (CnSR) (Devinney et al., 2006, in López

Davis, Rives & de Maya, 2017): “The conscious & deliberate choice to
make certain consumption choices based on personal & moral
beliefs”
 Ethical person (Freestone & McGoldrick, 2008, in López Davis, Rives & de Maya, 2017): “Individual who
is likely to conform to accepted standards of social or professional
behavior”
 Ethical consumption (Adams & Raisborough, 2010, in López Davis, Rives & de Maya, 2017): “Act of
discreet & enlightened consumer choice”
 Consumer social responsibility (Caruana & Chatzidakis, 2014, in López Davis, Rives & de Maya, 2017):
“The application of instrumental, relational & moral logics by
individual, group, corporate & institutional agents seeking to
influence a broad range of consumer-oriented responsibilities”
 Consumer social responsibility (Quazi et al., 2015, in López Davis, Rives & de Maya, 2017): “The
individual & collective commitments, actions & decisions that
consumers consider as the right things to do in their interactions with
producers, marketers & sellers of goods & services”
Multi-level, multi-agent
conceptualization of
CnSR
(Caruana & Chatzidakis, 2014)
Micro level (Caruana & Chatzidakis, 2014)
 “Agents: Consumers
 Motivations:
 Instrumental: Maximizing personal gains
 Relational: Showing care, adhering to social &
group norms
 Moral: Personal norms, altruistic concerns
 Mechanisms: Purchases, boycotts, protesting
Meso level (Caruana & Chatzidakis, 2014)
 “Agents:Families
 Motivations:
 Instrumental: Health concerns, concerns over
children’s well-being
 Relational: Firming relations between family
members & other referent groups
 Moral: Ethics of care
 Mechanisms: Purchases, boycotts, protesting”
Meso level (Contd.) (Caruana & Chatzidakis, 2014)
 “Agents: Consumption communities

 Motivations:
 Instrumental: Personal economic gains
 Relational: Mutual quest for community
 Moral: Moral & political ends
Macro level (Caruana & Chatzidakis, 2014)
 “Agents: Governments
 Motivations:
 Instrumental: Substituting government efforts
 Relational: Managing relations between the state,
consumers & markets
 Moral: Facilitating social justice & equality
 Mechanisms: Policies, incentives, laws”
Supermacro level (Caruana & Chatzidakis, 2014)
 “Agents: Corporations (Including Meso, Macro)

 Motivations:
 Instrumental: Doing better by doing good
 Relational: Fostering stakeholder relations
 Moral: Corporate altruism & citizenship
 Mechanisms: Communication, relationships,
CSR initiatives”
Supermacro level (Contd.) (Caruana
& Chatzidakis, 2014)
 “Agents: NGOs & Inter Governmental

Organizations
 Motivations:
 Instrumental: Mobilizing CnSR as a means to
achieving other goals
 Relational: Bridging & cementing relations between
other stakeholder
 Moral: Addressing social, environmental & political
aims
 Mechanisms: Lobbying, collaborations”
Why/ When do consumers decide
to be socially responsible?
(Antonetti & Maklan, 2016)
 Identification process:
 [Repeated personal (negative) experiences (with an
organization)]
 Perceived similarity of the victims
Leading to Emotional reactions

 Sympathy towards the victims
Leading to stakeholder reaction including

negative attitude towards the company
Leading to Punitive action and/ or
 Anger towards the corporation
Leading to
 [Consumers taking matters in their own hands – CnSR]
Determinants of CnSR
(Marín, Cuestas & Román, 2016)
 Company-cause fit (Becker-Olsen, 2004, in (Marín, Cuestas & Román, 2016): “… when
[the cause & the brand] are perceived as congruent, where
congruity is derived from the mission, products, markets,
technologies, brand concepts, or other key association [and
the CSR activities undertaken by the company adapt to the
above and are coherent with the above]”
 Corporate ability (Brown & Dacin, 1997, in Marín, Cuestas & Román, 2016): “… a
company’s expertise in producing & delivering its output”
 Interpersonal trust (Rousseau et al., 1998, in Marín, Cuestas & Román, 2016): “… a
psychological state comprising the intention to accept
vulnerability based on the positive expectations of the
intentions or behavior of another person”
 Corporate hypocrisy (Wagner et al., 2009, in Marín, Cuestas & Román, 2016): “… the
belief that a firm claims to be something that it is not”
An overview of Consumer Social
Responsibilities (Quazi, Amran & Nejati, 2016)
 “Supporting business growth

