IPD MIDTERM REVIEWER 2018
global reconfiguration of business
I. INTRODUCTION TO PEOPLE
DEVELOPMENT, CORPORATE
RESPONSIBILITY & SUSTAINABILITY
Ø Globalization Forces as the contemporary
Business Environment
- Globalization – process of the flows of
information, products, services, capital and
people across political and economic
boundaries (Daulaire, 1999)
- The integration of network that creates
an environment that can change the way
people interact with one another, in
various aspects of life including politics,
institutions, economy, trade, culture, and
social life.
Ø Globalization
- A term used to describe the world (after
the cold war) becoming more independent
in its economical and informational
dimension
• Roland Robertson – the
understanding of the world and the
increased perception of the world
as a whole
• Martin Albrow and Elizabeth King
– all those processes by which the
people of the world are
incorporated into a single world
society
• Anthony Giddens – the
intensification of social relations
throughout the world, linking
distant localities in such a way
that local happenings are formed
as a result of events that occur
many miles away and vice versa
- The interconnection between the social
and economic relationships and networks
(how they interact on different scales =
scalar in dimension)
- Spatial-Temporal process of change
a. The Shrinking World
• Space is not actually getting
smaller, but the linkages are
getting bigger because of
technology
b. Time-Space Convergence concept
• Trade barriers are removed,
reduces the cost of transmitting
information, and eases the flow of
information
• These changes have led to the
manifested in both physical and
social transformations, in the basic
infrastructure of the production,
distribution, and consumption of
goods
- Positive and Negative effects:
• Proponents: Desirable and
necessary for the good of human
society
• Critics: Detrimental to social
welfare on a global or local scale
- The outcome of the highly competitive
environment can be viewed in two ways:
1. Companies which have the capacity
and resource to join the race are
able to ride on to the pace and
depth of the process
2. Companies which do not have the
capacity, due to the insufficiency
of resources, suffer from decline
of operations, downsized, and
closed, because of incapacity to
compete in the global market
Ø Process of Globalization
- Flows are coming from various sources,
countries, and places driven by
international trade and seeking the
establishment of a global order
- National boundaries collapse
• People, goods, money/capital, and
resources move freely around the
world
- Increase mobility
• Bring harmony and disharmony with
diverse cultures to meet together
in one common space where
differences can intensify, and
displacement may occur when
differences are not settled
Globalization = Trade & Transactions +
Capital movements & investments +
Migration & Movement of people +
Spreading of knowledge
Ø Globalization and Business
- Stiff competition prevails when businesses
meet together in one place
- Effects on the business:
o Removal of trade barriers
o Reduce costs of transmitting
information
 o Global production networks are
managed by multinational
corporations
- Global reconfiguration of business occurs
with changes in the basic infrastructure of
the production, distribution, and
consumption of goods
• Innovative equipment and machines
have changed production systems,
including manufacturing sites and
their geographical locations such
as:
o US or British companies locate
their manufacturing sites in
Vietnam or Thailand
o Some car companies (Mercedes
Benz and Volvo) are
manufactured in China
• Chain commodity production –
where different phases of business
are located in different
geographical sites such as:
o Nike’s research and design are
in the US, raw materials are
from various places, production
is in China, and distribution is
in different countries of the
world
Ø Manufacturing as Enabler
- Business forms have emerged such as:
o Outsourcing jobs and goods
o Chain commodity production
Ø Competitiveness
- The ability of a firm or a nation to offer
products and services that meet the
quality standards of the local and world
markets, at prices that are competitive
and provide adequate returns on the
resources employed or consumed in
producing them
Ø Challenges
a. Anthropic Ecosystems
b. Technological Ecosystems
Ø Trends and Risks
1. Economic
• Socio-economic Inequality
• Structural Unemployment
2. Social
• Migration and Displacement
• Urbanization
• Climate Change
3. Environmental
• Environmental degradation
4. Technological
• Rise of cyber dependency
North America
ü 3. Extreme weather events
ü 4. Cyberattacks – data fraud and
theft
Latin America and the Caribbean
ü 1. Unemployment or
underemployment
ü 2. Failure of national governance –
profound social instability
Europe
ü 1. Fiscal crisis – unemployment or
underemployment
ü 2. Large-scale involuntary
migration
Middle East and North Africa
ü 1. Unemployment or
underemployment
ü 2. Water crises
Sub-Saharan Africa
ü 1. Unemployment or
underemployment and Failure of
critical infrastructure
ü 2. Failure of national governance
Central Asia including Russia
ü 1. Energy price shock
ü 2. Interstate conflict
East Asia and the Pacific
ü 2. Failure of national governance
ü 3. Natural catastrophes
South Asia
ü 1. Unemployment or
underemployment
ü 2. Water crises
ü 3. Extreme weather events
Ø Globalization Activities
- United Nations Millennium Development
Goals (2000)
- UN’s 2030 Agenda for Sustainable
Development (2015)
- Global Competitiveness Report by the
World Economic Forum
• Regional economies – ASEAN
• Stakeholder involvement
II. ETHICS, BUSINESS ETHICS & THE
CONCEPT OF SOCIAL RESPONSIBILITY
Ø Ethics
- Ethics – derived from the ancient Greek
work “ethos” = moral character
 - Inquiry into the nature and grounds of
morality, where the terms morality is
taken to mean moral judgements,
standards, and rule of conduct (Fraedrich
et al, 2012)
- Awareness that one is an intrinsic part of
a social order in which the interests of
the others and one’s own interests are
inevitably intertwined (Ibid, 2012)
Ø Business Ethics
- Business Ethics – the company must follow
the right behavior to benefit the good of
everybody – shareholders, stakeholders,
and the community
- Desire for profit should be equal to the
needs of the stakeholders and society
