A Brief Review of Research in Corporate Social Responsibility at De La Salle University

Transcription

1 A Brief Review of Research in Corporate Social Responsibility at De La Salle University Dr. Benito Teehankee Chair, Management and Organization Department, RVR-College of Business, De La Salle University Vice-chair, CSR Committee, Management Association of the Philippines President, Pambansang Samahan sa Sikolohiyang Pilipino

2 Outline 1. CSR Research at DLSU: Drivers and Impacts 2. The Macro View: The institutional foundations of Philippine corporate social responsibility vision vs. reality 3. The Micro View: Case studies and a theory of the entrepreneurial foundations of corporate social responsibility 4. Directions for Future Research

3 CSR Research at DLSU: Drivers and Impacts Vision-mission a leading learner-centered research university, bridging faith and scholarship in the service of society, especially the poor. Publications Doing Good in Business Matters Essentials of Investments Journal articles CSR Research at DLSU Basis of Philippine CSR vs. Socio-economic Realities Entrepreneurial social responsibility Corporate governance Pharmaceutical marketing ethics Catholic Social Teachings and business practice Leadership Dean Lydia Echauz 1990s Ethics in MBA Dean Philip Juico 2000s Center; 2004 Conference; Aquino professorial chair Teaching Continuing Education Corporate Governance for the Common Good Central Bank Management Skills Enhancement Program Teaching Degree programs BS-ACM, MBA,DBA students Public advocacy Managing for Society Column in Manila Times Securities and Exchange Commission Pharmaceutical and Healthcare Association of the Philippines Management Association of the Philippines United Nations Principles for Responsible Management Education (UN-PRME)

4 The Macro View The institutional foundations of Philippine corporate social responsibility vision vs. reality From: Teehankee, B. (2008). Why should corporations be socially responsible? In V. Santos (Ed.), Doing good in business matters: Frameworks (pp ). Makati: Asian Institution of Management.

5 Institutional Foundations of Philippine CSR

6 The Philippine Constitution on the Social Purpose of Private Property ARTICLE XII: NATIONAL ECONOMY AND PATRIMONY Section 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands.

7 The Philippine Constitution on the Social Purpose of Private Property ARTICLE II: STATE POLICIES Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all.

8 The Philippine Constitution on the Social Purpose of Private Property ARTICLE XIII, SOCIAL JUSTICE AND HUMAN RIGHTS Section 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments.

9 The Purpose of the Corporation The Code seeks to establish a new concept of business corporations so that they are not merely entities established for private gain but effective partners of the National Government in spreading the benefits of capitalism for the social and economic development of the nation. Explanatory Note to The Corporation Code of 1980

10 Figure 1: Net Sales of Top 1000 Philippine Corporations vs. Gross Domestic Product, (Data from Saldaña, 2000) Billion Peso GDP Net Sales Year

11 The Capital Market is Growing Market Capitalization ( in billions) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Year Source: Atty. Francis Lim The Philippine Stock Exchange

12 The Instrumentalization of Labor through Contractualization Cited in ADB Report

13 Compliance with the Labor Code Cited by the Asian Development Bank

14 The Above 30.4% Poverty Below 30.4% Poverty Distribution of Philippine Poverty 2003 From NEDA MDG Report citing NSCB data Philippine Daily Inquirer

15 The deceptive message of economic growth: The growing pizza BEFORE AFTER Ben Ben Juan Juan

16 Highest 10% of families earned 36% of the total family income

17 Philippine Corporations are Mechanisms for Concentrating Wealth for Controlling Families: An Asian Phenomenon

18 FAMILY 60% CORP A 40% Based on Dumlao (2004) PUBLIC A 2.8X 36% 100% 60% B 24% 40% PUBLIC B 100% 22% 60% C 60% 40% PUBLIC C 12.5X 8% 100% 100% 13% Legal cash flow & control; share-ownership D 60% E 40% 40% Effective cash flow PUBLIC D PUBLIC E Effective control

19 The Lopez Group Control of Meralco Based on Saldaña (2000) and Claessens et al. (1999) LOPEZ FAMILY 100% Lopez, Inc. 6.3% 16.4% 2.58X 88.3% Benpres Holding Corporation (majority control) 1.64% Manila Electric Company (minority control) 11.7% 14.76% 37.5% PUBLIC 62.5% First Phil. Holdings Corporation (minority control) Sum of control rights via Benpres & First Holdings Sum of cash flow rights via Benpres & First Holdings = 1.64% % (88.3%X1.64%) + (88.3%X37.5%X14.76%) Legal cash flow & control; share-ownership Effective cash flow Effective control