 Critical appraisal
 Action
 Social impacts
 Environmental impacts
 Solidarity [among consumers regarding their
collective expectations from corporations]”
Thank You
Aradhna Malik (PhD)

Assistant Professor
Corporate Social
Irresponsibility
(CSI/ CSiR)
What is CSiR?
 “By ‘irresponsible’ is mainly meant the antithesis of
responsible. Irresponsibility is characterized by unethical
& morally distasteful behavior. Irresponsibility is marked
by short views, self-righteousness, hypocrisy, & disdain
for the common good.” (Ferry, 1962, in Lin-Hi & Müller, 2013)
 “A socially irresponsible act is a decision to accept an
alternative that is thought by the decision maker to be
inferior to another alternative when the effects upon all
parties are considered. Generally this involves a gain by
one party at the expense of the total system.” (Armstrong, 1977,
in Lin-Hi & Müller, 2013)
What is CSiR? (Contd.) (Lin-Hi & Müller, 2013)
 “Corporate irresponsibility occurs when the

strategic management of stakeholders does not
remain responsibility-neutral practice but
becomes an immoral practice based on the
deception & manipulation of stakeholders.”
(Greenwood, 2007, in in Lin-Hi & Müller, 2013)
 “CSI is about being reactive as opposed to

practive in addressing corporate issues & the
ways & means by which they relate to wider
society. At its extreme, CSI may entail breaking
the law […]” (Jones, Bowd & Tench, 2009, in in Lin-Hi & Müller, 2013)
 “CSiR is conceptualized in terms of what

stakeholders consider to be socially irresponsible
behavior.” (Lange & Washburn, 2012; Waagner, Bicen & Hall (2008); Williams & Zinkin,
2008, in Lin-Hi & Müller, 2013)
 “Social irresponsibility should be seen as an

antonym of social responsibility […] As an
antonym of social responsibility, social
irresponsibility (while not defined per se by
ethicians) might well accept the notion that it
includes such ideas as showing no sense of
responsibility, as being undependable, unreliable
or even untrustworthy” (McMahon, 1999, in Lin-Hi & Müller, 2013)
 “[…] ethical behavior that shows disregard for

the welfare of others, that at its extreme is
manifested when executives seek personal gain
at the expense of employees, shareholders &
other organization stakeholders, & even society
at large” (Pearce & Manz, 2011, in Lin-Hi & Müller, 2013)
 “[…] the set of corporate actions that
negatively affects an identifiable social
stakeholder’s legitimate claims (in the long
run)” (Strike et al., 2006, in Lin-Hi & Müller, 2013)
Bottomline (Lin-Hi & Müller, 2013)
 CSiR refers to the “… corporate actions that

result in (potential) disadvantages and/ or
harm to the other actors.”
Forms of CSiR (Lin-Hi & Müller, 2013)
 Intentional CSiR
 Unintentional CSiR
Intentional CSiR (Lin-Hi & Müller, 2013)
 “… corporations deliberately perform actions

that disadvantage and/ or harm others, e.g.
bribery, issuing excessive bills, illegal industrial
waste disposal, & tax evasion.”
 “… usually driven by the aim to achieve a
higher level of profits & therefore, presents a
means for realizing specific objectives.”
 “… involves corporate efforts to conceal their
acts of CSiR”
Unintentional CSiR (Lin-Hi & Müller, 2013)
 “… (potential) disadvantages and/ or harm to others are not

inflicted deliberately by a corporation.”
 “… not employed to achieve a particular objective but has the
character of an unanticipated by-product of certain activities.”
 “… sometimes, just the result of a series of unfortunate events”
 Antecedents include, natural disasters (e.g. earthquake),
“unforeseen contingencies (e.g. the potentially lethal side
effects of a drug only appear some time after the market
introduction”, undetected problems in raw material used for
production (prohibited material used by suppliers without the
firm’s knowledge), etc.
 Responsibility still lies with the corporation to be as vigilant &
as careful as possible.
Doing good vs. avoiding bad
(Lin-Hi & Müller, 2013)
Doing good Avoiding bad