- Business ethics in organizations requires
principle-based leadership from top
management and purposeful actions,
including planning and implementation of
standards of appropriate conduct, as well
as openness and continuous effort to
provide the organization’s ethical
performance
Top Management (+ leadership)
|
Standards (+ action)
| - Social Responsibility – an ethical theory
Planning and Implementation
- Ethical business standards
è effective and efficient operations
• Effective – targets are met
• Efficient – achieving maximum
produce with the least costs
- The individual decisions of corporate
officials do not remain on the individual
level but consolidate to become the
organization’s values and traditions that
reflect the observation of business ethics
Personal Values
| order of society
Decisions, Actions, Policies of Organization
Ø Operating Units – Most Responsible for
Business Ethics
- Human Resource
ü Role: focuses on organizational
development, including frameworks
to measure and build a positive
culture
ü Focus: employee’s engagement,
retention, diversity, and inclusion
(rather than promoting integrity
explicitly)
- Compliance
ü Role: preventing employees from
committing fraud, corruption, and
other kinds of white-collar crime
ü Focus: consider how to incorporate
“cultures of compliance” (rather
than focusing on the system and
its control processes)
- Sustainability
ü Role: views corporate “values” and
“purpose” as a foundational aspect
ü Focus: drive a common
understanding to what “values”
and “purpose” means
Ø Ethical and Unethical Business Practices
- Accounting Frauds
- Thefts
- Biased Decision Making
• Can lead to business bankruptcies
o Lehman Brothers Scandal
(2008)
o Metrobank Executive
charged with fraud (2017)
Ø Social Responsibility
that embodies norms and standards to
maximize the positive impact and minimize
the negative impacts of business in society
Social
|
Man
|
Actions
|
Norms, Rules, Societal Standards of Behavior
- Seeded from those moral norms of right
and wrong serving as pillars of socially
desired behavior that sustains the social
- Core element: man’s accountability to one
another and to society – on the aspects of
growth and development, not only for its
present members but also towards its
future members
- A concept in Social Philosophy
 Social Philosophy Ø CSR Approaches
| 1. Ethical – companies have a
Social behavior, Interpretations of Society and responsibility for the effects their
Social Institutions actions have on themselves and on the
| environment
Ethical Values 2. Social – companies are “citizens” –
they relate to other citizens such as
Ethics Business Ethics Social the people and communities – they
Responsibility must respond to the expectations and
An individual’s Constitute Expression of demands of these stakeholders and of
sense of right moral principles moral the society in general
and wrong, that guide the obligation, a 3. Strategic – companies are oriented to
observed in behavior of duty to create value for their owners and
behaviors and business and all perform must combine the assumption of their
practices participants activities social responsibility to what is
(shareholders beneficial to presented as their fundamental
and all, especially economic function (as economic
stakeholders) the society institutions)
Employer- Payment of fair Employ disabled 4. Instrumental – companies must
employee wages and people measure the results it achieves and
relationship benefits to show accountability
should be employees
transparent Ø Social Doctrine of the Church
- Social Responsibility can be derived from:
Ø Awareness of Corporate Social Responsibility a. Social relationship that naturally
(CSR) occur in society
- The moral guidance that values provide in b. Experiences of man in everyday
business decision making, which recognizes life
the rights of all business participants to
receive corresponding benefits and fair Social Doctrine of the Church
compensation in return for their |
contribution to business operations Empirical Approach + Metaphysical aspects of
• Examples of companies that Man (inner self)
practice CSR: |
o Toms – One for One Nature of the moral course
campaign (subjectivity of man)
o Energy Development
Corporation – rescuing - The doctrine accounts for social
native tree species responsibility as being an inherent part of
human nature that needs to be preserved
III. THE DOCTRINAL ROOTS OF THE and protected through a respectable and
CONCEPT OF SOCIAL RESPONSIBILITY dignified human life

Ø Traditional Orientation of Business Respect (concern for one another)

- Cut cost = Increase profit |
Social Responsibility
Ø Economic and Social Issues |
- Profit and big government solutions of Concept of being “human”
technical nature, rather than moral |
principles to guide resolution to social Moral core
problems
• Hunger - According to doctrinal literature, social
• Degradation of the environment responsibility is a framework that suggests
• Displacement that an entity, be it an individual or an
• Energy organization, has an obligation to act for
the benefit of the other in a relationship
 • Two greatest commandments:
o Love the Lord your God
with all your heart, soul,
mind and strength
o Love your neighbor as you
love yourself
Ø Caritas Veritate
- An encyclical in 2009 by Pope Benedict
XVI
- The Pope raised his concern with the
problems of global development, which in
his observations addresses primarily
capitalism’s self-serving goals rather than
the common good
- Caritas in Veritate = Charity in Truth
• Love of truth
• Love of others
- The authentic human development that
concerns the whole of the person in every
single dimension
Ø Corporate Social Responsibility in the
Encyclical “Caritas in Veritate”
- It is to invoke good business practices
beneficial to all participants in its
operations, including the protection and
conservation of the environment
- Two allusions to CSR:
• No. 40 – business management
cannot concern itself only with the
interests of the proprietors
(owners), but must also assume
responsibility for all other
stakeholders who contribute to the
life of the business (workers,
clients, suppliers, community)
• No. 45 – the economy needs
(people-centered) ethics in order
to function correctly
Ø Interpretation of CSR in CV
1. CSR is Ethical Responsibility
• Every economic decision has a
moral consequence
• CSR has ethical content that is
