Topic: Individual assignment

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Business and Government in the Global Context

BUSM3886

 Ethics & corporate social responsibility

(CSR)

 Understanding of these key issues in the

context of business, government and

globalisation

Learning

overview

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Sociologist Raymond Baumhart (Cited in Velasquez, et al.,

2015) once asked a question to business people - What does ethics mean to you? Some of the replies were:

• Ethics has to do with what my feelings tell me is

right or wrong;

• Ethics has to do with my religious beliefs;

• Being ethical is doing what the law requires;

• Ethics consists of the standards of behaviour

our society accepts;

• I don't know what the word means!

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What is ethics, then?

• It is not easy to define ethics and the views

many people have about ethics are tentative.

• In general, ethics may refer to “well-founded

standards of right and wrong that prescribe

what humans ought to do” (Velasquez, et al.,

2015).

?

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 Ethics is directly concerned with human interaction and behaviour. It therefore has relevance to the way people behave in organisations.

 Business ethics: The principles, norms, and standards of conduct governing an individual or group in work situations (Trevino & Nelson 2006 and 2014)

 Factors that influence business ethics include the stage of development of a country, individual characteristics, issue intensity, and

Ethical Organisation Where the organisation’s culture promotes appropriate

ethical behaviours among all

 Unethical behaviours include bribery, theft, discrimination, harassment, deception and endangerment

 Unethical business practices also include illegitimate business activities by legitimate or illegitimate organisations (As-Saber and Cairns, 2015)

 Responsibility for ensuring an organisation has ethical standards is a duty of management, staff, the board, investors – all stakeholders really

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A taxonomy of ethics and legitimacy

High Business

Type 2

‘Legal but

morally questionable’

Low Ethical

Legitimacy

Type 1

‘Both morally and

legally appropriate’

High Ethical

Orientation

Type 4

‘Both morally and

legally inappropriate’

Low Business

Orientation

Type 3

‘Illegal with

moral high ground’

Legitimacy

Source: As-Saber, S. & Cairns, G. (2015)

What is Corporate Social

Responsibility?

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Definition of CSR

According to McWilliams (2015),

“Actions of firms that contribute to social welfare,

beyond what is required for profit maximization,

are classified as Corporate Social Responsibility

(CSR)”.

Evolving Meanings of CSR • … bearing in mind the impact of the company’s

actions on societies.

• … a commitment to take actions that safeguard and

improve the welfare of society as a whole, and the

company’s own interests.

• …assumes that the corporation has economic and

legal obligations as well as responsibilities to society

that extend beyond these obligations.

Carroll and Buchholtz 2015

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Based on: Crane Matten & Spence (2008)

CSR perspectives

 Classical – Friedman

 Contemporary – Carroll

 Stakeholder - Freeman

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Classical view – the case against CSR

 Economic behaviour different from

other behaviours – separation thesis.

 Different criteria of effective business

performance.

 Primary goal and motivation of

business is profit.

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Classical view - Friedman

Friedman’s (1970) arguments against CSR:

 ‘Only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but “business” as a whole cannot be said to have responsibilities’

 Business executives have the responsibility to conduct the business in accordance with the desires of the owners of the business …make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom

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The case against CSR – Karnani (2010)

Karnani’s arguments against: “Companies that simply do everything they can

to boost profits will end up increasing social welfare” – trickle down benefits?

Problem - misalignment between private and public interests Executives choose profit - otherwise

incompetent or selfish.

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Ed Freeman, CSR and Stakeholder Theory

• Unlike Friedman, Freeman (1986, 2010) asks

the question, “For whose benefit and at whose

expense should the firm be managed?”

• He considers anyone with a stake/claim in the

firm has the right to contribute in the way a firm

should operate.

• Stakeholders may include employees,

shareholders, competitors, customers, local

community and so on…

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Source: http://www.spidermak.com/en/ed-freeman-and-his-stakeholder-theory

Three domain approach

Source: Schwartz and Carroll 2003, p.509)

Legal

Economic Ethical

Legal Ethical Legal

Economic

Economic

Ethical

Legal

Economic

Ethical

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Corporate social responsibility –

Carroll’s pyramid

Philanthropic responsibilities

Ethical responsibilities

Legal responsibilities

Economic responsibilities

(Carroll 1991, 1998)

Source: Carroll (1991)

The Four Components of CSR

Please see: Carroll and Buchholtz 2015; Trevino and Nelson 2014

Responsibility

Societal

Expectation

Examples

Economic

Required

Be profitable. Maximize sales,

minimize costs. People money,

health and well being, taxes

Legal

Required

Obey laws, adhere to

regulations, pay taxes

Ethical

Expected

Avoid questionable practices.

