Faculty
Professor Paul A. Argenti
Objectives
Corporate Responsibility (CR) focuses on how organizations respect society’s interests by taking responsibility for the effect their activities have on key constituencies such as customers, employees, shareholders, communities, and the environment in all parts of their operations. This concept often extends beyond obligations to comply with regulations alone and finds organizations taking further steps voluntarily to improve the quality of life for employees and their families as well as for the local community and society at large.
The scale and nature of the benefits from such activities for an organization can vary depending on the business, and are difficult to quantify, although there is a large body of literature exhorting business to adopt measures beyond just financial. Some studies have even found a correlation between social/environmental performance and financial performance. However, businesses most likely are not looking at short-run financial returns when developing their CR strategy. The environmental, social, and governance (ESG) issues CR encompasses are increasingly important nonfinancial factors to ensure the long-term sustainability and success of corporations.
The definition of CR (and even the name to describe it) used within an organization can vary from the strict "stakeholder impacts" definition used by many advocates and will often include philanthropy and volunteering. CR may be based within the HR, business development, or corporate communication departments of an organization.
The Business Case for CR
The business case for such responsible behavior within a company, however, will likely rest on one or more of these arguments:
Human resources
A CR program can be used as an aid in employee recruitment and retention, and can also help to improve the perception of a company among employees, particularly when they can become involved through payroll giving, fundraising activities, or community volunteering.
Reputation risk management
Managing reputational risk is a central part of many corporate communication strategies today. Reputations that take decades to develop can be ruined in days through incidents such as corruption scandals or environmental accidents. These events can also draw unwanted attention from regulators, courts, governments and media. Building a genuine culture of 'doing the right thing' within a corporation may be a way to offset these risks.
Brand differentiation
In crowded marketplaces, companies strive for a unique selling proposition that can separate them from the competition in consumers’ minds. CR can help build customer loyalty based on distinctive ethical values. Several major brands, such as Stonyfield and The Body Shop (which we covered in AGM) are built on such ethical values.
License to operate
Corporations want to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps they may be able to persuade governments and the wider public that they are taking current issues like health and safety, diversity, or the environment seriously and so avoid intervention.
Debates About CR
Corporate responsibility as a practice has been an issue of some debate among critics from different perspectives. Some, for example, claim that CR cherry-picks the good activities a company is involved with and ignores the others, thus 'green washing' their image as a socially or environmentally responsible company. Others argue that it inhibits free markets. As Milton Friedman stated, there is no place for social responsibility as a business function. Critics of CR from both sides attribute other business motives, which companies would dispute. For example, some believe that CR programs are often undertaken in an effort to distract the public from the ethical questions posed by their core operations. And finally, critics who believe that CR is self interested argue that the only reason corporations put such programs in place is for the commercial benefit they see in raising their reputation with the public or with government. They suggest a number of reasons why self-interested corporations, solely seeking to maximize profits are unable to advance the interests of society as a whole.
Through cases focusing on the social, reputational, and environmental consequences of corporate activities, students will learn how to make difficult choices, promote responsible behavior within their organizations, and understand the role personal values play in developing responsible corporate behavior for both the organizations they will work for and themselves.
Requirements
Students are required to read and discuss the cases in study groups prior to class to get the most out of each session. You will need to notify me about your study group (no less than three, and no more than five per group) by the second week of class.
Materials
All of the cases and other readings for this course will be distributed at registration. Additional materials may be distributed through Tuck Streams from time to time.
Tuck Honor Code
I trust you to behave honorably. The final exam is an individual effort. By individual effort, I mean no one else is to read, listen to, comment on, proofread, or even type your exam.
Attendance Policy
I also expect you to attend every class session. See page 23 of the MBA Student Handbook if a family emergency or personal illness precludes you from attending class. I will also make some exceptions for important interviews and family events. If you are unprepared for class, please tell me beforehand. I like to challenge students, but have no interest in embarrassing you.
Grading
The course grade will be based on class participation (50 percent) and a final exam (50 percent). Participation is evaluated on the basis of quality and frequency. We will
discuss the criteria for effective participation in more detail during the first class session.
Schedule
Thursday 03/26
Argenti, Chapter 5, "Corporate Responsibility," Corporate Communication (CC)
Starbucks Coffee Company (Tuck 1-0023)
Study Questions:
What are the tradeoffs that Orin Smith must consider to make the right decision?
What role does the NGO play in this decision?
How do you judge whether the quality issue is a red herring or not in this case?
Friday 03/27
Martin, "The Virtue Matrix: Calculating the Return on Corporate Responsibility," Harvard Business Review
Porter and Kramer, “Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility,” Harvard Business Review.
Case: Malden Mills (A) (HBS 9-404-027)
Study Questions:
What is your assessment of Aaron Feuerstein? Does he deserve to be hailed as a hero?
What, if anything, could Feuerstein have done differently that would have averted his company’s bankruptcy?
Should Malden Mills be allowed to come out of bankruptcy? Would you favor a Chapter 7 liquidation or a Chapter 11 reorganization?
Why were the politicians so supportive of Feurestein’s efforts?
What are the social consequences of plant closures and the elimination of manufacturing job? Does it make sense for policy makers to try to stem this tide?
Wednesday 04/01
"Why sustainability is still going strong," Daniel Vermeer and Robert Clemen, Financial Times (February 12, 2009)
Case: Wal-Mart's Sustainability Strategy (Strategy Graduate School of Business, OIT-71)
Study Questions:
Do Wal-Mart’s environmental stewardship efforts compensate for its troubles/shortcomings in other areas of corporate responsibility?
