We make a living by what we get,

but we make a life by what we give.”

– Winston Churchill

5/1/2024
 Corporate Social
Responsibility
0 Corporate social responsibility deals with actions
that affect a variety of parties in a company’s
environment.
0 A socially responsible company shows concern for
its stakeholders—anyone who, like owners,
employees, customers, and the communities in
which it does business, has a “stake” or interest
in it.

5/1/2024
 What is the relation between CSR
and business ethics?
0 Business ethics represents the moral principles a company
uses to ensure all employees act in an acceptable manner when
completing business functions.
0 Social responsibility is typically an ideological theory
governments and the general public hold, believing that
businesses should not conduct themselves in a manner
counter to cultural or societal norms.
0 The marriage of business ethics and social responsibility
occurs when companies institute a written code of ethics to
prove that the company only acts in its best interest so long as
it does not damage the company’s social responsibility.
 The Relation between CSR
and business ethics

5/1/2024
Difference between Ethics and
Corporate Social Responsibility
0 Social responsibility is concerned with
functions, programmes and policies of an
enterprise,
0 whereas business ethics is related with the
conduct and behaviour of businessmen.
0 But social responsibility of business and its
policies are influenced by ethics.

5/1/2024
 Corporate Social
Responsibility

5/1/2024
 What is Corporate Responsibility?
Corporate Social
Responsibility (CSR) is the
obligation of organization
management to make
decisions and take actions
that will enhance the
welfare and interests of
society as well as the
organization
Copyright ©2010 by South-Western, a division of Cengage
Learning. All rights reserved. 8
 Corporate Social
Responsibility (CSR)
Preliminary definitions of CSR
0 The impact of a company’s actions on society
0 Requires a manager to consider his acts in terms of a
whole social system, and holds him responsible for
the effects of his acts anywhere in that system
Building Diverse Workforces

5/1/2024
 Three Theories of CSR

5/1/2024
Three Approaches to Corporate Responsibility
0 According to the traditional view of the corporation, it exists
primarily to make profits. From this money-centered
perspective, insofar as business ethics are important, they
apply to moral dilemmas arising as the struggle for profit
proceeds. These dilemmas include:
0 “What obligations do organizations have to ensure that
individuals seeking employment or promotion are treated
fairly?”
0 “How should conflicts of interest be handled?”
0 “What kind of advertising strategy should be pursued?”.
0 There are 3 theoretical approaches to these new
responsibilities:
1. Corporate social responsibility (CSR)
2. The triple bottom line 3. Stakeholder theory
 1. Corporate social
responsibility (CSR)
Group 1

5/1/2024
Corporate Social Responsibility (CSR)
0 The title corporate social responsibility means
0 It’s a general name for any theory of the corporation that
emphasizes both the responsibility to make money and the
responsibility to interact ethically with the surrounding
community.
0 As a specific theory of the way corporations interact with the
surrounding community and larger world, corporate social
responsibility (CSR) is composed of four obligations:
- The economic responsibility
- The legal responsibility
- The ethical responsibility
- The philanthropic responsibility
5/1/2024
Evaluating Corporate Responsibility

Copyright ©2010 by South-Western, a division of Cengage

Learning. All rights reserved. 15
Pyramid of CSR
 Corporate Social Responsibility (CSR)
Carroll’s Four Part Definition
Understanding the Four Components

