Business Ethics Now (Ghillyer) Chapter 4 Corporate Social

Responsibility
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Corporate
social
responsibility
(CSR) KEY
TERM

Actions of an organization that are targeted

toward achieving a social benefit over and
above maximizing profits for the shareholders
and meeting all its legal obligations. Also know
as corporate citizenship or corporate
conscience.

2.

Assumptions
of CSR

1. Corporation is operating in a competitive

environment.
2. Managers of the corporation are committed
to an aggressive growth strategy while
complying with all federal, state and local legal
obligations.

3.

Instrumental
approach to
CSR KEY
TERM

Perspective that the only obligation of a

corporation is to maximize profits for its
shareholders in providing goods an services
that meet the needs of the customers.
>focuses on the internal world of the
corporation itself and assumes there are not
external consequences to the actions of the
corporation and its management.

1.

4.

5.

6.

7.

"doing well by
doing good"

doing what is in the best long-term interest of

the customer is ultimately doing what's best
for the company
>key concern - customer perception.

8.

Five trends
behind CSR

1. Transparency - business practices have

become transparent
2. Knowledge - customers and investors have
more information at their disposal
3. Sustainability - earth's natural resources
are in accelerating decline
4. Globalization - protecting society by
balancing private corporate interests against
broader public interests
5. Failure of the public sector public has lost
confidence in the public sector as the best or
most appropriate venue for addressing social
problems

9.

most famous advocate of instrumental

approach
>argued it would be unethical for a corporation
to do anything other than deliver the profits for
which the investors have entrusted it with their
funds.
>managers have an ethical obligation to fulfill
his role in delivered on the expectations of his
employers.
>view supports rights of individuals to make
money with their investments.
>view recognizes clear legality of the
employment contract

Problems
with
operational
CSR

>how to promote acts to your stakeholders as

proof of your new corporate conscience
without appearing to be manipulative to
generate press coverage for policies that
could easily be dismissed as feel-good
initiatives that the chasing customer favor.
>many CSR initiatives do not generate
immediate financial gains, as cynical
customer wait

10.

adverse
results of
experimenting
with CSR
initiatives

>employees feel that they are working for an

insincere organization.
>public sees a token action for publicity.
>organization does not perceive much benefit
from CSR and does not see the need to
develop it further.

11.

bottom line

Social
contract
approach to
CSR KEY
TERM

Perspective that a corporation has an

obligation to society over and above the
expectations of its shareholders.
>acknowledges that there is a world outside
that is affected by the actions of the
corporation.

how much money is left over after all the bills

have been paid from the revenue generated
from the sale of a product or service.

12.

triple bottom
line (3BL)

1. social performance.
2. environmental performance.
3. financial performance.

Change of the
focus of
social
contract
approach

>original focus was an economic one; assumed

that the continued economic growth would bring
an equal advance in quality of life ---but
continued corporate growth was not matched
by an improved quality of life.
>realization that corporate actions had potential
impact on many lives, led to clear opinion shift.
>modern social contract approach argues that
there is an obligation for the corporation to
meet the demands of society rather than just
the demands of a targeted groups of customers
>corporations are social institutions as well as
economic enterprises.

13.

Ethical CSR
KEY TERM

Purest or most legitimate type of CSR in

which organizations pursue a clearly defined
sense of social conscience in managing
> their financial responsibilities to
shareholders
> their legal responsibilities to their coal
community and society as a whole
>their ethical responsibilities to do the right
for all their stakeholders.

Milton
Friedman

14.

Altruistic
CSR KEY
TERM

Philanthropic approach to SCR in which organizations underwrite specific initiatives to give back to the company's local
community or to designated national or international programs ( with funds that rightly belong to the shareholders).
UTILITARIAN
>concerns as to the choice of charitable giving is at the discretion of corporation (shareholders could end up supporting
a cause they may not support individually).

15.

criticism of
Altruistic
CSR

immoral since it represents a violation of shareholder rights if they are not given the opportunity to vote on the initiative
launched in the name of corporate social responsibility.

16.

Strategic
CSR KEY
TERM

Philanthropic approach to CSR in which organizations target programs that will generate the most positive publicity or
goodwill for the organization but which runs the greatest risk of being perceived as self-serving behavior on the part of
the organization.
>ETHICAL - these initiatives benefit stakeholders while meeting fiduciary obligations to the company's shareholders.

17.

"carbon
neutral"

offsetting damage being done to the environment by purchasing credits for "carbon-positive" projects to balance out your
emissions.

18.

carbon
footprint

calculation of total emissions on an annual basis.