A textile company expands its product A textile company abstains from the
range with clothes made from organic employment of cheap but harmful
cotton production methods
A pharmaceutical company financially A pharmaceutical company abstains from
supports an aid organization illegal drug studies
A computer manufacturer provides African A computer manufacturer abstains from
schools with free PCs. employing children in its production sites in
Africa
A bank provides micro credits in A bank abstains from selling bad but
developing countries profitable products to its customers
A global oil & gas company is active in the A global oil & gas company abstains from
field of renewable energies human rights abuses
A toy manufacturer establishes a A toy manufacturer abstains from the
foundation for maltreated women cooperation with suppliers who are known
for inhumane working conditions
Dimensions of CSiR (Wagner, Bicen & Hall, 2008)
 Natural environment
 Local businesses
 Foreign economies
 Local employment
 Societal rules
 Employee benefits
 Employee wages
 Local working conditions
 Employee discrimination
 Foreign labor
 Sales practices
 Dishonesty
 Offensive material
 Pricing policies
Natural environment (Wagner, Bicen & Hall, 2008)
 “Selling products whose production harms the

natural environment
 Producing extensive amounts of waste
 Contributing substantially to environmental
pollution”
Local businesses (Wagner, Bicen & Hall, 2008)
 “Forcing local small businesses into bankruptcy

 Selling goods below cost to put local
competitors out of business
 Creating a local monopolistic position for
themselves
 Forcing local retailers into bankruptcy”
Foreign economies (Wagner, Bicen & Hall, 2008)
 “Shifting capital overseas

 Selling a majority of products built overseas
 Contributing significantly to the national trade
deficit
 Buying from companies overseas instead of
domestic companies”
Local employment (Wagner, Bicen & Hall, 2008)
 “Increasing unemployment in local communities

 Replacing existing jobs with lower wage jobs in
local communities
 Causing local businesses to reduce jobs in local
communities
 Reducing their own workforce in local
communities”
Societal rules (Wagner, Bicen & Hall, 2008)
 “Cheating on taxes
 Paying bribes
 Ignoring the law
 Breaking the law”
Employee benefits (Wagner, Bicen & Hall, 2008)
 “Providing very limited benefits to employees

 Providing very limited medical insurance to
employees
 Making health-care coverage very expensive for
employees
 Referring employees to health care provided by
the state instead of providing medical insurance
themselves”
Employee wages (Wagner, Bicen & Hall, 2008)
 “Paying very low wages to employees

 Not paying employees living wages
 Paying employees less than the market
average”
Local working conditions
(Wagner, Bicen & Hall, 2008)
 “Having employees work in an unclean

environment
 Having employees work in an unsafe
environment
 Treating employees disrespectfully
 Providing poor working conditions to employees
 Not allowing employees to take sufficient
breaks”
Employee discrimination
(Wagner, Bicen & Hall, 2008)
 “Discriminating against employees based on

race, gender, age, looks/ personal
characteristics”
Foreign labor (Wagner, Bicen & Hall, 2008)
 “Paying extremely low wages to workers in

developing countries [or from vulnerable
communities, e.g. migrant labor from areas
ridden with civil strife]
 Having workers in developing countries work
extensive hours, or undertake heavy
workloads”
Sales practices (Wagner, Bicen & Hall, 2008)
 “Selling customers products

 They cannot afford,
 They do not really need,
 That are bad for their health”
Dishonesty (Wagner, Bicen & Hall, 2008)
 “Making misleading claims to customers

through advertising
 Having sales people make false claims to
customers about products”
Offensive material (Wagner, Bicen & Hall, 2008)
 “Exposing customers to:

 Provocative images through advertising
 Products that are offensive to some people
 Products & images that are not family friendly”
Pricing policies (Wagner, Bicen & Hall, 2008)
 “Overpricing products to customers

 Charging customers higher prices
 Than originally advertised
 Due to a monopolistic position”
Public Eye Award (Lin-Hi & Müller, 2013)
 www.publiceye.ch/en
Thank You
Aradhna Malik (PhD)

Assistant Professor
Future Directions in
CSR
CSR initiatives in
socially stigmatized
industries
(Austin & Gaither, 2017)
What are socially stigmatized
industries?
 Industries that have earned the reputation of
being detrimental to some aspect of the three
pillars – people, planet or profit.
e.g. Soft drinks, fast food, alcohol/ brewing
companies, cigarettes/ tobacco industry,
weapons & explosives, etc.
The challenge with socially
stigmatized industries (Austin & Gaither, 2017)
 “CSR activities that portray a company as

responsive to the concerns of society for social
causes negatively impacted by the company
are likely to face heightened scrutiny from
stakeholders regarding the motivations for the
initiatives” (Kim & Lee, 2012, in Austin & Gaither, 2017).
Why is it so difficult? (Austin & Gaither, 2017)
 “Stakeholders evaluate CSR more favorably when

