Good Corporate Citizenship Is a Fundamental Business Practice

By Verschoor, Curtis C. | Strategic Finance, March 2006 | Go to article overview

Good Corporate Citizenship Is a Fundamental Business Practice


Verschoor, Curtis C., Strategic Finance


One of the most extensive studies of the perspectives of U.S. business leaders on corporate citizenship and the role of private business in society has been completed. A joint effort of The Center for Corporate Citizenship at Boston College and the U.S. Chamber of Commerce's Center for Corporate Citizenship, the research report is titled The State of Corporate Citizenship in the U.S.: Business Perspectives in 2005. The work was produced in cooperation with the Hitachi Foundation and updates a similar effort from 2003.

The survey instrument was sent to approximately 24,000 members of the U.S. Chamber and the Boston College Center, and it generated 1,189 responses from companies of various sizes and industries. The research design oversampled large businesses in order to provide sufficient responses for separate analysis. The inclusion of members of the Boston College Center in the survey population also skews the results toward larger firms. As the goal of the Center is to "help business leverage its social, economic, and human assets to ensure both its success and a more just and sustainable world," companies having an interest in responsible business are likely to be overrepresented. Yet the findings are still remarkable in terms of the strength of the convictions of respondents. Focus groups provided additional insights into the motivations, challenges, and priorities of businesses across the country.

For purposes of the study, the authors define corporate citizenship as the commitment that a corporation makes to accomplish the following goals:

1. Minimize risks by working to decrease the negative consequences of corporate activities on all stakeholder groups.

2. Maximize benefits by contributing to societal and economic well-being.

3. Be accountable and responsive to stakeholders, building understanding of the progress and setbacks that result from efforts to operate ethically.

4. Institutionalize and integrate core values into operations. The findings of the 2005 study of the state of corporate citizenship include:

* 92% of respondents believe that many companies do a great deal more for their communities than is talked about or known.

* While 81% believe that corporate citizenship needs to be a priority for companies today, 80% agree it should be completely voluntary and not enforced through additional laws and regulations.

* 69% believe the public has a right to expect good corporate citizenship.

* 64% believe that corporate citizenship makes a tangible contribution to the bottom line.

Among large corporations, the portion of all companies having the above beliefs is even larger, ranging from 84% to 98%.

The involvement of private companies in socially related issues includes environmental protection, support of education, and economic development in poor communities. Large companies are likely to have a more expansive definition of their role in society and believe that human capital issues are most urgent. Large companies focus in particular on the role of business in supporting the health and safety, development, loyalty, diversity, and civic engagement of their employees. Ninety-eight percent of executives from large companies say their company's performance on social issues is important to their employees.

There was significant agreement by a majority of respondents as to how a number of corporate actions were important to the specific role of business in society. It's interesting, yet not unexpected, to note that "operating with ethical business practices" was far and away the action deemed most "critical" by respondents (62%). …

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