(CSR)
The debate
Friedman vs. Freeman
http://www.youtube.com/watch?v=_sNKIEzYM7M
Personal view
Corporations are like people & can therefore be held accountable for their actions
Social view
Corporations are social institutions with social responsibilities (best description of current reality?)
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Philanthropic
Ethical Resp.
CSR Pyramid
The voluntary acceptance by business corporations of responsibilities to their stakeholders in addition to their (1) economic (make profits) and (2) legal (obey the law) responsibilities Archie Carrolls 4-part definition of CSR: to (1) and (2) above, add also (3) and (4) of the next slides
http://www.terry.uga.edu/directory/profile/acarroll/
CSR Pyramid (3) ethical responsibilities operate above minimum behaviour mandated by law avoid questionable business & mngt. practices follow both spirit & letter of laws respect others rights & do what is fair/just refuse to deal with unethical customers & suppliers refuse to take advantage of lax environmental, labour, health & safety standards in other jurisdictions (care ethic); etc.
CSR Pyramid
(4) philanthropic responsibilities be a good corporate citizen improve the community assist education, health services, arts/culture, human welfare generally facilitate voluntarism among employees;
etc.
Economic Components
To perform in a manner consistent with
maximising earnings per share To be committed to being as profitable as possible To maintain a strong competitive position Maintain a high level of operational efficiency A successful firm is defined as one that is consistently profitable
Legal Components
To perform in a manner consistent with expectations
of government & the law To comply with Federal, Provincial, Municipal laws & regulations To be a law-abiding corporate citizen To provide goods & services that at least meet minimal legal requirements To treat employees according to least minimal legal requirements A successful firm is defined as one that fulfils its legal obligations
Ethical Components
To perform in a manner consistent with the
expectations of societys ethical norms To recognise & respect new or evolving ethical norms adopted by society To prevent ethical norms from being compromised in order to achieve corporate goals To recognise that ethical behaviour goes beyond mere compliance with laws & regulations respect both the letter & the spirit of the law A successful firm is defined as doing what is expected ethically
Philanthropic Components
To help improve education, health services, arts &
culture, human welfare generally To assist voluntarily those projects that enhance a communitys quality of life To facilitate the voluntary & charitable activities of managers/employees in the community To assist other organizations that attempt to improve the life of the community A successful firm is defined as one that performs in a manner consistent with the philanthropic & charitable expectations of society
Strategic Philanthropy
True strategic [philanthropic] giving addresses important social and economic goals simultaneously, targeting areas of competitive context where the company and society both benefit because the firm brings unique assets and expertise. (M. Porter, 2002) This strategic or context-focused philanthropy seeks to enhance the business environment in the locations where a corporation operates in addition to providing social benefits to others in the community.
http://csr.cisco.com/pages/about-cisco-csr
Todays Stakeholders
Pluralistic society (many different interests/stakeholders) + Rising expectations held by the public (regarding both material goods & especially quality of life issues) + Interest groups & the public are now less deferential to business & govt. authority = If expectations not met by business, interest groups try other means (influence business via govt. regulation and/or consumer boycotts) business must respond
effectively
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Case for Involvement (CSR) 8. CSR generates goodwill for business 9. Business has the resources / Let business try (business has leadership, managerial, & technical expertise in many areas, plus financial & other resources to try to solve some social problems; some problems best handled by business; fill in gaps when government doesnt act)
Case for Involvement (CSR) 10. Better to be proactive rather than reactive (e.g., easier & less costly to prevent environmental pollution & deterioration rather than to clean it up later) (preempt problems before they grow harder to manage) 11. Social capitalism (businesspeople are concerned citizens; some businesspeople use business, rather than interest groups & government, to advance social goals) (e.g.,
Patagonia Outdoor Clothing & Interface Carpet Tiles, both are concerned about environment & take concrete action)
Counterargument
3. Business lacks mandate (does business have public support to address social problems? Does this usurp role of government?) 4. Business lacks skills (do businesspeople really have the skills needed to identify & to solve social problems?)
Counterargument
5. Business has enough power already; dont give it another role (some are concerned that business values will influence social issues in addition to already influencing economic issues) (however, business is a powerful institution in society whether or not business adopts CSR practices)
Counterargument
6. Lowers economic efficiency & profits (harms society by diverting scarce resources away from optimal use as determined by free market; increased business failures may result) 7. No clear CSR standards (what is responsible behaviour? what is selfish? what are the standards? who determines these standards?)
Counterargument
only a few ways currently to effectively hold business to account for its social impacts) (certainly govt. has a role; but other than that who?) (some interest groups act as watchdogs/monitors, but without legal enforcement powers however they only have the power to embarrass or organize boycotts)
Counterargument 10. Higher costs of CSR-firms penalizes them relative to competitors (e.g., firms that outsource to low-wage nations do better than firms who refuse to outsource on CSR grounds) 11. Imposes hidden costs / passes them on to stakeholders (CSR costs may lead to lower wages for employees; lower dividends for owners; higher prices for customers)
Counterargument
12. Places responsibility on business rather than on individuals may encourage individuals to abandon their own responsibility to society erosion of individual responsibility may result individuals should work on social problems & not use corporate resources for this purpose
Counterargument 13. Business uses CSR only as a public relations tool CSR sometimes adopted to advance narrow profit-oriented goals, not as a genuine concern with ethics & philanthropy increases cynicism about business on the part of some stakeholders) (Joel Bakan CSR is an attempt by business to escape government regulation
http://www.youtube.com/watch?v=ZCa3_W3nTsw&feature=endscreen&NR=1
Additional Information
Bakan, J. The Corporation: The Pathological Pursuit of Profit and Power. 2004. Karakowsky, L., A.B. Carroll, and A.K. Buchholtz. Business and Society: Ethics and Stakeholder Management, First Canadian Edition. 2005. Sexty, R.W. Canadian Business and Society: Ethics and Responsibilities, Second Edition. 2011.