PHI 4301 IV

PHI 4301, Business Ethics 1

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

2. Explore the responsibilities of moral agents involved in all aspects of business. 2.2 Identify concepts associated with company culture and corporate social responsibility.

3. Examine the ethical foundations for controversial issues in business.

3.2 Describe how ethical business practices relate to different models of corporate social responsibility.

5. Formulate ethical solutions for real-world situations using ethical theories and concepts.

5.2 Describe the relationship between corporate social responsibility and reputation management.

Required Unit Resources Chapter 5: Corporate Social Responsibility In order to access the following resources, click the links below. Cadbury, A (1987, September). Ethical managers make their own rules. Harvard Business Review, 65(5), 69–

73. https://libraryresources.columbiasouthern.edu/login?url=https://search.ebscohost.com/login.aspx?dire ct=true&db=bsu&AN=8700002394&site=ehost-live&scope=site

Friedman, M. (1970, September 13). The social responsibility of business is to increase its profits. New York

Times. https://link.gale.com/apps/doc/A635262696/ITBC?u=oran95108&sid=bookmark- ITBC&xid=6dcae06c

Unit Lesson This unit is about corporate social responsibility, or CSR as it is commonly known. There are different ways of thinking about the extent to which corporations have moral responsibilities and what the nature of those moral responsibilities are. However, from a philosophical point of view, there is a more fundamental issue here, namely, whether a corporation is the kind of thing that can have moral responsibilities in the first place. This is a question of what philosophers call moral agency. Not everything in life has moral agency. Inanimate objects cannot be said to be good or evil, nor can plants and most (perhaps all) nonhuman animals. Not even all humans are moral agents. Humans do not have full moral agency when they are born (there is no such thing as an evil baby), and it takes some time for it to develop, which is why we think kids who do bad things have diminished moral responsibility. The best model we have of a moral agent is a fully autonomous adult human—someone who can make choices freely. To borrow a phase, with this freedom comes moral responsibility. In philosophical parlance, this is a moral person. The concept of CSR does not map neatly onto the concept of a person. Corporations, by definition, are not identical to any one human being. They are not identical to a particular collection of human beings, since stockholders, employees, and executives can change without affecting the identity of the corporation. We could make a similar point about other types of collective entities, from sports teams to national governments. Moral agency is relatively simple when we apply it to adult humans, but much more complicated when we apply it to collective entities like corporations. Sorting out the conceptual complexity surrounding CSR is not

UNIT IV STUDY GUIDE

Corporate Social Responsibility

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the point of this unit; however, it is important to acknowledge that most of the debate around CSR is a logical consequence of the imperfect mapping between humans and corporations as moral agents. When Mitt Romney said, “corporations are people” during the 2012 presidential campaign, he was met with derision from mainstream media (as cited in Hartman et al., 2024, p. 153). In fairness to Romney, he was correctly reflecting the consensus of business and legal opinion that corporations are, indeed, moral persons. U.S. law protects the free speech as well as religious expression rights of corporations and holds corporations liable for wrongdoing. We consider corporations to be moral agents, but scholars differ as to the correct model for framing the discussion around their consequences, principles, and character. The minimalist position—referred to variously as the economic model, shareholder model, or managerial capitalism—says businesses have an obligation to serve the interests of their respective owners and that is it. The title of Milton Friedman’s (1970) article “The Social Responsibility of Business Is to Increase Its Profits” is as explicit a declaration of the shareholder model as you will find. The model is primarily concerned with consequences. Businesses do have obligations to comply with laws and customs against fraud, but these are not moral principles as much as the basic ground rules for entering the market. Basically, if a business makes money for its owners, then it is good, and the more profit the better (Freidman, 1970). The primacy of profitmaking does entail certain moral principles. Business managers have a duty to protect and promote profits for business owners, regardless of the consequences for society. Any intervention that decreases profit for the sake of society amounts to a violation of owners’ rights. Although nothing prevents a business from participating in social causes, they ought to be targeted toward a reputational advantage bringing additional profits. In contrast to the shareholder model, the stakeholder model casts a wider net of moral concern. Sir Adrian Cadbury (1987) stated that the ethical framework for businesses is set by society and that company leaders must come up with codes of conduct to run companies. This puts the responsibility on both society and business leaders. To put it more candidly, businesses that benefit from society cannot just freeload on the moral values everyone else in society upholds. Stakeholders include not just business owners but all those affected by business decisions. The stakeholder model entails principles that put ethical constraints on business decisions (Hartman et al., 2024). Stakeholders are humans, humans have rights, and it is morally wrong to violate human rights. It follows that businesses have a moral duty to operate within a set of choices that respect human rights. If we characterize the stakeholder model as do no harm, then we can characterize the integrative model as do some good. This model says businesses exist within a global community having the ultimate goal of human flourishing or, more broadly, a biosphere supporting all life (Hartman et al., 2024). In this context, business activity is morally no different from any other activity impacting the whole. The profitability of a business is but one metric we must use to evaluate its goodness. Other considerations must include social and ecological benefits. The integrative model is by far the most consequentialist of the CSR models. It is possible that, in the end, the differences between the CSR models will not matter very much. Operating in accordance with the integrative model is, according to a growing number of studies, a highly effective way to satisfy the aims of the stakeholder model. In other words, evidence suggests that businesses with an expansive view of their moral agency are more profitable over time than businesses with a narrow moral vision.

References Cadbury, A (1987, September). Ethical managers make their own rules. Harvard Business Review.

https://hbr.org/1987/09/ethical-managers-make-their-own-rules Friedman, M. (1970, September 13). The social responsibility of business is to increase its profits. New York

Times. https://www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of- business-is-to.html

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Hartman, L. P., DesJardins, J., & MacDonald, C. (2024). Business ethics: Decision making for personal integrity and social responsibility (6th ed.). McGraw-Hill Education. https://online.vitalsource.com/#/books/9781265810153

Learning Activities (Nongraded) Nongraded Learning Activities are provided to aid students in their course of study. You do not have to submit them. If you have questions, contact your instructor for further guidance and information. The nongraded resource below can be found in Blackboard beneath the study guide: Unit IV Check Your Understanding-Self Check Quiz