BE-AR2

PHI 6301, Business Ethics 1

Course Learning Outcomes for Unit II Upon completion of this unit, students should be able to:

2. Assess ethical behavior to current high-profile events. 2.1 Explain the failure of ethical leadership in a business organization. 2.2 Discuss corporate culture and/or governance of a company.

Course/Unit

Learning Outcomes Learning Activity

2.1 Unit Lesson Chapter 3 Unit II Article Review

2.2 Unit Lesson Chapter 4 Unit II Article Review

Required Unit Resources Chapter 3: Corporate Social Responsibility Chapter 4: Corporate Culture, Governance, and Ethical Leadership Unit Lesson Over the last several years, there have been news stories about Facebook and its involvement in social and political activities or events. In October 2021, an insider leaked documents, now described as “The Facebook Papers,” that purport to describe the social media site’s pernicious effects on society and politics in the United States (Chappell, 2021). These documents were also shared with Congress by a former Facebook product manager and whistleblower, Francis Haugen, who alleges the release of such data and statements is evidence the leaders of Facebook have knowingly and repeatedly placed the company’s image and profitability before the well-being of the public and society (Chappell, 2021). There are four main takeaways regarding the contents of these documents:

1. Facebook employees fiercely debated their own policies after the January 6, 2021, attack on the U.S. Capital.

2. Standards of content were distorted based on fears of maddening high-profile user accounts. 3. Most young people find the content of Facebook negative, misleading, and for the most part, boring. 4. The global reach of Facebook far exceeds its control (Chappell, 2021).

Some of the political and social fallout from Facebook with respect to recent events may even be so out of control that it may take years to reestablish trust among its users. Going back much farther in time, during the 2012 election campaign, the Republican nominee for president, Mitt Romney, notably responded to a heckler criticizing him for supporting tax breaks for corporations. Romney replied that corporations are people also. Although Romney’s response was politically misguided, it is correct, according to U.S. law (DesJardins, 2020). The idea of treating corporations as persons and granting them special rights just as people raises some quite fascinating ethical questions: if corporations also have rights, does that not also mean they have

UNIT II STUDY GUIDE Corporate Social Responsibility, Corporate Culture, Governance, and Ethics

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responsibilities to the societies where they engage in commerce, and if so, what do such responsibilities entail? After the 2016 presidential campaign, these questions and more came to public attention after it was clear that some of the world’s biggest corporations, including Facebook, provided a platform for foreign entities to play havoc with the presidential campaign and influence U.S. voters (DesJardins, 2020). During the years following the 2016 campaign, Facebook has increasingly come under significant political and social criticism, such as Russian access to data it gave to Cambridge Analytica, which has alleged connections to not only the Trump campaign but also to foreign parties (DesJardins, 2020). The above remarks raise an interesting question: what social responsibilities do corporations have toward society? We will examine what has been commonly called corporate social responsibility (CSR)—the merging of social concerns into business interactions with stakeholders. We will explore CSR in relation to not only Facebook but also with respect to the many different approaches to ethical theory. Such topics will include

• the economic model and an assessment in relation to utilitarian and private property defenses, • the moral minimum, • CSR and the stakeholder model, and • how the strategic model benefits corporations (DesJardins, 2020).