accepted by some, not by all
2. Not just any Ethics will do
• It should be people-centered
ethics
3. It is not derived from Abstract Principles
• CSR is not an objective list of
responsibilities established by
society, but are recognized and
assumed by decision-makers of
companies
4. CSR derives from the Firm’s purpose of
objective
• Different types of organizations in
the market = pursuing different
goals with different responsibilities
5. CSR is based on Justice and Charity
• Socially responsible companies run
on ethical lines
• CSR is the manifestation of the
practices of virtues
6. It is Voluntary
• Based on the freedom of the agent
and not subject to the compulsion
of law
7. It is centered on the Human Person
• CSR must be oriented towards the
objective of “the centrality of the
human person”, as to promote the
good of every man
8. It implies a Conception of the Role of
Firms in Society and of the Common Good
• Responsibility of the company to
promote the common good for all
units of society
9. It is not to be identified with Social
Action or Philanthropy
• Virtue Ethics is different from
Philanthropy (promote the welfare
of others by giving generous
amounts of money to good causes)
10. It demands Committed Leaders
• CSR as part of the organizational
and managerial task of owners,
managers, and entrepreneurs
Ø CSR according to the Encyclical
- Business owners enjoy freedom in the
choice of business and its location
- Companies must assume moral
responsibility for all their actions and
omissions, which have ethical content
- Certain objective rules, nature of the
goods sought through the action, and
overall circumstances of time and place
should be recognized and assumed by the
decision-makers of companies, in
accordance with their well-formed
conscience
Ø Social Responsibility of Business towards:
- Shareholders or Investors
- Employees or Workers
- Consumers or Customers
- Government or Administrative bodies
- General Public
- Environment
- Local Community
IV. CSR TOWARDS SUSTAINABILITY
DEVELOPMENT
Ø Corporate Social Responsibility
- The nature of CSR emphasizes more
expected and routine obligations of
sustainable business practices to its
stakeholders and the environment, that
contribute to productivity and reputation
of business
- A concept whereby organizations consider
the interests of society by taking
responsibility for the impact of their
activities on customers, suppliers,
employees, shareholders, communities,
other stakeholders, and the environment
- The way firms integrate social,
environmental, and economic concerns into
their values, culture, decision-making,
strategy, and operations in a transparent
and accountable manner, to establish a
better practice within the firm, create
wealth, and improve society
Ø Difference between Social Responsibility
(as defined by Caritas Veritate and by the
Social Sciences)
- Caritas Veritate – empirical and
metaphysical basis for people development
• Moral core of man + Ethics +
Social Responsibility + Business
Ethics (CSR) + Sustainable
Development
- Social Sciences – empirical basis for
people development
• Ethics + Social Responsibility +
Business Ethics (CSR) + Sustainable
Development
Ø CSR: An overview and new research directions
- Business should have responsibility over its
the stakeholders and shareholders
- Two specific trends in CSR:
a. CSR has become a dedicated
organizational function with clear
reporting lines into senior
executive teams
b. Significant increase in the
involvement of employee
engagement in CSR activities
- Research trends in CSR:
1. Organizing CSR: Moving from
Antecedents and Outcomes to
Processes
• Process studies, an increase in
process-related articles
2. Moving beyond Shareholder Value:
From Financial to Organizational
Performance
• Broder role of business and
organization in the society
3. Unpacking the Dimensions of CSR: From
Aggregate to Specific Dimensions
• Shift from general view of
dimensions to specific
o Environmental views, social
relations
4. CSR as a Global Challenge: From U.S.
only to Non-U.S. based CSR research
• Reflects globalization
Ø CSR – A global view
- Directors all over the world are
questioning whether corporations should
exist solely to maximize shareholder profit
- The call for a “sustainable” approach to
corporate social responsibility globally
- The UN Global Compact – to improve
human rights, labor, environment, and
combat corruption
V. HISTORY OF THE CORPORATION
- From the decision of a group to pool
their resources together
è Launch a chartered venture which
served as the prototype of the
modern corporation
Ø Medieval time
- Corporation - derived from the Latin word
“corpus” = a body of people
- Corporations are entities which carried
business and were subjects of legal rights
Ø Elizabethan Era
- The actual incorporation of business
enterprises began by the mercantilist
policy
• Mercantilist policy – a corporation
should advance a specific public
purpose
Ø English East India Company of London
Ø Changes During the 19th Century
1.
- Adam Smith questioned the old
mercantilist policy
- Followed by Alexander Hamilton (the 1st US
Secretary of Treasury), on the desirability
of a direct tie between business enterprise
and public policy
 2.
- Reformers talked about the issue of
government favoritism, the advantages of
the laissez-faire approach, and the
principle of the right of corporations to
exist
• Laissez-faire approach – belief
that economies and business
function best when there is no
interference by the government
Ø Two views of the Corporation
1. The “corporate person” theory
• The corporation as a distinct
bundle of rights and obligation
• Government has the power to
create corporation implies and
assumes pervasive government
power to regulate corporations
2. The “contract” theory
• Based on the economic theory of
the firm pioneered by Ronald
Coase
• Undercuts the rationale for
applying a lower degree of
constitutional protection to
corporations than to individual
rights
VI. THE MODERN COPORATION AND THE
DEBATES ON ITS MORAL AGENCY
- Corporatism VS Philosophers
- Corporations are legal entities with legal
rights and responsibilities similar to those
of individuals
- A corporation is like a machine with a
structure where procedures and objectives
are pursued for profit single-mindedly
• Milton Friedman – the only
responsibility of business is to
make money for the owners
• Kenneth Goodpaster and John B.
