A Three-Dimensional Conceptual Model of Corporate Performance, Essay Example

Learning Log – Activity 3.9

In the 1980s, Freeman introduced stakeholder theory, which led to the development of the notion of the response organization and, it is argued, ultimately, the introduction of the concept of corporate social responsibility (CSR). There are many articles available that discuss the impact of corporate social responsibility and the various stakeholder’s theory that impact business decisions.  Friedman 1970 “asserts that engaging in CSR is systematic of an agency problem or a conflict between the interest of managers and shareholders. He argues that managers use CSR as a means to further their own social, political, or career agendas” (McWilliams & Siegel, p.118). In order to better understand stakeholder’s theories on corporate social responsibility, a research was conducted on ABS rated journals. The keyword, corporate social responsibility, was used for the final selection of the paper. The objective of this research is to establish a better understanding of stakeholder’s theories in association with corporate social responsibility.

The first journal article reviewed listed in the Association of Business School Journal Quality Guide (ABS list) is an article by Markus Kitzmueller and Jay Shimshack. The journal has a grade four rating on the ABS list. The article tiles is Economic Perspectives on Corporate Social Responsibility published in the Journal of Economic Literature. “The literature demonstrates that CSR can only achieve a second-best level of public goods provision. However, it outlines conditions under which CSR may produce higher welfare than public or other private provision channels” (Kitzmueller & Shimshack, p. 78). It addresses the emerging importance of CSR and the overall welfare it provides for the business. Galaskiewicz supports the findings by stating CSR “showed that corporations tend to act in socially responsible ways if normative or cultural institutions are in place that create the proper set of incentives for such behavior” (Galaskiewicz, p.299).

The second journal is a grade four rating on the ABS list, by Woo Jun and Chris Rowley. The article is Change and continuity in management systems and corporate performance: Human resource management, corporate culture, risk management and corporate strategy in South Korea in the Business History Journal. Woo and Rowley found that changing the culture within an organization is not an easy task, because individuals have established their own expectations, attitude, behavior and beliefs. They found there is an importance of disaggregating trends for simultaneously change and continuity. The need for corporate social responsibility is vital however stakeholder’s theories need to consider how the change will affect their employees. Scott (2003) recommends the use of institutional analysis literature “because institutionalists understand that institutions beyond the market are often necessary to ensure that corporations are responsive to the interests of social actors beside themselves, particularly in today’s increasingly global economy” (Scott, p.346.). Stakeholder’s theories need to not only understand how CSR affects their business, but how it will affect the employees as well. “Growing literature demonstrates that expanding formal regulations with extensive monitoring and enforcement drive environmental performance in transitional economies” (Lui, p.1484). It is important to consider the cultural changes and how to implement the necessary changes for the CSR can benefit the organization.

The third journal is a grade three on the ABS list is published in the Journal of Business Ethics by Simon S.M. Ho. The article title is Applied Ethics & Social Responsibility. The article addresses what they see as the triple bottom line, which includes planet, people, and profit. The emerging priority for CSR requires that advocates move from shareholders and focuses on multi-stakeholder focus. According to Votaw, “To some it conveys the idea of legal responsibility or liability; to others, it means socially responsible behavior in the ethical sense; to still others, the meaning transmitted is that of ‘responsible for’ in a causal mode; many simply equate it with a charitable contribution; some take it to mean socially conscious; many of those who embrace it most fervently see it as a mere synonym for legitimacy in the context of belonging or being proper or valid; a few see a sort of ?duciary duty imposing higher standards of behavior on businessmen than on citizens at large’’ (Votaw, p. 25). Corporate social responsibility is shifting beyond the shareholders theories and moving towards more considerations for where the responsibilities lye.

Carroll, one of the most prestigious scholars in this discipline, characterized the situation as ‘‘an eclectic ?eld with loose boundaries, multiple memberships, and differing training/perspectives; broadly rather than focused, multidisciplinary; wide breadth; brings in a wider range of literature; and interdisciplinary’’ (Carroll, p. 14). Corporate social responsibility is vast, and there are many considerations that need to be evaluate. Some organizations approach CSR in a more radical manner. ‘‘Corporate welfare makes good sense if it makes good economic sense – and not infrequently it does. But if something does not make economic sense, sentiment or idealism ought not to let it in the door’’ (Leavitt, p. 42). Shareholder’s theories also support the dynamic capabilities of creating a competitive advantage through CSR. “The ‘‘dynamic capabilities’’ approach presents the dynamic aspect of the resources; it is focused on the drivers behind the creation, evolution and recombination of the resources into new sources of competitive advantage” (Teece et al., p.521). Corporate social responsibility creates a ground for competitive advantage.

Corporate social responsibility involves many areas of business. “Carroll considered that a de?nition of social responsibility, which fully addresses the entire range of obligations business has to society, must embody the economic, legal, ethical, and discretionary categories of business performance” (Carroll, p.502). It is not limited to the society that the business operates in, it requires more. Wartich and Cochran (1985) “extended the Carroll approach suggesting that corporate social involvement rests on the principles of social responsibility, the process of social responsiveness and the policy of issues management”. Stakeholders need to understand the vast realms that CSR can reach. According to Jones, ‘‘corporate behavior should not in most cases be judged by the decisions actually reached but by the process by which they are reached’’ (Jones, p.65). Consequently, he emphasized the idea of process rather than principles as the appropriate approach to CSR issues.