Responsibility Societal Examples

Expectation
Economic Required Be profitable. Maximize sales,
minimize costs, etc.
Legal Required Obey laws and regulations.
Ethical Expected Do what is right, fair and just.
Discretionary Desired/ Be a good corporate citizen.
(Philanthropic) Expected
Business and Society: Ethics and Stakeholder Management, 5E • Carroll & Buchholtz
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved
2-16
Corporate Social Responsibility (CSR)
0 The economic responsibility to make money. Required by
simple economics, this obligation is the business version of the
human survival instinct. Companies that don’t make profits
are—in a modern market economy—doomed to perish. Of
course there are special cases.
0 Nonprofit organizations make money (from their own
activities as well as through donations and grants), but pour it
back into their work.
0 Also, public/private hybrids can operate without turning a
profit. In some cities, trash collection is handled by this kind of
organization, one that keeps the streets clean without (at least
theoretically) making anyone rich. For the vast majority of
operations, however, there have to be profits. Without them,
there’s no business and no business ethics.
Corporate Social Responsibility (CSR)
0 The legal responsibility to adhere to rules and regulations.
Which are understood as a proactive duty.
0 laws aren’t boundaries that enterprises cross over if the penalty
is low; instead, responsible organizations accept the rules as a
social good and to obey not just the letter but also the spirit of
the limits.
0 There is a difference between the driver who stays under the
speed limit because he can’t afford a traffic ticket, and one who
obeys because society as a whole is served when we all agree to
respect the limits.
0 A CSR vision of business affirms that society’s limits will be
obeyed, even if the fine is only one dollar.
Corporate Social Responsibility (CSR)
0 The ethical responsibility to do what’s right even when not
required by the letter or spirit of the law.
0 Many industrial plants produce, as an unavoidable part of their
fabricating process, poisonous waste. The law governing toxic
waste disposal was ambiguous, but even if the companies
weren’t legally required to enclose their poisons in doubled
encased, leak-proof barrels, isn’t that the right thing to do so as
to ensure that the contamination will be safely contained?
0 It might not be the right thing to do in terms of pure profits,
but from a perspective that values everyone’s welfare as being
valuable, the measure could be recommendable.
 Corporate Social Responsibility (CSR)
0 The philanthropic responsibility is to contribute to society’s
projects even when they’re independent of the particular
business. Some donate a percentage of sales or profits to worthwhile causes.
0 A lawyer driving home from work may spot the local children gathered around
a makeshift lemonade stand and sense an obligation to buy a drink to
contribute to the neighborhood project.
0 A law firm may volunteer access to their offices for an afternoon so some local
schoolchildren may take a field trip to discover what lawyers do all day.
0 An industrial chemical company may take the lead in rehabilitating an empty
lot into a park.
0 None of these acts arise as obligations extending from the day-to-
day operations of the business involved. They’re not like the
responsibility a chemical firm has for safe disposal of its waste.
0 Instead, these public acts of generosity represent a view that
businesses, like everyone in the world, have some obligation
to support the general welfare in ways determined by the
needs of the surrounding community.
Volunteerism
0 Many companies support employee efforts to help local
communities.
0 Patagonia, for example, a maker of outdoor gear and clothing,
lets employees leave their jobs and work full-time for any
environmental group for two months—with full salary and
benefits; so far, more than 850 employees have taken
advantage of the program. “Environmental Internships,”
Patagonia Web site,
0 http://www.patagonia.com/us/patagonia.go?assetid=1963

5/1/2024
Supporting Social Causes
0 Companies often take active roles in initiatives to improve health and social
welfare.
0 Microsoft’s former CEO Bill Gates intends to distribute more than $3 billion
through the Bill and Melinda Gates Foundation, which funds global health
initiatives, particularly vaccine research aimed at preventing infectious
diseases, such as polio,“2011 in undeveloped countries.
0 Noting that children from low-income families have twice as many cavities
and often miss school because of dental-related diseases, P&G invested $1
million a year to set up “cavity-free zones” for 3.3 million economically
disadvantaged children at Boys and Girls Clubs nationwide. In addition to
giving away toothbrushes and toothpaste, P&G provided educational
programs on dental hygiene.
0 The company maintained clinics providing affordable oral care to poor
children and their families.
0 P&G recently provide more than two billion liters of clean drinking water
to adults and children living in poverty in developing countries.
0 The company believes that this initiative will save an estimated ten
thousand lives.
 Corporate Social Responsibility (CSR)
0 Difficult questions arise when the economic responsibility
conflicts with the legal on. EX, to remain profitable, an industrial plant
may need to dispose of waste and toxins in barrels that barely meet legally
required strengths.
0 Assuming those legal limits are insufficiently strict to guarantee the barrels’
seal, the spirit of the law may seem violated. The positive economic aspect of
the decision to cut corners is the ability to stay in business. That means local
workers won’t lose their jobs, the familial stresses of unemployment will be
avoided, suppliers will maintain their contracts, and consumers will still be
served.
0 The negative, however, is those toxins will escape their containers and leave a
generation of workers’ children poisoned.
0 If necessary, the company should have accepted bankruptcy before causing the
social damage it did.
0 CSR means every business holds four kinds of obligations and
should respond to them in order: first the economic, then the
legal, next the ethical, and finally the philanthropic.
 2. The triple bottom line
Group 2

5/1/2024
The Triple Bottom Line
0 The triple bottom line is a form of corporate social
responsibility dictating that corporate leaders tabulate
bottom-line results not only in economic terms (costs versus
revenue) but also in terms of company effects in the social
realm, and with respect to the environment.
0 The notion of sustainability is very specific. At the intersection
of ethics and economics, sustainability means the long-term
maintenance of balance.
0 As elaborated by theorists including John Elkington, here’s
how the balance is defined and achieved economically,
socially, and environmentally:
The Triple Bottom Line