Mathews – the Corporate Internal
Decision-making process (CID)
works like a person, collecting
data, and considers the impact of
corporate actions on the employee
efficiency, productivity, and
environmental impacts.
- Corporations are entities constituted by
human beings, and its operation are by
nature coming from the rationality and
values of their individual members, not
from the corporation itself.
• Thomas Donaldson – enter into the
decision making process and guide
the corporate structure of policies
and rules
• Peter Trench – corporate
objectives and intentions are
enough to make corporations
morally responsible, formulated by
individuals guided by their moral
values
v Solving the Debate
1. To attribute moral agency to
corporations just as we do to individual
persons
2. To realize that many people tend to
escape personal responsibility
3. To submerge the issue into the
internal decision making of the modern
bureaucracy
Ø Diffusion of Responsibility
- Shared accountability cannot singularly
fall on an individual person
Ø A Redefinition of Business Orientation: From
Profit to Multiple Perspectives
- Capitalist Orientation = Profit
• Meeting the demands of the
market = Overexploitation of
natural resources
- Participants that contribute to business
success:
a. The success in creating new wealth
comes from primary constituents
b. Its openness to competitions and
innovation to heighten market gains
and win customers
- Reasons for the call for a redefinition
a. Business size and socioeconomic power
have become influential in accessing
vast resources that has broaden their
accountability (to the stakeholders and
society, including the natural
environment – where resources are
drawn)
b. The old model that shareowner
interests should dominate those of all
other constituents is unrealistic and
unethical.
Ø Collective Responsibility of Corporations
1. Responsible Agency VS Personhood
2. Corporations as Organizational
Collective Agents
3. Objections to the claim that
corporations are responsible agents
 3.1. Corporations are not agents –
any agency they appear to
have is fully reducible to the
agency of the individual human
beings who are their members.
3.2. Corporate responsibility dilutes
or erases individual
responsibility – based on the
notion that there are 2 levels
of intention, action and
responsibility to attend to in a
corporate context: corporate
level and individual level.
3.3. Corporate criminal liability
condemns some for the actions
of others – condemning
corporations is not the same as
condemning every person that
works there
3.4. You cannot punish a guilty
corporation without also
punishing innocent people –
people a corporation
3.5. “Personhood” affords to
corporations too many
protections and rights
v Accept without hesitation the idea that
corporations are moral agents with genuinely
moral, not just legal responsibilities
VII. STAKEHOLDER THEORY
- Stakeholder – any group or individual who
can affect or be affected by the
achievement of the organizational
objectives
• Shareholders, customers,
employees, suppliers, and
community
- Shareholders – they partly own the
corporation, hence are favored in the
distribution of returns
- Non-shareholders – employees and
customers
Business = Owners + Managers + Workers
Customers + Suppliers + Community
Ø The Principle of Stakeholder Recourse
- Freeman – stakeholders may bring an
action against the directors for failure to
perform the required duty of care
- Two categories of stakeholders
a. Primary – those whom the
company works with directly to
produce goods and services.
o Owners
o Employees
o Suppliers
b. Secondary – those groups affected
directly and indirectly by the
company’s primary activities and
decisions.
o Consumers
o Local community
- Owners
ü Role: have the financial stake in
the form of stocks, bonds, and
etc.
ü Expectation: some kind of
financial return that generally
has additional interest than the
principal investment given to the
company
- Employees
ü Role: have specialized skills which
they contribute to the company
ü Expectation: job security, wage,
benefits, safe workplace, and a
meaningful work to enjoy
ü Concern: their jobs and economics
of their households
- Suppliers
ü Role: provide the raw materials
which determine the final quality
and price of the product
ü Expectation: receive fair value in
their transactions
- Customers
ü Role: buy and provide the revenue
for the company in exchange for
quality goods
ü Concern: for the company to
provide safe and quality goods, as
customer satisfaction can increase
the trust of people towards the
corporation
- Local community
ü Role: provide the space (including
natural resources and manpower)
the company needs in order to
build its business
ü Expectation: when a company
settles in a site, they naturally
nurture a partnership with the
community through provision of
employment, services, and
community projects that will help
improve the quality of life of
employees and the residents
Ø The Stakeholder Model of the Corporation
Corporation = Owners + Management + Local
community
Suppliers + Employees +
Customers
Social Responsibility = Triple Bottom Line
(Econ + Envi + Soc)
Economic – Profit
Environmental – Planet
Social – People
Ø Different Responsibilities of Business Firms for
to its Stakeholders
1. Philanthropic Responsibility – be a
good corporate citizen by supporting
or contributing to the social causes
and advocacies of the community
2. Ethical Responsibility – be ethical by
being concerned of business practices
that genuinely address the varying
stakeholders’ interest, needs and
expectations
3. Legal Responsibility – consistently
obeys or complies with prevailing laws
as to avoid any group or institution
from being aggravated
4. Economic Responsibility – appropriate
allocation and timely distribution of
business returns across the different
obligations and expenditures to
increase the trust on the company
v The company and stakeholders each has an
obligation to one another and both has the
right to expect from each other a sense of
social responsibility. Equity of returns among
the range of stakeholders is in accordance to
what they contribute to the business (properly
recompensed for their work)
VIII. THE MODERN COPORATION DEFINED:
GOING BEYONG PROFIT TOWARDS FOR
STAKEHOLDERS AND THE ENVIRONMENT
- 2 types
a. Limited Liability Companies – owners
or stockholders are liable for
corporate debts only up to the extent
of their investments
b. Shared Responsibility Companies –
group responsibility with members
contributing their individual capacities
and expertise to the overall operation
of the business, without any single
member owning up to be individually
responsible for successes or flaws of
the whole organization
Ø Corporations are duty holders
- They have the social responsibility to:
o fulfill the rights of workers to a
fair wage
o just benefits
o safe working environment
o job security
o respect and fulfillment of human
rights
o remediation measures for violations
and injuries incurred at work
o observance of ethical standards in
the treatment of employees
Ø Globalization and Changes in Business
- Business critics of the 60’s raised ethical
concerns
è Companies were quick to respond
with the realization that there is
a connection between profit and
