Strategic Corporate Social Responsibility 3e
David Chandler and William B. Werther, Jr.
1
SECTION II
TEACHING RESOURCES BY CHAPTER
Part I: Overview and Intent
Section II of this Instructor’s Manual provides “Faculty Notes and Discussion” by
chapter, concluding with answers to the end-of-chapter “Questions for Discussion and Review.”
We begin with the overview of Part I of Strategic Corporate Social Responsibility, which
highlights the scope of corporate social responsibility (CSR).
Chapter 1 identifies the different viewpoints of CSR and then shows why CSR is of
growing concern to business students and leaders. Though businesses are economic entities that
exist to further the financial interests of their owners, this is not their sole concern. Without the
balance of a multi-stakeholder approach, firms can become exploitive, anti-social, and corrupt—
losing legitimacy and their ability to pursue the owners’ economic goals over the long term.
Arguments for and against CSR are presented along with trends that are propelling CSR to a
greater prominence in corporate and strategic thinking.
Chapter 2 puts CSR into a strategic context by explaining resource and industry
perspectives on strategy. Then the chapter turns to the stakeholder perspective and the need to
identify and prioritize them. In particular, this chapter presents the stakeholder model around
which the book is structured. The remainder of the chapter looks at integrating strategy and CSR,
creating a strategic CSR perspective that is needed for long term sustainability.
Chapter 3 asks the provocative question, “How much does CSR matter?” Who is
responsible for CSR? The organization? Stakeholders? To create a contrast around this question,
the views of Milton Friedman and Charles Handy are presented. This discussion is followed by
an extended look at Walmart, its varying impact on different constituents, and its tentative steps
in relation to CSR.
Chapter 4 introduces the idea of strategy through a strategic lens. The chapter argues that
strategy is likely to be both more effective and more sustainable if strategy passes through a CSR
filter that better attunes the firm to its environment and its constituents. Then, the driving social-
technological and economic forces behind the growing importance of CSR are discussed.

Strategic Corporate Social Responsibility 3e
David Chandler and William B. Werther, Jr.
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Chapter 5 emphasizes the integration of CSR into both strategy and, ultimately, the
culture of the organization. This cultural integration creates a sustainable CSR perspective
through the firm. The bulk of the chapter then addresses the implementation of CSR in the short
to medium term and in the long-run.
CHAPTER 1
WHAT IS CSR?
FACULTY NOTES AND DISCUSSION
Organizations are the collective structures used by people to pursue common goals. In
general, these organizations come in three broad forms: Businesses, governments, and nonprofits
(or Non-governmental Organizations, NGOs). Businesses exist to pursue profit with the intention
of making their owners wealthy; governments (at least in democratic societies) respond to the
will of their citizens; and, nonprofits or NGOs meet the needs of people in society when the
profit motive of business or the political will of government is lacking.
Though organizations are not legally compelled to be “socially responsible”—even if
society could agree on a universal definition—societal expectations become embodied in
tradition, laws, agency interpretations, and court rulings that form a set of expectations. Thus, we
arrive at two central questions of concern to CSR:
• What is the relationship between a business and the societies within which it
operates?
• What responsibilities do businesses owe society to self-regulate their actions in
pursuit of profit?
These questions grow in importance as businesses grow in importance to society.
Ultimately, it is business organizations that provide the most basic necessities of societal
survival, including much of the wealth that funds government and nonprofit activities. Because