the supported cause is related to the company’s
products, services, or market (Bhattacharya & Sen, 2004; Elving, 2016,
in Austin & Gaither, 2017).”
 “… stakeholder skepticism may be heightened

when a CSR campaign & a corporation’s goals
appear to be in contrast, such as when CSR
appears on the heels of an organizational crisis
(Cho & Hong, 2009, in Austin & Gaither, 2017), or
seems to be an effort to appease activist groups or
prevent regulatory actions detrimental to the
company (Austin & Gaither, 2016; Gaither & Austin, 2016, in Austin & Gaither, 2017).”
Examples of conflict of interest
 McDonald’s obesity prevention campaign
 Miller Brewing Company’s initiatives to reduce
& prevent binge drinking (Kim & Lee, 2012, in Austin & Gaither, 2017)
Megaproject
Social Responsibility
(MSR)
(Ma, Zeng, Lin, Chen & Shi, 2017)
Megaproject Social Responsibility
 “… the policies & practices of stakeholders

through the whole project lifecycle that reflect
responsibilities for the well-being of the wide
society.”
Megaproject Social Responsibility:
Challenges (Ma, Zeng, Lin, Chen & Shi, 2017)
 Complexity of tasks
 Size of projects
 Lifecycle: Several years to several decades e.g.
Building/ renovation of a national highway; setting
up a new railway head, flyovers in metropolitan
cities, metro rail service in large cities, etc.
 Large number of stakeholders
 Ongoing, sizable, & usually irreversible impacts on
social change
 “MSR can never rest with any single individual or
organization due to the above”
Governance of mega projects:
Characteristics (Ma, Zeng, Lin, Chen & Shi, 2017)
 Dual-centric: Large no. of stakeholders, &

decision makers
 Distributed: Geographically, in time, and with
respect to responsibilities – makes it difficult to
ensure uniformity across the project
 Diverse: As a result of diversity of impact
 Dynamic: As a result of a prolonged lifecycle
Principles & processes of
societal governance of MSR
 Principles of societal governance: Ref – OECD

principles
 Prudence of decision-making
 Reasonableness of action-taking
 Uniformity, transparency, & accountability of controlling
 Processes of societal governance:
 Social participation
 Social learning
 Social interaction
 Social integration
Territorial
Social
Responsibility
Territorial Social Responsibility:
Background (Baldo, Demartini, 2012)
 “When small & medium towns search for rapid &

extensive development, they have mutated their own
nature, &, at the same time, lost part of their social ties
& their local identity, because of a decline in social
consensus with regards to industry & industrialization.
Only in those territories, […], developing networks
between economic actors & actors coming from civil
society & from local politics, territorial closeness will
solidly form in terms of reciprocity of exchange, of
tradition, trust, identity, & will create a heritage of
understanding, relationships of images & values that are
rare ‘goods’ in an era of globalization, able to stop
injustice & insecurity in moments of difficulty like today.”
Territorial SR: The process
(Baldo, Demartini, 2012)
 Territory genius loci – Business climate

1. Territory entrepreneurs/ SMEs – Ethical principles
& values oriented towards CSR
 Mission
 Qualification of governance in companies with a soul
 Country governance oriented towards sustainability
2. Territory networks
Both 1 & 2 ultimately lead to Territorial social

responsibility
Sustainopreneurship
Sustainable Entrepreneurship
 “Sustainable entrepreneurship (SE) is a concept
that combines both sustainability &
entrepreneurship, & has been defined as, ‘an
innovative, market oriented & personality
driven form of value creation by
environmentally or socially beneficial
innovations & products exceeding the start-up
phase of a company’.” (Schaltegger & Wagner, 2007, in İyigün, 2015)
Sustainopreneurship (İyigün, 2015)
 “… the use of business organizing to solve