the social needs of labor, including
the state of the environment
o Social media
o Advancements in
science and technology
- Changes in business are felt immediately in
the routine lives of people at work and in
their consumption behaviors
Ø Business arise to fulfill basic human needs
- Man’s point of satiation keeps going higher
as basic needs are fulfilled
è Where capitalism can creatively
stimulate wants by constantly
discovering what people can
further need or want more to
their advantage
o Advertisements in
social media
Ø Specific phases of Business where changes are
occurring
1. Value-creation – discovering what people
need, want or could be encouraged to
want, by creating them
2. Marketing – attracting attention and
building demand for what have been
created
3. Sales – turning prospective customers into
paying customers, by competing
transactions in a global market
 4. Value-delivery – giving customers what
they want and ensuring their satisfaction
with the quality and price of goods
delivered
5. Finance – bringing enough returns to keep
the business going by reinvesting in the
business system as to satisfy increasing
needs and wants for further expansion of
the business operation
6. New products – as new products are
launched in the market, competitions are
provoked, and the cycle of system
dynamics propels the continuity of the life
of the business
a. Sources of Change: Technology and New
Knowledge
• Supra-territoriality – a condition
wherein businesses move and settle
wherever they can find sites with
cheap operational costs, couples
with high productivity and a robust
market.
b. Changes in Working hours, Jobs, and
Worksites
• Constant changes in technology
forces jobs to evolve and
businesses to grow, or they die
when unable to cope with fast
changes that are happening
c. Increased Commodification and
Consumerism
• With consumerism, there is a rising
consumer expectation to account
for the high mobility of different
and varied goods in the market
d. Increased Competition
• Businesses are in endless search
for novel ideas to construct and
reconstruct product design and
quality, including market
strategies in addressing discerning
consumers
e. Professionalism in Business
• Businesses working together to
create something good and
properly giving its employees
compensation and benefits
Ø Challenges Faced by Business
1. Financial Management – the
deconstructive and reconstructive
processes of CEO’s need to be combined
with financial expertise from within the
internal organization of the business or
sourced out from external consultancy, to
be able to have a measured step towards
addressing the changes contemplated by
the business
2. Monitoring Performance – becomes
effective with the use of Key Performance
Indicators (KPI), a measurable value,
qualitative or quantitative, used to gauge
how effectively a company is achieving key
business objectives
3. Regulation and Compliance - compliance to
changing rules and regulations in the
market, environment, certifications on
product quality and on equipment and
machines used may be required to avoid
penalty expenses and keep the business
clean and sustainable
4. Competencies and Recruitment of the right
talent – determinants of sustainability in
business:
o alert to the fast-changing business
scenes
o finding the right people
o developing the right skills and
competencies
5. Exploding data (data confidentiality) – new
techniques and procedures for data
management are needed to provide easy
extraction of insights, from the ever-
increasing amounts of data the company
produces
6. Customer service and Business reputation –
business should find a way to provide
instant response, as negative feedback
spread fast in the web which could affect
the reputation of the business
7. Problem solving and Risk management –
companies must develop:
o problem-solving capabilities
o proceed to identify risks
o have the problem-solving skills to
know how best to mitigate them
v Business as a social system – parts are
interrelated and interacting with each other, a
change in one part of the system can affect
the other parts
v Businesses should reconfigure its organization
and total production operations to
accommodate a more comprehensive
management that considers not only profit but
the non-economic aspects
IX. THE HISTORICAL ROOTS OF
SUSTAINABILITY
- Sustainability evolved from Progress
- 16th Century – Scientific Revolution:
the meaning of progress became more
material
è The idea that civilization has
moved, moving, and will move in a
desirable direction, which has been
investigated in terms of scientific
and technological material and
moral advancement
Ø Classical-Greco Roman
- The first ideas about progress were
formulated
Ø Hebrew and Christian Theology
- Giving Expression to the linear conception
of time as a directed succession of events
Ø Augustine’s City of God
- Portrayed the advancement of humankind
in terms of successive, emergent stages
Ø Medieval Period
- The Christian conception of progress
encompassed millennialism, utopian ideas,
and a sense of the importance of improving
upon this world, in preparation for life in
the next
Ø 13th Century
- Human Progress
• Awareness of the cumulative
advance of culture
• Belief in a future golden age of
morality on this earth
Ø Renaissance and the Reformation periods (14th
and 17th Century)
- “Linear Progress of Humanity”
Ø Enlightenment (18th Century)
- Linked progress and modernization with
the determined conviction that the
advance sin sciences would lead to the
mastery of nature
Ø Industrial Revolution (18th Century and 19th
Century)
- Unfolding and transforming human societies
and the changes it brought were linked to
economic growth and material
advancement
- Philosopher Auguste Comte, Hegel, Marx
and Spencer, and others
• Described together the irreversible
advance of humankind and believed
that it could lead to the moral
perfection of humanity
- Immanuel Kant
• Progress through increased
enlightenment is the driving
purpose of the advancement of
humankinds, the attainment of
ever more perfect conditions for
the exercise of individual freedom
- The idea of progress was secularized –
shifting away from a notion of
advancement in a divinely-ordained
desirable direction
è to promised land beyond the grave,
which has a better life on Earth
warranted by scientific and
technological development
Ø Industrial Capitalism (20th and 21st Century)
- The uneven distribution of wealth would
become a major factor in discourses about
development and sustainability
Ø Colonization during the 14th and 15th Century
- The material wealth of nations
accumulated through their colonization
activities
- Accumulated resources combined with own
native resources were converted to
constitute the development of developed
countries, in contrast to the development
of the underdeveloped world
Ø Big Issues to Industrial Development
- Environmental Degradation
X. EVOLUTION OF THE CONCEPT OF
SUSTAINABILITY
Ø Sustainability VS Sustainable Development
- As early as the ancient Greek and Roman
civilizations, environmental problems such
as deforestation, salinization, and loss of
fertility of soil occurred
• Other types of environmental
degradation were mentioned as
early as the 5th century B.C.
