CORPORATE SOCIAL RESPONSIBILITY (CSR) AND ETHICS

Chapter 15 Lecture 1

Definitions and Relationships

Corporate social responsibility (CSR) is the process by which businesses negotiate their role in society In the business world, ethics is the study of morally appropriate behaviors and decisions, examining what "should be done Although the two are linked in most firms, CSR activities are no guarantee of ethical behavior

Recent Evidence of CSR Interest

An Internet search turns up 15,000 plus response to corporate citizenship Journals increasingly rate businesses (and NGOs) on socially responsive criteria:
Best place to work Most admired Best (and worst) corporate reputation

Reasons for CSR Activities

CSR activities are important to and even expected by the public
And they are easily monitored worldwide

CSR activities help organizations hire and retain the people they want CSR activities contribute to business performance

Corporate Social Responsibility Continuum

Do more than required; e.g. engage in philanthropic giving Integrate social objectives and business goals

Maximize firms profits to the exclusion of all else

Fight social responsibility initiatives

Balance profits and social objectives

Do what it takes to make a profit; skirt the law; fly below social radar

Comply; do what is legally required

Articulate social value objectives

Lead the industry and other businesses with best practices

CSR are Grounded by Opposing Objectives (Maximize Profits to Balance Profits with Social Responsibility) and so Activities Range Widely
Do what it takes to make a profit; skirt the law; fly below social radar Fight CSR initiatives Comply with legal requirements Do more than legally required, e.g., philanthropy Articulate social (CSR) objectives Integrate social objectives and business goals Lead the industry on social objectives

Businesses CSR Activities

Philanthropy
give money or time or in kind to charity Integrative philanthropyselect beneficiaries aligned with company interests

Philanthropy will not enhance corporate reputation if a company

fails to live up to its philanthropic image or if consumers perceive philanthropy to be manipulative

Integrate CSR Globally

Incorporate values to make it part of an articulated belief system Act worldwide on those values
Cause-related marketing Cause-based cross sector partnerships

Engage with stakeholders

Primary stakeholders Secondary stakeholders

Business Ethics Development

The cultural context influences organizational ethics Top managers also influence ethics The combined influence of culture and top management influence organizational ethics and ethical behaviors

The Evolving Context for Ethics

From domestic where ethics are shared To international where ethics are not shared when companies:
Make assumptions that ethics are the same Ethical absolutismthey adapt to us Ethical relativismwe adapt to them

To global which requires an integrative approach to ethics

Emergence of a Global Business Ethic

Growing sense that responsibility for righting social wrongs belongs to all organizations Growing business need for integrative mechanisms such as ethics
Ethics reduce operating uncertainties Voluntary guidelines avoid government impositions

Ethical conduct is needed in an increasingly interdependent worldeveryone in the same game Companies wish to avoid problems and/or be good public citizens

Ways Companies Integrate Ethics

Top management commitment in word and deed Company codes of ethics Supply chain codes Develop, monitor, enforce ethical behavior Seek external assistance

External Assistance with Ethics

Industry or professional codes Certification programs, e.g., ISO 9000 Adopt/follow global codes
Caux Round Table Principles

Reasons for Businesses to Engage in Development of a Global Code of Business Ethics

Create the same opportunity for all businesses if there are common rules Level the playing field They are needed in an interconnected world They reduce operating uncertainties If businesses dont collaborate, they may not like what others develop

Four Challenges to a Global Ethic

Global rules emerge from negotiations and will reflect values of the strong Global rules may be viewed as an end rather than a beginning Rules can depress innovation and creativity Rules are static but globalization is dynamic