Social Licence, Chapter 4 Paragraphs PDF

​ Social licence The privilege for a business of operating in a society based on maintaining public trust by operating in ways that are deemed acceptable. Chapter 4 paragraphs: Stakeholders & Rightholders...

​ Social licence The privilege for a business of operating in a society based on maintaining public trust by operating in ways that are deemed acceptable. Chapter 4 paragraphs: Stakeholders & Rightholders A stakeholder is an individual or group with an interest in an organization's operations. By contrast, a rightsholder is a stakeholder with legal rights regarding the organization's activities. Issue A matter that is in dispute where different views are held of what is or what ought to be in the purpose of business and stakeholder expectations Issue Materiality/Salience Salience is the degree to which managers (Mitchell, Agle &Wood) give priority to competing stakeholder claim. It depends on three factors: Power (the ability to influence actions), Legitimacy (whether a claim is seen as proper or appropriate), and Urgency (how quickly a claim needs attention). The more attributes a stakeholder has, the more important they are to the organization. Stakeholder Influence Strategy According to Frooman, stakeholders influence organizations through resource (Frooman’s influence strategies) dependence, where they supply a resource and control its use. They use two strategies: Withholding (stopping the resource to force change) and Usage (continuing supply but with conditions). Influence can also happen through an influence pathway, where an ally of the stakeholder applies these strategies on their behalf.  Stakeholder Matrix Mapping Visual tool used to categorise stakeholders based on their level of interest and influence Issue Management Issue management helps organizations (Fink stages of crisis) identify problems that might affect their (Caroll and Bryson 6 steps issue goals. It includes six steps: finding issues, management process) understanding them, ranking their importance, deciding how to deal with them, creating a plan, and checking if the plan worked. The goal is to prevent problems or manage them early to avoid bigger issues later. Crisis management is used for sudden, serious problems like scandals or natural disasters. It focuses on planning, preparing, and responding quickly to reduce harm. A good response includes honesty, apologising if needed, and learning from the situation. By managing issues and crises well, organisations can stay organised, protect their reputation, and improve over time. Stakeholder Collaboration Stakeholder collaboration focuses on (Swendsen FOSTER) building strong, mutually beneficial relationships between organisations and their stakeholders to foster trust and shared goals. Swendsen's FOSTER framework is a six-step approach to developing collaborative stakeholder relationships: creating a foundation through relationship-building aligned with organisational values and ethics; organisational alignment to ensure internal systems and structures support stakeholder collaboration; strategy development to guide engagement with stakeholders; building trust as a foundation for stable and cooperative relationships; evaluation to assess the effectiveness of collaboration and identify improvements; and repeat the process to  ensure continuous progress. Power: A relationship among social actors in which A can get B to do something that B would not otherwise do. Power can be based upon force or threat, incentives, or symbolic influences. Legitimacy: Perception that the actions of an entity are desirable, proper, or appropriate within some system of norms, values or beliefs held by a stakeholder. Urgency: The degree to which a stakeholder’s claim calls for immediate attention, is critical and time-sensitive. Interest: Underlying motivation to want a particular outcome. You can think of interest as a combination of legitimacy and urgency in the perception of a specific stakeholder. Chapter 5 paragraphs Moral responsibility: A firm is accountable its stakeholders for any wrongful acts it performs and for the harm that it may cause (moral: good/bad). Corporate citizenship: A firm should act in ways that gain acceptance from stakeholders – refers to social licence or social contract (see next slide). Triple bottom line: Evaluation of a firm’s performance in terms of economic, social, and environmental impact. Reputation management: Efforts to enhance the firm’s image and good name, especially in cases of media controversy. Corporate philanthropy: A firm giving money to nonprofits pursuing social causes. Corporate volunteering: A firm remunerating its employees to volunteer for nonprofits pursuing social causes. Corporate Social Responsability (CRS) The way a corporation achieves a balance among its (achieves a balance) economic, social and environmental responsibilities in (Stakeholder view) its operations to address stakeholder expectations. The concept of CSR includes the "moral minimum," emphasising obligations that range from preventing harm to promoting societal good. Businesses are held accountable not just for their actions but for the indirect harm they may cause by omission or neglect, as illustrated by concepts like the moral duty continuum.The debate on CSR also connects to the concept of moral agency, where businesses, as socially constructed entities, demonstrate "reasoned" choices in their missions and practices, despite their nature as legal fictions. In ethical discussions, CSR extends beyond moral agency to include power dynamics. Organisations have different forms of power—economic, technological, political, cultural, and social. Such power creates added responsibility for businesses to act ethically. Caroll’s CRS Pyramid Carroll’s CSR pyramid explains the different levels of corporate social responsibility. At the base, businesses must be profitable to survive. Next, they must obey the law and follow regulations. Moving up, they are expected to act ethically beyond legal requirements. At the top, businesses are encouraged to be philanthropic, giving back to society as good corporate citizens. ⃕Corporate Citizenship Corporate citizenship is a company’s commitment to (Philanthropic approach) ethical behavior, social responsibility, and community (being good member of society) engagement beyond profit-making. Corporate sustainability balances/integrates social, Corporate Sustainability environmental, and economic responsibilities into (Long-term strategic approach) business operations to ensure