Strategic Corporate Social Responsibility 3e
David Chandler and William B. Werther, Jr.
3
of this broad reaching impact of business corporations, CSR has emerged as a study to better
understand the answers to the above questions.
Simply put, the narrow view suggests that businesses are only obligated to create wealth
for their owners. A broader view expects them to create wealth for owners, but to do so in ways
that are deemed acceptable to society. CSR covers the relationship between corporations (or
other large organizations) and the societies with which they interact.
The social responsibility of business encompasses the economic, legal, ethical, and
discretionary expectations that society has of organizations at a given point in time.1
Archie B. Carroll, 1979
CSR is, therefore, a fluid concept. Importantly, it is both a means and an end. It is an
integral element of the firm’s strategy, a way of maintaining its legitimacy in the larger society
by bringing stakeholder concerns to the foreground. At the same time, a firm’s CSR reflects how
well it is able to navigate stakeholder concerns while implementing its business model. CSR
means valuing the inter-dependent relationships that exist among businesses, their stakeholder
groups, the economic system, and the communities within which they exist. CSR is a means of
discussing the obligations a business has to its immediate society; a way of proposing policy
ideas on how those obligations can be met; as well as a tool by which the mutual benefits for
meeting those obligations can be identified. Simply put, CSR addresses a company’s
relationships with its stakeholders.
Corporate Strategy and CSR
CSR is (or, at least, should be) an integral part of an organization’s strategy. Strategic
plans and their implementation must past through a CSR Filter to understand the likely impact on
multiple stakeholders. Otherwise, reputation, legal, financial, or other consequences may impede,
even undermine the organization’s plans. And, when perceived violations of societal
expectations occur—even when corporate actions are “legally permissible”—actions against the
1 Archie B. Carroll, ‘A Three-Dimensional Conceptual Model of Corporate Performance,’ Academy of Management
Review, 1979, Vol. 4, No. 4, p500.

Strategic Corporate Social Responsibility 3e
David Chandler and William B. Werther, Jr.
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firm may range from legislative or court actions (think of the Standard Oil Trust) to protests from
Greenpeace or other activist groups.
What CSR Is and Is Not
CSR embraces the range of economic, legal, ethical, and discretionary actions and
obligations that directly or indirectly affect the future economic performance of the firm (see
Figure 1.1). Carroll suggests a hierarchy wherein discretionary issues that appear abusive may
become ethical considerations. Allowed to continue long enough or over a large enough number
of potential claimants and ethical issues may become legal ones. At the extreme, this hierarchy
of CSR issues can eventually lead to economic impact, whether by formal societal restraints
(such as laws or regulations) or less formal consumer boycotts.
Legal compliance is a necessary minimum condition for CSR. But, legal compliance does
not assure that the firm’s actions will be seen as ethical or proper. Often, actions that were
legal—even socially tolerated—may become unacceptable, even illegal, in a different time or
place. For example, consider the history of race- or gender-based discrimination. Both were
widely accepted by society (though certainly not by those affected!) in the 1940s and 1950s. But,
with the greater political activism of later years, these widespread practices were increasingly
seen as unethical, until eventually they became illegal through legislative actions and court
interpretations.
The Evolution of CSR
CSR is not a new or sudden phenomenon. Early writings in the Middle East and China at
the dawn of written history report standards, expectations, and rules for commerce. Consumer
boycotts appeared in England, for example, in the 1790s in response to slave-harvested sugar,
actions deemed unacceptable by segments of society. Even today, one can hardly pick up a
newspaper without reading about some CSR-related complaint about businesses, ranging from
the serious ecological damage of oil spills to more mundane matters.
TEACHING NOTE: It may be a useful exercise to ask students to identify current
issues from local newspapers, the Wall Street Journal, or other business periodicals as the
basis of a classroom discussion that illustrates the timeliness and immediacy of CSR.

Strategic Corporate Social Responsibility 3e
David Chandler and William B. Werther, Jr.
5
In the United States, The Alien Tort Claims Act allows foreign nationals to sue in U.S.
courts for the overseas actions of U.S. firms or their partners. This 1789 law is being used to try
and hold U.S. firms accountable for the actions of others, as when a U.S. firm partners with a
foreign firm that violates human rights. Thus, what may be legal—even encouraged—in one
country, may bring legal repercussions in another.
The Cultural and Contextual Assumptions
Democracy and economics are two major variables that influence CSR. Democracy is,
perhaps, obvious. People in North Korea, Cuba, or other repressive, non-democratic societies
have little recourse to protest the CSR-related actions of organizations, domestic or foreign. Even
in democratic societies, the demands of CSR may be constrained by economic reality. Rich
societies can afford to “tax” themselves with demands for clean air, for example, even if the
result is that automobiles cost hundreds of dollars more than they would without clear air
devices. In poor societies, however, even though people value clean air, the imposition of clean-
air rules may mean the loss of jobs, especially among marginal firms that lack the resources to
comply with CSR concerns that evolve from ethical to legal.
A Moral Argument for CSR
CSR emerges from the interaction and interdependence between for-profits and society. It
is shaped by individual and societal standards of morality, ethics, and values that define
contemporary views of human rights and social justice. Thus, to what extent does a business
have an obligation to re-pay the debt it owes society for its continued business success?

