Module 9

Corporate Governance,
Social Responsibility,
and Ethics
 Housekeeping Items
• Final Paper Consultations
• 29-Mar-2023 During Class Period

• Group Project Written Report Due

• 01-APR-2023 11:59 pm

• NO CLASS! Ching Ming Festival

• 5-APR-2023:

• Module 12 (12-APR-2023)
• Exam Review
2 Points Extra Credit:
• 1 Photo
• 1 Paragraph* (What you did at the fair, what you liked, what you’d
improve)
• Submit via Blackboard by 26 March 11:59pm

*4-6 sentences
 Learning Objectives
• Understand the relationship between stakeholder
management and corporate performance
• Explain why maximizing returns to stockholders is
viewed as the preeminent goal in many corporations
• Identify the concept of CSR, CSV, and ESG
• Identify how corporates can differentiate by shared
value and value co-creation.
5
Stakeholders and Corporate Performance

• Stakeholders - Individuals or groups with an interest, claim, or stake

in the company.
• Internal stakeholders - Stockholders and employees, including
executive officers, other managers, and board members.
• External stakeholders - All other individuals and groups that have
some claim on the company.

VS

6
Stakeholders

7
Steps in Stakeholder Impact Analysis

• Identify stakeholders
• Identify stakeholders’ interests and concerns
• Identify the probable claims of stakeholders on the
organization
• Identify important stakeholders from the organization’s
perspective
• Identify the resulting strategic challenges

8
Profitability, Profit Growth, and Stakeholder Claims
• Stockholders receive a return on investment from dividend
payments and capital appreciation in the market value of a
share.
• Ways to grow profits
• Increase the margins earned on products and services
• Participate in a market that is growing
• Take market share from competitors
• Develop new markets through innovation, geographic
expansion, or diversification

9
Strategical Thinking in the Business
The Role of Business in Society

§ Business can create prosperity

§ Healthy businesses need a healthy community

§ There is an ever-growing awareness of major societal challenges

§ More of the public see's business as prospering at the expense of the
society
§ Despite growing corporate citizenship activities, the legitimacy of
business has fallen
The Role of a Company in Its Communities
Levels of Shared Value

I: Reconceiving products, needs, and customers – Meeting societal needs

and reaching unserved or underserved customers

II: Redefining productivity in the value chain – How the organization better
uses resources across the value chain, including employees, to improve
fundamental productivity

III: Enabling local cluster development – Improving available skills,

suppliers, and supporting institutions in the region
Redefining Productivity in the Value Chain
Identifying Opportunities for Shared Value in the Value Chain
Food Services
Tourism Cluster in Cairns, Australia

Sources: HBS student team research (2003) - Peter Tynan, Chai

McConnell, Alexandra West, Jean Hayden
Improving the Business Environment in the Company’s Major Locations

§ A strong local cluster improves company productivity and growth

ü Local suppliers
ü Supporting institutions and infrastructure
ü Related businesses
§ Companies, working collaboratively, can catalyze major improvements
in the cluster and the local business environment

§ Local cluster development strengthens the link between a company’s

success and community success
The Purpose of a Business
§ There is an opportunity to transform thinking and practice about the role of
the corporation in society
§ Shared value gives rise to far broader opportunities for economic value
creation
§ Shared value thinking will drive the next wave of innovation, productivity
growth, and economic growth
§ Shared value will reignite a whole new generation of management thinking
§ Businesses acting as businesses, not as charitable givers, are arguably the
most powerful force for addressing many of the pressing issues facing our
society
§ A transformation of business practice around shared value will give purpose
to the corporation and represents our best chance to legitimize business
again
ESG?

https://sdgs.un.org/goals
Environmental, Social, and Governance
SDG by UN
ESG and SDG
Hilton ESG report 2022
Current issues in HK
Environmental Issues in Hong Kong in 2023
q Outdoor Air Pollution
q Landfill Waste
q Plastic Pollution Your Take-a-Way: How Does Hospitality
q Food Waste and Tourism Respond?
q Biodiversity Loss
q Water Pollution

Social Issues in HK
q Poverty
q Increasing number of elders
q Drug abuse