Corporate citizenship involves the efforts business organizations undertake to meet their responsibilities both as economic and social agents.  Businesses become aware of their social responsibilities through pressure exerted by their stakeholders.  Customers, for example, expect businesses to supply reliable and safe products at a fair price.  Stockholders demand that corporate operations be managed efficiently and that their investments be rewarded by dividends or improved market value.  Employees desire their employer to honor commitments, provide a safe and rewarding work environment, and offer reasonable benefits.  Similarly, other stakeholder groupsCsuch as suppliers, community leaders, and the mediaCcall for companies to offer benefits that contribute to the community beyond just providing jobs and quality products.  Companies appear eager to demonstrate that they are willing to provide society with benefits beyond those resulting from their core productive activities.  A few statistics help further highlight this trend: 60 percent of all American businesses have some type of community involvement program (Suzman 1995); nearly 80 percent have a volunteer program (Jackson 1997); and 50 percent have an ethics program (Miller 1996).

Managers hold primary responsibility for the integration of corporate citizenship into organizational decision making.  Without top management support for socially responsible conduct employees can ignore concern for corporate citizenship.  For example, there is a relationship between top managements commitment to ethics and its commitment to financial and strategic concerns (Weaver, Trevino, and Cochran 1999).  In addition, it is desirable for management to balance the interest of various stakeholders, including consumers and investors to achieve corporate performance (Ogden and Watson 1999).

Much examination of corporate social performance has related whether or not good social performance is directly related to financial performance (Harrison and Freeman 1999).  By analyzing the interest of stakeholder groups, such as customers, employees, investors the multifaceted aspects and contributions of corporate citizenship can be understood.  Implementing a balanced perspective of stakeholder management can provide the opportunity to obtain maximum productivity from each stakeholder.  A key principle is that managers should acknowledge the potential conflicts between (a) their own role as corporate stakeholders, and (b) their legal and ethical responsibilities for the interest of other stakeholders, and should address such conflict through open communication, appropriate reporting and incentive systems, and where necessary, third party review (Clarkson 1999). 

Our overall hypothesis is that corporate citizenship contributes to competitive advantage.  We argue that corporate citizenship is a potentially lucrative business practice, a position based primarily on the findings of two research projects that demonstrate the existence of a relationship between corporate citizenship and improved competitive advantage.  One of the studies (Loe 1996) surveyed employees in a mid-size water treatment company to assess the relationship between organizational ethical climate and perceived quality, intrafirm trust, and customer focus (market orientation).  The second study (Maignan 1997) surveyed marketing managers to determine the relationship between corporate citizenship, employee satisfaction, customer loyalty, and profitability.  Finally, the paper proposes practical recommendations to build a good citizen corporation and provides an agenda for future research. 

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