problems related to social & environmental
sustainability. It is a ‘business with a cause’ –
where world problems are turned into business
opportunities by deployment of sustainability
innovations.”
Examples of sustainopreneurship
 Pavegen
 Ketto edible cutlery
 Solar panelling over water canals in Gujarat
 Solar panelling for energy generation in large
kitchens
 Solar panel torches  - show & tell
CSR in Forestry
&
Wildlife
CSR in Forestry (Ref: Forest products
industry in the US) (Panwar & Hansen, 2008)
 Issues:
 “Environmental:
 Promote sustainable forestry practices
 Increase the use of renewable resources
 Adopt environmentally sound purchasing policies
 Mitigate global warming
 Reduce overall energy consumption
 Improve waste management”
CSR in Forestry (Ref: Forest products
industry in the US) (Contd.)
(Panwar & Hansen, 2008)
 Issues (Contd.):
 “Social:
 Encourage public scrutiny of environmental & land
management practices
 Invest in surrounding communities
 Promote responsible consumption among consumers
 Stem declining employment in the sector
 Engage with surrounding communities
 Improve industry’s public image”
CSR and wildlife
 Destruction of natural habitats due to rapid
industrialization leading to plants and animals
having no place to grow, live, or go.
Cyberstalking
CSR & Cybercrimes: Case in
point – ‘Cyberstalking’
(Al-Khateeb, Eiphaniou, Alhaboy, Barnes, Short, 2016)
 Role of CSR in dealing with cyberstalking

through:
 “encouragement of the implementation of
cyberstalking-aware schemes by service providers
to support victims
 Measurement of the effects of externality factor in
dictating the relationship between the impact of a
given individual’s privacy loss & strategic decisions
on investment to security controls in an
organizational context”
CSR in heritage tourism
(Wells, Smith, Taheri, Manika, McCowlen, 2016)
 Ref: Consolidative model of CSR development

proposed by Maon, Lindgreen, & Swaen (2016)
 “consolidation of ‘cultural, moral, strategic &
organizational elements that characterize an
organization at different stages in its CSR
development’.” (Slide 383)
CSR in heritage tourism: Perspectives
(Wells, Smith, Taheri, Manika, McCowlen, 2016)
 “Preserving museums & heritage

 Mass tourism
 Tour operators
 Airlines
 Leisure & sport
 ‘Responsible environmental marketing’
 ‘Community based tourism’
 ‘Green strategies’ in maintenance & upkeep of heritage
buildings
 ‘Green (environmentally friendly) accommodation
(especially energy & water use)’ in hotels”
Thank You

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Corporate Social Responsibility

Aradhna Malik (PhD)

 Three words, corporate, social, responsibility

 “A view of the corporation and its role in

 Corporate philanthropy: The desire of profit

 “The acid test of good corporate philanthropy

 A balance between the “… ends of economic

Be a good citizen Desired

 Economic responsibility: “…to produce an

 Rich and poor societies: Who can afford what

 The existence of an organization and the

“In a democratic society, power is taken away

“While CSR does not increase profits, higher

 The society gives organizations their resources.

 “Organizations can only continue to exist if the

 “To educate relevant stakeholders about their actual

 Legitimacy gap: Dynamic nature of the

 “… the management of an organization is

“Stakeholders are the persons, institutions,

 “External stakeholders are individuals, companies

Based on how they are influenced by decisions/ actions

Based on the amount of power and influence they have:

 Managerial perspective: “ an organization is

 Isomorphism: “A constraining process that

 Decoupling: “… situation in which the formal

Convergent predictions Convergent motivations

1. An organization seeks 1. To legitimize the business or

Aradhna Malik (PhD)

 “The corporation is an instrument for wealth

 Maximising the shareholder value:

 Strategies for achieving competitive advantage:

 Social investments in a competitive context:

 “When philanthropic activities are closer to a

 “… philanthropic investments by members of

 Natural resource based view of the firm (RBV)

 ‘Dynamic capabilities’ approach:

 Strategies for the bottom of the economic

 Cause related marketing :

 Goal: “… to enhance company revenues & sales or customer

 “… the social power of the corporation is

 Principles for managing social power (Davis, 1967, in

Garriga & Mele, 2004):

 Social power equation: “… the social responsibilities

 “The constituency groups of corporations

 Integrative social contract theory

 Donaldson & Dunfee (1994, 1999):

 Corporate citizenship: Profit making

 “… consider that business ought to integrate

 “… the process by which the corporation can

 “… public policy includes not only the literal text of law

 “… the relationship between business & society

Aradhna Malik (PhD)

 Obstructionist strategy: Ignorance of social

Intense Accommodative: Stakeholder Proactive: Synchrony in external

 Corporations will be less likely to act in socially

Corporations will be more likely to act in socially

Corporations will be more likely to act in socially

Corporations will be more likely to act in socially

Based on a sense of perceived fairness by

 “Individual employees’ needs for control, for

 “Internal and external organizational actors’ (Shareholders’,

 “A downward hierarchical ordering of motives among insider

 “An upward hierarchical ordering of motives among outsider