5/1/2024
 Sustainability
0 The sustainability initiatives believe that meeting business needs
and protecting the environment are not mutually exclusive. They
must do both.
0 Google’s Chief Sustainability Officer is responsible for reducing
Google’s impact on the environment. (Google has the world’s
biggest solar power system) that reduce the company’s use of
electricity. The CSO makes sure Google’s offices are green—
energy efficient and healthy, gets to pick out carpeting that can be
returned to the manufacturer when it’s worn out so it can be
ground up and used to make other rugs, rather than sit in a
landfill decaying. Also makes sure there is plenty of filtered water
for everyone and 90 percent fresh air coming into the building
during the day.
Sustainability
0 Google, like many other companies who are proactive in
environmental and social responsibility issues often have a
“triple bottom line” focus.
0 To reporting profit through income statement,
- companies should report their progress in being socially
responsible to other people (stakeholders, including employee,
customers, owners)
- and to the planet (the environment).
- Triple bottom line: It consists of three Ps: profit, people, and
planet,
 The Triple Bottom Line
Economic sustainability
0 Sustainability as a virtue means valuing business plans that may
not lead to quick riches but that also avoid calamitous losses.
0 Moving this reasoning dumping toxins into the ground soil,
there’s a possible economic-sustainability argument against that
kind of action.
0 Corporations trying to get away with polluting the environment
may increase their bottom line in the short term. Looking
further out, however, there’s a risk that a later discovery of the
action could lead to catastrophic economic consequences. This
possibility leads immediately to the conclusion that concern for
corporate sustainability in financial terms argues against the
dumping.
 The Triple Bottom Line
Social sustainability values balance in people’s lives and the way
we live. It doesn’t end with dollars; it also requires human respect.
All work, the logic of stability dictates, contains dignity, and no
workers deserve to be treated like machines or as expendable tools
on a production line.
0 In today’s capitalism, a world in which dignity has been stripped
away from a large number of trades and professions. They see
minimum wage workers who’ll be fired as soon as the next
economic downturn arrives. They see bosses hiring from
temporary agencies, turning them over fast, not even bothering
to learn their names.
0 Finally, social sustainability requires that corporations maintain a
healthy relationship with people.
0 It’s clear that any corporation spilling toxins that later appear as birth defects
in area children isn’t going to be able to sustain anything with those living
nearby. Any hope for cooperation in the name of mutual benefit will be
drowned by justified hatred.
The Triple Bottom Line
0 Environmental sustainability actions must be taken to
facilitate our natural world’s renewal.
0 Conservation of resources, therefore, becomes tremendously
important, as does the development of new sources of energy
that may substitute those we’re currently using.
0 Recycling or cleaning up contamination that already exists is
important here, as is limiting the pollution emitted from
factories, cars, and consumer products in the first place. All
these are actions that corporations must support, not because
they’re legally required to do so, but because the preservation
of a livable planet is a direct obligation within the triple-
bottom-line model of business responsibility.

5/1/2024
3. Stakeholder Theory
Group 3
 Stakeholder Theory
0 Who are the stakeholders surrounding companies? The answer
depends on the particular business. If the enterprise produces
chemicals for industrial use and is located in a small town, the
stakeholders include:
➢ Company owners, whether a private individual or shareholders
➢ Company workers
➢ Customers and potential customers of the company
➢ Suppliers and potential suppliers to the company
➢ Everyone living in the town who may be affected by contamination from
workplace operations
➢ Creditors whose money or loaned goods are mixed into the company’s actions
➢ Government entities involved in regulation and taxation Local businesses that
cater to company employees (restaurants where workers have lunch, grocery
stores where employee families shop, and similar)
➢ Other companies in the same line of work competing for market share
➢ Other companies that may find themselves subjected to new and potentially
burdensome regulations because of contamination at that one Massachusetts
plant.
 Management’s relationships with
stakeholders
0A model of corporate
responsibility based on a
company’s relationships with its
stakeholders.
0 In this model, the focus is on
managers—not owners—as the
principals involved in these
relationships.
0 Owners are the stakeholders who
invest risk capital in the firm in
expectation of a financial return.
0 Other stakeholders include
employees, suppliers, and the
communities in which the firm
does business.
Owners
0 Owners invest money in companies. In return, the people who
run a company have a responsibility to increase the value of
owners’ investments through profitable operations.
0 Managers also have a responsibility to provide owners (as
well as other stakeholders having financial interests, such as
creditors and suppliers) with accurate, reliable information
about the performance of the business.
0 Managers have what is known as a fiduciary responsibility to
owners: They’re responsible for safeguarding the
company’s assets and handling its funds in a trustworthy
manner.
Employees
0 Companies are responsible for providing employees with safe,
healthy places to work—as well as environments that are free all
types of discrimination. They should also offer appropriate
wages and benefits.
0 Procter & Gamble (P&G), for example, considers the safety
and health of its employees and promotes the attitude that
“Nothing we do is worth getting hurt for.”
0 With nearly one hundred thousand employees worldwide, P&G
uses a measure of worker safety called “total incident rate per
employee,” which records injuries resulting in loss of
consciousness, time lost from work, medical transfer to another
job, motion restriction, or medical treatment beyond first aid.
0 The company attributes the low rate of such incidents—less than
one incident per hundred employees—to a variety of programs
to promote workplace safety.
Customers
0 The purpose of any business is to satisfy customers, who reward businesses by
buying their products. Sellers are also responsible—both ethically and legally—
for treating customers fairly.
0 The rights of consumers were first articulated by President John F. Kennedy in
1962 when he submitted to Congress a presidential message devoted to
consumer issues. Kennedy identified four consumer rights:
1) The right to safe products.. The automobile industry, for example, conducts
extensive safety testing before introducing new models (though recalls remain
common).
2) The right to be informed about a product. . That’s why pillows have labels
identifying the materials used to make them, for instance.
3) The right to choose what to buy. Pharmacists, for example, should tell
patients when a prescription can be filled with a cheaper brand-name or generic
drug. Telephone companies should explain alternative calling plans.
4) The right to be heard. Companies must tell customers how to contact them
with complain
0 Companies share the responsibility for the legal and ethical treatment of
consumers with several government agencies.
Communities
0 Most communities see getting a new business as an asset
and view losing one—especially a large employer—as a
detriment.
0 After all, the economic impact of business activities on local
communities is substantial: They provide jobs, pay taxes,
and support local education, health, and recreation
programs.
0 Both big and small businesses donate funds to
community projects, encourage employees to volunteer
their time, and donate equipment and products for a
variety of activities. Larger companies can make greater
financial contributions.

