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Ethics Digest BUILDING THE GOOD CITIZEN CORPORATION Overall,
the results of our two research projects demonstrate that
corporate citizenship does not represent a mere business
expense; instead it should be considered as a worthwhile
business investment. Based
on our observations, we also suggest that corporate
citizenship may be an excellent source of competitive
advantage: (1) It
provides superior value to customers, (2) it is difficult to
imitate, and (3) it is capable of multiple applications. The good
corporate citizen offers superior value to customers by
embracing economic and social responsibilities.
Customers enjoy the benefits of this commitment
directly because the good citizen corporation treats them
fairly and continuously strives to satisfy their changing
needs. Customers
also enjoy the fruits of corporate citizenship indirectly: As
social actors, they enjoy the efforts organizations undertake
to generate revenues, respect established regulations, adopt
modes of conduct considered morally right, and help their
community. Corporate
citizenship is not easily imitated because it is based on the
web of relationships that the organization establishes with
its own stakeholders. The
corporate citizenship efforts displayed by Wal-Mart illustrate
this point. The
retailer regularly grants large donations to communities in
which its stores are located.
These funds are used to support local schools, local
associations, and economic development.
Such actions help Wal-Mart forge tight bonds with local
customers, employees, suppliers, and community leaders.
Recently, Wal-Mart introduced strict environmental
standards for the packaging of the products it stocks.
This program requires the active participation of
suppliers. Hence,
effective corporate citizenship is incorporated into the daily
interactions between the company and its stakeholders.
It is the result of trusting relationships and
long-lasting interactions that can hardly be replicated by
competing firms. Finally,
corporate citizenship is capable of multiple applications: It
may be used as a core argument in internal promotions designed
to stimulate employees=
motivation and in external advertising intended to improve
customers=
image of the company. It can also be employed to gain the support of investors, to
generate the interest of suppliers, and to secure the help of
community leaders. Thus,
corporate citizenship is an excellent tool to rally various
stakeholder groups, to differentiate the firm from its
competitors, and, subsequently, to establish an sustainable
competitive advantage. One
approach to developing corporate citizenship within an
organization may be derived from the guidelines the Federal
Sentencing Commission established in 1991.
The Federal Sentencing Guidelines for Organizations (FSGO)
have a significant impact on U.S. businesses=
approach to compliance and ethics issues.
Since 1991, federal judges have been allowed to impose
stiff monetary penalties for white-collar crimes in cases.
However, organizations that establish Aeffective@
compliance programs may have fines mitigated if they are
convicted of certain misdemeanors and felonies. In addition, in 1995, the Sentencing Commission organized a
symposium on the theme of the AGood
Citizen Corporation@
(Conaboy 1995; Swenson 1995).
Thus, the legal system is promoting value-driven
corporate citizenship as a useful framework to prevent
corporate misconduct. The
Federal Sentencing Commission holds organizations accountable
for their employees=
criminal acts. Certain
organizational climates promote unethical and illegal behavior
and, when this is the case, organizations can be fined
substantially under the FSGO.
However, the Federal Sentencing Commission recognizes
that organizations sometimes have Arogue@
employees who will commit criminal acts even when their
organization has taken legitimate steps to discourage and
prevent such activity. An
effective compliance program includes (1) establishing
compliance standards and procedures (e.g., codes of ethics and
policies), (2) appointing a high-level executive with overall
responsibility to oversee compliance, (3) exercising due care
not to delegate substantial discretionary authority to
employees with a past history of illegal or unethical
behavior, (4) disseminating standards of conduct and policies
regarding those standards, (5) having a monitoring and
auditing system in place to detect criminal conduct (e.g.,
anonymous hotlines), (6) enforcing the standards consistently,
and (7) responding appropriately to offenses and modification
of the program. With
such programs in place, organizations can promote higher
levels of corporate citizenship. Loe=s
(1996) study implemented such a program and found its impact
improved the ethical climate in the organization and, as
suggested in this present research, in turn, promoted good
corporate citizenship. Maignan=s
(1997) study emphasized the role of corporate values in
establishing corporate citizenship: The existence of a
positive association between a humanistic culture and
corporate citizenship is highlighted.
In a humanistic culture, employees are encouraged to
further the well-being of their coworkers and to ensure that
their own decisions do not negatively affect the activities of
other organizational members (Cooke and Hartmann 1989; Kilman
and Saxton 1983; Xenikou and Furnham 1996).
Our results suggest that the values that foster harmony
in the workplace also encourage organizational members to
systematically facilitate the relationships between the
business and its stakeholder groups.
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