Cover Letter
STUDY GUIDE 25:
THE COMPLEX RELATIONSHIP BETWEEN CORPORATE SOCIAL RESPONSIBILITY AND ORGANIZATIONAL BEHAVIOR
The relationship between corporate social responsibility (CSR) and organizational behavior is complex. An examination of this relationship yields two major perplexing conclusions:
1] Companies that engage in costly CSR programs are not necessarily "rewarded" in terms of increased market share. In fact, the opposite is true. As explained, British research shows that while around 30% of consumers claim to be "ethical" consumers, few services or products which make "ethical" claims have a market share greater than 3%. Most enjoy a market share between 1.5% and 3%. Thus it is clear that consumer purchase behavior is not influenced by corporations' CSR behavior. Consumers usually are incensed by and demonstrate against what they perceive to be irresponsible CSR behavior, but, in the main, are not willing to pay more for CSR goods and services.
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2] On the other hand, companies are "punished" if they do not implement a CSR program. The "punishment" takes the form of consumer boycotts. This happens to corporations periodically. The Nike case has become a classic example of this. In the Nike case, the sports footwear manufacturer several years ago was criticized for sweatshop conditions at its Asian contractors' factories. Nike initially dismissed the criticisms. It asserted that because it did not own its contractors' factories, workplace standards inside their factories were not Nike's responsibility. In the face of a worldwide boycott campaign by consumers and NGOs that Nike had "become synonymous with slave wages, forced overtime, and arbitrary worker abuse," Nike, in a remarkable reversal, stated that three Indonesian suppliers were to be terminated over workplace conditions and stated: "Good shoes come from good factories and good factories have good labor relations." Today, Nike
THE COMPLEX RELATIONSHIP BETWEEN CORPORATE SOCIAL RESPONSIBILITY AND ORGANIZATIONAL BEHAVIOR
The relationship between corporate social responsibility (CSR) and organizational behavior is complex. An examination of this relationship yields two major perplexing conclusions:
1] Companies that engage in costly CSR programs are not necessarily "rewarded" in terms of increased market share. In fact, the opposite is true. As explained, British research shows that while around 30% of consumers claim to be "ethical" consumers, few services or products which make "ethical" claims have a market share greater than 3%. Most enjoy a market share between 1.5% and 3%. Thus it is clear that consumer purchase behavior is not influenced by corporations' CSR behavior. Consumers usually are incensed by and demonstrate against what they perceive to be irresponsible CSR behavior, but, in the main, are not willing to pay more for CSR goods and services.
1
2] On the other hand, companies are "punished" if they do not implement a CSR program. The "punishment" takes the form of consumer boycotts. This happens to corporations periodically. The Nike case has become a classic example of this. In the Nike case, the sports footwear manufacturer several years ago was criticized for sweatshop conditions at its Asian contractors' factories. Nike initially dismissed the criticisms. It asserted that because it did not own its contractors' factories, workplace standards inside their factories were not Nike's responsibility. In the face of a worldwide boycott campaign by consumers and NGOs that Nike had "become synonymous with slave wages, forced overtime, and arbitrary worker abuse," Nike, in a remarkable reversal, stated that three Indonesian suppliers were to be terminated over workplace conditions and stated: "Good shoes come from good factories and good factories have good labor relations." Today, Nike