resulting from human activities,
such as logging, mining, and
farming
 - Sustainability
• Appeared in the Oxford Dictionary
during the second half of the 20th
century
• First used in German forestry
circles, which implies maintaining a
balance between harvesting old
trees and ensuring that there was
enough young tress to replace
them
- The fixation of humankind for progress has
led to a tremendous level of human
productivity, which now endangers the life
of the planet
- The roots of the concept of sustainability
can be traced back to ancient times
Ø The difference between “sustainability” and
“sustainable development”
- Sustainability
• Implies the meaning of endurance
– something existing need to be
maintained
• Two elements invoked:
a. Sustainability implies the
need to “remain upright” –
to grow and maintain what
is needed
b. An underlying suggestion to
withstand or diminish the
obstacle that may hinder
the occurrence of
maintenance or growth
- Sustainable Development
• Clearly demonstrates progressive
change
• Development – not only in terms of
quantitative growth but also
qualitative (more difficult to
ascertain as it involves looking into
personal experiences and
indicators)
- duality consisting of
both human and capital development,
and not merely economic growth
v Sustainability is the underlying principle
behind sustainable development – interrelated
and overlapping concepts that point to one
direction: utilization, generation, and
protection of economic, environmental, and
social resources
Ø The Stockholm Conference
- Promoted the balance between economic
and environmental development
- Represents the first initiative to address
the challenge of preserving and enhancing
the human environment
Ø The Brundtland Commission
- The report focused on the need for
securing global equity for future
generations by redistributing resources
towards poorer nations, to support their
economic needs and enable all to achieve
their basic needs
- Identified that it is possible for social
equity, economic growth, and
environmental maintenance to occur
simultaneously, thereby highlighting the 3
fundamental components of sustainable
development
• Environment, Economy, Society
- Sustainable development became a major
political goal that earned attention
globally
• Sustainable Development –
development that meets the needs
of the present without
compromising the ability of future
generations to meet their own
needs
v Human needs are insatiable – for as soon as
prevailing needs are satisfied, there is a
human tendency for new needs and wants to
emerge
v With a shared environmental space, the social
responsibility for development becomes global
in nature intended to have an
intergenerational impact
XI. SUSTAINABILITY VALUES, ATTITUDES,
AND BEHAVIORS
- Sustainability is rooted in the concept
of social responsibility
• Sustainability – a decision that
involves the individual’s valuing
process, mobilizing ideals and
standards of behavior that are
moral and correct coming from the
human sense of right and wrong
• Sustainable Development –
emerged out of effort to reconcile
the competing demands of
development and environmental
protection
Ø Difference of CSR and SD
- SD shares the basic elements of CSR:
• Preserving the overall balance
between economic and social
factors
• Respect for the environment
• Preventing the exhaustion of
natural resources
• Reduced production of waste
• Rationalization of production and
energy consumption. For the
welfare of all
Rooted in balancing the interests of economic,
social and environmental concerns
- To be sustainable means to:
• Improve economic efficiency
• Protect and restore ecological
systems
• Enhance the well-being of peoples
- Sustainable development – local initiatives
become expanded and more comprehensive,
which is raised on a global level
• involves a complex web of concerns
across national and international
spheres, where varying political
and cultural factors become issues
for consultations to arrive at one
focused direction – “greening” the
planet (Benn, Dumphy, Griffiths
2014)
• Goal: to find a coherent and long-
lasting balance between social,
economic, and environmental
(different in nature but are
interrelated)
- Corporate Social Responsibility – remains
on the level of business sustainability or
across businesses,
Coordination
| governments, NGOs, and countries in planning
Businesses, Sectors of Society, Countries
SD
- Global or Macro level
- Intergenerational and future directed
- Impact is transformative
CSR
- Meso (middle) or Micro level
- May or may not be transformative
- More of the observation of ethics and
regulatory business behavior
- Lays down the ground for sustainable
development to occur
v Vision:
Similarities – create a balance in integrating
the social, economic, and environmental
concerns of business operations for a greener
economy
Differences -
SD – plan a comprehensive agenda for a “Risk-
Free” world, such as waste-reduction
measures across businesses in regions and
countries
CSR – remains on the business level in specific
community-societal level operations
v Mission:
Similarities - the integration of ethical
practices and moral standards in the
operations of business
Differences –
SD – aims to create a culture of innovation
and creativity in design of programs to
balance social, economic, and environmental
concerns across a wide range of participants in
different sectors, societies, and countries
v Organization:
Difference:
SD – look forward to organizing a plan for
changes to realize social, economic, and
environmental themes on a more comprehensive
and integrated level
CSR – to organize policies, programs,
procedure, which integrate the elements of
social, economic, and environmental, on the
level of the present and routine needs of
business and seek partnerships with community
agencies to reach a wider coverage of
beneficiaries
v Targets:
Difference:
SD – to target a wider reach of participants,
citizens, businesses, community institutions,
and implementing projects in consonance with
the social, economic, and environmental themes
to change individual and institutional behaviors
to realize a “green economy”
