Last Updated 02 Aug 2020

Starbucks corporation

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Corporate Social Responsibility has been defined as the duty of the organization to respect individuals' rights and promote human welfare in its operations (Manakkalathil and Rudolf, 1995; Oppewal et al., 2006). Businesses not only have the economic responsibility of being profitable and the legal responsibility to follow the laws or ground rules that guide their ability to achieve their economic requirements, but they also have ethical responsibilities that include a range of societal norms, or standards (Carroll, 2000a).

The UK's Confederation of British Industry (2001) has argued that "Corporate Social Responsibility is highly subjective and therefore does not allow for a universally applicable definition", Frankental (2001) has argued that "Corporate Social Responsibility is a vague and intangible term which can mean anything to anybody, and therefore is effectively without meaning". The Commission for the European Communities (2001) defines CSR as "a concept whereby companies integrate social and environmental concerns in the business operations and in their interactions with their stakeholders on a voluntary basis".

According to Wood (1991) "the basic idea of CSR is that business and society are interwoven rather than distinct entities" and for Mallenbaker (2005) "CSR is about how companies manage the business process to produce an overall positive impact on society". More generally, a distinction has been drawn between CSR seen as philanthropy as opposed to CSR as a core business activity. In the former companies conduct their business unfettered by wider social concerns and then make charitable donations to selected worthy causes while in the latter the accent is upon operating the core business in a socially responsible way which seeks to enhance the competitiveness of the business and maximise the value of wealth creation to society.

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Different types of CSR

The notion that business has duties to society is firmly well-established although in the past several decades there has been a revolution in the way people view the relationship between business and society. Carroll (1979) and other researchers believe that we should judge corporations not just on their economic success, but also on non-economic criteria. Carroll (1979) proposed a popular four-part definition of CSR, suggesting that corporations have four responsibilities or "four faces" (Carroll, 2000b, p. 187) to fulfill to be good corporate citizens: economic, legal, ethical and philanthropic: 1. Economic responsibility. Economic responsibility is to be profitable for principals, by delivering a good quality product, at a fair price, is due to customers.

2. Legal responsibilities. Legal duties entail complying with the law and playing by the rules of the game.

3. Ethical responsibilities. Ethical duties overcome the limitations of legal duties. They entail being moral, doing what is right, just, and fair; respecting peoples' moral rights; and avoiding harm or social injury as well as preventing harm caused by others (Smith and Quelch, 1993).

4. Philanthropic responsibility. Interest in doing good for society, regardless of its impact on the bottom line is what is called altruistic, humanitarian or philanthropic CSR. "giving back" time and money in the forms of voluntary service, voluntary association and voluntary giving - is where most of the controversy over the legitimacy of CSR lies. CSR framework: Castka et al. (2004) proposed a useful framework, based on three major assumptions: 1. The CSR framework should be integrated into business systems, objectives, targets and performance measures.

2. The governance system, whose purpose is to control, provide resources, opportunities, strategic direction of the organisation and be held responsible for doing so, is an integral part of business hence CSR system. 3. Central to the CSR framework is the transformation of stakeholders' needs and expectation into business strategy, where the organisation has to balance the need for CSR from their key stakeholders with entrepreneurship.

Corporate Social Responsibility, Corporate Governance, Corporate Sustainability (CS), Corporate Citizenship and Triple Bottom Line (TBL) are becoming synonymous with the emerging effort to determine the meaning of "ethical business". However, even though the theory and models surrounding stakeholders management and social responsibility are abundant (Harrison and Freeman, 1999), the analysis of CSR is still in an embryonic stage and critical issues regarding frameworks, measurement, and empirical methods have not yet been resolved (Academy of Management, 2003).

Coffee sector : Coffee is consumed all over the globe, making it one of the most valuable primary products in world trade. It is an important source of income for an estimated 25 million people living in more than 70 tropical coffee-producing countries. As an export, it is crucial to the economies and politics of many developing countries, and in some cases accounts for 80% of their foreign exchange earnings. There are two commercially important species of coffee - robusta and arabica. About 75% of the world's production is arabica coffee, which flourishes in higher altitudes and has a more refined flavour compared to the robusta varieties, which grow in lower elevations.

Coffee is one of those commodities that have fascinated increasing attraction in the past fifteen years in relation to corporate social responsibility. This has resulted from changes in the overall coffee market in recent decades. Traditionally, international coffee agreements between consuming and producing countries, managed by the International Coffee Organization (ICO), served as a regulated system to ensure stable prices. It was certainly not uncontroversial, however, which contributed to the end of this quota system in 1989 (Gilbert, 1996 and Ponte, 2002). Subsequently, prices have dropped dramatically: the $1.20 per pound average fell to $0.55, and reached its lowest point in 2002 (UNCTAD, 2003, p. 24). This was due to the emergence of new producers (particularly Vietnam) and substantial production increases in Brazil, while demand failed to meet growing supply.

The end of the international coffee regime meant a reordering of the balance of power in the coffee sector and a redistribution of income. From a stable system in which producers and consumers knew the rules of the game, the market became not only much more volatile, but trade and industry in the consuming countries gained considerable power to the detriment of producing-country governments, farmers and local traders. Coffee thus transformed into a more buyer-driven commodity chain (cf. Gereffi, 1999).

Likewise, for the consuming countries the value added of coffee increased, while value added and prices for the producing countries decreased. For producer countries, earnings in the early 1990s amounted to $10-12 billion, with a value in retail sales of $30 billion (UNCTAD, 2003, p. 24). A decade later producers only receive $5.5 billion, while retail sales come to $70 billion. These figures show that producer income has fallen concurrent with increased consumer spending on coffee in Western countries, related to growing interest in specialty coffees.

With these developments, the role of the main actors on the buyer-side of the chain, the large roasting and instant manufacturing companies, has received more attention. Their behaviour has become linked to the fate of farmers, their declining income levels, poor working conditions and social situation, and to poverty in developing countries in general (Oxfam, 2002). In this respect, it is notable that smallholders supply 70% of the world's coffee, and that approximately 125 million people are estimated to depend on this commodity for their incomes (RIAS, 2002 and UNCTAD, 2003).

By the mid-1990s, the large multinational coffee corporations started to experience great pressure from non-governmental organisations (NGOs). This was not only due to the apparent inability of governments to address the coffee crisis and to the lack of other feasible solutions. It also fell in line with the overall move towards corporate social responsibility, and with actions against the largest flagship companies (cf. Rugman and D'Cruz, 1997) that were obvious targets in other campaigns as well (for example, against child labour, environmental pollution and mining in indigenous territories).

Among the CSR responses adopted by multinational corporations (MNCs), codes of conduct have figured prominently. For companies, their business associations, international organisations and NGOs, codes have been important instruments to enhance CSR, although the specificity and stringency of the various stakeholders' approaches has shown considerable variety (Kolk et al., 1999, Kolk and Van Tulder, 2002a and Kolk and Van Tulder, 2002b). Often, a dynamic development could be noted, in which the interaction of different stakeholders in the formulation and implementation of codes proved very important in improving corporate codes (van Tulder and Kolk, 2001).

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