One may also rightly raise the next question: what is the history of CSR, and why is it important? During the late 1800s, there was growing concern regarding the well-being of workers, according to the article “A Brief History of Corporate Social Responsibility (CSR)” (Thomas, 2019). More specifically, there were growing concerns about general working conditions in factories and the plight of women and children who worked there. The basic consensus was that the current working conditions were contributing to a myriad of problems that included illness, labor unrest, and even poverty. Nevertheless, efforts to combat these issues were merely considered, at best, humanitarian or paying lip service to these issues. Even though responsible businesses had already existed during the 1800s, the expression corporate social responsibility was officially created by Howard Bowen, an American economist who wrote a book titled Social Responsibilities of the Businessman. Still, it was not until the 1970s that CSR actually began to take hold, at least in the United States. During the 1980s, CSR continued to evolve as increasingly more businesses and organizations started to integrate social interests into organizational practices while also becoming more responsive to stakeholders. It has been only since the 1990s that widespread approval of CSR came into practice. By the early 2000s, many organizations started to implement CSR as an essential strategy, including many high-profile corporations such as Coca-Cola, Walt Disney, Pfizer, and Wells Fargo (Thomas, 2019). Today, CSR is integrated into many if not most organizations as a successful business strategy, operation, and function. An additional topic related to CSR is corporate culture. Many of you may rightly wonder what corporate culture is, and though your textbook covers the topic of corporate culture, more ought to be said about it and the roles it plays in organizations. According to Rhonda Howell (2016), the concept of corporate culture is considered to be a set of shared practices and values of an organization’s employees; it guides how employees act, think, and feel. The social and psychological environment also expresses the culture of a given organization, and it symbolizes the particular personality of the company through the expression of behaviors, ethics, values/principles, and beliefs. Today, corporate culture matters perhaps more than ever before. If for instance, your employer brand is not strong, people will quickly and easily find out. One way they can do this is merely by using social media to express both positive and negative thoughts about products, services, and the company as a whole. In our present-day environment so heavily imbued with social media, a robust corporate culture is critical for the success of all organizations. A notable corporate culture will not only attract more potential employees to a company but also drive the performance of existing employees. When an employee is working in a supportive, fostering, and overall positive environment, they will be motivated to perform a good job all the while attempting to achieve not only their personal goals but the goals of the company as well. When everything is considered, corporate culture is one of the most important aspects that prospective employees

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will consider when deciding whether they will want to work for a company, and having an exceptional corporate culture sets one organization apart from the many competing organizations on many different levels (Howell, 2016). Another related topic is corporate governance. This term could be defined as a system of policies, practices, and methods whereby a company is managed and strategically directed. Essentially, it involves balancing the many interests of the company’s stakeholders, including senior management and customers. It also gives a framework and strategy for attaining a company’s objectives, encompassing all spheres of management— from action plans and performance measurements to internal controls, along with corporate disclosure agendas. Corporate governance could also be considered as the configuration of rules, processes, and practices that are used to manage and strategically direct a company. It entails the areas of ethical behavior, environmental awareness, compensation, and risk management. Some basic principles of corporate governance include fairness, transparency, and responsibility (Chen, 2021).

References Chappell, B. (2021, October 25). The Facebook papers: What you need to know about the trove of insider

documents. NPR. https://www.npr.org/2021/10/25/1049015366/the-facebook-papers-what-you-need- to-know

Chen, J. (2021, July 4). Corporate governance. Investopedia.

https://www.investopedia.com/terms/c/corporategovernance.asp DesJardins, J. (2020). An introduction to business ethics (6th ed.). McGraw-Hill Education.

https://online.vitalsource.com/#/books/9781260687354 Howell, R. (2016, April 19). Why corporate culture is so important for every organization. Recruiter.

https://www.recruiter.com/i/why-corporate-culture-is-so-important-for-every-organization/ Thomas. (2019, September 25). A brief history of corporate social responsibility (CSR). Thomas Insights.

https://www.thomasnet.com/insights/history-of-corporate-social-responsibility/ Suggested Unit Resources In order to access the following resources, click the links below. The following article gives a retrospective on Milton Friedman’s argument that the social responsibility of business is to increase profits. This article will discuss whether his argument is still tenable 50 years after its publication. Ramanna, K. (2020, May). Friedman at 50: Is it still the social responsibility of business to increase profits?

California Management Review, 62(3), 28–41. https://libraryresources.columbiasouthern.edu/login?url=https://search.ebscohost.com/login.aspx?dire ct=true&db=bsu&AN=143347987&site=ehost-live&scope=site

The following article presents corporate governance from a feminist perspective, especially in relation to the ethics of care. Machold, S., Ahmed, P. K., & Farquhar, S. S. (2008, September). Corporate governance and ethics: A

feminist perspective. Journal of Business Ethics 81(3), 665–678. https://libraryresources.columbiasouthern.edu/login?url=https://search.ebscohost.com/login.aspx?dire ct=true&db=bsu&AN=33281558&site=ehost-live&scope=site