5/1/2024
 Stakeholder Impact from
Unethical Behaviour

5/1/2024
 Conclusion on the Three Forms of
Corporate Social Responsibility
0 The best companies have been those generating the highest sales,
gaining the most customers, and clearing the largest profits. As
for ethical questions, they’ve been arranged around the basic
obligation to represent the owners’ central interest, which
presumably is to profit from their investment.
0 Consequently, the field of business ethics has mainly concerned
conflicts and dilemmas erupting inside the company as people
try to work together to win in the very competitive economic
world. The idea of CSR—along with the related ideas of the triple
bottom line and stakeholder theory—opens a different kind of
business ethics.
 Green washing
Group 4

5/1/2024
Greenwashing
0 Greenwashing is when a company attempts to appear
environmentally-friendly when it really is not.
0 Carrying out superficial CSR efforts that merely cover up
systemic ethics problems in this inauthentic way (especially as
it applies to the environment), and acting simply for the sake of
public relations is called greenwashing.
0 Greenwashing refers to the act of portraying an organization’s
product or services as environmentally friendly only for the
sake of marketing. In truth, the product or service doesn’t have
or hardly has any environmental benefits. In fact, they may be
operating in damaging ways to the environment while making
the opposite claim.
0 The American multinational oil and gas corporation
ExxonMobil indicating they were reducing the negative impact
of gas while they were actually increasing.
 Greenwashing
0 When an Image of Social Responsibility May Be Greenwashing
0 Ben and Jerry’s Ice Cream started as a small ice cream stand in Vermont and
based its products on pure, locally supplied dairy and agricultural products. The
company grew quickly and is now a global brand owned by Unilever, an
international consumer goods company co-headquartered in Rotterdam, The
Netherlands, and London, United Kingdom. According to its statement of values,
Ben and Jerry’s mission is threefold: “Our Product Mission drives us to make
fantastic ice cream—for its own sake. Our Economic Mission asks us to manage
our Company for sustainable financial growth. Our Social Mission compels us to
use our Company in innovative ways to make the world a better place.”
0 With its expansion, however, Ben and Jerry’s had to get its milk—the main raw
ingredient of ice cream—from larger suppliers, most of which use confined-
animal feeding operations (CAFOs). CAFOs have been condemned by animal-
rights activists as harmful to the well-being of the animals. Consumer activists
also claim that CAFOs contribute significantly to pollution because they release
heavy concentrations of animal waste into the ground, water sources, and air.
 Greenwashing
Critical Thinking
0 Does the use of CAFOs compromise Ben and Jerry’s mission? Why
or why not?
0 Earth is nothing without its beautiful creatures. For decades,
SeaWorld has fascinated large crowds with its killer whale
shows. But recently the amusement park has faced scrutiny over
its alleged concealed mistreatment of the animals. Several class-
action lawsuits allege SeaWorld misrepresents that it “cares for,”
“protects,” “nurtures,” and creates a “fun, interesting, and
stimulating” environment for its killer whales when, in reality, the
captive animals lead “unhealthy and despairing lives.”
https://www.truthinadvertising.org/six-companies-accused-
greenwashing/
Summary
0 Corporate social responsibility refers to the approach that
an organization takes in balancing its responsibilities toward
different stakeholders when making legal, economic, ethical,
and social decisions.
0 Companies are socially responsible to their various
stakeholders—owners, employees, customers, and the
communities in which they conduct business.
0 Owners invest money in companies. In return, the people who
manage companies have a responsibility to increase the value
of owners 'investments through profitable operations.
0 Managers have a responsibility to provide owners and other
stakeholders with accurate, reliable financial information.
0 They also have a fiduciary responsibility to safeguard the
company’s assets and handle its funds in a trustworthy
manner.
Summary
0 Sellers are responsible—both ethically and legally—for treating
customers fairly.
0 Consumers have certain rights: to use safe products, to be
informed about products, to choose what to buy, and to be
heard.
0 Companies also have a responsibility to the communities in
which they produce and sell their products. The economic
impact of businesses on local communities is substantial.
0 Companies have the following functions:
1. Provide jobs 2. Pay taxes
3. Support local education, health, and recreation activities
4. Donate funds to community projects
5. Encourage employees to volunteer their time
6. Donate equipment and products for a variety of activities
Summary
0 Corporations may have obligations that go beyond generating
profits and include the larger society.
0 Corporate social responsibility as a specific theory affirms that
corporations are entities with economic, legal, ethical, and
philanthropic obligations.
0 Corporations responsible for a triple bottom line see
sustainability in the economic, social, and environmental
realms.
0 Corporate ethics built on stakeholder theory seek to involve all
those affected by the organization in its decision-making
process.
 Stages of Corporate
Responsibility

