Business ethics chapter 9

Corporate social responsibility
responsibility beyond economic and legal obligations- to act ethically and to contribute in a positive way to society.
Corporate social responsibility
focuses more on external factors. Values serve as the glue to the org with external factors and ethics.
3 reasons for corporate social responsibility
pragmatic reason, an ethical reason, a strategic reason.
Pragmatic
_____ reason for CSR is that business must use its power responsibly in society or risk losing it.Corporations exist as legal entities with certain advantages (such as limited liability) because society allows them to do so, and these corporate rights and advantages can be taken away from firms that are perceived to be irresponsible.
Pragmatic
CSR can help to maintain legitimacy, protect reputation, visibility for _____ reason of CSR
Pragmatic
_____ reason for CSR: Avoid being too reactive, playing catch-up to repair damage. One way to be proactive in a ____ way is by analyzing stakeholder landscape and initiating constructive dialog. Ex of this- Dell including environments to craft a recycling strategy
Ethical
_____ reason for CSR argues that businesses, as part of society, have a responsibility to behave ethically. It is the right thing to do. Some say duty exists despite whether an economic payout is likely to result (some people or some top managers who put this into place believe “look, we should be doing thing regardless.”- levis example) Can be costly in the short-term but likely to pay off in the long term (hondas commitment to fuel economy)
ethical standards
example of being committed to _______ is levis jeans. They have gone above and beyond what they should be doing in terms of making sure they uphold these standards even if it makes so that the economic gain isn’t quite there.
Strategic
____ reason for CSR: being socially responsible creates shared values and can differentiate one from competitors (has the potential to be a competitive advantage). When society prospers, business prospers- they are partners.
Shared value
according to Proter and Kramer, you should search for opportunities that create ______- opportunities that are good for business as well as good for society because the two are thought of as partners
strategic
the ____ approach is more proactive and affirmative than the pragmatic approach because it asks companies to identify and acknowledge company actives that can do harm (or that can be helpful) and encourages firms to scrutinize their practices and address potential harms by focusing on their value chain activities.
Value chain
business activities of a firm that add value as a product or service passes from one part of the business to another.
ways to use value chain
where in the value chain does the organization create (potential) harm and how can it manage it.. example of toy company. Also used to recognize opportunities for social good.. example of fed ex
Responsive
_____ CSR: identify value chain opportunities, creating clear goals and evaluation criteria, implementing initiatives. Also helps the organization succeed in a competitive environment.
Strategic
____ CSR: CSR initiatives are sometime costly but still carried out for ethical reasons. Consistent with values and the right thing to do (properly disposing of toxic waste). Can backfire if society believes the company only engages in CSR initiatives when it can profit from doing so.
Types of CSR
Philanthropic responsibilities, ethical responsibilities, legal responsibilities, and economic responsibilities.
Economic
Type of CSR where the primary function of producing goods and services that consumers need and want while making an acceptable profit.
economic
if you don’t consider _____ responsibility then you can’t really consider the rest of the responsibilities because without financial viability, the other responsibilities do not matter.
Milton Friedman
this person said managers sole responsibility is to maximize profits. Also said management should make as much money as possible while conforming to the basic rules of society, both those embodied in the law and those embodied to ethical custom.
legal
_____ type of CSR responsible for carrying out work in accordance with current law and government regulations. Can be seen as the bare minimum in terms of ethical standards.
ethical
_____ type of CSR- general responsibility to avoid harm and do whats right. Places expectations on businesspersons to function at a level above the law.
ethical CSR
example of ____ where building products company insisted on having asbestos warning label, despite losing business in Japan.
concurrently
all of the different types of CSR need to be considered _____- need to be considered all together.
Philanthropic
_____ type of CSR- actives that promote human welfare of goodwill generally through donations of time and money or products and services.
Philanthropic
Failure to be ____ is not unethical. Some question whether it is a responsibility at all. Those with wealth are often expected to share their good fortune (Bill gates and Andrew Carnegie). Public disclosure is not required. Because of knowledge and wealth, obligations exist to give back.
Philanthropic
Examples of ____ CSR: Fed Ex response to the tsunami of 2004 in Southeast Asia. Wal-mart in response to Katrina.
triple bottom line
a firms economic, social, and environmental impacts
sustainability
the term ____ has sometimes been used to represent harmony among the three dimensions of TBL (economic, social, and environmental impacts)
Sustainable development
meeting the needs of the present without compromising the ability of future generations to meet their needs.
Sustainability
Companies are using _____ as an umbrella term to encompass all CSR efforts that make business more sustainable in the long term, including environmental efforts.
CSR
Other companies use _______ as the umbrella term and sustainability to represent their social responsibility efforts aimed at preserving the natural environment
Environmental Sustainability
More execs agree with the scientific consensus- human activity is a key driver of climate change. Stakeholder expectations that companies will use resources responsibly, recycle and reuse when possible, eliminate harmful toxins, and reduce greenhouse gas emissions.
support
some execs actually _____ increased government regulations, seeing it as a way of reducing uncertainty and ensuring fairness.
Greenwashing
corporate efforts that are seen as disingenuous attempts at public relations rather than sincere efforts to reduce environmental harm or to do good.
sustainability
some organizations make _____ the cornerstone of their broader strategy in an effort to gain competitive advantage.
sustainability
____ has come to be associated with environmental impact- “long term growth that doesn’t deplete natural resources and lowers emissions of greenhouse gases.”
Benefits of a good reputation
Pays off in terms of lower costs, higher sales, the ability to charge premium prices. Attracts investors. Workers are more attracted to socially responsible organizations.
Cost of illegal conduct for senior executives
sentenced to prisión and financial restitution. Far from “club fed”. Shame brought to self and families. Often lose their families
Cost of illegal conduct for the firm
Drop in stock prices. FInancial penalties. Lost reputation with associated market value losses. Lose legitimacy with business partners. More profitable, reputable forms distance themselves.
Cost of government regulation
Government is responsible for risks to our system and for holding companies accountable for the externalities they create. Industries that became de-regulated have been on the forefront of recent business scandals and society lost trust and demanded more regulation.
Externalities
Costs to society, such as environmental damage, that are produced by companies, but not reflected in the company’s cost structure.
The cost of government regulation
regulation, such as SOX, has placed focus on conducting audits and away from innovation and day-to-day- business (a cost to business). Benefits: Improved internal control systems, increased credibility of the markets, catch problems before they become serious. companies have streamlined processes to become more efficient. increased shareholder confidence in financial reporting.
Boards of directions
____ of public companies are taking their oversight responsibilities more seriously because of the new regulations as well, largely out of concern for their own personal liability.
What research says about social responsibility and firm performance
A recent meta analysis (summary of a bunch of quantitive studies of CSR) provides evidence for a positive relationship between CSR and financial performance. A “virtuous cycle” likely exists-CSR leads to higher financial performance. Higher financial performance provides slack resources for CSP. Does show a pattern where orgs that are more socially responsible do tend to have higher firm performance
Being socially responsible because its the right thing to do
businesspeople are people first, who value their good reputations and the opinions of their friends, family and community. Businesspeople are guided by a moral compass. Its not just about financial consequences, but about human consequences.
both
over the long term, companies must have _____ excellent business strategies and socially responsible business practices.
financial
paying attention to the social bottom line and the environmental bottom line suggest the _____ bottom line is going to be better.