CSR – to address the local and present needs
of business operation, to reach out to
community for partnership, and to meet the
demands of external and internal stakeholders
for sustainability
v Managements:
SD – requires a strong transformative
leadership that will organize initiative to
create change agents across sectors
CSR – managed through the existing
structural hierarch of the business
organization, through the creation of a
technical working group within the
organization that will undertake consultation
in the community, and provide the mechanism
for communication between business and
community
v Driver
SD – driven by the need to create new
realities for business toward higher
productivity in a safe and risk-free world
CSR – driven by the need to integrate ethical
and moral principles in business operations, to
ensure the welfare and protection of all
business participants, and to counteract
negative forces that can destroy the stability
of the business
v Domains of Practice/Intervention and Outcome
3 forms of practice engaged by SD and CSR
1. Philanthropy – an intervention
intended mainly to support the
recipient who in certain ways need
help – a practice that recognizes the
social responsibility of men to other
men
2. Transactional – an intervention given
to support a recipient who is expected
to make a return, not in monetary
terms, but in the form of sustainable
behavior
3. Transformative – an intervention
indented to change the behavior of the
recipient towards the desired
sustainable form
SD – form of practice necessarily aims for
transformative outcomes; there is an expected
change of behavior (individual and organization
level)
CSR – form of practice can range from
philanthropy to transactional towards an
expected transformative impact
Ø Safety Culture: A Catalyst for SD
- Safety Culture – observable degree of
effort to which all organizational members
direct their attention and actions towards
improving safety on a daily basis (Cooper,
2002)
• First coined in the International
Nuclear Safety Advisory Group’s
(INSAG) on the Chernobyl accident
- Safety Practice – policies, procedures, and
activities implemented or followed by the
management of an organization targeting
safety of their employees (Kirwan, 1998)
- Environmental Practices – encompass the
techniques to reduce, minimize, or
eliminate the negative impacts of
organization’s operations, products, or
services on the natural environment (Rao
and Holt 2005, Shrivastava 1995)
- Organization’s Performance – 3 dimensions
• Environmental Performance (EPE)
• Safety Performance (SPE)
• Financial Performance (FPE)
- Conceptual Model –
Envi. Practices -> Envi. Performance
/ |
Safety Culture -> Financial Performance
\ |
Safety Practices -> Safety
Performance
- Discussion – Organizational Support
Theory is built upon the underlying
concept that employees perceived
organizational support stimulates their
felt obligation to return the profitable
treatment they receive from the
organization, by caring about the
organization’s success and helping the
organization reach its objective
v From the concept of sustainable development
emerged the concept of “going green”, “green
economy”, “green building”, and “green
technology” = all refers to sustainable
practices that are environmentally responsible
and resource efficient.
v Sustainability needs to be embedded in
everyday life as one’s natural behavior, to
fully express the concept of social
responsibility
XII. THE LEVELS OF SUSTAINABILITY
- Macro, Meso, and Micro
Ø The 3 spheres of Sustainability
1. Environmental – natural resource use,
environmental management, pollution
prevention
 2. Economic – profit, cost savings, economic
growth, research and development
3. Social – education, community, standards
of living, equal opportunity
1) Environmental-Economic – energy
efficiency, subsidies/incentives for use
of natural resources
2) Social-Environmental – environmental
justice, local and global natural
resources stewardship
3) Social-Economic – fair trade, workers’
rights. Business ethics
ENVIRONMENTAL
Ø Environmental Sustainability
- The quality of environmental systems,
stresses on those systems, the
vulnerability of human populations to
environmental degradation, the social and
institutional capacity to respond to
stresses, and global stewardship
- Condition of balance, resilience, and
interrelatedness that allows human society
to satisfy its needs, neither exceeding the
capacity of its supporting ecosystems to
continue to regenerate the services
necessary to meet those need nor by
actions diminishing biological diversity
(Morelli, 2011)
Ø Environmental Sustainability Index
- Provides a composite profile of national
environmental stewardship based on a
compilation of indicators, derived from
underlying datasets
ECONOMIC
Ø Economic sustainability
- Involves decisions that observe equity and
fiscal concerns, considering the other
aspects of sustainability to arrive at long
term benefits rather than short term
gains for society
SOCIAL
Ø Social Sustainability
- Encompasses the continuity of the
economic, social, institutional, and
environmental aspects of human society, as
well as the non-human environment
v These macro spheres are operationalized on
the meso and micro levels, through the
incorporation of CSR standards into the
policies, programs, and activities of business
corporations observing the elements of the
triple bottom line (social, economic and
environmental)
1. People: the social equity bottom-line
• The people or human capital
deserve to benefit from a fair and
beneficial labor practices of
business, including the community
where the institutions that serve
business and the larger consumer
population are all present
2. Planet: the environmental bottom-line
• The company should reduce its
carbon footprints, manage its
consumption of energy, non-
renewable resource, reduce
manufacturing wastes, and use
waste treatment plants to
minimize toxicities that can impact
negatively on the natural
environment
3. Profit: the economic bottom-line
• Corporate management will have
to be transparent about business
earnings and decisions, regarding
what percent of net profits will be
retained by the business for