5/1/2024
Stages of Corporate Responsibility
0 We expect companies to recognize issues of social importance
and to address them responsibly.
0 The companies that do this earn reputations as good corporate
citizens and enjoy certain benefits, such as the ability to keep
satisfied customers, to attract capital, and to recruit and retain
talented employees.
0 But companies don’t become good corporate citizens
overnight.
0 Learning to identify and develop the capacity to address social
concerns takes time and requires commitment. The task is
arduous because so many different issues are important to so
many different members of the public—issues ranging from
the environment, to worker well-being (both at home and
abroad), to fairness to customers, to respect for the
community in which a company operates.
The Five Faces of Corporate Responsibility
0 Faced with public criticism of a particular practice, how does a
company respond?
0 What actions does it take to demonstrate a higher level of
corporate responsibility?
0 According to Harvard University’s Simon Zadek, exercising
greater corporate responsibility generally means going
through the series of five different stances
0 summarized in Figure "Stages of Corporate
Responsibility".Simon Zadek, “The Path to Corporate
Responsibility,” Harvard Business Review

5/1/2024
Stages of Corporate Responsibility

5/1/2024
Here’s Your Salad—How About Fries?
0 Several years ago, McDonald’s found itself in a public relations
nightmare. The fast food giant faced massive public criticism
for serving unhealthy food that contributed to a national
epidemic of obesity. Let’s look at McDonald’s responses to
these criticisms and assess how far along the five-stage
process the company ha progressed.

