CORPORATE SOCIAL RESPONSIBILITY (CSR) AND ETHICS Chapter 15 Lecture 1

1. CORPORATE SOCIAL RESPONSIBILITY (CSR) AND ETHICS Chapter 15 Lecture 1

2. 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

3. 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

4. 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

5. Corporate Social Responsibility Continuum Do more than required; e.g. engage in philanthropic giving Integrate social objectives and business goals Fight social responsibility initiatives Maximize firm’s profits to the exclusion of all else Balance profits and social objectives Do what it takes to make a profit; skirt the law; fly below social radar Lead the industry and other businesses with best practices Comply; do what is legally required Articulate social value objectives

6. 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

7. Businesses CSR Activities • Philanthropy • give money or time or in kind to charity • Integrative philanthropy—select 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

8. 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

9. 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

10. 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 absolutism—they adapt to us • Ethical relativism—we adapt to them • To global which requires an integrative approach to ethics

11. 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 world—everyone in the same game • Companies wish to avoid problems and/or be good public citizens

12. 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

13. External Assistance with Ethics • Industry or professional codes • Certification programs, e.g., ISO 9000 • Adopt/follow global codes • Caux Round Table Principles

14. 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 don’t collaborate, they may not like what others develop

15. 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