20 The Social Question: Poverty amidst plenty

21 The Micro-view Case studies and a theory of the entrepreneurial foundations of corporate social responsibility From: Teehankee, B. (2008). Humanistic entrepreneurship: An approach to virtue-based enterprise. Asia-Pacific Social Science Review, 8(1),

22 The Company and its Main Stakeholders Capital commitment Investors Fair & attractive returns Funds Repayment & returns Creditors Taxes, compliance & cooperation Government Legal license, infrastructure support & law enforcement Value through Suppliersproducts and services Fair compensation and development support Oversight Managers Board Performance accountability Community meeting basic needs of members towards integral human development Company Employees Renewal Environment Resources Products & services for human development Purchase & patronage Trustworthy service & behavior Trust Sustenance Renewal Customers Community & Society Current Future

23 Decent Work: The Philippines is a signatory to the International Labour Organization (ILO) agenda 1. Opportunities for work that is productive 2. Opportunities for work that delivers a fair income 3. Security in the workplace 4. Social protection for families 5. Better prospects for personal development and social integration 6. Freedom for people to express their concerns, organize and participate in the decisions that affect their lives 7. Equality of opportunity and treatment for all women and men

24 Trends in Philippine Decent Work

25 Sharing Profits at San Jose Oscar Chan General Manager

26 San Jose Profit Sharing Plan Capital and labor are 50% partners and this justifies a 50% profit share. Before we can declare a profit share, we need to satisfy the maintenance needs of both partners: For employees, there should be a regular salary enough to maintain their physical and mental health. The salary of the employee at the lowest level should however not exceed what is enough to satisfy his daily needs as stated above; otherwise, the 2nd principle will be violated. In a study made several years ago by the University of Asia and Pacific, the monthly living wage for a family of five is around Php 15,000. For capital, an inflation allowance shall be provided equivalent to the inflation rate multiplied by the owner's equity. This inflation allowance shall have to be deducted first before the profit sharing is computed. Source: San Jose Kitchen Cabinets web site

27 San Jose Profit Sharing Plan All employees' benefits such as SSS employer's share, contribution to retirement fund, medical assistance, etc. and other incentives such as sales commission are already considered part of the employee's 50% profit share. These do not form part anymore of the operating expenses. If and when the company incurs a loss or when the employee's benefits exceed the 50% share for the employees in a particular year, the losses (which include the inflation factor) will be a receivable of the company from the employees' profit share in the next profitable year(s). A maximum of 50% of the profit share for distribution shall be used to pay for the losses of the previous year(s). BASIS FOR PROFIT SHARING DISTRIBUTION TO EMPLOYEES: Performance and Job Levels RESULTS: Profitable for all of past 20 years except one year, low turnover Source: San Jose Kitchen Cabinets web site

28 Yolanda Yoling Sevilla, CEO

29 Keeping Employees Informed and Engaged: Monday Morning Assembly Agenda Pananalangin Pagpapasalamat at pag-aaalay Pampagising Pampagising Stretching & aerobics Pagbabalik-tanaw Pagbabalik-tanaw Week review / examen Paglilinaw at pagpapaliwanag Paglilinaw at pagpapaliwanag Week s Priorities Source: Y. Sevilla

30 Dealing with with global competition and business downturns German training for employees on premium leather work to combat cheap substitutes from China Retained earnings as buffer during lean years Rightsized only after retained earnings had been exhausted Voluntary pay reduction as an alternative to rightsizing 1 day leave + 1 day no pay; 20% pay cut for managers Right sizing as the only means for the enterprise to survive Compassionate execution Separation benefits Source: Y. Sevilla

31 A Theory of the Entrepreneurial Foundations of Corporate Social Responsibility Entrepreneur s culture leadership skills H4 Organization s financial viability H5 Entrepreneur s business skills & creativity H3 VIRTUOUS CYCLE H6 H7 Industry and institutional support for ethical business practices H8 Entrepreneur s ethical development and virtues H2 Organization s ethical culture development H1 Employees integral human development Antecedents Process mediators and moderators Outcomes

32 The Spreading of Capitalism s Benefits through Decent Work v v v The Threshold for Integral Human Development vv v v v v v v Philippine society and its members

33 Directions for Future Research 1. The role of Catholic Social Teachings in CSR 2. Transformational practices of business leaders towards CSR