5/1/2024
1. The Defensive Stage
0 When companies are first criticized over some problem or issue,
they tend to take a defensive, often legalistic stance. They reject
allegations of wrongdoing and refuse to take responsibility,
arguing that fixing the problem or addressing the issue isn’t their
job.
0 As the documentary film Super Size Me demonstrated, a steady
diet of McDonald’s burgers and fries will cause you to gain
weight. It was certainly inevitable that one day the public would
make a connection between the rising level of obesity in the US
and McDonald’s fast food/obesity.
0 McDonald’s reaction to the public outcry against the company’s
menu items was defensive. The owner of McDonald’s in midtown
Manhattan said, “We offer healthy choices. It is up to individuals
to set limits and to be informed.…McDonald’s discloses
nutritional information about its foods in its restaurants.”
 The Compliant Stage
0 During this stage, companies adopt policies that acknowledge the
wishes of the public. As a rule, however, they do only what they
have to do to satisfy their critics, and little more. They’re acting
mainly to protect brands or reputations and to reduce the risk of
litigation.
0 McDonald’s faced daily criticisms on its super-sizing campaign, from nutritionists,
doctors, advocacy groups, and lawyers who held it up as a “grossly overweight” poster
child for U.S. obesity concerns. And the company feared public criticism would escalate
when the movie Super Size Me hit the theaters.
0 The documentary tells the story of a young man who gained twenty-four pounds and
wrecked his health by eating only McDonald’s food for a month. Even worse, one scene
shows him getting sick in his car after trying to wolf down a super-size meal.
0 So McDonald’s immediately moved from the defensive stage to the compliant stage and
announced that it was eliminating its super-size option by the end of 2004. The move,
though small, was in the right direction. It was touted by the company as a “menu
simplification” process, but a spokesman did state, “It certainly is consistent with and
on a parallel path with our ongoing commitment to a balanced life style. ”Bruce
Horovitz
 The Managerial Stage
0 Managerial. When it becomes clear that the problem won’t go
away, companies admit that they need to take responsibility and
action, so they look for practical long-term solutions.
0 Criticism of McDonald’s continued as customers stayed away
and its profits plummeted. The company searched for ways to
win back customers and keep them long-term. To do this, it
would have to come up with a healthier menu.
0 The company got serious about salads and introduced new, improved
“premium salads. (a nice public relations touch, as all profits on the salad
dressings are donated to charities).
0 The company also improved the Happy Meal for both kids and adults by
letting kids substitute apple slices and low-fat milk for the usual fries and
soda and the adult version of the Happy Meal, called the GoActive meal,
which includes a salad, a bottle of water, a book on nutrition, and a clip-on
pedometer that measures the number of steps you take.
0 McDonald’s goal was to convince customers that it had turned a corner and
would forever more offer healthy choices to both adults and children.
The Strategic Stage
0 Strategic. At this point, they may start to reap the benefits of
acting responsibly. They often find that responding to public
needs gives them a competitive edge and enhances long-term
success.
0 The new focus on healthy choices worked, and customers started returning.
McDonald’s salads were well received and accounted for about 10 percent of
sales.
0 Overall, things improved financially for the company: Sales increased and
profits rose. To complete the transition to a healthier image, McDonald’s
came up with a new theme: helping adults and children live a balanced,
active lifestyle.
0 To go along with the theme, it launched a new active-life public-awareness
campaign with the tagline “It’s what I eat and what I do…I’m lovin’ it.”
McDonald’s demonstrated its concern for the health of its customers through
permanent menu changes and an emphasis on the value of physical fitness.
0 The company launched a program called GoActive to help people find fun
ways to build physical activity and fitness into their daily lives.
The Civil Stage
0 Civil. Ultimately, many companies recognize the importance of
getting other companies to follow their lead. They may
promote participation by other firms in their industries,
endorsing the principle that the public is best served through
collective action.
0 McDonald’s hasn’t advanced to the final stage yet; it hasn’t enlisted the
cooperation of other fast-food companies in encouraging children and
adults to eat healthier foods. It’s difficult to predict whether it will assume
this role in the future, or even whether the company will stick with its
healthier lifestyle theme.
0 Indeed, it’s hard to reconcile McDonald’s commitment to helping people eat
healthier with a promotion that gave a free forty-two-ounce “super-size”
soda to anyone buying a Big Mac and fries.
0 Given that a Big Mac and medium fries deliver 910 calories, it’s hard to
justify encouraging customers to pile on an additional 410 calories for a big
drink (at least, it’s hard to justify this if you’re promoting yourself as a
company helping people eat better). Eric Herman, “McDonald’s Giant Drinks
Return,”
Coca-Cola Company
0 One well-represented example of the socially responsible marketing is the
Coca-Cola Company. The Coca-Cola Company is a company that is globally
engaged with socially responsible marketing because this company has
become one of most successful corporation that markets all over the world.
On the website Coca-Cola Company talks about health issues like
cavity (dental caries), sugar diabetes, and obesity that would increase
the risk of heart disease even though this accusation would change
the consumer behavior on its product. Its website also says that Coca-
Cola Company not only sponsors a number of health programs like
Special Olympics, Coca-Cola Cup, and etc but also donate amount of
time and money for improving quality of society like building youth
centers. Their donations take all over the places in the world where Coca-
Cola Company is responsible for its product. This example show what make
socially responsible marketing represent a departure from traditional
marketing.
Summary
0 Faced with public criticism of a particular practice, a company is likely to
progress through five different stages:
1. Defensive. When first criticized over some problem, companies take a
defensive stance. They reject allegations of wrongdoing and refuse to take
responsibility.
2. Compliant. During this stage, companies do only what they have to do to
satisfy their critics, protect brands or reputations, and reduce the risk of
litigation.
3. Managerial. When it’s clear that the problem won’t go away, companies
take responsibility and look for long-term solutions.
4. Strategic. At this point, they may start to reap the benefits of acting
responsibly. Responding to public needs gives them a competitive edge and
enhances long-term success.
5. Civil. Ultimately, companies recognize the importance of getting other
companies to follow their lead. They enlist the cooperation of other
companies in supporting the issue of concern to the public.
 Give examples of companies
you know whether local or
global ones that in favor of or
against Social Corporate
responsibility?