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Strategic Corporate Social Responsibility 3e
David Chandler and William B. Werther, Jr.
6
TEACHING NOTE: Two questions from the text may be worth discussing at this
juncture:
• To what extent does a business have an obligation to re-pay the debt it owes
society for its continued business success?
• What responsibilities do businesses face in return for the benefits society grants?
As an academic field, CSR represents an organized approach to answering these
questions. As an applied discipline, it represents the extent to which businesses need to deliver
on their societal obligations as defined by society.
A Moral Argument for CSR
CSR broadly represents the relationship between a company and the principles expected by the
wider society within which it operates. It assumes businesses recognize that for-profit entities do
not exist in a vacuum and that a large part of their success comes as much from actions that are
congruent with societal values as from factors internal to the company.
Because society’s contributions make businesses possible, those businesses have an
obligation back to society to operate in ways that are deemed socially responsible and beneficial.
Without the larger society, there would be no businesses. So, some argue that society has the
right to define the terms of the relationships among its players.
A Rational Argument for CSR
As argued in the text:
The loss of moral legitimacy can lead to the countervailing power of social activism,
restrictive legislation, or other constraints on the firm’s freedom to pursue its economic

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Strategic Corporate Social Responsibility 3e
David Chandler and William B. Werther, Jr.
7
arguments. Where compliance with moral expectations is based on highly subjective
values, the rational argument rests on sanction avoidance.
By not adopting a proactive (or at least accommodative) approach to fair treatment,
businesses can find their behavior suddenly (and expensively) curtailed through legislation,
judicial and agency interpretations, and penalties, because of a failure to interpret the evolving
social and business environment.
A Rational Argument for CSR
CSR is a rational argument for businesses seeking to maximize their performance by minimizing
restrictions on operations. In today’s globalizing world, where individuals and activist
organizations feel empowered to enact change, CSR represents a means of anticipating and
reflecting societal concerns to minimize operational and financial constraints on business.
Ultimately, the Iron Law of Social Responsibility suggests that in a free society
discretionary abuse of societal responsibilities leads, eventually, to mandated solutions. That is,
in a democratic society, power is taken away from those who abuse it.
An Economic Argument for CSR
Summing the moral and rational arguments for CSR leads to an economic argument. To
incorporate CSR into operations offers a potential point of differentiation and competitive market
advantage upon which future success can be built, besides avoiding moral, legal, and other
sanctions.
An Economic Argument for CSR
CSR is an argument of economic self-interest for business. CSR adds value because it allows
companies to reflect the needs and concerns of their various stakeholder groups. By doing so, a
company is more likely to retain its societal legitimacy and maximize its financial viability over
the medium- to long term. Simply put, CSR is a way of matching corporate operations with

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Strategic Corporate Social Responsibility 3e
David Chandler and William B. Werther, Jr.
9
Maltreatment of workers, defective products, and related problems can tarnish, even destroy, a
brand and the investments made to create it.
Perhaps most interesting, these trends are virtually certain to continue and will make
attention to CSR increasingly important for both consumers and corporations.
Beyond Trends
Admittedly, arguments against CSR exist. These will be explored in Chapter 3, “How
Much Does CSR Matter?” But, first, we examine “Corporate Strategy: A Stakeholder
Perspective” in Chapter 2.

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Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation Third Edition Solution Manual

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