CORPORATE SOCIAL RESPONSIBILITY (CSR)

AND ETHICS

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 workMost admiredBest (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

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

Fight social responsibility initiatives

Comply; do what is legally required

Integrate social objectives and business goals

Lead the industry and other businesses with best practices

Do more than required; e.g. engage in philanthropic giving

Articulate social value objectives

Corporate Social Responsibility Continuum

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 ActivitiesPhilanthropy

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

Integrate CSR GloballyIncorporate values to make it part of an articulated belief systemAct worldwide on those values

Cause-related marketingCause-based cross sector partnerships

Engage with stakeholdersPrimary stakeholdersSecondary 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 EthicsFrom domestic where ethics are shared To international where ethics are not shared when companies:

Make assumptions that ethics are the sameEthical absolutism—they adapt to us Ethical relativism—we 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 uncertaintiesVoluntary guidelines avoid government impositions

Ethical conduct is needed in an increasingly interdependent world—everyone in the same gameCompanies 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 codesCaux Round Table Principles

Reasons for Businesses to Engage in Development of a

Global Code of Business EthicsCreate 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

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