5/1/2024
 Should Corporations
Have Social
Responsibilities?

The Arguments in Favor

5/1/2024
 1. The Moral Requirement Argument
The moral requirement that business goals go beyond the bottom line to include
the people and world we all share is built on the following arguments :
0 Corporations are already involved in the broad social world and the ethical
dilemmas defining it.
0 For example, factories producing toxic waste are making a statement about the
safety and well-being of those living nearby every time they dispose of the
toxins. If they follow the cheapest—and least safe—route in order to maximize
profits, they aren’t avoiding the entire question of social responsibility; they’re
saying with their actions that the well-being of townspeople doesn’t matter too
much. That’s an ethical stance.
0 Taking the example of an industrial chemical factory, toxic waste is produced.
Even though it may be disposed of carefully, that doesn’t erase the fact that
barrels of poison are buried somewhere and a threat remains, no matter how
small. Similarly, companies that fire workers create social tensions. The
dismissal may have been necessary or fully justified, but that doesn’t change
the fact that problems are produced, and with them comes a responsibility to
participate in alleviating the negative effects.
 2. The Externality Argument
0 The second type of argument favoring corporate social responsibility revolve
around externalities. These attach corporations to social responsibilities not
morally but operationally. An externality in the economic world is a cost of a
good or service that isn’t accounted for in the price.
0 EX: if a corporation’s factory emits significant air pollution, and that results in a
high incidence of upper respiratory infections in the nearby town, then a
disproportionately high number of teachers and police officer are going to call
into work sick throughout the year. Substitute teachers and replacment officers
will need to be hired, and that cost will be borne by everyone in town when
they receive a higher tax bill.
0 EX: the iPhone does a pretty good job of displaying traffic congestion in real
time on its map. That ability costs money to develop, which Apple invested, and
then they get cash back when an iPhone sells. Apple doesn’t receive, however,
anything from those drivers who don’t purchase an iPhone but still benefit
from it: those who get to where they’re going a bit faster because everyone who
does have an iPhone is navigating an alternate route. More, everyone benefits
from cleaner air when traffic jams are diminished, but again, that part of the
benefit, which should channel back to Apple to offset its research and
production costs, ends up uncompensated.
 3. The Enlightened Self-interest Argument
0 Enlightened self-interest means businesses take on broad responsibilities because that
public generosity also benefits the company. The benefits are:
0 Corporations perceived as socially engaged may be rewarded with more satisfied
customers. TOMS shoes is an excellent example. For every pair of shoes they sell, they
give a pair away to needy children. No one doubts that this is a noble action—one
displaying corporate vision as going beyond the bottom line—but it’s also quite
lucrative. Many people buy from TOMS because of the antipoverty donations, and those
customers feel good about their footwear knowing that a child somewhere is better off.
0 Organizations positively engaged with society or the environment may find it easier to
hire top-notch employees. All workers seek job satisfaction, and given that you spend
eight hours a day on the job, the ingredients of satisfaction go beyond salary level.
Consequently, workers who select from multiple job offers may find themselves
attracted to an enterprise that does some good in the world. This point can also be
repeated negatively. Some organizations with more checkered reputations may find it
difficult to hire good people even at a high salary because workers simply don’t want to
have their name associated with the operation
0 CSR becomes an example of cause egoism that is, giving the false appearance of being
concerned with the welfare of others in order to advance one’s own interests.
 Should Corporations
Have Social
Responsibilities?

The Arguments in
Against

5/1/2024
 The Only Corporate Responsibility Is to Increase Profits
0 The economist Milton Friedman published a short essay titled “The Social
Responsibility of Business is to Increase its Profits.” Friedman set out to show
that large, publicly owned corporations ought to be about making money, and
the ethical obligations imposed by advocates of CSR should be dismissed. Here
are his arguments:
- The Argument That Businesses Can’t Have Social Responsibilities
A business can’t have moral responsibilities. Only humans have moral
responsibilities because only we have consciousness and intentions. Business is
tool we make to further our ends. It may work well or poorly, so we can’t blame
or credit the business, only those individuals who use it for one purpose or
another.
- The Argument That Corporate Executives Are Responsible Only to Shareholders
Corporate executives are employees of the owners of the enterprise. They’re
contracted and obligated to conduct the business as the owners desire, not in
accord the wishes of some other people out in the world advocating social
concerns. Executives in this sense can’t take the job and then flip the hamburgers
into the trash because people are texting them about how unhealthy McDonald’s
food is.
 The Only Corporate Responsibility Is to Increase Profits
- The Argument That Society Won’t Be Served by Corporate Social Responsibility
0 One serious practical problem with the vision of corporate executives resolving
social problems is it’s hard to be sure that their solutions will do good.
One example of the reversed result comes from Newsweek. Executives at the
magazine probably thought they were serving the public interest when they
dedicated space to the threatening environmental disaster posed by
global…cooling.. Today, many scientists believe that global warming is the real
threat and requires corporations to join governments in reducing carbon
emissions.
- The Right Institution for Managing Social Problems Is Government
0 Social problems shouldn’t be resolved by corporations because we already have
a large institution set up for that: government. If members of a society are
worried about carbon emissions or the disposal of toxic waste at chemical
plants, then they should elected representatives who will elaborate laws and
regulations. Government should do its job, which is to regulate effectively, and
those in the business world should do their job, which is to comply with
regulations while operating profitably.