reinvestment purposes and the
percent which will be divided
among the shareholders and the
range of stakeholders, who
contribute to the operations of the
business
v Sustainability is a community’s control and
prudent use of capital, to ensure that
present and future generations can attain a
high degree of economic security and achieve
democracy, while maintaining the integrity of
the ecological systems upon which all life and
all production depends
Ø The Humility Principle
- The limits of knowledge, and by extension,
the limits of our capacity to manage,
especially at ever increasing scales, such
as the planet
v Corporate sustainability is the new mode of
that may bring solutions to present threats
to human life never before encountered in
the form of wider social inequality, under
conditions of material wealth alongside abject
poverty
 - It disturbs our ecosystem and the
XIII. DRIVERS OF SUSTAINABILITY
- The sources of pollution:
1. Climate Change/Global Heating
- In 2008, UN Secretary General Ban
Ki-moon warned that climate change is
the “defining challenge of the era”
è A few years later, the
Organization for Economic
Cooperation and Development’s
(OECD) Environmental Outlook to
2050 provided more evidence of
the urgency with which action is
needed on behalf of global
ecological limits
- There is a need to formulate more
ambitious policies than those being
enforce today as greenhouse gas
emission will increase by another 50%
by 2050, primarily due to a projected
80% increase in global energy demand
and economic growth in key emerging
economies (Benn, S. et al, 2014)
- The implications of climate change are
constraining the journey towards
sustainability
• The use of coal as a source of
energy is not in sync to the goal
of reducing carbon emissions
o President Duterte refused
to sign the Paris
Agreement on climate
change, since we are a
developing country and
working on increasing our
productivity level using
cola in most of our
factories – developing
countries can do it but it
should not be imposed on
developing ones
- UN Environment’s Climate Change sub-
program focuses on helping countries
to pursue low-emission development
pathways and strengthen their
adaptation and resilience capacities to
change climate
2. Pollution
- Occurs when the natural environment
cannot destroy an element without
creating harm or damage to itself
- It takes place when nature does not
know how to decompose an element
that has been brought to it in an
unnatural way
balance in the environment
a. Natural Disasters – typhoons,
floods, earthquake, landslide
b. Environmental Hazards
a) Mining companies use toxic
substances to facilitate the
extractive function they
undertake, the wastes that
flow contaminate existing
watersheds and even destroy
them, which can endanger lives
b) Excessive use of pesticides in
agriculture and aquaculture,
livestock farming uses vast
amounts of resources and
dioxide into atmosphere
c) Manufacturing with enormous
emissions of heavy dirt fumes
in the air:
o Raw material extraction
o Raw material processing
o Heavy industry (equipment
and transport
manufacturing)
o Light industry (textile,
pulp, and paper)
o Construction
d) Power generation
o Use of resource other than
fossil fuels such as oils,
gas, and coal – public
transport and shipping uses
them for operations, which
are sources of air
contamination
o Nuclear power is not clean
energy – it produces toxic
radioactive waste, which
takes thousands of years
to decompose to become
harmless (reason why they
are specially kept in
cemented jars before
burying in specific burial
grounds, to avoid
contamination of soil,
water and other life
essentials)
c. Man-made Disasters – volcano
eruptions, tsunamis
v Sustainability is a journey, which can be Ø Relationship of Culture and Sustainability
started through a step by step process a Attitudes and Behaviors
company can begin initially through its CSR - The most significant and positive
initiative relationship with sustainability were found
for low power distance and low masculinity
Ø 5 Stages in the efforts of organizations to - Consider findings with caution, but it
work towards sustainability seems reasonable to conclude that culture
1. Legal Pre-compliance – the company sees affects sustainability adoption
profit as its sole purpose, ignores
sustainability, and stands against any v Drivers for sustainability – physical forces,
related regulation, as this would mean organizational readiness, and institutional
additional expense perspective
2. Legal Compliance – the company manages v Culture is one explanation among many
its liabilities by complying with labor, variabilities in sustainability performance, but
environmental, and health &safety it appears to be an important contextual
legislation factor acting via multiple mechanisms in
3. Beyond Legal compliance – the company influencing sustainability adoption
takes a proactive approach, understanding
it can save costs through eco-efficiency
initiatives, recognizing the social and
environmental risks, and improves
reputation which will have a positive
impact on economic values (specialized
departments for sustainability, instead of
being institutionalized)
4. Integrated Strategy – the company
rebrands itself and integrates
sustainability in its key business strategies
– perceives investment and opportunities
not as costs and risks, develops clean
products and services, understands its life
cycle, and benefits from sustainability
initiatives
5. Purpose and Passion – the company,
through the board of directors, adopts
sustainability practices because it
understands that it does not make sense
to contribute to an unsustainable world

Ø Sustainability Adoption from an Institutional

Perspective
- Society – creates pressure for
sustainability adoption by building
institutional infrastructure for
organizational sustainability
- Compliance with standards – confers
legitimacy in current business context and
explains firms’ responses to pressure for
sustainability
• Macro-level sources of
institutional pressures can be
identified, but can impede adoption
of sustainable principles
• Sustainability can be thwarted by
institutions’ particular interests