What is a company€™s responsibility to society? Proponents of the modern view of stakeholder theory argue that companies have a social obligation to operate in ethically, socially, and environmentally responsible ways. This active approach is referred to as corporate social responsibility (CSR) or corporate citizenship. The idea of corporate citizenship is that a firm should conduct its business in a manner that meets its economic, legal, ethical, and philanthropy expectations.
The economic responsibilities have the highest priority. A firm must be efficient and survive over the long term in order to be useful to society. It must also execute its business activities in a legal and ethical way. These responsibilities are those over and above the ones codified in laws and are in line with societal norms and customs. They are expected, by society even though they may be ill-defined. This could include things such as environmental ethics. Philanthropy is the least important priority. The corporate citizenship concept focuses more on engagement with stakeholders to achieve mutual goals. Some corporations have responded to this trend by including CSR-oriented statements in their corporate goals. These statements recognize that CSR has value in a code of conduct or ethics, a commitment to local communities, an interest in employee health and education, an environmental consciousness, and recognition of social issues (e.g. diversity, social fairness, etc.). In October of 2006, The Conference Board surveyed large U.S. firms on corporate citizenship issues, 198 firms responded. When asked about the top 3 CSR topics receiving attention at the company, the results were:

What is the motivation for these companies to fund CSR programs? When asked, 92 percent stated that enhancing corporate reputation was very important. Other popular responses were for recruiting and retention (78 percent), reducing risk (65 percent).
a. Wal-Mart generates over $11 billion in profits per year and is the largest corporate employer in the U.S., with 1.4 million employees. But Wal-Mart also seems to be coming under increasing pressure from different social groups for its business practices. Community groups have worked to keep Wal-Mart from coming to their towns. Wal-Mart claims that its low prices help everyone in the community. Also by giving over $270 million to charity last year, it is the largest corporate cash contributor in the United States. Go to walmartwatch.org and describe the current stakeholder problems with Wal-Mart. Also go to www.walmart.com and describe what Wal-Mart is doing to engage these stakeholders. What is your opinion?
b. What activities might companies engage in to satisfy the four components of corporate citizenship: economic, legal, ethical, and philanthropy?
c. By embracing citizenship goals, assess whether corporations can insulate themselves from many activist actions, thereby avoiding negative mediaevents.

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