0 .
 The Only Corporate Responsibility Is to Increase Profits
- Marketplace ethics reinforce human freedom and CSR threatens society with socialism
0 The movement to socialism that Friedman fears comes in two steps:
1. Environmental activists, social leaders, and lawyers will convince business
executives that working life isn’t about individuals’ freedom in a wide open
world; it’s about serving the general welfare. The notion of CSR wins wide public
support.
2. With the way forced open by activists, the risk is that government will follow.
Under the weight of intrusive laws, business executives will be forced to give up
on their own projects and march government-dictated social welfare projects.
Hiring decisions, for example, will no longer be about companies finding the best
people for their endeavors; instead, they’ll be about satisfying social goals
defined by politicians and bureaucrats.
0 Friedman cites as an example the hiring of felons. Obviously, it’s difficult for
people coming out of jail to find good jobs. Just as obviously, it’s socially
beneficial for jobs to be available to them. The problem comes when
governments decide that the social purpose of reinserting convicts is more
important than protecting the freedom of companies to hire anyone they
choose. When that happens, hiring quotas will be imposed—corporations will
be forced to employ certain individuals.
 The Only Corporate Responsibility Is to Increase Profits
- The best way for corporations to serve the public welfare is by pursuing profits.
0 When corporations are making profits, the money isn’t just disappearing or
piling up in the pockets of the greedy super rich (though some does go there);
most of it gets sent back into the economy and everyone benefits. Jobs are
created, and those who exist get some added security. With employment
options opening, workers find more chances to change and move up: more
successful corporations mean more freedom for workers.
0 Corporations don’t get to be successful through luck, but by delivering goods
and services to consumers at attractive prices. Corporate success, that means,
should indicate that consumers are doing well. Their quality of life improves as
their consumer products improve, and those products improve best and fastest
when corporations are competing against each other as freely as possible.
0 What about the public welfare, the construction of parks, schools, and similar?
Corporations do the best for everyone by concentrating on their own bottom
line. More hiring, sales, and profits all also mean more tax revenue flowing to
the government.
 Conclusion: Corporate Social Responsibility
versus Marketplace Responsibility
0 Corporations affect their local, regional, national, and global communities.
Creating a positive impact in these communities may mean providing jobs,
strengthening economies, or driving innovation. Negative impacts may include
doing damage to the environment, forcing the exit of smaller competitors, and
offering poor customer service, to name a few.
0 Advocates of CSR believe corporations are obligated to share the burden of
resolving society’s problems. They maintain that the responsibility stands on
pure moral grounds. If businesses are going to contaminate the environment or
cause distress in people’s lives, they should work to resolve the problems. If the
corporate should be to make profits, social responsibility is an excellent way to
achieve the goal.
0 Adversaries of the CSR model—argue that by definition corporations can’t have
moral responsibilities. More, corporate directors aren’t experts at solving social
problems, and there are an institution that presumably does have expertise:
government. If the corporate should include broad social responsibilities, free
individuals and corporations in the world making profits is an excellent way to
achieve the goal.
 KEY TAKEAWAY
0 There are three broad arguments in favor of corporate social responsibility:
it is morally required, it’s required b externalities, it serves the interest of
the corporation.
0 The first argument against theories of corporate social responsibility is
corporations can’t have ethical responsibilities.
0 The second argument is corporate executives are duty bound to pursue
profits.
0 The third argument is corporations are ill-equipped to directly serve the
public good.
0 The fourth argument is social issues should be managed by government,
not corporations.
0 The fifth argument is marketplace ethics reinforce human freedom and
corporate social responsibility threatens society with socialism.
0 The sixth argument against theories of corporate social responsibility is the
best way for corporations to serve the public welfare is by pursuing profits.
 Assignment lecture 3
Answer one of the following case studies:

- The Body Shop case Study

- The Fish and Chips case Study

5/1/2024