Corporate citizenship designates the activities and organizational processes adopted by businesses to meet their social responsibilities.
The meaning of corporate citizenship
The “corporate citizen” concept refers to a type of company that intends to put the interest of society (in the broad sense) at the same level as its own interest. The concept of corporate citizenship defines the company as a political actor with a legitimate role to play beyond the economic and financial sphere. The company assumes the economic, legal, ethical and discretionary responsibilities established by its stakeholders.
Many companies now use corporate citizenship as a way to support society. Growing social involvement of corporations complete the government spending on social welfare through their philanthropy and CSR programs. Moreover, customers and investors are paying increasingly attention to environmental, social and governance practices of companies. Having a corporate citizenship policy provides employees commitment and customer loyalty which have a direct impact on the business performance of the company.
The stage of the development of a corporate citizenship
The five stages of the development can be defined as the following:
In this base stage, citizenship activity is episodic, and its programs are undeveloped. The reasons are usually straightforward: scant awareness of what corporate citizenship is all about, uninterested or indifferent top management, and limited or one-way interactions with external stakeholders, particularly in the social and environmental sectors.
At this second stage, top management often wakes up to society’s increasing expectations and begins to adopt a new outlook on the company’s role and responsibilities. Companies will often develop policies that promote the involvement of employees and managers in activities that exceed rudimentary compliance to basic laws. Citizenship policies become more comprehensive in the innovative stage, with increased meetings and consultations with shareholders and through participation in forums and other outlets that promote innovative corporate citizenship policies.
During this stage of development, a company moves forward in two ways: 1) broadening its agenda by embracing a more comprehensive concept of citizenship and 2) deepening its involvement as a top leader and assuming more of a stewardship role. High levels of innovation and learning mark this stage. One spark is usually increased consultation with a diversity of stakeholders that involve more open, two-way communication and mutual influence. Another feature is contact with leading-edge companies and experts through forums, conferences, and professional meetings.
One of the developmental challenges for companies at the Integrated Stage is to progress from coordination to collaboration in driving citizenship efforts. Select firms are making moves in this direction. Boards of directors are increasingly setting standards and monitoring corporate performance in these arenas. An analysis of the Dow Jones Sustainability Index reveals that roughly one in five of its member companies have board-level citizenship committees. These include risk management systems, stakeholder consultation schemes, sustainability training for managers and employees, issues management frameworks, and the like.
At this stage, companies rarely operate solo in the social and environmental fields. They work closely with other businesses, community groups and NGOs to tackle problems, reach new markets and develop local economies.
Corporate social responsibility (CSR)
The concepts of corporate social responsibility (CSR) and corporate citizenship are often used interchangeably. However, corporate social responsibility is a concept of corporate citizenship that can take different forms depending on the company and sector. Companies can benefit from philanthropy, CSR programs and volunteer efforts while strengthening their own brands.
Examples of corporate citizenship
Hewlett Packard, for example, has invested in digital communities in Sao Paulo, Brazil, in villages in India and South Africa, and in inner-city Baltimore to create new market opportunities and promote community economic development. On the business side of the deal, HP has partnered with local business leaders, community groups, and NGOs to create web-based services for education, healthcare, and agriculture needs. These efforts, led by the company’s emerging market solutions team, aim to give HP “first mover” skills, credibility, and advantage in reaching other emerging markets. On the citizenship side, this is all part of HP’s “e-inclusion” strategy to reduce the digital divide.
Ben & Jerry’s and Patagonia are example among many companies that make social and environmental activism central to their mission and appeal to consumers. Ben & Jerry’s credo speaks of an economic, product, and social mission and its product manufacture, packaging, and marketing all designed for green consumers. The cause-related marketing of the eco-friendly products of Patagonia give credence to the maxim that you can both “do good” and “do well.”