Do what is right, fair, and just

Philanthropic

Desired/

Expected

Be a good corporate citizen.

Give back.

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Ethics, CSR and Bad Apples

VW (emissions scandal) – Exon Valdez oil

spills in Alaska– BHP Billiton (Ok Tedi/Brazil) –

Securrency (bribes) – Commonwealth Bank

Australia (Financial Planners and Insurance) –

National Australia Bank (Financial Planners) –

Foxconn (suicides)

And there are many claims against other corporations – in your own

time please refer to http://anonhq.com/10-corrupt-corporations-alecs-

dirt-hands/

The Framework Behind the Selection Process

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Some of the Most Ethical Companies in the World, 2017

For a full list, please see: http://worldsmostethicalcompanies.ethisphere.com/honorees/

Company Industry Country

3M Company Industrial Manufacturing USA

Accenture Consulting Services IRELAND

Aflac Incorporated Accident & Life Insurance USA

Allstate Insurance Company Property & Casualty Insurance USA

Alyeska Pipeline Service Company Oil & Gas, Renewables USA

Applied Materials, Inc. Electronics & Semiconductors USA

Arthur J. Gallagher & Co. Insurance Brokers USA

Avnet, Inc. Electronics & Semiconductors USA

Baptist Health South Florida Healthcare Providers USA

BDP International, Inc. Logistics & Transportation USA

 Whilst debate exists in relation to ethical and socially

responsible corporate behaviour, most businesses embrace a

range of CSR practices

 Arguably, corporations do not always go far enough and need

to do more to make a real difference in these extremely

important management areas.

 The civil society and other stakeholders including governments

should also put real efforts in making corporations more ethical

and socially responsible.

Conclusions

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Finally…

Let us hope for a better, harmonious, ethical and socially responsible corporate world!

Thank You!

References • As-Saber, S. & Cairns, G. (2015). ‘Black international business’ – critical issues and

ethical dilemmas. In A. Pullen & C. Rhodes (eds.), The Routledge Companion to Ethics,

Politics and Organization. Routledge, London: 119-131.

• Carroll, AB (1991). 'The pyramid of corporate social responsibility: Toward the moral

management of organizational stakeholders', Business Horizons, 34(4): 39-48.

• Carroll, A., Buchholtz, A. 2015. Business & society : Ethics, sustainability, and

stakeholder management (9th ed.). Mason, Ohio: South-Western/Cengage Learning.

• Crane. A., Matten, D. & Spence, LJ. (2008). Corporate Social Responsibility: In Global

Context, In Crane. A., Matten, D. & Spence, LJ. (eds.). Corporate Social Responsibility:

Readings and Cases in Global Context, Routledge, London: 3-20.

• Freeman, R.E. (2010). Strategic Management: A Stakeholder Approach, Cambridge

University Press, Cambridge.

• Friedman, M. (1970). The Social Responsibility of Business is to Increase its Profits, The

New York Times Magazine, September 13, 1970. Available at

http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-

business.html

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References • Karnani, A (2010) 'The Case Against Corporate Social Responsibility', Wall Street

Journal, 23 August 2010.

• Matten, D & Moon, J (2008) Implicit and explicit CSR: a conceptual framework for a

comparative understanding of corporate social responsibility, Academy of Management

Review 33(2): 404-424.

• McWilliams, A. (2015). Corporate Social Responsibility. Wiley Encyclopedia of

Management. 12:1–4.

• Schwartz, MS & Carroll, AB (2003) ‘Corporate Social Responsibility: A Three-Domain

Approach’, Business Ethics Quarterly, 13(4): 503-530

• Trevino, L. and Nelson, K. 2014. Managing Business Ethics: Straight Talk about How to

Do It Right (6th Edition), John Wiley, New York.

• Velasquez, M., Andre, C., Shanks, T., Meyer, M.J. (2015). “What is Ethics?”, Markkula

Center for Applied Ethics, Santa Clara University, Santa Clara, Available at

https://www.scu.edu/ethics/ethics-resources/ethical-decision-making/what-is-ethics/