Wal-Mart’s customers generally are unwilling to pay a premium for environmentally-friendly products. In light of this, how is the company deriving business value from its sustainability strategy
How can Wal-Mart ensure that it keeps deriving commercial value through sustainability?
Imagine that you are Andy Ruben or Tyler Elm, evaluating the progress of the electronics, seafood, and textiles networks. Which networks have been most successful? What factors explain the success (or lack of success) of these initiatives?
Wednesday 04/08
Responding to Market Failures (HBS 9-396-344)
Maignan, “Consumers’ Perceptions of Corporate Social Responsibilities: A Cross-Cultural Comparison,” Journal of Business Ethics.
Case: Royal Dutch/Shell in Nigeria (A) (HBS 9-399-126)
Study Questions:
Why has Shell become the subject of criticism and controversy?
During its time in Nigeria, what, if anything, should Shell have done differently?
What is your appraisal of Shell’s stated business principle of non-interference in political matters?
In Brian Andersen’s position, what would you recommend to Shell’s Committee of Managing Directors regarding the death sentence for Saro-Wiwa and his co-defendants? What, if anything, would you do personally about this matter?
What advice would you give Shell’s leadership going forward? What about the liquefied natural gas project?
Wednesday 04/08
Gordon Peterson, T84, Vice President of CSR, and Beth Holzman, Manager of CSR and Reporting, Timberland Company.
Corporate Responsibility has been the ethos of doing business at Timberland for decades, long before a formal team was established in 2007. Gordon and Beth will discuss how Timberland’s integrated four pillar CR function influences the way business is done across the organization, how unconventional partnerships with suppliers, competitors, and the community advance both CR and business objectives, and the opportunities, challenges, and expectations stemming from being known as a “responsible” business.
Please visit Timberland's web 2.0 platform for stakeholder engagement and CSR reporting. At www.timberland.justmeans.com, you will find an overview of our CSR programs and also our most recent reporting on our social and environmental impacts.
We'd like for you to review and comment on Timberland's Q4 and year end 2008 reports - located on the right side of our homepage. Our CSR disclosure covers our progress against goals such as becoming carbon neutral, creating cradle-to-cradle products, fostering fair, safe and non-discriminatory workplaces, and engaging in community service. Please feel free to comment directly on the report comments page. Your comments will directly contribute to our evolving analysis and strategy!
We've also created a special event page that will allow Tuck students to ask additional questions. This page is available at http://www.justmeans.com/companyevents/334/Timberland-to-visit-Dartmouth-Tuck-MBA-Students.html. For both the reports and this Tuck-designated page, Timberland staff will respond in a timely manner.
Instructions for posting a comment on Just Means
Go to the Timberland Just Means page at www.timberland.justmeans.com and click on the reports on the right hand side of the page that link to our Q4 performance.
When you move through the pop-up windows, you'll see spaces to comment on the material you have reviewed (the actual reports are PDFs).
To post a comment, you will be prompted to create a Just Means user profile. This takes 3 minutes (literally) and will allow you to post comments on our page and all of Just Means.
Enter your name and email address, create a password and then you're done! It would be great to have stakeholders post a picture if possible.
Your comment should show up on the page you were viewing and you'll also be able to log back in and see the dialogue unfold, adding to it as you see fit.
Thursday 04/09
Case: Cipla (HBS 9-503-085)
Study Questions:
What is your assessment of how well the various parties are handling the global AIDS pandemic?
How does Cipla’s business model differ from that of the traditional pharmaceutical companies? What are the key drivers and challenges to Cipla’s success?
In your view, do Cipla’s business practices constitute unfair competition?
What should Dr. Hamied and his company do in response to the challenges they face?
What, if anything, should the following parties do to combat the global AIDS crisis: (1) “Big Pharma”; (2) “rich country” governments; (3) NGOs and non-profits such as the Clinton Foundation?
Wednesday 04/15
"Do not destroy the essential catalyst of risk," Lloyd Blankfein, Financial Times (February 8, 2009)
Case: Executive Pay and the Credit Crisis of 2008 (HBS 9-109-036)
Study Questions:
How did executive compensation contribute to the financial crisis?
What could have compensation committees of affected banks done differently? What risk management elements should have been more closely considered? Could such actions have helped avoid the global credit crisis?
What role did risk-taking incentives play? Should pay packages discourage risk, or is risk-taking an essential part of success in the U.S. and global economy? How will compensation caps impact competitiveness and the fundamental risk-reward relationship?
In light of the credit crisis, should bankers exercise "moral responsibility" and give up their bonuses?
What, in your mind, would be an ideal structure for executive compensation to ensure pay is tied to long-term performance and maximum shareholder value?
Thursday 04/16
Study Questions:
What is the purpose of a for-profit corporation?
For what and to whom is a corporate executive responsible?
Does widespread stock market participation by average Americans require corporations to be more broadly responsible to society?
What happens when the rule-makers (i.e., governments, regulators) can’t keep up with market innovation? Should corporations be responsible for taking the regulatory lead?
Friedman, “The Social Responsibility of Business is to Increase its Profits,” New York Times
Handy, “What’s a Business For?” (HBR R0212C)
Wednesday 04/22
Parable of the Sadhu (HBR 97307)
McEwan, “Us or Me,” Enduring Love
Study Questions:
McCoy says he is “haunted” by the decision made on the mountain. Should he be?
What accounts for the decision that was made?
What accounts for the outcome in “Us or Me”?
What do these stories teach about leadership and personal responsibility?
Wednesday 04/22
Friday 05/01
Exam