Finally, Emshoff and Freeman (1978) provides two basic principles which reinforce the stakeholder management. “The ?rst is that the central goal is to achieve maximum overall cooperation between the entire system of stakeholder groups and the objectives of the corporation. The second states that the most ef?cient strategies for managing stakeholder relations involve efforts, which simultaneously deal with issues affecting multiple stakeholders” (Emshoff & Freeman, np). The research provided a strong understanding of how stakeholder’s theories directly influence the organization’s corporate social responsibility. It is no longer an option to ignore the business’ obligation to comply with CSR and its impact on the organization.

Learning Log – Activity 8.8

Question 1. State H0 and H1 for the test to check this?

H0 shows there is no difference between the average annual profit for each employee in the sector last year and my organization’s employee’s annual profit.

H1 A one-tailed test was utilized and it shows that my employee’s profited less than the employees for the sector last year.

Question 2. Based entirely on this P-value, what would you conclude from the test?

It has been determined that the critical alpha level is .05 and the provided alpha level is larger than that. Based on the findings there is not enough evidence to reject the null hypothesis that dictates there is no difference between the sector and my organization average annual profit per employee.

Question 3. What is the probability of getting a profit per employee of £1203, or less, when there is no statistically significant difference between that for your company and the industry average?

The first step is to calculate the z-score. The results are (1203-1228)/104 =.195. The probability is .423 which leads the assumption that there is a 42.3% chance that an organization has the profit of 1203 or less.

Question 4. If your annual per employee profit was such that the test had resulted in a P-value given by P=0.032 and you were testing at the ?=0.01 significance level, what would you conclude and why?

Because my the critical alpha level .01 and the alpha testing level is larger than that, it is concluded that there is not enough evidence at this point to reject the null hypothesis. Therefore the conclusion is made that there is no difference between the annual profit per employee for the sector and the profit of the employees in my organization last year.

Question 5. If you chose to reject H0 but H0 was actually true, would you be making a Type I or Type II error?
This would make it a Type I error.

Question 6. What assumptions have you made about the annual per employee profit in this test?

The assumptions that have been made is that the data comprising the sample is representative of the population. The data used in the samples are statistically independent. Finally, there is the assumption that the average profit per employee is distributed normally in the population.

Work Cited

Carroll, A. B. A Three-Dimensional Conceptual Model of Corporate Performance. Academy of Management Review, 1979, 4(4), 497–505.

Carroll, A. B. ‘Social Issues in Management Research’, Business and Society, 1994, 33(1), 5–25. Print.

Emshoff, J. R. and R. E. Freeman. Stakeholder Management. Working Paper from the Wharton Applied Research Center, July 1978. Print.

Galaskiewicz, J. Making corporate actors accountable: Institution-building in Minneapolis-St. Paul.  The new institutionalism in organizational analysis; 1991, 293–310. Chicago: University of Chicago Press. Print.

Ho, Simon S.M. Applied Ethics & Social Responsibility. Journal of Business Ethics, 2015, journal number 13520. Print.

Jones, T. M. Corporate Social Responsibility Revisited, Rede?ned. California Management Review, 1980, 22(2), 59–67. Print.

Jun, Woo and Chris Rowley. Change and continuity in management systems and corporate performance: Human resource management, corporate culture, risk management and corporate strategy in South Korea. Business History Volume 56, Issue 3, 2014. Print.

Kitzmueller, Markus and Jay Shimshack. Economic Perspectives on Corporate Social Responsibility. Journal of Economic Literature 2012, 50:1, 51–84. Print.

Leavitt, T. The Dangers of Social Responsibility, Harvard Business Review 36 September–October, 1958, 41– 50. Print.

Liu, Yong. Investigating External Environmental Pressure on Firms and Their Behavior in Yangtze River Delta of China. Journal of Cleaner Production, 2009 17 (16): 1480–86. Print.

McWilliams, Abigail & Donald Siegel. Corporate Social Responsibility: A Theory of the Firm. Perspective. Academy of Management Review, 2001, Vol. 25 No. 1, 117-127. Print.

Scott, W. R. Organizations: Rational, natural, and open systems (5th ed.). 2003. Upper Saddle River, NJ: Prentice-Hall. Print.

Teece, D. J., G. Pisano and A. Shuen. Dynamic Capabilities and Strategic Management. Strategic Management Journal, 1997, 18(7), 509–533.

Votaw, D. Genius Became Rare: A Comment on the Doctrine of Social Responsibility Pt 1’, California Management Review, 1972, 15(2), 25–31. Print.

Wartick, S. and P. L. Cochran. The Evolution of Corporate Social Performance Model. Academy of Management Review, 1985, 10(4), 758–769.