long-term successes. (long-term survival) The Triple-E bottom line (3E) The Triple-E Bottom Line (3E) assesses a company’s (s how we measure whether a company success based on its economic,ethical , and is successfully applying CSR, corporate environmental impact, showing whether it benefits or citizenship, and sustainability.) harms these areas Shareholder view According to the shareholder view, the primary goal of (Friedman) businesses is profit maximisation.Friedman believes that if business solely focused on making profits, everyone will benefit because the economy will grow. Additionally, Friedman argues that businesses, unlike  people, do not have moral responsibility. Critics argue that since businesses have power and confluence, they should act morally. CSR Business Case The justification that guides management thinking. (Schaltegger & Burritt) There are four variants of CSR business cases: Reactionary:CSR is only done to avoid reputational damage by removing harmful ads. Reputational: CSR is applied to make the company look good in the eyes of society. Responsible: CSR is applied to improve the company’s performance. Collaborative: applied to work closely with stakeholders to solve problems. Risk of not practicing CSR Not practising CSR exposes businesses to reputational damage, such as negative media coverage and consumer boycotts. It can lead to financial losses, legal risks and decreased share value. Companies may face increased costs to address these issues. CSR is essential to maintaining stability and operational success. Corporate philantropy Refers to a business’s voluntary contributions to society through donations of money or services, going beyond legal obligations. Corporate sponsorship a partnership where a business provides financial support to an organisation or cause, benefiting both parties through mutual goals such as brand promotion. Cause-related marketing a strategy where a business links the purchase of its product or service to a donation to a charitable cause Chapter 11 Consumer Sovereignty Consumer sovereignty refers to the power and freedom of consumers to decide what goods and services are produced in an economy. How Consumer Sovereignty works 1.​ Consumer Preferences Drive the Market:​ ○​ Businesses exist to make profits. To do that, they must sell products that people want. EG, if everyone prefers electric cars over petrol cars, businesses will shift their focus to making electric cars. 2.​ Producers Respond to Consumer Demand:​ ○​ Companies invest resources to make products that follow consumer trends. 3.​ Choice Determines Success:​ ○​ Consumers have options. They choose products based on quality, price, ethical practices, or brand loyalty. The businesses that meet these expectations succeed. Illusion of customer choice Consumer sovereignty is often weakened because buyers struggle get reliable information about a (limites of consumer sovereignty) product. A few big companies control most of the market, making it seem like there are many choices when there really aren’t. Factors that affect customer sovereignty 1.​ Advertising and Marketing:​ ○​ Sometimes, companies try to manipulate consumer preferences through catchy ads. 2.​ Information Availability:​ ○​ If consumers lack information, their decisions might not truly reflect their preferences. 3.​ Government Regulation:​ ○​ Rules on safety, pricing, and quality can limit or guide consumer choices. Limits of consumer sovereignty 1.​ Income Inequality:​ 2.​ Consumer Manipulation:​ ○​ Clever advertising can push people to buy things they don’t need. Example:Rise of the electric car In the past, petrol cars dominated the market because they were cheaper. As consumers became more concerned about climate change, they demanded greener options. Companies like Tesla responded by producing electric cars. Over time, traditional carmakers followed the trend to stay relevant.Now, widespread charging stations highlight how consumer demand reshaped the market. Greenwashing Misleading consumers into believing a product is environmentally friendly when it’s not. Monopoly When one company dominates a market, reducing consumer choices. Demand The desire and ability of consumers to purchase goods and services. Competition Competition is important for improving products, services, and consumer choices. However, it can lead to unethical actions like stealing ideas between companies. A few large companies controlling the market makes things worse, reducing competition and giving them too much power. This can harm fairness in the economy. Laws like the Competition Act aim to make markets fair and support smaller businesses. Lobbying Lobbying is when individuals or organisations try to influence government decisions or laws. Businesses often hire lobbyists to protect their interests. Lobbying can help governments make better decisions by showing different perspectives, but it is also criticised for favouring big companies, sometimes using unethical methods like bribery. To regulate lobbying, Canada introduced the Lobbying Act in 2008, which requires "paid" lobbyists to register and follow specific rules. Value Chain A value chain is the process where a product gains value at each step, starting from extracting raw materials, processing them, manufacturing, transporting, and finally distributing the finished product to customers Consumer rights and responsibilities  Chapter 10 Social auditing A systematic assessment that identifies, measures, reports, and monitors the effects that a firm has on society (i.e., its social impact). Social Impact How a firm’s actions affect the surrounding community. Impact (a.k.a. responsible) investing: Investment strategy that aims to generate financial returns while addressing environmental, social, and governance problems. Transparency The extent to which financial and non-financial information is made available to stakeholders. CSR Reporting It’s how companies share information about their impact on society and the environment. It helps businesses show that they are responsible and care about more than just profit. Importance of Sustainability Corporate Reputation & Strategy: reporting Sustainability reports help sustain corporate reputation by reflecting stakeholder perceptions and influencing strategic management. Stakeholder Expectations: Various stakeholders expect organizations to report on social and environmental initiatives. Profitability & Sustainability: While many studies suggest a positive link between sustainability and profitability, research methods are still debated.